Stock Code: 2324
Compal Electronics, Inc.
2017 Annual Report
Notice to readers
This English-version annual report is a summary translation of the Chinese version
and is not an official document approved in a shareholders’ meeting in accordance
with Taiwanese laws. Should any discrepancy arise between the English and
Chinese versions, the Chinese version shall prevail.
Taiwan Stock Exchange Market Observation Post System:
http://newmops.twse.com.tw
Company Annual Report is available at: http://www.compal.com
Printed on May 9, 2018
0
I. Spokesperson
Spokesperson: Gary Lu / Vice President
Deputy Spokesperson: Jack Wang / Director of Accounting Dept.
Tel: 886-2-8797-8588
E-mail: Investor@compal.com
II. Headquarters, Branches and Plant
Headquarters
Address: No.581& 581-1, Ruiguang Rd., Neihu District, Taipei, Taiwan
Tel: 886-2- 8797-8588
Manufacturing Site
Address: No. 8, South East Rd., Pingzhen City, Taoyuan County
Tel: 886-3-439-1707
III. Share Administration Agency
Chinatrust Transfer Agent
Address: 5F, No. 83, Sec 1, Chung Ching Nan Road, Taipei, Taiwan
Tel: 886-2-6636-5566
Website: https://www.ctbcbank.com
IV. Auditors
CPA Firm: KPMG
Auditors: Kuo, Kuan Ying and Au, Yiu Kwan
Address: 68F, No. 7, Sec. 5, Xinyi Road, Taipei, Taiwan
Tel.: 886-2-8101-6666
Website: http://www.kpmg.com.tw
V. Overseas Securities Exchange
Luxembourg Stock Exchange: http://www.bourse.lu
London Stock Exchange http://www.londonstockexchange.com
VI. Corporate Website
http://www.compal.com
1
Table of Contents
3 I. Letter to Shareholders
II. Company Profile
6
6
2.1 Date of Incorporation
2.2 Company History
III. Corporate Governance Report
7
9
32
67
70
3.1 Organization
3.2 Directors, Supervisors and Management Team
3.3 Implementation of Corporate Governance
3.4 Information Regarding the Company’s Audit Fee and Independence
3.5 Changes in Shareholding of Directors, Supervisors, Managers and Major
Shareholders
72
73
3.6 Relationship among the Top Ten Shareholders
3.7 Ownership of shares in Affiliated Enterprises
IV. Capital Overview
75
81
81
81
81
81
81
4.1 Capital and Shares
4.2 Bonds
4.3 Global Depository Receipts
4.4 Employee Warrants
4.5 Subscription of New Shares by Employees and Restricted Shares
4.6 New Share Issuance in Connection with Mergers and Acquisitions
4.7 Financing Plans and Implementation
V. Operational Highlights
5.1 Business Activities
5.2 Market and Sales Overview
5.3 Human Resources
5.4 Environmental Protection Expenditure
5.5 Labor Relations
5.6 Important Contracts
82
86
92
92
93
95
VI. Financial Information
96
100
103
104
104
6.1 Five-Year Financial Summary
6.2 Five-Year Financial Analysis
6.3 Audit Committee’s Report in the Most Recent Year
6.4 Consolidated Financial Statements and Independent Auditors’ Report
6.5 Parent-Company-Only Financial Statements and Independent Auditors’ Report
1
104
6.6 Status of financial difficulties for the Company and its subsidiaries
VII. Review of Financial Position, Operating Results, and Risk Management
105
106
107
108
108
7.1 Analysis of Financial Status
7.2 Analysis of Operation Results
7.3 Analysis of Cash Flow
7.4 Major Capital Expenditures
7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement
Plans and Investment Plans for the Coming Year
110
7.6 Analysis of Risk Management
VIII. Special Disclosure
114
118
118
118
8.1 Summary of Affiliated Companies
8.2 Private Placement of Securities in the Most Recent Year
8.3 Subsidiaries’ Holding of the Company’s Shares in the Most Recent Year
8.4 Events with Significant Impacts
2
I.
Letter to Shareholders
Dear Shareholders,
Looking back at 2017, political and economic situations around the world have continued on their
tumultuous path from the preceding year as many challenges remain in terms of industry developments.
Issues such as the fluctuations in global exchange rates, the shortage of labor in China, tightness and
increase in prices for component parts have meant significant impact on the entire manufacturing as a whole.
As a member of the global supply chain, Compal has not been spared from the effects of these circumstances.
Fortunately, with the collaborative efforts from all Compal employees, the company managed to achieve
some breakthrough in terms of sales for 2017 to achieve a growth of 16% in consolidated revenue compared
to 2016, with the total shipping volume for 5C related electronic products reaching 80 million units. Compal
has also continued to reap fruits of success from its Innovation and new business developments. We would
like to present a summary of our operational results for last year and business outlook for this year as
follows:
2017 Financial and Business Performance
Compal’s 2017 consolidated revenue came to NT$ 887,657 million, which translated to an increase by 16%
compared to the previous year thanks to the growth in computing products and progress of multiple smart
devices. Consolidated operating income was NT$ 9,208 million, which was down by 17% compared to 2016.
The decline was mainly attributed to the one-time inventory and accounts receivable bad debt losses for
Chinese smartphone customers that totaled at NT$ 3,588 million. With non-operating income and income
tax accounted for, the net profit attributed to the parent company came to NT$ 5,750 million, with the EPS
at NT$ 1.32.
With regards to business development, computing products have benefitted from the trend of commercial
replacement demand. Coupled with Compal’s efforts in client cultivation and relevant collaborations in the
development of innovative design for products with high added-values, the company has achieved the
growth in shipping volumes in 2017 with performance superior to the market and other industry peers. As
for non-computing products, after Compal has made breakthrough developments in technology and
mass-production for various internet connected devices in 2016, the company initiated more extended
collaborations with customers in 2017 to achieve modest progress in the development of Smart Home
applications, such as AI speaker and Home gateway, as well as Wearable devices. All in all, Compal’s
non-NB business has contributed in excess of 30% of the company’s revenue in 2017 and reached a
short-term milestone in Compal’s record of active transition in recent years. Our next step is to ensure
further improvement in the company’s profit through better management and efficacy as Compal diversifies
its operations.
3
Honors and Awards
With our continual effort towards innovation, Compal has kept up with its impressive performance in the
German iF product designs in 2017 by receiving a total of 43 awards over the past six years, thereby firmly
securing Compal’s place in the iF Top 100 Global Innovation Corp. Ranking. Compal’s commitment to
Corporate Social Responsibilities (CRS) and Corporate Governance has once again been acknowledged by
the Gold Medal Award in TCSA given by Taiwan Institute for Sustainable Energy along with the company’s
placement in the top 20% in Corporate Governance Evaluation by Taiwan Stock Exchange Corporation in
2017. Not only that, Compal is once again selected as a Taiwan Stock Exchange Corporate Governance
Index constituent stock.
2018 Business Outlook
For 2018, Compal will be focusing on a few key developments, including to continue strengthening
collaboration with customers to achieve higher market share in the company’s core business in order to
attain higher economy of scale; in terms of technology, Compal will invest in the deployment for Artificial
Intelligence and next-generation 5G technologies in order to create more opportunities for new product and
service development. For manufacturing, we will accelerate automation and optimize the overall processes
to achieve better productivity. With regards to management, we will continue to push cross-organization
integration and resource sharing while nurturing more talents to achieve our goal of sustainable
developments. Looking ahead to the global economy for 2018, while many variables of uncertainty remain
at play, after careful assessment of market situations and Compal’s business development, there is a good
chance that the total shipping volume of 5C related electronic products could continue the trend of growth as
we have seen in 2017. Pertaining to the percentage of revenue from non-NB products, we expect to see
continued growth. At the same time, Compal shall persevere to improve upon the company’s organizational
fortitude to vie for better leverage in the competition.
New Business Development of Smart Medical
Ever since the company’s foray into the smart medical and healthcare industry in 2015, we have witnessed
many collaborations of horizontal alliance unfold. In 2017, Compal unveiled its “Smart Healthcare Solution
for Senior Citizens” – a joint-effort with Taoyuan City Government, Department of Social Welfare along
with several long-term care centers to serve seniors with smart healthcare technology. At the same time, the
company has also developed its “Smart Fitness Solution” to introduce a platform of physical exercise for
people of all ages through the use of the featured smart matt to help users incorporate health management
into their day-to-day lives. In early 2018, the cooperative program between the Unicore Animal Hospital
(operated by Unicore BioMedical Co. Ltd. – a 100%-owned subsidiary of Compal) and National Pingtung
University of Science and Technology has been officially commence, while “iDiabCare® –Remote
Healthcare Solution for Chronic Illnesses and Diabetes” developed by Compal’s internal Smart Medical
team has also been officially adopted at Changhua Christian Hospital, with more horizontal alliance
collaborations currently ongoing. We believe that our investment in Smart medical and healthcare will serve
as the next key propellant that drives the company towards long-term growth.
4
Once again, we sincerely appreciate your support and advice for Compal and wish you a peaceful and
prosperous year ahead!
Sincerely yours,
Chairman: Sheng-Hsiun Hsu (Rock Hsu)
Chief Executive Officer (CEO): Jui-Tsung Chen (Ray Chen)
Chief Finance Officer (CFO): Ching-Hsiung Lu (Gary Lu)
5
II. Company Profile
2.1
Date of Incorporation: June 1, 1984
2.2 Company History
Company history in the past two years:
Year
2016
• Won 10 awards of 2016 “iF design” and ranked 15th on Global Innovation.
Milestones
•
•
•
•
•
•
•
•
•
•
•
Ranked within top 6%~20% TWSE-listed companies of the “Second Round of Corporate
Governance Evaluation” by TWSE
Ranked 4th in CommonWealth Magazine’s “Top-2000 Manufacturers.”
Ranked 48th in CommonWealth Magazine’s “Cross-strait Top 1000 Survey”.
Ranked 400th on the Fortune Global 500.
Ranked 1467th on the Forbes Global 2000.
Ranked 26th on CommonWealth Magazine’s Top 50 CSR in Corporate Citizen Awards.
Ranked 25th on The 100 most sustainable companies in Asia by CSR Asia Summit.
Received Taiwan Corporate Sustainability Report Awards in “2016 TCSA” – ICT Manufacturing –
The Silver Medal.
The Company’s share capital reached NTD 44.2 billion by the 2016.
The Company earned NTD 766.8 billion in consolidated revenues in 2016.
Chairman Rock Hsu received the “Pan Wen Yuan Award” – the most prestigious award for
technology in Taiwan.
• Won 4 awards of 2017 “iF design” and ranked 31th on Global Innovation.
•
•
•
•
•
•
•
•
•
Ranked within top 6%~20% TWSE-listed companies of the “Third Round of Corporate Governance
Evaluation” by TWSE.
Ranked 5th in CommonWealth Magazine’s “Top-2000 Manufacturers”.
Ranked 53th in CommonWealth Magazine’s “Cross-strait Top 1000 Survey”.
Ranked 458th on the Fortune Global 500.
Ranked 1531th on the Forbes Global 2000.
Received Taiwan Corporate Sustainability Report Awards in “2017 TCSA” – ICT Manufacturing –
The Gold Medal.
The Company’s share capital reached NTD 44.2 billion by the 2017.
The Company earned NTD 887.7 billion in consolidated revenues in 2017.
Chairman Rock Hsu received the Economic Profession Medal (First Rank).
• Won 11 awards of 2018 “iF design”.
•
•
•
•
Ranked within top 6%~20% TWSE-listed companies of the “Fourth Round of Corporate Governance
Evaluation” by TWSE.
Ranked 6th in CommonWealth Magazine’s “Top-2000 Manufacturers”.
Ranked 59th in CommonWealth Magazine’s “Cross-strait Top 1000 Survey”.
Selected to take part in the CDP climate change program for four consecutive years (2014-2017) and
received an overall CDP rating of B at the Management Level for 2017.
6
2017
2018
III. Corporate Governance Report
3.1 Organization
3.1.1 Organizational Chart (As of Jan 1, 2018)
Shareholders
Board of Directors
President’s Office
Remuneration
Committee
Audit
Committee
Personnel Evaluation Committee
Investment Office
Legal Affairs Office
Insider Trading Prevention
Office
Auditing Office
Top Management
Committee
Green Sustainability
Office
Corporate Social
Responsibility Office
PC
BG
Smart Device
BG
Accounting Group
HR &
Administration
7
3.1.2 Major Corporate Functions
Department
Functions
President’s Office
Responsible for the Company’s operation
Investment Office
Responsible for investment-related activities
Auditing Office
Conducts internal audits
Legal Affairs Office
Handles the Company’s legal affairs
Green Sustainability Office
Executes “Green Life” projects
Insider Trading Prevention
Office
Corporate Social
Responsibility Office
Implements preventive measures against insider trading
Promotes and executes CSR-related affairs
PC BG
Responsible for the R&D, production, quality control and sale of PC products
Smart Device BG
Responsible for the R&D, production, quality control and sale of smart devices
Accounting Group
Handles accounting, share administration, and funding affairs
HR & Administration Group
Responsible for human resource, training, education, employee relations,general
affairs and building management
8
3.2 Directors, Supervisors and Management Team
3.2.1 Directors and Supervisors
Title
Name/
Nationality/Gender
(Note 1)
Elected
Date
Ter
m
First
Elected
Date
(Note 3)
Shareholding as of
elected date
Current shareholding
Shares held by
spouse and underage
children
Current shareholding
Shares held by
proxy
Shares
Shareho
lding
Percent
age
(%)
Shares
Shareh
olding
Percent
age
(%)
Shares
Shareh
olding
Percent
age
(%)
Shares
Shareh
olding
Percent
age
(%)
Chairman Hseng-Hsiun Hsu 2015.6.26
Director
Jui-Tsung Chen 2015.6.26
Director Wen-Being Hsu 2015.6.26
3
years
3
years
3
years
Director
Kinpo Electronics,
Inc.
Representative:
Shyh-Yong Shen
2015.6.26
3
years
1984.04.16
17,775,401 0.40%
8,975,401 0.20% 17,107,025 0.39%
0 0.00%
1992.04.30
50,782,587
1.14%
35,352,587 0.80%
1,069,405 0.02%
0 0.00%
1984.04.16
4,000,000
0.09%
4,000,000 0.09%
0 0.00% (Note3) (Note 3)
1990.06.22
151,628,692
3.39%
151,628,692 3.43%
-
-
0 0.00%
2012.03.14
0
0.00%
0 0.00%
0 0.00%
0 0.00%
Director
Charng-Chyi
Ko(Note 2)
3
2015.6.26
years 1984.04.16
7,896,867
0.18%
7,896,867 0.18%
30,645 0.00%
0 0.00%
Director
Sheng-Chieh Hsu
(Note 2)
2015.6.26
3
years
1997.05.29
9,119,297
0.20%
9,119,297 0.21%
8,600,928 0.19% (Note 3) (Note 3)
Director
Yung-Chia Chou
(Note 2)
3
2015.6.26
years 1987.06.13
8,022,874
0.18%
8,022,874 0.18%
2,502,768 0.06%
0 0.00%
Director Wen-Chung Shen 2015.6.26
Director Yung-Ching Chang 2015.6.26
3
years
3
years
1998.04.08
11,935,968
0.27%
6,735,968 0.15%
5,201,931 0.12%
0 0.00%
2000.03.30
3,898,587
0.09%
2,206,587 0.05%
7,259 0.00%
0 0.00%
9
April 24, 2018
Spouse or relatives of second degree
as Directors,
acting
or
Supervisors, or department heads
closer
Title
Name
Relations
hip
Selected
Current
Positions
held
concurrently
in the
company
and/or any
other
companies
(Note 4)
Director
Director
Sheng-Chieh
Hsu
Shyh-Yong
Shen
Brothers
Father and
son in law
(Note 4)
N/A
N/A
N/A
(Note 4)
N/A
N/A
N/A
(Note 4)
Chairman
Hseng-Hsiun
Hsu
Father and
son in law
(Note 4)
N/A
N/A
N/A
(Note 4)
Chairman
Hseng-Hsiun
Hsu
Brothers
(Note 4)
N/A
N/A
N/A
(Note 4)
N/A
N/A
N/A
(Note 4)
N/A
N/A
N/A
Major career (academic) achievements
Honorary Doctorate, National Taiwan
Normal University
Chairman of Kinpo and Compal
Electronics Inc.
Department of Electrical Engineering,
National Cheng Kung University
Chairman of Compal Communication
Inc. & Arcadyan Technology Corp.
National Tao-Yuan Sr. Vocational
Agricultural & Industrial School
Director of BAOTEK, Inc.
M.B.A., University of Southern
California; PhD, Whittier Law School
MBA WHITTIER
Director and President of Kinpo
Electronics Inc.
National Taiwan University College of
Management
PhD, Lincoln University, USA
Chairman and President of Taiwan
Biotech Co., Ltd.
Department of Architecture,
Tam-Kang University
Managing Director of Kinpo
Electronics Inc.
Department of Geosciences, National
Taiwan University
Supervisor of Kinpo Electronics Inc.
Department of Electrical Engineering,
National Taiwan University
Director of Arcadyan Technology
Corp.
Master’s Degree in Graduate School
of Management, Yuan Ze University
Chairman of Allied Circuit Co., Ltd.
Title
Name/
Nationality/Gender
(Note 1)
Elected
Date
Ter
m
First
Elected
Date
(Note 3)
Shareholding as of
elected date
Current shareholding
Shares held by
spouse and underage
children
Current shareholding
Shares held by
proxy
Shares
Shareho
lding
Percent
age
(%)
Shares
Shareh
olding
Percent
age
(%)
Shares
Shareh
olding
Percent
age
(%)
Shares
Shareh
olding
Percent
age
(%)
Director
Chung-Pin Wong 2015.6.26
Director
Chiung-Chi Hsu 2015.6.26
Director Chao-Cheng Chen 2015.6.26
3
years
3
years
3
years
2007.06.15
4,833,618
0.11%
6,618,618 0.15%
1,398 0.00%
0 0.00%
1994.04.23
2,000,731
0.04%
2,000,731 0.05%
30,000 0.00%
0 0.00%
2014.6.20
4,850,000
0.11%
4,785,000 0.11%
1,428 0.00%
0 0.00%
Independent
Director Min-Chih Hsuan 2015.6.26
3
years
2012.6.22
0
0.00%
0 0.00%
0 0.00%
0 0.00%
Independent
Director
Duei Tsai
2015.6.26
3
years
2012.6.22
0
0.00%
0 0.00%
0 0.00%
0 0.00%
Independent
Director
Duh-Kung Tsai 2015.6.26
3
years
2012.6.22
0
0.00%
0 0.00%
0 0.00%
0 0.00%
Selected
Current
Positions
held
concurrently
in the
company
and/or any
other
companies
Spouse or relatives of second degree
or
as Directors,
acting
Supervisors, or department heads
closer
Title
Name
Relations
hip
(Note 4)
N/A
N/A
N/A
(Note 4)
N/A
N/A
N/A
(Note 4)
N/A
N/A
N/A
(Note 4)
N/A
N/A
N/A
(Note 4)
N/A
N/A
N/A
(Note 4)
N/A
N/A
N/A
Major career (academic) achievements
Graduate Institute of Management
Science, National Chiao Tung
University
Chairman of Rayonnant Technology
Holdings Ltd.
Master’s Degree, Golden Gate
University, San Francisco, USA
Director of I PAO Bearing Co., Ltd.
Graduate Institute of Electrical
Engineering, National Taiwan
University
President of Compal Communication
Inc.
Honorary Doctorate, National Chiao
Tung University
Chairman of United Microelectronics
Corp. & Faraday Technology Corp.
PhD, Graduate Institute of Electrical
Engineering,National Taiwan
University
Minister of Transportation and
Communications R.O.C.
Department of Industrial Engineering,
National Taipei Institute of
Technology
Chairman of Powertech Technology
Inc.
Note: All directors are Republic of China nationals and male.
2. The previous supervisors Charng-Chyi Ko, Sheng-Chieh Hsu and Yung-Chia Chou resigned as of June 26, 2015 and were elected as directors in 2015 shareholders meeting. The service of
Supervisor Sheng-Chieh Hsu was temporarily discontinued between June 22, 1990 and April 22, 1994.
3. Director Wen-Being Hsu held 5,000,000 shares (0.11%) through proxies, while Supervisor Sheng-Chieh Hsu held 3,500,000 shares (0.08%) through proxies.
4. Selected Current Positions as below:
10
Title
Name
Selected Current Positions
Chairman: Kinpo Electronics, Inc., AcBel Polytech Holdings Inc., Thailand Citi Office, Teleport Access Services Inc., Cal-Comp Electronics (Thailand), Gempal
Technology Corp., Panpal Technology Corporations, Hong Ji Capital Co., Ltd., Hong Jin Investment Co., Ltd., Jipo Investment Inc., Kinpo Group
Management Consultant Company, Breeze Integrated Development Co., Ltd., NTNU Startup Holding Co., Ltd., Compal Electronics Technology
(Kunshan) Co., Ltd., Compal Information (Kunshan) Co., Ltd., Compal Information Technology (Kunshan) Co., Ltd., Compal Information Research &
Development (Nanjing) Co., Ltd, Compal Digital Technology (Kunshan) Co., Ltd., Compal Electronics (Chengdu) Co., Ltd., Compal Electronics
(Chongqing) Co., Ltd., Compal Electronics (China) Co., Ltd., Compal Optoelectronics (Kunshan) Co., Ltd., Compal Display Electronics (Kunshan) Co.,
Ltd., Kunshan Botai Electronics Co., Ltd., Chongqing Yipal Smart Electronic Device Co., Ltd., Compal Investment (Sichuan) Co., Ltd., Compal
Investment (Jiangsu) Co., Ltd., Compal Management (Chengdu) Co., Ltd., Kinpo Electronics (China) Co., Ltd.
Chairman
Sheng-Hsiun
Hsu
Director
Jui-Tsung
Chen
Managing Director: Taiwan Biotech Co., Ltd.
Director:
Baotek Industrial Materials Ltd., Crownpo Technology Inc., Compal System Trading (Kunshan) Co., Ltd., Cal-Comp Optical Electronics (Suzhou) Co.,
Ltd., Cal-Comp Technology (Suzhou) Co., Ltd., Cal-Comp Electronics and Communication (Suzhou) Co., Ltd., Acbel Polytech Holdings Inc., Acbel
Polytech (Singapore) Pte. Ltd., Ascendant Private Equity Investment Ltd., Billion Sea Holdings Limited, Big Chance International Co., Ltd., Center Mind
International Co., Ltd., Compal Display Holding (HK) Limited, Compal Electronics (Holding) Ltd., Compal Electronics International Ltd., Compal
International Ltd., Compal International Holding (HK) Limited, Compal International Holding Co., Ltd., Compal Rayonnant Holdings Ltd., Core Profit
Holdings Limited, Flight Global Holding Inc., Forward International Ltd. , Fortune Way Technology Corp., Global Strategic Investment Inc., Goal Reach
Enterprises Ltd., HengHao Holdings A Co., Ltd., HengHao Holdings B Co., Ltd., HengHao Trading Co., Ltd., High Shine Industrial Corp., Intelligent
Universal Enterprise Ltd., Jenpal International Ltd., Just International Ltd., Kinpo International (Singapore) Pte. Ltd., Kinpo International Ltd., Lipo
Holding Co., Ltd., Prospect Fortune Group Ltd., Prisco International Co., Ltd., Ranashe International Ltd., Smart International Trading Ltd.
President: Kinpo Group Management Consultant Company
Other:
Chinese National Federation of Industries Honorary President,Importers and Exporters Association of Taipei Honorary President,, Taiwan Electrical and
Electronic Manufacturers’ Association Strategy Consultant, China Productivity Center Chairman, Straits Exchange Foundation Vice Chairman,SINOCON
Industrial Standards Foundation Vice Chairman,Taiwan Design Center Managing Director, Management Institute in Taipei Director
Chairman: Arcadyan Technology Corp., Ripal Optoelectronics Co., Ltd. Infinno Technology Corporation, Huang Feng Communication Co., Ltd., UNICOM
GLOBAL INC., General life Biotechnology Co., Ltd., Raycore Biotech Co., Ltd.,UniCore Biomedical Co., Ltd., Compal System Trading (Kunshan) Co.,
Ltd.
Director: Kinpo Electronics, Inc., Compal Broadband Networks, Inc., Henghao Technology Co., Ltd., Mactech Co., Ltd., Infinno Technology Corporation, Gempal
Technology Corp., Panpal Technology Corporations, Hong Ji Capital Co., Ltd., Hong Jin Investment Co., Ltd., Kinpo Management Service Co., Ltd.,
Compal Electronics Technology (Kunshan) Co., Ltd., Compal Information (Kunshan) Co., Ltd., Compal Information Technology (Kunshan) Co., Ltd.,
Compal Information Research & Development (Nanjing) Co., Ltd., Compal Digital Technology (Kunshan) Co., Ltd., Compal Electronics (Chengdu) Co.,
Ltd., Compal Electronics (Chongqing) Co., Ltd., Compal Electronics (China) Co., Ltd., Compal Optoelectronics (Kunshan) Co., Ltd., Compal Display
Electronics (Kunshan) Co., Ltd., Compal Network Information (Kunshan) Co., Ltd., Kunshan Botai Electronics Co., Ltd., Chongqing Yipal Smart
Electronic Device Co., Ltd., Compal Investment (Sichuan) Co., Ltd., Compal Investment (Jiangsu) Co., Ltd., Compal Management (Chengdu) Co., Ltd.,
Compal (Vietnam) Co., Ltd.,Compal (Vietnam) Co., Ltd., Ascendant Private Equity Investment Ltd., Arcadyan Technology N.A. Corporation, Arcadyan
Holding (BVI) Corp., Arch Holding (BVI) Corp., Billion Sea Holdings Limited, Big Chance International Co., Ltd., Bizcom Electronics, Inc., Center
Mind International Co., Ltd., Compal Display Holding (HK) Limited, Compal Electronics International Ltd., Compal Electronics (Holding) Ltd., Compal
International Ltd., Compal International Holding Co., Ltd., Compal International Holding (HK) Limited, Compal Rayonnant Holdings Ltd., Compalead
Electronics B.V., Core Profit Holdings Limited, Etrade Management Co., Ltd., Flight Global Holding Inc., Forever Young Technology Inc., Fortune Way
Technology Corp., Giant Rank Trading Ltd., Goal Reach Enterprises Ltd., HengHao Holding A Co., Ltd., HengHao Holding B Co., Ltd., HengHao
Trading Co., Ltd., High Shine Industrial Corp., Intelligent Universal Enterprise Ltd., Jenpal International Ltd., Just International Ltd., Prospect Forture
Group Ltd., Prisco International Co., Ltd., Smart International Trading Ltd., Sinoprime Global Inc., Wah Yuen Technology Holding Ltd., Webtek
Technology Co., Ltd.
President: Compal Electronics, Inc., Gempal Technology Corp., Panpal Technology Corp., Hong Ji Capital Co., Ltd., Hong Jin Investment Co., Ltd., Zhaopal
Investment Co., Ltd., Yongpal Investment Co., Ltd., Kaipal Investment Co., Ltd.
11
Title
Director
Name
Wen-Being
Hsu
Kinpo
Electronics
Inc.
Director
Kinpo
Electronics Inc.
Representative:
Shyh-Yong Shen
Director
Charng-Chyi
Ko
Director
Sheng-Chieh
Hsu
Director: Baotek Industrial Materials Ltd.
Selected Current Positions
Director: AcBel Polytech Holdings Inc., CastleNet Technology Inc., Baotek Industrial Materials Ltd., Teleport Access Services Inc., Crownpo Technology Inc.,
Cal-Comp Biotech Co., Ltd., Medipal Sapiens Co., Ltd., Cal-Comp Big Data, Inc., XYZprinting Co., Ltd., Norm Pacific Automation Corp., Kinpo
Management Service Co., Ltd., Jipo Investment Inc., Kun Ji Entrepreneurial Investment Co., Ltd., Prudence Capital Management, NTNU Startup Holding
Co., Ltd.
Supervisor: Cal-Comp Biotech Co., Ltd., Jipo Investment Inc.,
Chairman: CastleNet Technology Inc., Cal-Comp Biotech Co., Ltd., New Era AI Robotic Inc., Medipal Sapiens Co., Ltd., Cal-Comp Big Data, Inc., XYZprinting
Co., Ltd., Kaipo Electronics Co., Ltd., Cal-Comp Optoelectronic (Suzhou) Co., Ltd., Cal-Comp Technology (Suzhou) Co., Ltd., Cal-Comp Electronics &
Communications (Suzhou) Co., Ltd., Peifeng (Kunshan) Co., Ltd., Xinli (Shanghai) Network Technology Co., Ltd., Cal-Comp Precision (Wujiang) Co.,
Ltd, Cal-Comp Precision (Dongguan) Co., Ltd., Avaplas Precision Plastics (Shanghai) Co., Ltd., XYZprinting (Suzhou) Co., Ltd., Cal Comp (Malaysia)
Sdn. Bhd., Cal-Comp Electronics de Mexico Co. S.A. de C.V., Cal-Comp Precision (Philippines) Ltd., Cal-Comp Precision (Singapore) Ltd., Cal-Comp
Technology (Philippines), Inc., Kinpo Electronics (Philippines) Inc., New Era AI Robotic Ltd., XYZLife (Philippines) Inc., XYZprinting Japan, Inc.
Vice Chairman: Cal-Comp Technology Co., Ltd., and PChome (Thailand) Co., Ltd.
Director: New Kinpo Group, AcBel Polytech Inc., Cal-Comp Electronics & Communications (Suzhou) Co., Ltd., Qbit Semiconductor Co.,Ltd., Dawning Leading
Technology Inc., Jipo Investment Inc., Kinpo Group Management Consultant Company, Kinpo Electronics (China) Co., Ltd., Ascendant Private Equity
Investment Ltd., Cal-Comp Big Data Internation Ltd., Cal-Comp Electronics (USA) Co., Ltd., Cal-Comp (India) Private Ltd., Cal-Comp Holding (Brasil)
S.A., Cal-Comp Industria De Semicondutores S.A., Cal-Comp Precision (Malaysia) Sdn. Bhd., Cal-Comp Precision (Thailand) Ltd., Cal-Comp USA (San
Diego), Co., Inc., Castlenet Techology (BVI) Inc., Kinpo International (Singapore) Pte. Ltd., Kinpo International Ltd., Logistar International Holding
Company Limited, Nexa3D Inc., Ruten Singapore Pte. Ltd., Power Station Holdings Ltd., QBit Semiconductor Holding, Ltd., XYZprinting, Inc. (Korea),
XYZprinting, Inc. (Samoa), XYZprinting, Inc. (USA), XYZprinting Netherlands, B.V., XYZprinting (Thailand) Co., Ltd.
President: New Kinpo Group, Cal-Comp Electronics & Communications Co., Ltd., Cal-Comp Big Data, Inc, Kinpo Electronics (China) Co., Ltd., Cal-Comp
Optoelectronic (Suzhou) Co., Ltd., Cal-Comp Technology (Suzhou) Co., Ltd., Cal-Comp Electronics & Communications (Suzhou) Co., Ltd., Xinli
(Shanghai) Network Technology Co., Ltd., Avaplas Precision Plastics (Shanghai) Co., Ltd, , XYZprinting (Suzhou) Co., Ltd., Cal-Comp Electronics
(USA) Co., Ltd., Cal-Comp USA (Indiana) , Co., Inc, Cal-Comp USA (San Diego), Co., Inc., XYZprinting, Inc. (U.S.A)
Chairman: Baotek Industrial Materials Ltd., Taiwan Biotech Co., Ltd., SMARTINT, INC., Evergene Biotech Industrial Co., Ltd., Wei Ke Biotech Co., Ltd., Global
BioPharma, Inc. ,Genhealth Pharma Co., Ltd., Taiwan Veterans Pharmaceutical Co., Ltd., Chao Chien Industrial Co., Ltd., You Yuen Co., Ltd., Taiwan
Venture Capital Association, Chang Yi Investment Co., Ltd., Yin Feng International Co., Ltd., Charleston Asset Management Co., Ltd., Twin Luck Global
Co., Ltd.
Director: Kinpo Electronics, Inc., Formosan Union Chemical Corp., SMARTINT Inc., OmniHealth Group, Inc., AIM PIC/S GMP, Spiregene Biotech Healthcare,
Chipgene International Enterprise Co., Ltd., Min-Sheng Asset Management Co., Ltd., Min-Sheng Healthcare Co., Ltd., Global Strategic Investment Inc.
(Samoa), Gold Precision Ltd., KKXC Intergrated Management Holding (CYPRUS) Ltd., Medinox Inc., Optics Lab Inc., Syn Pharm Inc.
Supervisor: Teleport Access Services Inc., Cal-Comp Electronics & Communications Co., Ltd., Kenly Precision Industrial Co., Ltd., Formosan Union Chemical
Corp., Sunny Special Dyeing & Finishing Co., Ltd., Zhaopal Investment Co., Ltd., Yongpal Investment Co., Ltd., Kaipal Investment Co., Ltd.,
CommonWealth Magazine Group
President: Baotek Industrial Materials Ltd., Yin Feng International Co., Ltd.
Other:
Cross-Strait Healthcare and Leisure Activities Association Executive Supervisor, Health, Welfare & Environment Foundation Director, YBL Foundation
Managing Director
Chairman: Cheng Chi Investment Co., Ltd.
Director: New Kinpo Group, Cal-Comp Technology Co., Ltd., Cal-Comp Electronics & Communications Co., Ltd., Jipo Investment Inc., Kinpo Electronics (China)
Co., Ltd., , Kaipo Electronics Co., Ltd., Kinpo International Ltd.
Director
Yen-Chia
Chou
Supervisor: Gempal Technology Corp., Panpal Technology Corp., Hong Ji Capital Co., Ltd., Hong Jin Investment Co., Ltd.
Chairman: Sceptre Industry Co., Ltd.
Director: New Kinpo Group, Micro Metal Electronics Co., Ltd.
12
Title
Name
Director
Director
Wen-Chung
Shen
Yung-Ching
Chang
Director
Chung-Pin
Wong
Director
Chiung-Chi
Hsu
Director
Chao-Cheng
Chen
Independent
Director
Min-Chih
Hsuan
Independent
Director
Duei Tsai
Selected Current Positions
Supervisor: Full Power Investment Co., Ltd.
President: Sceptre Industry Co., Ltd.
Director: Arcadyan Technology Corp., Topower Co., Ltd., Arcadyan Technology (Shanghai) Corp., Maxima Ventures I, LC Future Center Ltd
Senior Consultant: Compal Electronics, Inc.
Chairman: Allied Circuit Co., Ltd., Mactech Co., Ltd.
Director: Kunshan Allied Circuit Co., Ltd., Wei Chu Holding Co., Ltd., Bo Feng Capital Management Co., Ltd.,
Senior Consultant: Compal Electronics, Inc.
Chairman: Henghao Technology Co., Ltd., Jui Hong Technology Co., Ltd., Kunshan Botai Electronic Services Co., Ltd., Auscom Engineering Inc., Wah Yuen
Technology Holding Ltd.
Managing Director: Kunshan Botai Electronic Services Co., Ltd.
Director: Arcadyan Technology Corp., Allied Circuit Co., Ltd., Mactech Co., Ltd., Panpal Technology Corp., Ripal Optoelectronics Co., Ltd., UNICOM GLOBAL
INC., General life Biotechnology Co., Ltd., UniCore Biomedical Co., Ltd., Sanga Taiwan Co., Ltd., Hong Jin Capital Co., Ltd., Maxima Ventures I, Inc.,
Compal System Trading (Kunshan) Co., Ltd., Compal System Trading (Kunshan) Co., Ltd., Compal Information Technology (Kunshan) Co., Ltd.,
Compal Information (Kunshan) Co., Ltd., Compal Electronics Technology (Kunshan) Co., Ltd., Compal Electronics (Chengdu) Co., Ltd., Compal
Electronic Technology (Chongqing) Co., Ltd., Compal Digital Technology (Kunshan) Co., Ltd., Compal Investment (Sichuan) Co., Ltd., Compal
Management (Chengdu) Co., Ltd., Allied Power Holding Corp., Amexcom Electronics, Inc., Bizcom Electronics, Inc., Compal Connector Manufacture
Ltd., Compal Europe (Poland) Sp. z o.o., HengHao Holdings A Co., Ltd., HengHao Holdings B Co., Ltd., HengHao Trading Co., Ltd, Primetek
Enterprises Ltd., Sirqul Inc.
Supervisor: Hong Ye Technology Corporation
Executive Vice President: Compal Electronics Inc.
Chairman: Full Power Investment Co., Ltd.
Director:
Chairman: Compal Broadband Networks Inc., Compal Wireless Communications (Nanjing) Co., Ltd., Compal Digital Communications (Nanjing) Co., Ltd., Compal
Plank Optoelectronics Inc., Eb Bearing Co., Ltd., Chienhsinbao Hardware Co., Ltd.
Communications (Nanjing) Co. Ltd., HANHELT Communications (Nanjing) Co., Ltd.
Director: Arcadyan Technology Corp., Mactech Co., Ltd., Henghao Technology Co., Ltd., Gempal Technology Corp., Topower Co., Ltd., Huang Feng
Communication Co., Ltd., Ripal Optoelectronics Co., Ltd., General Life Biotechnology Co., Ltd., UniCore Biomedical Co., Ltd., Hong Ji Capital Co.,
Ltd., Kinpo Group Management Consultant Company, Compal Optoelectronics (Kunshan) Co., Ltd., Compal Display Electronics (Kunshan) Co., Ltd.,
Compal Electronics (China) Co., Ltd., Kunshan Botai Electronics Co., Ltd., Chongqing Yipal Smart Electronic Device Co., Ltd., Compal Investment
(Jiangsu) Co., Ltd., Amexcom Electronics, Inc., Bizcom Electronics, Inc., CENA Electromex S.A. de C.V., Compalead Electronics, B. V., Mexcom
Electronics, LLC, Mexcom Technologies, LLC, Speedlink Tradings Ltd.
President: Compal Investment (Jiangsu) Co., Ltd.
Executive Vice President: Compal Electronics Inc.
Chairman: Taiwan Memory Corporation, Meridigen Biotech Co., Ltd., Meribank Co., Ltd., Qi Ding Biotech Co., Ltd., Taiwan Cultural Creativity No.1 Co., Ltd.,
Life Pioneer Investment Co., Ltd., Maxima Ventures I, Inc., Maxima Ventures II, Inc.
Director: General Biologicals Corporation, SIPP Technology Corporation, Clientron Corp., Elevant BioPharma Co., Ltd., Tonghua Uni-Capsule LLC, Angeluca
Science Ltd. (Republic of Seychelles), Ikala Global Online Corp., Pacgen Biopharmaceuticals Corporation (Canada)
Independent Director: Wistron Corporation, Siliconware Precision Industries Co., Ltd.
Remunerate Committee member: Compal Electronics, Inc., Wistron Corporation, Siliconware Precision Industries Co., Ltd.
Audit Committee member :Compal Electronics, Inc., Wistron Corporation, Siliconware Precision Industries Co., Ltd.
Independent Director: Getec Technology Corporation,TaiwanTaxi Corp., TTY Biopharm
Remunerate Committee member: Compal Electronics, Inc.,Getec Technology Corporation, TaiwanTaxi Corp., TTY Biopharm
Audit Committee member:Compal Electronics, Inc., TTY Biopharm
Independent Duh Kung Chairman: Powertech Technology Inc., Greatek Electronics Inc.
13
Title
Director
Name
Tsai
Director:
Powertech Technology (Suzhou) Ltd., Powertech Technology Akita Inc., Powertech Holding (B.V.I.) Inc., Powertech Technology (Singapore) Pte. Ltd.
and PTI Technology (Singapore) Pte. Ltd., Tera Probe, Inc.
Selected Current Positions
Sales Representative: Powertech Technology Japan Ltd.
Independent Director: Wistron Corporation, Chicony Power Technology Co., Ltd.
Remunerate Committee member: Compal Electronics, Inc., Wistron Corporation, Chicony Power Technology Co., Ltd.
Audit Committee member: Compal Electronics, Inc., Wistron Corporation
Chief Executive Officer: Powertech Technology Inc.
Major shareholders of the Company’s corporate shareholders
Name of corporate shareholder
Kinpo Electronics, Inc.
Major shareholders of the corporate shareholder (Note)
Compal Electronics, Inc. (8.52%), Jipo Investment Inc. (3.17%), Lai-Shun Shen Tsai (2.84%), Nan Shan Life Insurance Company Ltd. (2.81%),
Citibank Taiwan in its Capacity as Trustee of NBIM Investment Account (2.58%), Panpal Technology Corporation (1.59%), Hebao Investment Co., Ltd.
(1.50%), Li-Chu Tsai (1.49%), Shyh-Yong Shen (1.46%), Standard Chartered in custody of CITIC Hong Kong Accounts (1.44%)
April 13, 2018
Note: If the major shareholder is also a corporate entity, please refer to the following table.
Major shareholders of the Company’s major corporate shareholders
Name of corporate shareholder
Major shareholders of corporate shareholders
Jipo Investment Inc.
Kinpo Electronics Inc. (100%)
Nan Shan Life Insurance
Company Ltd.
First Commercial Bank in its Capacity as Trustee of Ruen Chen Investment Holding (75.14%), Ruen Chen Investment Holding (15.48%), Ying-Zong Tu
(3.25%), Ruen Hua Dyeing & Weaving Co., Ltd (0.28%), Ruentax Leasing Co., Ltd. (0.15%), Wen-De Kuo (0.11%), Jipin Investment Co., Ltd.
(0.11%), Bao Chi Investment Co., Ltd. (0.05%), Bao Yi Investment Co., Ltd.(0.05%), Bao Hui Investment Co., Ltd. (0.05%), Bao Huang Investment
Co., Ltd. (0.05%)
Panpal Technology Corporation
Compal Electronics Inc. (100%)
Hebao Investment Co., Ltd.
Chieh-Li Hsu (41.52%), Li-Chu Tsai (27.83%), Yong-Hsu Hsu (12.50%), Chun-Chi Hsu (13.91%), Huang-Hsin Hsu(2.83%), Yue-Hsia Huang
Hsu(1.41%)
14
Professional qualifications and independence analysis of directors and supervisors
Criteria
Name
Sheng-Hsiun Hsu
Jui-Tsung Chen
Wen-Being Hsu
Kinpo Electronics Inc.
Representative:
Shyh-Yong Shen
Charng-Chyi Ko
Sheng-Chieh Hsu
Yen-Chia Chou
Wen-Chung Shen
Yung-Ching Chang
Chung-Pin Wong
Chiung-Chi Hsu
Chao-Cheng Chen
Min Chih Hsuan
Duei Tsai
Duh Kung Tsai
Having Met One of the Following Professional Qualifications, Together with at Least
Five Years Work Experience
An Instructor or Higher
Position in a Department of
Commerce, Law, Finance,
Accounting, or Other
Academic Department Related
to the Business Needs of the
Company in a Public or
Private Junior College,
College or University
A Judge, Public Prosecutor,
Attorney, Certified Public
Accountant, or Other
Professional or Technical
Specialist Who has Passed a
National Examination and been
Awarded a Certificate in a
Profession Necessary for the
Business of the Company
Having Work
Experience in the
Areas of Commerce,
Law, Finance, or
Accounting, or
Otherwise Necessary
for the Business of
the Company
Independence Criteria (Note)
1
2
3
4
5
6
7
8
9
10
Number of Other
Public Companies
in Which the
Individual is
Concurrently
Serving as an
Independent
Director
0
0
0
0
0
0
0
0
0
0
0
0
1
3
2
Note: Tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office.
1. Not an employee of the Company or any of its affiliates.
2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its
15
parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.
3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’
names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three
subparagraphs.
5. Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the
Company or who holds shares ranking in the top five holdings.
6. Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution which has a financial or business
relationship with the Company.
7. Not a professional individual who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that
provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof.
8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
9. Not a person of any conditions defined in Article 30 of the Company Act.
10. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act.
16
3.2.2 Management Team
Title
Name/
National
ity/
Gender
(Note 1)
Date
elected /
appointed
Shares held
Shares held by
spouse and
underage children
Subsidiary
shareholding
Total shares held in
the names of others
Shares held
Shares
Shareho
lding
Percent
age
(%)
Shares
Shareho
lding
Percent
age
(%)
Shares
Sharehol
ding
Percentag
e
(%)
1989.06.01
35,352,587
0.80%
1,069,405
0.02%
0
0.00%
2007.04.01
6,618,618
0.15%
1,398
0.00%
2014.02.27
4,785,000
0.11%
1,428
0.00%
2011.08.31
0
0.00%
0
0.00%
2007.01.01
2,953,700
0.07%
900,000
0.02%
0
0
0
0
0.00%
0.00%
0.00%
0.00%
2007.01.01
1,102,823
0.02%
10,924
0.00%
0
0.00%
2009.10.06
3,487,698
0.08%
1,045,585
0.02%
0
0.00%
President
Jui-Tsung
Chen
Executive Vice
President
Chung-Pin
Wong
Executive Vice
President
Chao-Cheng
Chen
Executive Vice
President
Chen-Chang
Hsu
Senior Vice
President
Chun-De
Shen
Senior Vice
President
Kuo-Chuan
Chen
Senior Vice
President
Pei-Yuan
Chen
Senior Vice
President
Chiu-Rui
Wei
2010.03.18
350,000
0.01%
142,966
0.00%
Senior Vice
President
Ying Chang 2011.02.24
735,000
0.02%
0
0.00%
0
0
0.00%
0.00%
17
April 24, 2018
Spouse or relatives of second
degree or closer acting as
managers
Major career (academic)
achievements
Selected Current
Positions
Department of Electrical Engineering, National
Cheng Kung University
Chairman of Compal Communication Inc. &
Arcadyan Technology Corp.
Graduate Institute of Management Science,
National Chiao Tung University
Rayonnant Technology Co., Ltd.Chairman
Graduate Institute of Electrical Engineering,
National Taiwan University
President of Compal Communication Inc.
National Chiao Tung University EMBA
Executive Vice President of WINTEK
Corporation
Graduate Institute of Electrical Engineering,
National Taiwan University
Director of Kinpo Electronics Inc.
Department of Physics, Chung Yuan Christian
University
Senior Vice President of Compal
Communication Inc.
Department of International Trade, Hsingwu
College
Director of Kinpo Electronics Inc.
Master of Business Administration, University
of Washington, USA
Senior Vice President of Toppoly
Optoelectronics Corp.
MBA, University Of Georgia
President of Swenc Technology Co., Ltd.
Title
Name
Refer to
Page 11-14
Vice
President
Bo-Tang
Wang
Relatio
nship
Relative
by
affinity
Refer to
Page 11-14
Refer to
Page 11-14
N/A
N/A
N/A
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Title
Name/
National
ity/
Gender
(Note 1)
Date
elected /
appointed
Shares held
Shares held by
spouse and
underage children
Subsidiary
shareholding
Total shares held in
the names of others
Shares held
Shares
Shareho
lding
Percent
age
(%)
Shares
Shareho
lding
Percent
age
(%)
Shares
Sharehol
ding
Percentag
e
(%)
Major career (academic)
achievements
Selected Current
Positions
Spouse or relatives of second
degree or closer acting as
managers
Title
Name
Relatio
nship
Senior Vice
President
Ming-Chih
Chang
Senior Vice
President
Sheng-Hua
Peng
Senior Vice
President
Wen-Da
Hsu
Senior Vice
President
Wei-Cheng
Chen
Senior Vice
President
Hsi-Kuan
Chen
Senior Vice
President
Chih-Wei
Wen
Vice President
Chih-Chuan
Cheng
Vice
President
and head of
finance
Ching-Hsiu
ng Lu
Vice President
Shih-Tung
Wang
2011.08.01
1,919,489
0.04%
0
0.00%
0
0.00%
2014.02.27
835,000
0.02%
0
0.00%
0
0.00%
2014.02.27
1,333,000
0.03%
0
0.00%
0
0.00%
2004.04.01
810,656
0.02%
0
0.00%
0
0.00%
2009.05.01
0
0.00%
0
0.00%
0
0.00%
2017.05.10
0
0.00%
0
0.00%
0
0.00%
2003.01.01
2,103,786
0.05%
51,194
0.00%
0
0.00%
2003.01.01
8,707,007
0.20%
0
0.00%
0
0.00%
2003.01.01
10,197
0.00%
0
0.00%
0
0.00%
18
Department of Electrical Engineering, Ming
Chi University of Technology
LCFC (Hefei) Co., Ltd. CEO
Graduate Institute of Electrical Engineering,
National Taiwan University
Senior Vice President of Compal
Communication Inc.
Department of Media Administration, Shih
Hsin University
Senior Vice President of Compal
Communication Inc.
Department of Electronic Engineering, Taipei
College of Maritime Technology
Vice President of Cheong Tat Technology
Master of Industrial Design, Cranbrook
Academy of Art
Director of Design and Customer Affairs,
Philips (Hong Kong)
Department of Electrical Engineering, Fu Jen
Catholic University
Inventec Corp. Vice President
Department of Electronic Engineering,
Lunghwa University of Science and
Technology
Deputy Manager of Research and
Development, Top Information Technologies
Co., Ltd.
Department of Accounting, Feng Chia
University
Director Compal Communication Inc.
Graduate Institute of Electrical Engineering,
San Jose State University
KC Technology Inc.Vice President
(Note 3)
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Title
Name/
National
ity/
Gender
(Note 1)
Date
elected /
appointed
Shares held
Shares held by
spouse and
underage children
Subsidiary
shareholding
Total shares held in
the names of others
Shares held
Shares
Shareho
lding
Percent
age
(%)
Shares
Shareho
lding
Percent
age
(%)
Shares
Sharehol
ding
Percentag
e
(%)
Major career (academic)
achievements
Selected Current
Positions
Spouse or relatives of second
degree or closer acting as
managers
Title
Name
Relatio
nship
Vice President
Bo-Hsiung
Chang
Vice President
Bo-Tang
Wang
Vice President
Vice President
Vice President
Vice President
Zong-Ming
Wang
Fu-Chuan
Chang
Yung-Nan
Chang
Sheng-Hung
Li
2006.02.21
0
0.00%
270
0.00%
0
0.00%
2007.07.10
559,548
0.01%
486
0.00%
0
0.00%
2009.07.16
398,184
0.01%
0
0.00%
2009.07.16
120,662
0.00%
2011.01.01
180,000
0.00%
2011.07.01
504,574
0.01%
0
0
0
0.00%
0.00%
0.00%
0
0
0
0
0
0.00%
0.00%
0.00%
0.00%
0.00%
Vice President Yung-He Su 2011.07.01
500,401
0.01%
100,000
0.00%
Vice President
Chih-Hsien
Liang
Vice President
Ming-Dong
Wong
Vice President
Yue-Chun
Li
Vice President
Chiao-Lieh
Huang
2011.10.31
120,000
0.00%
0
0.00%
0
0.00%
2013.01.31
623,786
0.01%
0
0.00%
0
0.00%
2014.02.17
420,000
0.01%
0
0.00%
0
0.00%
2014.02.27
148,992
0.00%
0
0.00%
0
0.00%
19
Department of Electrical Engineering, National
Taipei Institute of Technology
UNICOM GLOBAL., Inc. Director
Department of Computer Science and
Information Engineering, National Taiwan
University
President of Vibo Telecom Inc.
National Taipei Institute of Technology
Head of Research and Development, CLEVO
Company
National Chin-Yi University of Technology
Production Manager, ADI Corp
MBA, Pacific Western University
Factory Manager, Delta Electronics Inc.
Department of Electronics, National Taipei
Institute of Technology
Department of Electrical Engineering, National
Taipei Institute of Technology
Vice President of Arima Photovoltaic &
Optical Corp.
University of Colorado
Postgraduate Institute of Digital
Communication/Vice President of Wireless
Communication, Altek Corporation
Master of Business Administration, University
of Washington, USA
Deputy Manager of Sales, Kapok Computer
Company
Department of Electronic Engineering,
Lee-Ming Institute of Technology
Chairman's Special Assistant, Mag Technology
Co., Ltd.
Graduate Institute of Electrical Engineering,
National Taiwan University
Vice President of Compal Communication Inc.
(Note 3)
N/A
N/A
N/A
N/A
President
Jui-Tsung
Chen
Relative
by
affinity
N/A
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
Title
Name/
National
ity/
Gender
(Note 1)
Date
elected /
appointed
Shares held
Shares held by
spouse and
underage children
Subsidiary
shareholding
Total shares held in
the names of others
Shares held
Shares
Shareho
lding
Percent
age
(%)
Shares
Shareho
lding
Percent
age
(%)
Shares
Sharehol
ding
Percentag
e
(%)
Major career (academic)
achievements
Selected Current
Positions
Spouse or relatives of second
degree or closer acting as
managers
Title
Name
Relatio
nship
Vice President
Chung-Hsin
g Tan
Vice President
Yi-Yun
Chang
Vice President
Hsin-Kung
Mao
Vice President
Hsin-Hsiun
g Huang
Vice President
Vice President
Shih-Hung
Huang
Yi-Chiang
Chiu
2014.02.27
170,000
0.00%
5,320
0.00%
0
0.00%
2014.08.13
300,246
0.01%
0
0.00%
0
0.00%
2014.11.13
420,714
0.01%
0
0.00%
0
0.00%
2015.01.22
419,001
0.01%
0
0.00%
2016.02.24
280,000
0.01%
0
0.00%
2016.02.24
280,000
0.01%
0
0.00%
0
0
0
0
0.00%
0.00%
0.00%
0.00%
Vice President Ching-Fa Li 2016.02.24
200,690
0.00%
0
0.00%
Vice President
Vice President
Bo-Heng
Chen
Jui-Chun
Hsu
2016.02.24
280,010
0.01%
0
0.00%
0
0.00%
2016.05.11
0
0.00%
0
0.00%
0
0.00%
Vice President Shih-An Li 2016.06.29
76,071
0.00%
4,259
0.00%
0
0.00%
20
Department of Electrical Engineering, Tatung
University
Vice President of Compal Communication Inc.
Graduate Institute of Electrical Engineering,
National Taiwan University
Senior Manager of Compal Communication
Inc.
Master of Business Administration, University
of Lincoln
Head of Business, Display BU
Department of Electronics, Chung Yuan
Christian University
Senior Manager of Compal Communication
Inc.
Master in Control Engineering, National Chiao
Tung University
Director - Coretronic Corporation
Master in Earth Sciences, National Central
University
Information Engineering Ph.D., National Tsing
Hua University
Vice General Manager – Eten Technology Inc.
COLUMBIA UNIVERSITY
Master of Industrial Engineering and
Operations Management
PhD, Graduate Institute of Electrical
Engineering, National Taiwan University
Photonics Industries International,
Inc.President
Department of Navigation, Taipei College of
Maritime Technology
LCFC Taiwan Branch Vice CEO
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
(Note 3)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Title
Name/
National
ity/
Gender
(Note 1)
Date
elected /
appointed
Shares held
Shares held by
spouse and
underage children
Subsidiary
shareholding
Total shares held in
the names of others
Shares held
Shares
Shareho
lding
Percent
age
(%)
Shares
Shareho
lding
Percent
age
(%)
Shares
Sharehol
ding
Percentag
e
(%)
Major career (academic)
achievements
Selected Current
Positions
Spouse or relatives of second
degree or closer acting as
managers
Title
Name
Relatio
nship
Vice President
Vice President
Ta-Chun
Wang
Fei-Long
Chen
Vice President
Jen-Liang
Lin
Chief Legal
Officer
Peng-Hong
Chan
Head of Audit
Bo-Wen
Hsieh
2016.06.29
204,200
0.00%
4,119
0.00%
2016.06.29
0
0.00%
0
0.00%
0
0
0.00%
0.00%
2018.03.06
100,500
0.00%
0
0.00%
0
0.00%
2018.05.09.
0
0.00%
0
0.00%
0
0.00%
2010.10.27
0
0.00%
0
0.00%
0
0.00%
Master of Industrial Engineering, University of
Illinois
Shanghai Real Industrial Co., Ltd. Managing
Vice President
PhD, Industrial Engineering, Auburn Uni.,
USA
Kunshan MYZY Technology Co., Ltd. CTO
Department of Industrial Engineering, Feng
Chia University
Director of Operations Division, Compal Fab
No. 2
Master of Cornell University Law School
CSO, Pou Chen Group
Department of Accounting, National Taiwan
University
Audit Manager, KGT Telecom
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Note: 1. All managers are ROC nationals; with the exception of Senior Vice President Chui-Rui Wei, all other managers are male.
2. Senior Advisors Wen-Chung Shen, Yung-Ching Chang, Advisor Tian-Yuan Tsai retired in 2017; Vice President Ming-Hsiang Kan resigned in 2017; Vice
Presidents Lung-Hua Shen, Ling-Sheng Wu and Chi-Hsiang Ma resigned in 2018.
3. Concurrent positions in other companies
21
Title
Name
Concurrent positions in other companies
Executive
Vice
President
Senior Vice
President
Senior Vice
President
Chairman: Henghao Technology (Kunshan) Co., Ltd., Lucom Display Technology (Kunshan) Ltd.
Chen-Chang
Hsu
Vice Chairman: Henghao Technology Co., Ltd., Optronics Corporation
Director: Mactech Co., Ltd.
President: Henghao Technology Co., Ltd., Henghao Technology (Kunshan) Co., Ltd., Lucom Display Technology (Kunshan) Ltd.
Chun-De
Shen
Director: Kinpo Electronics Inc., Compal Information Research & Development (Nanjing) Co., Ltd., Auscom Engineering Inc.
President: Compal Information Research & Development (Nanjing) Co., Ltd.
Pei-Yuan
Chen
Director: Kinpo Electronics In., Infinno Technology Corporation, Full Power Investment Co., Ltd.
Chairman: Allmedi Electronic Co., Ltd. Rapha Bio Ltd.
Director:
Chipbond Technology Corporation, Taiwan Star Telecom Corporation Limited, UniCore Biomedical Co., Ltd., Trust Bio-Sonic Co., Ltd., Raycore
Biotech Co., Ltd., Maxima Ventures I, Inc., HWA VI Venture Capital Corp., Hwa Chi Venture Capital Corp., CDIB Partners Investment Holding Corp.,
Changbao Electronic Technology (Chongqing) Co., Ltd., Zhengying Electronics (Chongqing) Co., Ltd., Compal Precision Model (Jiangsu) Co.,
Senior Vice
President
Chiu-Rui
Wei
ShengBao Precision Electronics (Taicang) Co., Ltd., Rayonnant Technology (HK) Holdings Limited, LC Future Center Ltd. and so forth
Supervisor: Henghao Technology Co., Ltd., Infinno Technology Corporation, Rayonnant Technology Co., Ltd., Ripal Optoelectronics Co., Ltd., Mactech Co., Ltd.,
Unicom Global Inc., General life Biotechnology Co., Ltd., Global Pharma Co., Ltd., UniCore Biomedical Co., Ltd., Rayonnant Precision Technology
(Taicang) Co., Ltd.
Independent Director: Synergy Scientech Corp.
Remunerate Committee member: Synergy Scientech Corp.
Senior Vice
President
Ming-Chih
Chang
Director:
President: Compal System Trading (Kunshan) Co., Ltd., Compal Information Technology (Kunshan) Co., Ltd., Compal Information (Kunshan) Co., Ltd.,
LC Future Center Ltd. and so forth
Compal Electronics Technology (Kunshan) Co., Ltd., Compal Electronics (Chengdu) Co., Ltd., Compal Electronic Technology (Chongqing) Co., Ltd.,
Compal Digital Technology (Kunshan) Co., Ltd., Kunshan Botai Electronic Services Co., Ltd., Compal Investment (Sichuan) Co., Ltd., Compal
Management (Chengdu) Co., Ltd. and so forth
Director: Huang Feng Communication Co., Ltd., HANHELT Communications (Nanjing) Co., Ltd., Amexcom Electronics, Inc., CENA Electromex S.A. de C.V.
Senior Vice
Sheng-Hua
President
Peng
and so forth
President: Compal Display Electronics (Kunshan) Co., Ltd., Kunshan Botai Electronic Services Co., Ltd., Compal Wireless Communications (Nanjing) Co., Ltd.,
Compal Digital Communications (Nanjing) Co., Ltd., Compal Communications (Nanjing) Co. Ltd., Chongqing Yipal Smart Electronic Device Co.,
Ltd. and so forth
Senior Vice
President
Vice
Wen-Da Hsu Director: HANHELT Communications (Nanjing) Co., Ltd.
Hsi-Kuan Director:
Rayonnant Technology Holdings Ltd., Rayonnant Technology (Taicang) Co., Ltd.
22
President
Vice
President
Vice
President
Vice
President
Vice
President
Vice
President
Title
President
Name
Chen
Concurrent positions in other companies
Director:
ZHI-PAL Technology Inc., Arcadyan Technology (Shanghai) Corp., Compal Wireless Communications (Nanjing) Co., Ltd., Compal Digital
Vice
Communications (Nanjing) Co., Ltd., Compal Communications (Nanjing) Co. Ltd., Kunshan Botai Electronic Services Co., Ltd., Great Arch Group
Ltd., Leading Images Limited
President
and head of
Ching-Hsiun
g Lu
Supervisor: Compal Broadband Networks Inc., Accesstek Inc., Compal Electronics Technology (Kunshan) Co., Ltd., Compal Information (Kunshan) Co., Ltd.,
Compal Information Technology (Kunshan) Co., Ltd., Compal Electronics (China) Co., Ltd., Compal Digital Technology (Kunshan) Co., Ltd., Compal
finance
Electronics (Chengdu) Co., Ltd., Compal Electronic Technology (Chongqing) Co., Ltd., Compal Optoelectronics (Kunshan) Co., Ltd., Compal Display
Electronics (Kunshan) Co., Ltd., Compal Network Information (Kunshan) Co., Ltd., Kunshan Botai Electronic Services Co., Ltd., Compal Investment
(Sichuan) Co., Ltd., Compal Investment (Jiangsu) Co., Ltd., Compal Management (Chengdu) Co., Ltd.
Vice
Bo-Hsiung
Chang
Fu-Chuan
Chang
Director: Unicom Global Inc., Avalue Technology Inc.
President: Compal Optoelectronics (Kunshan) Co., Ltd., Compal Electronics (China) Co., Ltd.
Ming-Dong
Wong
Director: Auscom Engineering Inc.
President: Auscom Engineering Inc.
Chiao-Lieh
Huang
Hsin-Hsiung
Huang
Supervisor: HANHELT Communications (Nanjing) Co., Ltd.
Director:
Compal Wireless Communications (Nanjing) Co., Ltd., Compal Digital Communications (Nanjing) Co., Ltd., Compal Communications (Nanjing) Co.
Ltd. and so forth
Hsin-Kung
Mao
Director:
President: Amexcom Electronics, Inc.
CENA Electromex S.A. de C.V.
23
3.2.3
Remuneration of Directors, Supervisors, President, and Vice Presidents
Remuneration of Directors
Directors' remuneration
Remuneration
from earnings
appropriation
(C)
Pension (B)
Remuneration
(A)
The
Compa
ny
All
compan
ies
include
d in the
financi
al
stateme
nts
The
Com
pany
All
compan
ies
include
d in the
financi
al
stateme
nts
The
Compa
ny
All
compan
ies
include
d in the
financi
al
stateme
nts
Business
department
implementation
Fees for services
rendered (D)
All
compan
ies
include
d in the
financi
al
stateme
nts
The
Compa
ny
Remuneration as an employee
Unit: NTD thousand; thousand shares; %
The sum of A,
B, C and D as a
percentage of
after-tax profit
Salaries, bonuses,
special allowances
etc (E)
Retirement
Pension (F)
Share of profit as an employee (G)
The
Compa
ny
All
compan
ies
include
d in the
financi
al
stateme
nts
The
Company
All
companie
s
included
in the
financial
statement
s
The
Compa
ny
All
companie
s
included
in the
financial
statement
s
The Company All companies included in
the financial statements
Cash
Amount
Stock
Amoun
t
Cash
Stock
The sum of A, B, C, D,
E, F, and G as a
percentage of after-tax
profit
The
Compa
ny
All companies
included in
the financial
statements
Remuneration
from invested
businesses other
than the
subsidiaries (H)
5,760
6,400
0
0
33,012 33,012 2,759
3,359 0.72% 0.74%
57,356
57,356
633
633
7,950
0
7,950
0
1.87%
1.89%
69,863
Title
Name
Chairman
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Sheng-Hsiun
Hsu
Jui-Tsung
Chen
Wen-Being
Hsu
Representativ
e of Kinpo
Electronics
Inc.:
Shyh-Yong
Shen
Charng-Chyi
Ko
Sheng-Chieh
Hsu
Yen-Chia
Chou
Wen-Chung
Shen
Yung-Ching
Chang
Chung-Pin
Wong
Chiung-Chi
Hsu
24
Directors' remuneration
Remuneration
from earnings
appropriation
(C)
Pension (B)
Remuneration
(A)
The
Compa
ny
All
compan
ies
include
d in the
financi
al
stateme
nts
The
Com
pany
All
compan
ies
include
d in the
financi
al
stateme
nts
The
Compa
ny
All
compan
ies
include
d in the
financi
al
stateme
nts
Business
department
implementation
Fees for services
rendered (D)
All
compan
ies
include
d in the
financi
al
stateme
nts
The
Compa
ny
The sum of A,
B, C and D as a
percentage of
after-tax profit
Salaries, bonuses,
special allowances
etc (E)
Remuneration as an employee
Retirement
Pension (F)
Share of profit as an employee (G)
The
Compa
ny
All
compan
ies
include
d in the
financi
al
stateme
nts
The
Company
All
companie
s
included
in the
financial
statement
s
The
Compa
ny
All
companie
s
included
in the
financial
statement
s
The Company All companies included in
the financial statements
Cash
Amount
Stock
Amoun
t
Cash
Stock
The sum of A, B, C, D,
E, F, and G as a
percentage of after-tax
profit
The
Compa
ny
All companies
included in
the financial
statements
Remuneration
from invested
businesses other
than the
subsidiaries (H)
Title
Name
Director
Chao-Cheng
Chen
Independent
Min-Chih
Director
Hsuan
Independent
Director
Duei Tsai
Independent
Duh Kung
Director
Tsai
*Remuneration collected by Directors for their services (i.e. acting as advisor for non-employees) as disclosed in the Financial Report in the most recent year not shown in the table: 0
Note: 1. In 2017, the Company made pension contributions totaling NTD 633,000 (including NTD 216,000 under the new system and NTD 417,000 under the old system) for directors who
also assumed managerial roles as employees; meanwhile, all companies reported in the financial statements had made pension contributions totaling NTD 633,000 (includingNTD
216,000 under the new system and NTD 417,000 under the old system).
2. Directors’compensation refers to the estimated directors’ compensation approved by the Board of Directors meeting on March 19, 2018.
25
Range of Remuneration
Under NT$ 2,000,000
NT$2,000,000 ~ NT$5,000,000
NT$5,000,000 ~ NT$10,000,000
NT$10,000,000 ~ NT$15,000,000
NT$15,000,000 ~ NT$30,000,000
NT$30,000,000~ NT$50,000,000
NT$50,000,000 ~ NT$100,000,000
Over NT$100,000,000
Total
Note:
Total of (A+B+C+D)
Total of (A+B+C+D+E+F+G+H)
Number of Directors
The Company
1 (Note 1)
14 (Note 2)
1 (Note 3)
Companies in the
consolidated financial
statements
1 (Note 4)
14 (Note 5)
1 (Note 6)
The Company
2 (Note 7)
9 (Note 8)
2 (Note 9)
2 (Note 10)
1 (Note 11)
Companies in the
consolidated financial
statements
1 (Note 12)
8 (Note 13)
1 (Note 14)
1 (Note 15)
3 (Note 16)
2 (Note 17)
16
16
16
16
1. Shyh-Yong Shen – 1 position
2.
Jui-Tsung Chen, Wen-Being Hsu, Charng-Chi Ko, Sheng-Chieh Hsu, Yung-Chia Chou, Wen-Chung Shen, Yung-Ching Chang, Chung-Pin Wong, Chiung-Chi
Hsu, Chao-Cheng Chen, Min-Chih Hsuan, Duei Tsai, Duh-Kung Tsai and Kinpo Electronics Inc. – 14 positions
3. Rock Hsu – 1 position
4. Shyh-Yong Shen – 1 position
5.
Jui-Tsung Chen, Wen-Being Hsu, Charng-Chi Ko, Sheng-Chieh Hsu, Yung-Chia Chou, Wen-Chung Shen, Yung-Ching Chang, Chung-Pin Wong, Chiung-Chi
Hsu, Chao-Cheng Chen, Min-Chih Hsuan, Duei Tsai, Duh-Kung Tsai and Kinpo Electronics Inc. – 14 positions
6. Rock Hsu – 1 position
7. Shy-Yong Shen, Yung-Ching Chang – 2 positions
8. Wen-Being Hsu, Charng-Chi Ko, Sheng-Chieh Hsu, Yung-Chia Chou, Chiung-Chi Hsu, Min-Chih Hsuan, Duei Tsai, Duh-Kung Tsai and Kinpo Electronics
Inc. – 9 positions
9. Rock Hsu, Wen-Chung Shen – 2 positions
10. Chung-Pin Wong, Chao-Cheng Chen – 2 positions
11. Jui-Tsung Chen – 1 position
12. Yung-Ching Chang – 1 position
13. Wen-Being Hsu, Charng-Chi Ko, Yung-Chia Chou, Chiung-Chi Hsu, Min-Chih Hsuan, Duei Tsai, Duh-Kung Tsai and Kinpo Electronics Inc. – 8 positions
14. Wen-Chung Shen – 1 position
15. Sheng-Chieh Hsu -1 position
26
16. Chung-Pin Wong, Chao-Cheng Chen, Shyh-Yong Shen – 3 positions
17. Rock Hsu, Jui-Tsung Chen – 2 positions
Remuneration of Supervisors: Not Applicable (The Company adopts an Audit Committee system)
27
Remuneration of the President and Vice Presidents
Salary (A)
Pension (B)
Bonus and
special allowances (C)
Share of profit as an employee (D)
The
Company
All
companies
included in
the
financial
statements
The
Compa
ny
All
companies
included
in the
financial
statements
The
Company
All
companies
included in
the financial
statements
The Company
All companies included in
the financial statements
Cash
Amount
Stock
Amount
Cash
Amount
Stock
Amount
Unit: NTD thousand; thousand shares; %
Sum of A, B, C and D as a
percentage of after-tax
profit (%)
The
Company
All companies
included in the
financial
statements
Remuneration
from invested
businesses other
than the
subsidiaries (E)
124,879
130,562
6,226
6,226
262,431
262,995
24,983
0
24,983
0
7.28%
7.39%
3,426
Title
Name
50 employees
including President
Jui-Tsung Chen
(Note1)
Note: 1.Managers’ titles and names
‧President: Jui-Tsung Chen – 1 position
‧Executive Vice Presidents and Senior Advisors: Chung-Pin Wong, Cheng-Chao Chen, Chen-Chang Hsu, Wen-Chung Shen and Yung-Ching Chang – 5 positions
‧Senior Vice Presidents: Chun-De Shen, Kuo-Chuan Chen, Pei-Yuan Chen, Chiu-Rui Wei, Ying Chang, Ming-Chih Chang, Shen-Hua Peng, Wen-Da Hsu, Wei-Cheng
Chen, Hsi-Kuan Chen, Chih-Wei Wen – 11 positions
‧Vice Presidents and Advisors: Chih-Chuan Cheng, Gary Lu, Shih-Tung Wang, Bo-Hsiung Chang, Bo-Tang Wang, Zong-Ming Wang, Fu-Chuan Chang, Yung-Nan
Chang, Sheng-Hung Li, Yung-He Su, Chih-Hsien Liang, Ming-Dong Wong, Yue-Chun Li, Chiao-Lieh Huang, Chung-Hsing Tan,
Yi-Yun Chang, Hsin-Kung Mao, Hsin-Hsiung Huang, Shih-Hung Huang, Yi-Chiang Chiu, Ching-Fa Li, Bo-Heng Chen, Jui-Chun Hsu,
Shih-An Li, Ta-Chun Wang, Fei-Lung Chen, Liang-Jen Lin, Peng-Hong Chan, Ming-Hsiang Kan, Tian-Yuan Tsai, Lung-Hua Shen,
Ling-Sheng Wu, Chi-Hsiang Ma – 33 positions
2. The Company made pension contributions totaling NTD 6,226,000 (including NTD 4,495,000 under the new system and NTD 1,731,000 under the old system);
while all companies reported in the financial statements made pension contributions totaling NTD 6,226,000 (including NTD 4,495,000 under the new system and
NTD 1,731,000 under the old system).
3. Employees’ compensation appropriation was approved by Board of Directors on meeting on March 19, 2018. The compensations of the aforementioned managers
were not yet final and will be reviewed based on the list of the date of distribution.
28
Range of Remuneration
Under NT$ 2,000,000
NT$2,000,000 ~ NT$5,000,000
NT$5,000,000 ~ NT$10,000,000
NT$10,000,000 ~ NT$15,000,000
NT$15,000,000 ~ NT$30,000,000
NT$30,000,000 ~ NT$50,000,000
NT$50,000,000 ~ NT$100,000,000
Over NT$100,000,000
Total
Note:
Number of President and Vice Presidents
Total of (A+B+C+D)
The Company
5 (Note 1)
8 (Note 2)
23 (Note 3)
8 (Note 4)
5 (Note 5)
1 (Note 6)
Total of (A+B+C+D+E)
Companies in the consolidated
financial statements
4 (Note 7)
9 (Note 8)
22 (Note 9)
8 (Note 10)
6 (Note 11)
1 (Note 12)
50
50
1. Yung-Ching Chang, Ming-Hsiang Kan, Tian-Yuan Tsai, Liang-Jen Lin, Peng-Hong Chan – 5 positions
2. Wen-Chung Shen, Bo-Hsiung Chang, Fu-Chuan Chang, Chi-Hsiang Ma, Ling-Sheng Wu, Ching-Fa Li, Shih-An Li, Lung-Hua Shen – 8 positions
3. Pei-Yuan Chen, Wei-Cheng Chen, Chih-Chuan Cheng, Gary Lu, Shih-Tung Wang, Bo-Tang Wang, Zong-Ming Wang, Yung-Nan Chang,
Sheng-Hung Li, Yung-He Su, Chih-Hsien Liang, Yue-Chun Li, Chiao-Lieh Huang, Chung-Hsing Tan, Yi-Yun Chang, Hsin-Kung Mao,
Hsin-Hsiung Huang, Shih-Hung Huang, Yi-Chiang Chiu, Bo-Heng Chen, Jui-Chun Hsu, Ta-Chun Wang, Fei-Lung Chen – 23 positions
4. Chun-De Shen, Kuo-Chuan Chen, Chiu-Rui Wei, Ying Chang, Ming-Chih Chang, Wen-Da Hsu, Hsi-Kuan Chen, Ming-Dong Wong – 8 positions
5. Chung-Pin Wong, Chao-Cheng Chen, Chen-Chang Hsu, Sheng-Hua Peng, Chih-Wei Wen – 5 positions
6. Jui-Tsung Chen – 1 position
7. Yung-Ching Chang, Ming-Hsiang Kan, Liang-Jen Lin, Peng-Hong Chan - 4 positions
8. Wen-Chung Shen, Bo-Hsiung Chang, Fu-Chuan Chang, Chi-Hsiang Ma, Ling-Sheng Wu, Ching-Fa Li, Shih-An Li, Tian-Yuan Tsai, Lung-Hua
Shen – 9 positions
9. Pei-Yuan Chen, Wei-Cheng Chen, Chih-Chuan Cheng, Gary Lu, Shih-Tung Wang, Bo-Tang Wang, Zong-Ming Wang, Yung-Nan Chang,
Sheng-Hung Li, Yung-He Su, Chih-Hsien Liang, Chiao-Lieh Huang, Chung-Hsing Tan, Yi-Yun Chang, Hsin-Kung Mao, Hsin-Hsiung Huang,
Shih-Hung Huang, Yi-Chiang Chiu, Bo-Heng Chen, Jui-Chun Hsu, Ta-Chun Wang, Fei-Lung Chen – 22 positions
10. Chun-De Shen, Kuo-Chuan Chen, Chiu-Rui Wei, Ying Chang, Wen-Da Hsu, Hsi-Kuan Chen, Ming-Dong Wong, Yue-Chun Li – 8 positions
11. Chung-Pin Wong, Chao-Cheng Chen, Chen-Chang Hsu, Ming-Chih Chang, Sheng-Hua Peng, Chih-Wei Wen – 6 positions
12. Jui-Tsung Chen – 1 position
29
Employee profit sharing granted to the management team
Title
Name
Stock dividends
Cash dividends
Total
Total as a percentage to after-tax profit (%)
Unit: NTD thousand
43 employees including President
Jui-Tsung Chen (Note 1)
Note: 1.Managers’ titles and names
0
24,983
24,983
0.43%
‧President: Jui-Tsung Chen -1 position
‧Executive Vice Presidents and Senior Advisors: Chung-Pin Wong, Cheng-Chao Chen, and Chen-Chang Hsu – 3 positions
‧Senior Vice Presidents: Chun-De Shen, Kuo-Chuan Chen, Pei-Yuan Chen, Chiu-Rui Wei, Ying Chang, Ming-Chih Chang, Shen-Hua Peng, Wen-Da Hsu,
Wei-Chang Chen, Hsi-Kuan Chen and Chih-Wei Wen – 11 positions
‧Vice Presidentsand: Chih-Chuan Cheng, Gary Lu, Shih-Tung Wang, Bo-Hsiung Chang, Bo-Tang Wang, Zong-Ming Wang, Fu-Chuan Chang, Yung-Nan Chang,
Sheng-Hung Li, Yung-He Su, Chih-Hsien Liang, Ming-Dong Wong, Yue-Chun Li, Chiao-Lieh Huang, Chung-Hsing Tan, Yi-Yun Chang,
Hsin-Kung Mao, Hsin-Hsiung Huang, Shih-Hung Huang, Yi-Chiang Chiu, Ching-Fa Li, Bo-Heng Chen, Jui-Chun Hsu, Shih-An Li,
Ta-Chun Wang, Fei-Lung Chen, Liang-Jen Lin, Peng-Hong Chan – 28 positions
2. Senior Advisors Wen-Chung Shen, Yung-Ching Chang and Advisor Tian-Yuan Tsai retired in 2017; Vice President Ming-Hsiang Kan resigned in 2017; Vice Presidents
Lung-Hua Shen, Ling-Sheng Wu and Chi-Hsiang Ma resigned in 2018.
3. Employees’ compensation appropriation was approved by the Board of Directors at the March 19, 2018 meeting. The compensations of the aforementioned managers
have not been finalized and will be reviewed based on the list upon the date of distribution.
30
3.2.4 Comparison of Remuneration for Directors, Supervisors, Presidents and Vice Presidents in the
Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents
and Vice Presidents
A. The percentage of total remuneration paid by the Company and by all companies included in the
consolidated financial statements for the two most recent fiscal years to directors, supervisors, presidents
and vice presidents of the Company, relative to net income.
2017
2016 (Note)
Amount
%
Amount
%
Unit: NT$ thousands
Increase (Decrease)
%
Amount
467,537
8.13%
635,347
7.81%
(167,810)
(26.41)%
Analysis
Directors
Presidents and
Vice Presidents
Net Income
5,749,525
8,130,890
(2,381,365)
Note: 2016 is the actual amount.
B. The policies, standards, and portfolios for the payment of remuneration, the procedures for determining
remuneration, and correlation with business performance.
‧Remunerations paid by the Company to Directors have been made in accordance with the Articles of
Incorporation; when the Company makes profit in a year, no more than 2% of the Company’s pre-tax profit (not
including remuneration for employees and Directors) shall be paid to Directors as remuneration along with
reasonable compensation based on other factors such as the Company’s operational performance and the
individual Director’s contribution to the Company’s performance taken into consideration.
‧The Company’s remuneration policy for Managers has been established based on various factors, including the
Company’s wage policy, the average wage offered by competitors for the same position, the duties and
responsibilities for the position in question and the Manager’s actual contribution to the Company’s operational
objectives.
‧The Company’s procedure of determining remuneration not only takes into account the Company’s overall
operational performance but also includes employee’s personal performance and their contribution to the
Company’s performance in order to determine a reasonable compensation. Relevant wages and compensations
are reviewed by the Remuneration Committee and resolved by the Board of Directors. The Company will also be
keeping a close eye on the latest developments in the global economy, international financial environment and
state of the industry in order to predict its operational development, profit status, operational risks and changes in
pertinent regulations in the near future in order to review the compensation system, thereby striving for an ideal
balance between the Company’s sustainable operation and relevant risk control.
31
3.3
Implementation of Corporate Governance
3.3.1 Board of Directors
‧The term of the Board of Directos is from June 26, 2015 to June 25, 2018.
‧There were six Board meetingsduring 2017 (A). Director’s attendance records are as shown below:
Title
Name
Sheng-Hsiun Hsu
Chairman
Director
Jui-Tsung Chen
Director Wen-Being Hsu
Director
Director
Director
Director
Kinpo Electronics, Inc.
Representative:
Shyh-Yong Shen
Charng-Chyi Ko
Sheng-Chieh Hsu
Yen-Chia Chou
Director Wen-Chung Shen
Director
Yung-Ching Chang
Director
Chung-Pin Wong
Director
Director
Chiung-Chi Hsu
Chao-Cheng Chen
Independent
Director
Independent
Director
Independent
Director
Min-Chih Hsuan
Duei Tsai
Duh Kung Tsai
Attendance in
Person (B)
6
6
6
1
6
5
2
5
5
4
5
6
4
6
5
By Proxy
Attendance Rate
(%)[B/A]
Remarks
0
0
0
5
0
1
3
1
1
2
1
0
2
0
1
100%
100%
100%
17%
100%
83%
33%
83%
83%
67%
83%
100%
67%
100%
83%
․In 2017, Independenet Director’s attendance records are as shown below:
Title
Independent
Director
Independent
Director
Independent
Director
Name
1st Meeting 2nd Meeting 3rd Meeting 4th Meeting 5th Meeting 6th Meeting
Min-Chih Hsuan
Duei Tsai
Duh Kung Tsai
●
●
●
●
●
●
★
●
●
●
●
●
●
●
★
★
●
●
Note: ●: Attendance in Person﹔★: By Proxy﹔ 〇: Absent
A. Enhance the valuation regarding the target achievement and execution by the Board of Directors in the current and
most recent year:
The Company established a “Remuneration Committee” since 2011. During the election of the 11th Board of
Directors and Supervisors in 2012 shareholders’ meeting, 3 independent directors were elected and appointed to be
the committee members of the Remuneration Committee. Supervisors were replaced with the Audit committee
after the 12th Board of Directors was chosen in 2015 shareholders’ meeting.
B. Other notes:
Please refer to page 23-25 of the Chinese annual report.
32
3.3.2 Audit Committee
‧The Company’s Audit Committee has three members.
‧The term of the committee members is from June 26, 2015 to June 25, 2018.
‧There were five Audit Committee meetings during 2017 (A). The attendance records of the Independent
Directors are as follows:
Title
Name
Independent
Director
Independent
Director
Independent
Director
Min-Chih Hsuan
Duei Tsai
Duh Kung Tsai
Attendance in Person
(B)
3
5
4
By Proxy
2
0
1
Attendance Rate (%)
[B/A]
60%
100%
80%
Remarks
-
-
-
Other notes:
1. The Company should record the date of the Board of Directors’ meeting, the term, content of discussion, the result
of the Audit Committee’s decision and the actions the Company has taken in response should any of the
following situations arise in the operation of the Audit Committee:
(1) Matters listed in Item 5, Article 14 of the Security Act:
Board of
Directors
Content of discussion and actions taken in response
Matters listed in Item
5, Article 14 of the
Security Act
1. To review and approve the consolidated and
individual financial statements for 2016.
2. To review and approve the Company’s internal control
declaration for 2016.
11th
Meeting of
the 12th
term of
Board of
Directors
2017.3.28
3. To review and approve the independence and fitness
of the CPA engaged by the Company for the
financial statements.
4. To review and approve Compal Information
Technology (Kunshan) Co., Ltd. (100% owned by
the Company)’s investment in Leshi Zhixin
Electronic Technology (Tianjin) Limited.
‧Decisions by the Audit Committee (2017.3.28):
V
V
V
V
Not approved by the Audit
Committee but had the consent
of more than two-thirds of all
directors.
N/A
N/A
N/A
N/A
The motion was made with unanimous support from all committee members in attendance when
inquired by the Chair.
‧Actions taken by the Company in response to the Audit Committee’s decision:
The motion was made with unanimous support from all board members in attendance when
12th
Meeting of
the 12th
term of
Board of
Directors
2017.5.10
inquired by the Chair.
1. To review and approve the motion to revise the
“Procedures for Acquisition or Disposal of Assets”.
2. To review and approve the motion to lift the
non-competition restriction for directors and
managers.
3. To review and approve the request by Compal Europe
(Poland) Sp.z o.o. (100% owned by the Company)
for a letter of support from the Company needed for
factory lease escrow.
‧Decisions by the Audit Committee (2017.5.10):
V
V
V
N/A
N/A
N/A
The motion was made with unanimous support from all committee members in attendance when
inquired by the Chair.
‧Actions taken by the Company in response to the Audit Committee’s decision for motions No. 1
and 3:
The motions were made with unanimous support from all board members in attendance when
33
Board of
Directors
Content of discussion and actions taken in response
Matters listed in Item
5, Article 14 of the
Security Act
Not approved by the Audit
Committee but had the consent
of more than two-thirds of all
directors.
inquired by the Chair.
‧Actions taken by the Company in response to the Audit Committee’s decision for motion No.2:
As directors and managers Jui-Tsung Chen, Chung-Pin Wong and Chao-Cheng Chen were
directly involved in the matter, they were excluded from the discussion and voting in order to
avoid conflicts of interest per rules and procedures of board of directors meeting. The motion
was moved with unanimous support from the remaining board members in attendance when
inquired by the Chair.
1. The Consolidated Financial Statement for the 1st half
of 2017 was presented to the Board for review and
approval.
2. To review and approve the loan to be made to
UNICOM GLOBAL INC.
‧Decisions by the Audit Committee ( 2017.8.10):
V
V
N/A
N/A
The motion was made with unanimous support from all Committee Members in attendance when
inquired by the Chair.
‧Actions taken by the Company in response to the Audit Committee’s decision for Motion No. 1:
not applicable (the motion was a report intended for the Board of Directors)
‧Actions taken by the Company in response to the Audit Committee’s decision for Motion No. 2:
The motion was made with unanimous support from all Board Members in attendance when
inquired by the Chair.
1. To review and approve the loan to be made to
Henghao Technology Co., Ltd.
2. To review and approve the draft of the “Annual Audit
Plan for 2018”.
‧Decisions by the Audit Committee (11.9.2017):
V
V
N/A
N/A
The motion was made with unanimous support from all Committee Members in attendance when
inquired by the Chair.
‧Actions taken by the Company in response to the Audit Committee’s decision for Motion No. 1:
As Directors Jui-Tsung Chen, Chung-Pin Wong and Chao-Cheng Chen were also serving
concurrently as Directors of Henghao Technology Co., Ltd., they were excluded from the
discussion and voting in order to avoid conflicts of interest per rules and procedures of Board of
Directors Meetings. The motion was made with unanimous support from the remaining Board
Members in attendance when inquired by the Chair.
‧Actions taken by the Company in response to the Audit Committee’s decision for Motion No. 2:
The motion was made with unanimous support from all Board Members in attendance when
inquired by the Chair.
1. To review and approve the Consolidated and
Individual Financial Statements for 2017.
2. To review and approve the Company’s Internal
Control Declaration for 2017.
3. To review and approve the independence and fitness
of the CPA engaged by the Company for the
Financial Statements.
‧Decisions by the Audit Committee (3.19.2018):
V
V
V
N/A
N/A
N/A
The motion was made with unanimous support from all Committee Members in attendance when
inquired by the Chair.
‧Actions taken by the Company in response to the Audit Committee’s decision:
The motion was made with unanimous support from all Board Members in attendance when
inquired by the Chair.
14th
Meeting of
the 12th
term of
Board of
Directors
2017.8.10
15th
Meeting of
the 12th
term of
Board of
Directors
2017.11.9
17th
Meeting of
the 12th
term of
Board of
Directors
3.19.2018
34
Board of
Directors
Content of discussion and actions taken in response
Matters listed in Item
5, Article 14 of the
Security Act
1. To approve the motion of changing the Company’s
CPA.
2. To review and approve the independence and fitness
of the CPA engaged by the Company for the
Financial Statements.
3. To review and approve the motion to lift the
non-competition restriction for Managers.
‧Decisions by the Audit Committee (5.9.2018):
V
V
V
Not approved by the Audit
Committee but had the consent
of more than two-thirds of all
directors.
N/A
N/A
N/A
The motion was made with unanimous support from all Committee Members in attendance when
inquired by the Chair.
‧Actions taken by the Company in response to the Audit Committee’s decision for Motions No. 1
and No. 2:
The motion was made with unanimous support from all Board Members in attendance when
inquired by the Chair.
‧Actions taken by the Company in response to the Audit Committee’s decision for Motion No. 3:
As Directors and Managers Jui-Tsung Chen, Chung-Pin Wong and Chao-Cheng Chen were
directly involved in the matter, they were excluded from the discussion and voting in order to
avoid conflicts of interest per rules and procedures of Board of Directors Meetings. The motion
was made with unanimous support from the remaining Board Members in attendance when
inquired by the Chair.
18th
Meeting of
the 12th
term of
Board of
Directors
5.9.2018
(2) With the exception of the aforementioned matter, other matters not approved by the Audit Committee but had the
consent of more than two-thirds of all directors: none.
2. The actions of the independent directors with respect to the avoidance of conflict of interest should be disclosed
including the name of the independent director, the matter, the reasons for the avoidance and the voting and
attendance status: none.
3. Status of communication between independent directors, internal audit supervisor and accountant:
1. Method of communication between independent directors, internal audit supervisor and accountant:
‧After the internal audit supervisor has submitted an audit report and follow-up report, he/she should
provide the completed audited items to the independent directors for their review by the end of the
following month. Should the independent directors require clarification of the audit and follow-up,
they should contact the internal audit supervisor at any time. The internal auditor shall report audit
results to the Audit Committee on a quarterly basis and discuss relevant matters in person with the
committee.
‧The independent directors must communicate with the CPA on a yearly basis through the Audit
Committee or Board of Directors’ Meeting. The CPA shall report to the independent directors on the
results of financial statement audit and other pertinent legal requirements while the Audit
Committee shall also evaluate the selection, independence, and fitness of the CPA engaged by the
Company.
2. Summary of the communications between independent directors and internal audit supervisor:
Date
Key point of communication
2017 March 28
Report on audits carried out between 2016/11/1~2017/1/31, internal audit
self-evaluation review results and internal audit declaration
2017 May 10
Report on audits carried out between 2017/2/1~2017/4/20
2017 August 10
Report on audits carried out between 2017/5/1~2017/7/31
35
2017 November 9
Report on audits carried out between 2017/8/1~2017/11/2 and formulation of the Audit
Plan for 2018
2018 March 19
Report on audits carried out between 2017/11/3~2018/1/31, internal audit
self-evaluation review results and internal audit declaration
3. Summary of the communications between independent directors and accountant:
Date
Key point of communication
2017 February 8
Report on the key audit items for 2016 consolidated and individual financial statements
2017 March 28
Report on the outcome of audit for 2016 consolidated and individual financial
statements
2018 March 19
Report on the key audit items for 2017 consolidated and individual financial statements
and audit outcomes
36
3.3.3 Corporate Governance Implementation and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEX Listed
Companies”
Assessment criteria
Yes
No
Yes
Yes
Yes
Yes
I. Has the company established and disclosed
its corporate governance principles based
on “Corporate Governance Best-Practice
Principles for TWSE/TPEX Listed
Companies?”
II. Shareholding structure and shareholders’
interests
1. Has the company implemented a set of
internal procedures to handle shareholders’
suggestions, queries, disputes and
litigations?
2. Is the company constantly informed of the
identities of its major shareholders and the
ultimate controller?
3. Has the company established and
implemented risk management practices
and firewalls for companies it is affiliated
with?
4. Has the company established internal
Yes
policies that prevent insiders from trading
securities against non-public information?
Actual governance
Summary description
The Company’s corporate governance principles were approved by the Board of
Directors on Mar 28, 2017, and have been disclosed on its official website and
MOPS.
Deviation and causes of
deviation from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEX Listed
Companies
No deviations were found
The Company has a spokesperson and acting spokesperson that represent the
interest of the shareholders and a unit that specializes in addressing shareholders’
suggestions, queries, disputes and litigations.
No deviations were found
The Company keeps track of the identity of its ultimate controller by monitoring
insider shareholding positions (including that of directors, supervisors, managers,
and shareholders with more than 10% ownership interest), with the shareholder
registry is held by the share administration agency.
The Company has established “Internal Control Policy - Non-trade Activities -
Supervision and Management of Subsidiaries”, “Internal Control Policy - Trade
Activities – Invstment Management,” and “Guidelines on Financial and Business
Dealings Between Affiliated Enterprises” to set up and execute firewalls and risk
controls over related parties.
To prevent insider trading, the “CO10 Insider Trading Prevention Management” and
“Insider Trading Prevention Procedures” have been included as part of internal
control of the company and details are published on the intranet and linked to the
TWSE website to which employees have access. Both policies have been included
as part of the compulsorye-Learning courses for departmental heads, and eCSA
questionnaires are issued on a yearly basis to facilitate self-assessment. Insiders
37
No deviations were found
No deviations were found
No deviations were found
Assessment criteria
Yes
No
Summary description
Actual governance
III. Assembly and obligations of the board of
directors
1. Has the board devised and implemented
Yes
policies to ensure diversity of its members?
2. Apart from the Remuneration Committee
and Audit Committee, has the company
assembled other functional committees at
its own discretion?
such as directors, supervisors and managers are given a copy of the TWSE “Insider
Share Trading Manual” when they come aboard to make them aware of the
company insider rules.
The Company has established rules and regulations such as the “Corporate
Governance Guidelines” and “Rules for Director Election” to ensure diversified
board member composition in addition to drafting suitable guidelines for
diversification based on the Board’s operation, the Company’s operating format and
its needs and developments. And as such, board members are required to possess the
required knowledge, skills and character in order to accomplish the goal of ideal
corporate governance. For more information on the diversification of board
members, please refer to page 42.
No Apart from the Remuneration and Audit Committees, the Company has also
established a CSR Committee headed by EVP Chung-Pin Wong, who in turn reports
to the Board of Directors regarding the operating status and results of the committee
on a yearly basis.
3. Has the Company established a set of
No At present, the Company has yet to establish any policy or assessment tool to
policies and assessment tools to evaluate
the board’s performance? Is performance
evaluated regularly at least on an annual
basis?
4. Are external auditors’ independence
Yes
assessed on a regular basis?
evaluate Board performance.
The CPA issues an “Independent Auditor’s Report” on an annual basis and is
required to decline engagement should he/she be involved in any direct or indirect
material interest. The Company evaluates the independence and suitability of the
CPA at least once a year, in accordance with Article 47 of the CPA Law and Bulletin
10 of the Norm of Ethics for Certified Public Accountants. The CPA cannot be a
director, supervisor or shareholder of the company and may not be on the payroll or
be a related party to the Company. The Company then submits the “CPA
38
Deviation and causes of
deviation from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEX Listed
Companies
No deviations were found
No deviations were found
Such policies and tools
will be created after
careful consideration.
No deviations were found
Assessment criteria
Yes
No
Summary description
Actual governance
IV. Has the company established dedicated
Yes
unit or full time (or part time) personnel
responsible for corporate governance
related affairs (including but not limited
to providing the requisite
information/data to directors or
supervisors to perform their duties,
organizing director and shareholder
meetings as required by pertinent
regulations, processing company
registration and/or changes in
registration, preparing the agendas for
board of directors’ meeting/shareholders’
meeting)?
V. Has the company provided proper
Yes
communication channels and created
dedicated sections on its website to
address corporate social responsibility
issues that are of significant concern to
stakeholders (including but not limited
Independence and Fitness Evaluation Form” along with the “Independent Auditor’s
Report” to the Audit Committee for review before it is submitted to the Board of
Directors for examination and discussion. The same principles apply to whenever
there is an internal rotation within the accounting firm.
VP Ching-Hsiung Lu has been appointed to take charge of and supervise affairs
pertaining to corporate governance in accordance with the Company’s “Corporate
Governance Guidelines”, while the HQ Accounting Department was assigned as the
Company’s responsible unit for corporate governance to handle relevant affairs.
VP Gary Lu and designated personnel responsible for corporate governance have
more than 25 years of experience in stock affairs and meeting related management
for publicly traded companies. They are primarily responsible for handling
corporate governance affairs, organizing director and shareholder meetings as
required by pertinent regulations, preparing the agendas for board of directors’
in company registration,
meeting/shareholders’ meeting, processing changes
periodically examining and revising
the Company’s corporate governance
guidelines and relevant procedures, providing the requisite information/data to
directors or auditors to perform their duties and ensuring legal compliance so as to
improve disclosure transparency,safeguard shareholder rights and promote better
corporate governance. For more information on the status of Compal’s corporate
governance unit operations for 2017, refer to page 42.
The Company has addressed its stakeholder relations on its corporate website, CSR
report and CSR Sustainability website. Separate contact persons, phone numbers,
and e-mail addresses have been provided for each type of stakeholder relation to
ensure that queries are directed to the relevant departments. In addition, an online
“Material Aspects” questionnaire has also been created for stakeholders to identify
issues that are of significant concern. The Company will address stakeholders’
responses properly and take their suggestions as part of the Company’s goals.
39
Deviation and causes of
deviation from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEX Listed
Companies
No deviations were found
No deviations were found
Assessment criteria
Yes
No
Summary description
Actual governance
Deviation and causes of
deviation from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEX Listed
Companies
to shareholders, employees, customers
and suppliers)?
VI. Does the company engage a share
administration agency to handle
shareholder meeting affairs?
VII. Information disclosure
1. Has the company established a website that
discloses financial, business and corporate
governance-related information?
2. Has the company adopted other means to
disclose information (e.g. English website,
assignment of specific personnel to collect
and disclose corporate information,
implementation of a spokesperson system,
broadcasting of investor conferences via the
company website)?
Yes
Yes
Yes
The Chinatrust Commercial Bank – Securities Trust has been appointed as the share
administration agency responsible for handling shareholder affairs and meetings
while offering share administration services.
No deviations were found
The Company website at (www.compal.com)
is regularly updated with
information such as financial performance, corporate governance and
shareholder meetings
‧The Company website has both Chinese and English pages. The information is
gathered and disclosed by a dedicated department.
‧The Company has also appointed a spokesperson and an acting spokesperson in
No deviations were found
No deviations were found
place.
‧Investor conferences are held regularly and whenever deemed necessary. The
proceedings are posted on the Company’s website and also broadcasted on the
TWSE platform (at http://webpro2.twse.com.tw/webportal/schedule/).
40
Assessment criteria
Yes
No
Summary description
Actual governance
VIII. Does the company offer other vital
Yes
information (including but not limited to
employee rights, employee care, investor
relationship, supplier relationship,
stakeholders’ interests, continuing
education of directors/supervisors, risk
management policies, risk assessment
standard implementation status,
implementation status of customer
policies, insuring against liabilities of
company directors and supervisors) that
would enable a better understanding of
the company’s corporate governance
practices?
•
•
•
•
•
•
•
•
•
Employee welfare and care to employees
Directors and Managers code of conduct; Employee code of conduct
Investor relations
Supplier relations and execution of customer policy
Stakeholders’ interests
Risk management execution and framework; risk analysis and evaluation
Insuring against liabilities of company directors and supervisors
Directors’, supervisors’ and managers’ ongoing education
Qualification of personnel involved in financial transparency
Deviation and causes of
deviation from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEX Listed
Companies
No deviations were found
IX. State the improvements that have been made with regards to the results of the latest Corporate Governance Evaluation conducted by TWSE in the most recent year; for
items that have yet to be improved upon, state the company’s priorities and measures for improvement.
In the “4th Round of Corporate Governance Evaluation” by TWSE, Compal was placed in the top 6%~20% listed companies. With regards to further education for
Directors (including Independent Directors), Compal has advocated and encouraged Directors to take part in the courses on pertinent regulations offered by subsidiary
Kinpo Group Management Consultant Company or trainings provided by external professional organizations. In 2017, members of the Board of Directors completed a
total of 80 hours of training. Pursuant to amendments to pertinent regulations and operations, the Company has made partial revisions to the “Corporate Governance
Best-Practice Procedures”, “Procedures for Acquisition or Disposal of Assets”, “Board of Directors Meeting Guidelines”, “Audit Committee Procedures”, and “The
Responsibilities and Rules for Independent Directors”. Pursuant to the amendments to the “Regulations Governing the Exercise of Powers by Audit Committees of Public
Companies” (effective July 28, 2017) by the FSC, the entire proceedings of Audit Committee Meetings shall be recorded on audio tape.
41
A. Status of board member diversification :
Core items for
diversification
Gender
Name of director
Sheng-Hsiun Hsu
Jui-Tsung Chen
Wen-Being Hsu
Shyh-Yong Shen
Charng-Chyi Ko
Sheng-Chieh Hsu
Yen-Chia Chou
Wen-Chung Shen
Yung-Ching Chang
Chung-Pin Wong
Chiung-Chi Hsu
Chao-Cheng Chen
Min-Chih Hsuan
Duei Tsai
Duh-Kung Tsai
Male
Male
Male
Male
Male
Male
Male
Male
Male
Male
Male
Male
Male
Male
Male
Operation
management
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
Leadership
and
decision-making
V
Knowledge
of the
industry
V
International
market
perspective
V
Finance
and
accounting
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
B. The status of Compal’s corporate governance unit operations for 2017 is as follows:
․Compiled and prepared relevant documents needed for the Audit Committee and Board of Directors’ Meetings in
accordance with pertinent regulations and operational/financial needs; responsible for coordination of relevant
affairs with units making the proposals.
․Pursuant to amendments to pertinent regulations and operations, partial revisions have been made to the
“Corporate Governance Best-Practice Procedures”, “Procedures for Acquisition or Disposal of Assets”, “Board
of Directors Meeting Guidelines”, “Audit Committee Procedures”, and “The Responsibilities and Rules for
Independent Directors”, all of which have been submitted to the Board of Directors for approval.
․Cancelled and changed the registration for new restricted employee shares because the criteria were not met by
the intended employees.
․Planned the communication meeting between Independent Directors, Internal Audit Supervisors and CPA to
have the Audit Committee determine the independence and fitness of the CPA engaged by the Company as a
measure to ensure sound corporate governance. For the records of the communication meetings, visit Compal’s
website and go to Investor Relations > Corporate Governance > Communication with Independent Directors
http://www.compal.com/investor-relations/corporate-governance/#directors-communication
․Pursuant to “Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE
Listed and TPEx Listed Companies”, Compal has advocated and encouraged Directors to take part in the courses
on pertinent regulations offered by subsidiary Kinpo Group Management Consultant Company or trainings
provided by external professional organizations.
․Disclosed and announced important information in conjunction with Board of Directors Meetings, Shareholders
Meetings, financial and sales information; in addition, the Company has also hosted investor conferences on a
quarterly basis and has been invited to attend domestic/overseas investor conferences to help investors better
understand the Company’s status of operation.
․Registered the date for Shareholders Meetings as required by law; prepared meeting notifications within the
scheduled deadline, meeting handbook and meeting minutes; coordinated relevant units, agents for stock affairs,
accountants, attorneys and so forth.
․Contents on the chapter for corporate governance – responsible for the collection of data, compilation of stock
affairs data, coordination of different units and editing.
42
․Corporate governance evaluation – responsible for the collection of data, compilation of stock affairs data,
coordination of different units and website maintenance.
C. Other vital information on the operating status of corporate governance:
Please refer to page 32-35 of the Chinese annual report.
(1) Purchasing liability coverage for the Company’s directors, supervisors and managers
Starting from 2002, the Company has been purchasing liability coverage for directors, supervisors and
managers. The amount for their liability insurance in 2017 came to USD 50,000 thousand, which was roughly
equivalent to NTD 1,499,750 thousand. Vital information relating to their liability insurance was reported to the
Board of Directors on March 6, 2018.
(2) Continuing education for directors, supervisors and managers
All directors and managers are equipped with relevant professional knowledge and skills. In addition to
offering relevant information both on a regular and irregular basis to directors and managers, the Company would
also organize seminars and workshops when deemed necessary. Trainings completed by directors and managers in
2017 include:
Title
Name
Director
Rock Hsu
Date of
training
07.13.2017
Organized by
Course title
Hours
of training
Securities & Futures
Institute
Director
Jui-Tsung
Chen
07.13.2017
Securities & Futures
Institute
Director
Director
Director
12.05.2017
06.13.2017
07.13.2017
Taiwan Corporate
Governance
Association
Taiwan Academy of
Banking and Finance
Securities & Futures
Institute
Wen-Being
Hsu
Shih Jung
Shen
Chang Chi Ko 02.17.2017 Kinpo Group
Management
Consultant Company
Securities & Futures
Institute
07.13.2017
08.15.2017
Taiwan Corporate
Governance
Association
Director
Sheng Chieh
Hsu
06.13.2017
07.13.2017
Taiwan Academy of
Banking and Finance
Securities & Futures
Institute
Director
Director
Yung-Chia
Chou
Chiung-Chi
Hsu
07.13.2017
Securities & Futures
Institute
06.13.2017
Taiwan Academy of
Banking and Finance
43
Corporate Financial Crisis
Early Warning and Type
Analysis
Corporate Financial Crisis
Early Warning and Type
Analysis
Corporate Governance and
Securities Regulations
Corporate Governance Forum
– Family Business Succession
Corporate Financial Crisis
Early Warning and Type
Analysis
Global Economic Outlook for
2017
Corporate Financial Crisis
Early Warning and Type
Analysis
Prospect and Analysis of
Taiwan’s Current Tax Reform:
The Withdrawal of the
Integrated Income Tax
System
Corporate Governance Forum
– Family Business Succession
Corporate Financial Crisis
Early Warning and Type
Analysis
Corporate Financial Crisis
Early Warning and Type
Analysis
Corporate Governance Forum
– Family Business Succession
3
3
3
3
3
2
3
3
3
3
3
3
Date of
training
Organized by
Course title
Hours
of training
Title
Name
Director
Wen-Chung
Shen
Director
Yung-Ching
Chang
Director
Chao-Cheng
Chen
Independent
Director
Min-Chih
Hsuan
Independent
Director
Duei Tsai
02.17.2017 Kinpo Group
Management
Consultant Company
Taiwan Academy of
Banking and Finance
06.13.2017
12.05.2017
06.13.2017
02.17.2017 Kinpo Group
Management
Consultant Company
Taiwan Academy of
Banking and Finance
Taiwan Corporate
Governance
Association
Securities & Futures
Institute
Securities & Futures
Institute
12.20.2017
11.02.2017
04.07.2017
02.17.2017 Kinpo Group
Management
Consultant Company
Securities & Futures
Institute
Securities & Futures
Institute
07.14.2017
08.25.2017
Taiwan Academy of
Banking and Finance
09.15.2017
10.25.2017
Independent
Director
Duh Kung Tsai 10.27.2017
10.27.2017
Accounting
Supervisor
Gary Lu
12.25.2017~
12.26.2017
Taiwan Corporate
Governance
Association
Taiwan Corporate
Governance
Association
Taiwan Corporate
Governance
Association
Taiwan Corporate
Governance
Association
Accounting Research
and Development
Foundation
Head of
Auditing
Bo-Wen Hsieh 02.14.2017 Accounting Research
and Development
Foundation
06.13.2017 Accounting Research
and Development
Foundation
44
Global Economic Outlook for
2017
Corporate Governance Forum
– Family Business Succession
Global Economic Outlook for
2017
Corporate Governance Forum
– Family Business Succession
Corporate Governance and
Securities Regulations
Effective Protection of Trade
Secrets
Legal Standpoint on
Embezzlement – Tunneling
and Misreporting
Global Economic Outlook for
2017
2017 Insider Trading and
CSR Seminar
Seminar on Equity Trading
Law Compliance for Insiders
of Listed Companies
Corporate Governance Forum
– Corporate Sustainable
Operation
Trends in the Amendment of
the Company Act in Taiwan
13th Corporate Governance
International Summit Forum
Legal Risks for Corporate
Directors and Management
Responsibilities and
Obligations for Corporate
Directors and Management
Professional Development
Course for Principal
Accounting Officers of
Issuers, Securities Firms and
Securities Exchanges
Rationale on Legal Risks for
Internal Auditors in Light of
the Trends of Globalized
Management
Key Points of the Latest
Labor Law Amendments and
Internal Audit Practices for
Payroll Cycles
2
3
2
3
3
3
3
2
3
3
3
3
6
3
3
12
6
6
(3) Certificate and qualification acquisition status for personnel involved in financial information transparency
Name of certificate
CPA qualification
USCPA qualification
Senior Securities Specialist
Securities Specialist
Futures Specialist
Securities Investment Trust and Consulting
Professional
Certified Internal Auditor - Taiwan
Certified Internal Auditor
Chartered Financial Analyst
No. of persons
7 persons
2 persons
13 persons
8 persons
7 persons
5 persons
3 persons
4 persons
1 person
45
3.3.4 Composition, Responsibilities and Operations of the Remuneration Committee
A. Professional Qualifications and Independence Analysis of Remuneration Committee Members
Criteria
Title
(Note 1)
Name
Independent
Director
Independent
Director
Independent
Director
Min-Chih
Hsuan
Duei Tsai
Duh Kung
Tsai
Having Met One of the Following Professional
Qualifications, Together with at Least Five Years Work
Experience
A judge, public
prosecutor, attorney,
Certified Public
Accountant, or other
professional or
technical specialist
who has passed a
national examination
and been awarded a
certificate in a
profession necessary
for the business of the
Company
Having work
experience in
the areas of
commerce, law,
finance, or
accounting, or
otherwise
necessary for the
business of the
Company
An instructor or
higher position in
a department of
commerce, law,
finance,
accounting, or
other academic
department related
to the business
needs of the
Company in a
public or private
junior college,
college or
university
Independence Criteria
(Note 2)
1 2 3 4 5 6 7 8
Number of
Other Public
Companies in
Which the
Individual is
Concurrently
Serving as an
Remuneration
Committee
Member
Remarks
1
3
2
-
-
-
Note 1: Please fill in director, independent director, or other in the identification.
Note 2: Please check “” in the box for a member, who during the two years before being elected or during the term
of office, any of the following applied:
(1) Not an employee of the company or any of its affiliates.
(2) Not a director or supervisor of the company or any of its affiliates. (The same does not apply, however, in
cases where the person is an independent director of the company, its parent company, or any subsidiary in
which the company holds, directly or indirectly, more than 50 percent of the voting shares.)
(3) Not a natural-person shareholder or holder of shares, together with those held by a spouse, minor children,
or held by the person under other names, in an aggregate amount of one percent or more of the total
number of issued shares of the company or ranking within the top 10 in holdings.
(4) Not a spouse, relative within a second degree of kinship, or lineal relative within the third degree of
kinship, or a person in compliance with any of the preceding three subparagraphs.
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more
of the total number of issued shares of the company or that holds shares ranking within the top five in
holdings.
(6) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified
company or institution that has a financial or business relationship with the company.
(7) Not a professional individual who, as an owner, partner, director, supervisor, or officer of a sole
proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting
services or consultation to the company or to any affiliate of the company, or the spouse thereof.
(8) No matters as noted in Article 30 of Company Law.
46
B. Attendance of Members at Remuneration Committee Meetings
‧The Company elected three members of the Remuneration Committee.
‧The term of the committee members is from June 26, 2015 to June 25, 2018.
‧There were four Remuneration Committee meetings during 2017(A) and the committee member
qualifications and attendance records are as follows:
Title
Name
Convener
Committee
Member
Committee
Member
Min-Chih
Hsuan
Duei Tsai
Duh Kung
Tsai
Attendance in
Person (B)
2
4
3
By Proxy
2
0
1
Attendance Rate (%)
[B/A]
50%
100%
75%
Remarks
-
-
-
Other notes:
1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should
specify the date of the meeting, the session, the nature of motion, the resolution made by the board of directors,
and the Company’s response to the remuneration committee’s opinion (eg., if the amount of remuneration passed
by the Board of Directors exceeds the remuneration committee’s recommended amount, the circumstances and
cause for the difference shall be specified): None.
2. If resolutions of the remuneration committee are objected by members or become subject to a qualified opinion,
which have been recorded or declared in writing, then the date of the meeting, the session, the nature of the
motion, all members’ opinions and the response to members’ opinion should be specified: None.
47
3.3.5 Corporate Social Responsibility
Assessment criteria
Yes No
Summary description
Actual governance
Deviation and causes
of deviation from
Corporate Social
Responsibility Best
Practice Principles for
TWSE/TPEX Listed
Companies
I.
1.
2.
3.
Sound corporate governance
Does the company have a
corporate social responsibility
policy or system in place? Is
progress reviewed on a regular
basis?
Yes
The Company has established its CSR policies and relevant management guidelines,
including Corporate Governance Best-Practice Procedures, Code of Conduct for Directors
and Managers, Code of Conduct for Employees, Ethical Corporate Management Best
Practice Principles, Business Integrity Procedures and Behaviors, Insider Trading Prevention
Procedures, Corporate Social Responsibility Best Practice Principles and so forth. The CSR
Committee reports annually to the Board of Directors to present the results of implementation, review
the outcomes, and establish the targets for the following year. Under the CSR Committee, there are
other subordinating units including the CSR Office and CSR Execution Teams for each factory/fab
responsible for the implementation, follow-up, revision and recording of relevant plans. The results of
implementation are also disclosed in our Annual Report, CSR Report and on our corporate
website/CSR sustainability website.
No deviations were
found
Does the company organize
social responsibility training on
a regular basis?
Yes
Yes
Does the company have a unit
that specializes (or is involved)
in CSR practices? Is the CSR
unit run by senior management
and reports its progress to the
board of directors?
The Company organizes annual CSR training courses in accordance with its Employee Code of
Conduct and CSR-related policies. These training courses cover a broad variety of topics including
corporate policies, HR system, employee code of conduct, personal information protection act and
other areas as the law may require. All training courses are accessible online and have been made as
requisites for new employees. Existing employees may complete courses online at their own
discretion at any time. In 2017, 3,039 employees had completed their training for a total of 11,640
hours.
The Company has established a CSR Committee and a dedicated unit responsible for the prevention
of insider trading. The Committee consists of members of senior management authorized by the
Board of Directors to oversee affairs pertaining to CSR and integrity management. In addition,
Compal has also initiated its CSR Office with designated personnel to handle the promotion of
relevant tasks resolved by the CSR Committee. The CSR Office reports annually to the Board of
Directors on its status of operation and implementation. The results of implementation are also
No deviations were
found
No deviations were
found
48
Deviation and causes
of deviation from
Corporate Social
Responsibility Best
Practice Principles for
TWSE/TPEX Listed
Companies
No deviations were
found
Assessment criteria
Yes No
Summary description
Actual governance
4.
II.
1.
2.
Yes
Has the company implemented
a reasonable remuneration
system that associates
employees’ performance
appraisals with CSR? Is the
remuneration system supported
by an effective
reward/discipline system?
Fostering a sustainable
environment
Is the company committed to
achieving efficient use of
resources, and using renewable
materials that produce less
impact on the environment?
Yes
Has the company developed an
appropriate environmental
management system, given its
distinctive characteristics?
Yes
disclosed in our Annual Report, CSR Report and on our corporate website/CSR sustainability
website.
Employees’ salary levels are set based upon those of similar responsibilities, with adjustments made
based on individual work performance. Different salary levels may be granted depending on
education, experience, job grade and the assigned duties, but are higher than the statutory minimum in
any case. Furthermore, employees are entitled to a portion of share of the Company’s current year
profits.
The Company has set clear guidelines to reward and penalize employees’ conducts and performance.
Rewards and penalties are decided to depend on the severity and impact of the event involved.
Generally speaking, employees’ compensation includes 12 months of salary, a mid-year bonus and
year-end bonus (to be determined based on the Company’s operational performance and employees’
individual performance), with adjustment to their wages. In addition, pursuant to the Articles of
Incorporation; when the Company makes profit in a year, no more than 2% of the Company’s pre-tax
profit (not including remuneration for employees and Directors) shall be appropriated to employees.
The aforementioned bonus, adjustment in wages and employee compensations are reviewed by the
Remuneration Committee and resolved by the Board of Directors.
The R&D and Production Teams deeply recognize
the design and production of more
environmentally friendly, green, and low-carbon products that are compliant with international
certifications such as Energy Star, US EPEAT, US & WW EPEAT, China CECP & CEC and Taiwan
Green Mark so as to mitigate climate changes and impacts on the environment. Not only that, Compal
has begun to use recycled plastic for specific product models in order to respond quickly to
customers’ needs in terms of certifications.
The Company began its implementation of ISO 14001 Environment Management System in April
1997; quality and environmental safety policies were created in 2005 to guide the Company’s efforts
on employee workplace safety and corporate responsibilities. Operating procedures and
environmental/safety/health management systems have been established based on government
No deviations were
found
No deviations were
found
49
Assessment criteria
Yes No
Summary description
Actual governance
regulations and international standards such as ISO, OHSAS etc. The Company adopts proper
communication channels to convey its environmental and safety policies and goals to employees,
suppliers, contractors, surrounding neighbors and interest groups.
The Company began its greenhouse gas surveys (scopes 1 and 2) and carbon footprint inventory as
early as 2010. Starting from 2014, the Company has conducted greenhouse gas inventory and
validation on a yearly basis. In 2015, Compal was included in the CDP Climate Disclosure
Leadership Index for the first time (CDLI). The Company has actively participated in the Carbon
Disclosure Project (CDP) as a means to improve its response to climate changes. The CDP achieves
its purpose by assessing a company’s carbon emission, reduction progress, compliance risks and
exposure to physical risks such as supply disruption, shortage of resources, extreme weather, rising
sea levels and diseases etc. And as such, Compal participated in UNFCCC’s 2050 pathways platform
initiative in 2016 in the hopes of reducing operational risks and costs through autonomous carbon
reduction or even turn risks into opportunities to ensure the Company’s sustainability.
The Company places great emphasis on equal opportunities and business ethics. It has policies and
systems in place to ensure compliance with international conventions.
The Company and all its subsidiaries throughout the world have established employment guidelines
according to international human rights conventions and local labor regulations. All employment
terms have been assured to conform with the laws of the local country or region. Out of respect
towards labor rights, the Company changes its policies and rules in line with the latest regulations,
and announces them to the understanding of all its employees. For the purpose of maintaining
harmonic employer-employee relations, a communication platform has been created to enable
exchange of opinions and information between the Company and its employees.
The Company has set up email contacts through which employees may express their opinions and
offer suggestions. These opinions and suggestions are referred to appropriate units within the
Company; progress and outcomes are reported back to employees as they become available.
Yes
3.
Is the company aware of how
climate changes affect its
business activities? Are there
any actions taken to measure
and reduce greenhouse gas
emission and energy use?
III. Enforcement of public welfare
Has the company developed its
1.
policies and procedures in
accordance with laws and
International Bill of Human
Rights?
Yes
Yes
2.
3.
Does the company have means
through which employees may
raise complaints? Are employee
complaints being handled
properly?
Does the company provide
Yes
The Company is well-aware of how significantly “workplace safety and health” affects a company, its No deviations were
50
Deviation and causes
of deviation from
Corporate Social
Responsibility Best
Practice Principles for
TWSE/TPEX Listed
Companies
No deviations were
found
No deviation was
found
No deviations were
found
Assessment criteria
Yes No
Summary description
Actual governance
employees with a safe and
healthy work environment? Are
employees trained regularly on
safety and health issues?
4.
5.
6.
7.
Yes
Does the company have means
to communicate with
employees on a regular basis,
and inform them of operational
changes that may be of
significant impact?
Has the company implemented
an effective training program
that helps employees develop
skills over their career?
Has the company implemented
consumer protection and
grievance policies with regards
to its research, development,
procurement, production,
operating and service
activities?
Has the company complied
with laws and international
standards with regards to the
Yes
Yes
Yes
employees and stakeholders. This was the reason why the Company has enhanced its environmental,
safety and quality policies and obtained OHSAS 18001 certification since 2005, which requires all
departments to implement proper safety and health practices as well as regular training on matters
such as fire safety equipment, utility plans, waste disposal, emergency response procedures etc. The
Company organizes health and safety training for employees on a regular basis as a means to prevent
occupational hazards and ensure workplace safety. In 2017, 2,346 employees had completed their
training for a total of 5,033 hours.
The Company is committed to creating communication platforms where employees may exchange
opinions and information. “Employee opinion boxes” have been made available at the headquarter
and at various plant sites to receive employees’ complaints; “Sunshine Group” and hotlines have been
set up in all plant sites and are run by compassionate people who promptly respond to employees’
opinions so that the Company can rectify its flaws and help solve employees’ problems immediately.
Townhall Meetings are organized regularly at the turn of the year. During which, the CEO will
personally address employees on the Company’s new business developments. Key points of this
meeting are also summarized and delivered to all employees via email.
Annual training programs are tailored to suit the needs of different employees, based on the
Company’s business strategies, policy guidelines, and career roadmaps. The Company constantly
aims to establish itself as a learning organization and coaching management.
The Company is an OEM/ODM manufacturer, manufacturing TV sets, notebooks, cell phones and
electronics for top brands. There is a dedicated unit responsible for every step in the production
process such as product development and design, shippings, and maintenance and service. Once
customers have launched their products, the Company will continue to support them with services and
parts until the product no longer requires after-sale responsibilities. Customers are given the option to
visit Compal’s website, click on Stakeholder Communication Area and leave messages using an
exclusive link; these messages will then be handled by the appropriate departments.
The Company is an OEM/ODM. It manufactures TV sets, notebooks, cell phones and electronics for
the world’s top brands. All products are printed with customers’ trademarks, names, and labeling that
conform with relevant laws and international guidelines; however, the Company does not print its
51
Deviation and causes
of deviation from
Corporate Social
Responsibility Best
Practice Principles for
TWSE/TPEX Listed
Companies
found
No deviations were
found
No deviations were
found
No deviations were
found
No deviations were
found
Assessment criteria
Yes No
Summary description
Actual governance
Deviation and causes
of deviation from
Corporate Social
Responsibility Best
Practice Principles for
TWSE/TPEX Listed
Companies
8.
9.
Yes
Yes
marketing and labeling of
products and services?
Does the company evaluate
suppliers’ environmental and
social conducts before
commencing business
relationships?
Is the company entitled to
terminate supply agreement at
any time with a major supplier,
if the supplier is found to have
violated its corporate social
responsibilities and caused
significant impacts against the
environment or the society?
IV. Enhanced information
1.
disclosure
Has the company disclosed
relevant and reliable CSR
information on its website and
at the Market Observation Post
System?
Yes
own logos or names on the products it produces.
The Company requests all its suppliers to fulfill their responsibilities with respect to the environment,
labor, management, and ethics. Furthermore, the Company also demands its suppliers to sign and
comply with RBA (Responsible Business Alliance) and evaluates suppliers’ performance by their
contribution to corporate social responsibilities.
No deviations were
found
The Company requires all major suppliers to comply with local regulations and fulfill their duties to
the environment and the society. They are demanded to immediately rectify any violations found to
ensure the business relationship with the Company.
The Company’s standard procurement contract specifically requires suppliers to comply with RBA
(Responsible Business Alliance) and environmental protection laws. The contract empowers the
Company to terminate procurement relationship with any supplier that is found to have violated the
above rules.
No deviations were
found
A “CSR” section is created on the Company’s website to disclose information in different categories.
A “News” section is also available on the home page where stakeholders are given access to the latest
information. The Company prepares CSR reports on an annual basis to disclose how it has fulfilled its
social responsibilities. This report may be downloaded from the Company’s website and from Market
Observation Post System (MOPS).
No deviations were
found
52
V. If the company has established the corporate social responsibility principles based on “Corporate Social Responsibility Best-Practice Principles for
TWSE/TPEX Listed Companies,” please describe any discrepancy between the Principles and their implementation:
■ The Company has established “Compal Corporate Social Responsibility Best Practices” based on “Corporate Social Responsibility Best-Practice Principles for
TWSE/TPEX Listed Companies.” A “CSR Office” has also been introduced specifically for the purpose of promoting social responsibilities, environmental
sustainability, public welfare, and information disclosure. The Company has adopted the principles of RBA by including corporate social responsibilities as part of its
overall business plan, thereby making sure that everything it does confirms with RBA. The CSR Office reports its progress regularly to the Board of Directors, and
publishes annual CSR reports to ensure proper disclosure of CSR information.
■ To contribute to the sustainability of our environment, the Company publishes green knowledge materials on a monthly basis and organizes regular environmental
training courses for the management and general employees. It adopts green product management starting from the design stage and covering all aspects of the supply
chain, which aims to: reduce resource and energy consumption, minimize discharge of pollutants and toxic waste, ensure proper waste disposal, enhance recyclability
and reusability of raw materials and products, maximize usage of available resources, extend product durability, and enhance product/service efficiency. The green
management also aims to prevent pollution to water, air and soil, and embodies a series of strategies to reduce the level of greenhouse gas and carbon emitted during
the Company’s operations. It is our hope to minimize adverse impacts on health and the environment by adopting the best and most feasible pollution controls
available.
VI. Other important information to facilitate better understanding of the company’s corporate social responsibility practices:
There is a specific CSR section on the corporate website containing CSR policy, target and management procedures. Please refer to: http://www.compal.com
53
VII. A clear statement shall be made below if the corporate social responsibility reports were verified by external certification institutions:
■ Criteria undertaken by institutions to certify the Company’s products:
The Company adopts the green concept right from the design and development stage for all products it manufactures. In addition to making sure that all manufactured
products conform with compulsory regulations and voluntary certifications in countries where they are distributed, the Company also takes the initiative in developing
talents and technologies in relation to energy-saving issues and thereby keeping up with world’s latest trends and challenges. Apart from knowing the latest news in
environmental regulations and certifications, Compal also possesses adequate R&D and execution capacity to quickly respond to customers’ needs for certification
such as IECQ QC 080000, Energy Star, US & EPEAT, US & WW EPEAT, China CECP & CEC, Taiwan Green Mark and Indoor Air Quality Testing & Certification.
■ Criteria undertaken by institutions to certify the Company’s CSR report:
The Company has been preparing annual CSR reports and disclosing them to stakeholders on its website since 2010. The CSR report was first certified by an external
institution in 2012, and later in 2017, the Company adopted Global Reporting Initiative’s most updated guidelines (GRI Standards, published in 2016) to prepare its
CSR report. The 2014 report was compiled based on stakeholders’ concerned issues and the Company’s key objectives. To ensure the credibility of reported contents,
the Company commissioned SGS to provide independent assurance based on the criteria specified in AA 1000 AS and GRI Standards. After their assurance, the report
was certified to meet AA 1000 AS Standard Type 2, mid-level accountability and GRI Standards application core requirements. The Company was awarded a Silver or
Bronze Awards by Taiwan Institute for Sustainable Energy in four consecutive years for its “Taiwan Corporate Sustainability Report Award”.
54
3.3.6 Ethical Corporate Management
Assessment criteria
Yes No
Summary description
Actual governance
I.
1.
2.
Establishment of integrity
policies and solutions
Has the company stated in
its Memorandum or external
correspondence about the
policies and practices it has
to maintain business
integrity? Are the board of
directors and the
management committed in
fulfilling this commitment?
Does the company have any
measures against dishonest
conducts? Are these
measures supported by
proper procedures,
behavioral guidelines,
disciplinary actions and
complaint systems?
Yes
The Company has clearly outlined the procedures for ethical management and guidelines for conduct
in its HR policies, social responsibility policies, the integrity principles and code of conduct for
directors, supervisors, managers, and the general code of conduct. The Board of Directors and the
management have committed themselves to business integrity. The Company’s “Board of Directors
Meeting Guidelines” contain a conflicting interest clause that requires directors to disassociate from
all discussion and voting of any agenda that poses a conflict of interest between the Company and
themselves or the entities they represent.
Yes
The Company has established the “Ethical Corporate Management Best Practice Principles” and
“Business Integrity Procedures and Behaviors” (hereinafter, “Procedures and Behaviors”) as an
incentive to insiders and outsiders to report unethical or unseemly conduct. Any insider who makes a
false report or a malicious accusation shall be subject to disciplinary action and be removed from
office if the circumstance concerned have substance.
This Company has appointed a contact person, and has established a hotline and mailbox that can be
used either through the Intranet of the company website. Any person involved in unethical conduct
will be referred to an authorized department and processed according to the “Business Integrity
Procedures and Behaviors”.
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
No deviations were
found
No deviations were
found
3.
Has the company taken
steps to prevent occurrences
listed in Article 7, Paragraph
2 of “Ethical Corporate
Yes
The Company’s “Business Integrity Procedures and Behaviors” govern the following
‧ Prohibition against offering and acceptance of improper gains
No deviations were
found
‧ Prohibition against lobbying
55
Assessment criteria
Yes No
Summary description
Actual governance
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
Management Best Practice
Principles for
TWSE/TPEX-Listed
Companies” or business
conducts that are prone to
integrity risks?
II.
1.
2.
Integrity actions
Does the company evaluate
the integrity of all
counterparties it has
business relationships with?
Are there any integrity
clauses in the agreements it
signs with business
partners?
Does the company have a
unit that specializes (or is
involved) in business
integrity? Does this unit
report its progress to the
board of directors on a
regular basis?
‧ Prohibition against illegal political donations
‧ Prohibition against improper donations or sponsorships
‧ Prohibition against inappropriate gifts, treatments and illegitimate benefits
‧ Prohibition against unfair competition
‧ Prohibition against leakage of commercial secrets and infringement of intellectual property rights
‧ Prohibition against insider trading and rules of confidentiality
Furthermore, the “Information Security Policy” has introduced measures to prevent violation of
commercial secrets.
Yes
The Company requires all suppliers to sign commitments to RBA (Responsible Business Alliance),
which binds them to local regulations on workers’, environment, safety, health, management, and
moral conducts, and prevents them against corruptive and unethical behaviors.
No deviations were
found
Yes
The Company has appointed its Human Resources, Administrative management and Legal Affairs
Office as the competent unit in charge of the Company’s ethical matters. Together, these units set the
guidelines and policies, which are monitored by the auditors and reports to the Board of Directors on
a yearly basis. To prevent potential conflicts of interest, the Company has established the “Ethical
Corporate Management Best Practice Principles” and “Business Integrity Procedures and Behaviors”
in 2014 and 2015 respectively. In addition, the Company has also designed relevant course for its
online e-Learning, including legal affairs related training on information security, personal
information protection act, relevant company policies and employees’ code of conduct so as to
56
No deviations were
found
Assessment criteria
Yes No
Summary description
Actual governance
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
familiarize all employees with the aforementioned guidelines and thereby facilitate the promotion of
honest management.
Status of Operation and Implementation in 2017:
A total of 661 suppliers (95.66%) engaged in business transactions with the Company signed the
EICC commitment or completed the EICC questionnaire. In addition, A total of 2,319 employees
completed a total of 10,280 integrity management related trainings, including:
‧Orientation training for new employees and group activities, covering topics such as:
Company policies, corporate culture, human resource system, ethical corporate management best
practice principles, trade secrets, information security, Personal Information Protection Act, and so
forth
‧Management for the prevention of insider trading (for senior managers)
‧Training on advertising and fair trade guidelines
‧Introduction to intellectual property rights, understanding information security, and Personal
Information Protection Act, and case studies
The Company has established the “Ethical Corporate Management Best Practice Principles” and
“Business Integrity Procedures and Behaviors” (hereinafter, “Procedures and Behaviors”); a
No deviations were
found
Company director, officer or other stakeholder attending, or present at a board meeting, or a juristic
representative whose presence infers a likelihood that company interests might be prejudiced, may not
participate in a discussion or vote on that proposal, shall recuse themselves from any discussion and
voting, and may not exercise voting rights as proxy on behalf of another director. The directors shall
exercise discipline among themselves, and may not support each other in any inappropriate manner.
If, in the course of conducting company business, an employee of this Corporation discovers that a
potential conflict of interest exists involving themselves or the juristic person that they represent, or
that they or their spouse, parents, children, or a person with whom they have a relationship of interest
57
3.
Yes
Does the company have any
policy that prevents conflict
of interest, and channels that
facilitate the report of
conflicting interests?
Assessment criteria
Yes No
Summary description
Actual governance
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
is likely to obtain improper benefit, the matter shall be reported to their immediate supervisor and the
responsible unit, and the supervisor shall provide the employee with the proper instructions.
No employee of this Corporation may use company resources for commercial activities other than
those of this Corporation, nor may his or her job performance be affected by involvement in
commercial activities other than those of this Corporation.
The Company’s HR policy and employee code of conduct have introduced rules to identify, supervise
and manage conflicts of interest for business activities that are more highly prone to dishonest
behaviors. There are channels in place for directors, supervisors, managers, stakeholders, and board
meeting participants to state their conflicting interests with the Company.
To prevent leakage of material non-public information, the Company has established “CO10 Insider
Trading Prevention Management” as part of its internal control and demanded strict compliance from
directors, supervisors, managers, employees, and any party that gains knowledge to the Company’s
material non-public information whether because of their identity, job responsibility or controlling
relationships.
4.
5.
Has the company
implemented effective
accounting and internal
control systems for the
purpose of maintaining
business integrity? Are these
systems reviewed by
internal or external auditors
on a regular basis?
Does the company organize
internal or external training
on a regular basis to
Yes
The Company has set “Ethical Corporate Management Best Practice Principles” and focuses on
creating an effective accounting system and internal control system to avoid high-risk or unethical
business activities and the use of external or secret accounts. Self-evaluation is done on a regular basis
to make sure the design and execution of the system is effective.
The Company’s internal audit unit oversees compliance of the system every year and prepares routine
audit reports for the Board of Directors.
No deviations were
found
Yes
The Company organizes training courses in accordance with “Regulations Governing Establishment
of Internal Control Systems by Public Companies” and the board-approved “Insider Trading
No deviations were
found
58
Assessment criteria
Yes No
Summary description
Actual governance
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
maintain business integrity?
Prevention Principles.” Insider training prevention courses are organized for vice president-grade
employees and above, while general employees are subjected to training on ethical behaviors on a
yearly basis.
III.
1.
2.
3.
Implementation of
whistleblowing system
Does the company provide
incentives and means for
employees to report
malpractices? Does the
company assign dedicated
personnel to investigate the
reported malpractices?
Has the company
implemented any standard
procedures or
confidentiality measures for
handling reported
malpractices?
Does the company assure
malpractice reporters that
they will not be mistreated
for making such reports?
IV Enhanced information
Yes
The Company has mailboxes in place to receive malpractice reports from within or outside the
Company. Once a report has been sent to the mailbox, it will be referred to the appropriate department
and personnel depending on the nature of the underlying issue. The identity of the informer and
details of the report will be kept confidential, and may involve internal auditors if the situation
No deviations were
found
requires it.
Yes
The Company has specifically instructed case handlers to strictly follow procedures when building,
assigning and investigating cases, and to exercise discretion during the investigation process.
No deviations were
found
Yes
The Company has confidentiality procedures built into its management policies and employee code of
conduct to protect informers and investigators from improper treatments or retaliation.
No deviations were
found
disclosure
Has the company disclosed
its integrity principles and
progress onto its website
and MOPS?
If the company has established business integrity policies in accordance with “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-Listed
The Company has disclosed corporate governance and business integrity matters and updated the
progress of such efforts in its annual reports, CSR reports and “Investor Relations-corporate
governance” and “CSR” sections of its website.
Yes
No deviations were
found
1.
V
59
Assessment criteria
Yes No
Summary description
Actual governance
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
Companies,” please describe its current practices and any deviations from the Best Practice Principles:
The Company’s “Business Integrity Principles” and “Business Integrity Procedures and Behaviors” have been passed by the Board of Directors and disclosed at the
Company’s website and MOPS. A specialized unit will be empowered to enforce these policies and ensure employees’ compliance.
VI. Other information relevant to understanding the company’s business integrity (e.g. reviews over business integrity principles):
Courses have been introduced to the e-Learning system so that employees are made aware of the Company’s “Business Integrity Principles” and “Business Integrity
Procedures and Behaviors.”
60
3.3.7 Corporate Governance Guidelines and Regulations
Please refer to the Company’s website→ Investor Relations → Corporate Governance → Major Internal
Policies http://www.compal.com/investor-relations/corporate-governance/#major-internal
‧Framework of Corporate Governance
‧Articles of Incorporation
‧Rules of Procedure for Shareholders’ Meetings
‧Regulations for Election of Directors
‧Procedures for Acquisition or Disposal of Assets
‧Procedures for Financial Derivatives Transactions
‧Procedures for Lending Funds to Other Parties
‧Procedures for Endorsement and Guarantee
‧Board of Directors Meeting Guidelines
‧The Responsibilities and Rules for Independent Directors
‧Audit Committee Procedures
‧Remuneration Committee Procedures
‧CSR Committee Procedure
‧Corporate Governance Best-Practice Procedures
‧Code of Conduct for Directors and Managers
‧Code of Conduct for Employees
‧Ethical Corporate Management Best Practice Principles
‧Business Integrity Procedures and Behaviors
‧Insider Trading Prevention Procedures
‧Corporate Social Responsibility Best Practice Principles
‧Rules Governing Financial and Business Matters Between this Corporation and its Affiliated Enterprises
‧Procedures of Application to Suspend and Resume Trading
3.3.8 Other Important Information Regarding Corporate Governance
Please refer to the Company’s website→ CSR http://www.compal.com/CSR/
‧Sustainable Management
‧Employee Relationship
‧Charity
‧Environment
‧Supply Chain Management
‧Stakeholders
‧Download CSR Report
Please refer to the Company’s website→ Stakeholder Communication
http://www.compal.com/stakeholder-communication-area/
Employee Relations
Customer Relations
Supplier Relations
Investor Relations
Other Affiliates
61
3.3.9 Internal Control Systems
Compal Electronics, Inc.
Statement of the Internal Control System
Date: March 19 2018
Based on the findings of a self-assessment, the Company states the following with regard to its internal control system
for the year of 2017:
1. The Company is fully aware that the establishment, operation, and maintenance of an internal control system is
the responsibility of the Board of Directors and management. The Company has established such a system. It is
aimed at providing reasonable assurance regarding the achievement of objectives in the effectiveness and
efficiency of operations (including profitability, performance, and the safeguard of assets); Reliability, timeliness,
transparency, and regulatory compliance of reporting, and compliance with all the applicable laws and
regulations.
2. An internal control system has inherent limitations. No matter how perfectly designed, it can only provide some
reasonable assurance of the accomplishment of the three objectives mentioned above. Moreover, the effectiveness
of an internal control system may be subject to changes of environment or circumstances. Nevertheless, the
internal control system of the Company contains self-monitoring mechanisms, and corrective action is taken
whenever a deficiency is identified.
3. The Company evaluates the design and operating effectiveness of its internal control system based on the criteria
provided in the “Regulations Governing the Establishment of Internal Control System by Public Companies”
(herein below, the “Regulations”). The criteria adopted by the Regulations identify five components of internal
control based on the process of management control: (1) control environment, (2) risk assessment, (3) control
activities, (4) information and communication, and (5) monitoring. Each component further contains several
items. Please refer to the Regulations for details.
4. The Company has evaluated the design and operating effectiveness of its internal control system according to the
aforementioned criteria.
5. Based on the findings of the evaluation mentioned in the preceding paragraph, the Company believes that, on
December 31 2017, its internal control system (including the supervision and management of subsidiaries), as
well as internal controls to monitor the effectiveness of its own objectives concerning operational effectiveness
and efficiency, reliability, timeliness, transparency, and regulatory compliance in reporting, and compliance with
applicable laws and regulations, were effective in design and operation, and provided reasonable assurance that
the above-stated objectives would be achieved.
6. This Statement will be an integral part of the Company’s Annual Report and Prospectus, and will be made public.
Any falsehood, concealment, or other illegality of content made public will entail legal liability under Articles 20,
32, 171, and 174 of the Securities and Exchange Law.
7. This Statement has been passed by the Board of Directors at a meeting held on March 19, 2018, with 0 of the 14
attending directors expressing dissenting opinions; the remainder all affirmed the content of this Statement.
Compal Electronics, Inc.
Chairman:
President:
62
3.3.10 Penalties imposed against the company and its staff, or penalties imposed by the company
against its staff for violations of internal control or regulations; state any corrective actions
taken in the most recent years up till the date of the annual report: None.
3.3.11 Major Resolutions Made in Shareholders’ Meeting and Board Meetings
1. Shareholders’ meeting
▓Time: 9 AM, June 22, 2017 (Thursday)
Venue: B1, 581 Ruiguang Road, Neihu District, Taipei City
▓Major Resolutions:
(1) Ratified the Operation Report and Financial Statement for 2016.
(2) Ratified the Distribution of Earnings for the year 2016.
(3) Passed the motion to distribute capital reserves in cash.
(4) Passed the motion to partially amend “Procedures of Application to Suspend and Resume Trading”.
(5) Passed the motion to remove restrictions imposed against Directors to be involved in competing
business.
▓Post-meeting Execution:
(1) The 2016 distribution of cash dividends and capital reserves are summarized as follows:
‧The adjustment of the dividend ratio and the ratio of cash distributed from capital reserves
results from the cancellation of new restricted employee shares because the criteria were not met
by the intended employees and the impact on outstanding shares is as follows:
‧Cash Dividends: Initial NTD 1 per share, adjusted to NTD 1.00006377 per share.
‧Cash Distributed from Capital Reserve: Initial NTD 0.2 per share, adjusted to NTD 0.20001275
per share.
‧Ex-dividend Date: August 2, 2017.
‧Declaration Date: August 23, 2017.
63
2. Board meetings
Date
Major resolutions
12th term
10th meeting
106.2.8
12th term
11th meeting
106.3.28
12th term
12th meeting
106.5.10
12th Term
13th Meeting
7.10.2017
12th Term
14th Meeting
2017.8.10
1. Approved the promotion of managers.
2. Approved the cancellation of restricted employee warrant shares where conditions had not been
met by the intended employee.
3. Approved the settlement of CPT shares between the Company along with subdiairies Zhaopal
Investment Co., Ltd., Yongpal Investment Co., Ltd., and Kaipal Investment Co., Ltd with Tatung
Company Per arbitration No. 103814 issued in 2014.
4. Approved the cap of short-term loans from financial institutions.
5. Approved of the Company’s financing authorization from financial institute.
1. Approved the 2016 employee and director compensation.
2. Approved the distribution of the first 2017 mid-year bonus (Dragon Boat Festival).
3. Approved the 2017 salary adjustment.
4. Approved the 2016 consolidated and individual financial statements.
5. Approved 2016 Statement of Internal Control System.
6. Approved the call of 2017 shareholders’ meeting.
7. Approved the 2017 CSR goal.
8. Approved the evaluation of the independence and suitability of the Company CPA.
9. Approved the submission of application for the business license for “CF01011 Medical Materials
and Equipment Manufacturing” to the competent authority.
10. Approved the investment in Leshi Zhixin Electronic Technology (Tianjin) Limited. through
Compal Information Technology (Kunshan) Co., Ltd. (100% owned by the Company).
11. Approved the amendment of Corporate Governance Best-Practice Principles.
12. Approved the change of endorsement and guarantee seal custodian.
13. Approved the financing of the re-investment company through the issue of a Company Letter of
Support.
14. Approved of the Company’s financing authorization from financial institute.
1. Approved the appointment of the manager.
2. Approved the 2016 operation report.
3. Approved the 2017 operation plan.
4. Approved the 2016 distribution of earnings.
5. Approved capital surplus to shareholders.
6. Approved the amendments to “Guidelines for Handling Acquisition and Disposal of Assets”.
7. Resolved to remove non-competition for directors and managers.
8. Approved the 2017 appropriation of director and employee compensation ratio.
9. Approved the cancellation of restricted employee warrant shares where conditions had not been
met by the intended employee.
10. Approved the issuance of Corporate Guarantee by the Company to extend factory lease
fulfillment guarantee for Compal Europe (Poland) Sp.z o.o. (100% owned subsidiary in Europe.
1. Approved the distribution of cash dividends and capital surplus for 2016.
2. Approved the financing of the re-investment company through the issue of a Company Letter of
Support.
3. Approved of the Company’s financing authorization from the financial institute.
1. Approved the distribution of Director compensation for 2016.
2. Approved the adjustment of compensation for Independent Directors.
3. Approved the distribution of the second 2017 mid-year bonus.
4. Approved the cancellation of restricted employee warrant shares where conditions had not been
met by the intended employee.
5. Approved the appointment of a Manager responsible for the supervision and control of derivative
product trading risks.
6. Approved the loan to UNICOM GLOBAL INC.
7. Approved the financing of the re-investment company through the issue of a Company Letter of
64
Date
Support.
Major resolutions
8. Approved of the Company’s financing authorization from the financial institute.
1. Approved the distribution of the 2016 employee bonus.
2. Approved the distribution of the 2017 year-end bonus.
3. Approved the cancellation of restricted employee warrant shares where conditions had not been
met by the intended employee.
4. Approved the proposal to partially amend the “Rules and Procedures of Board of Directors
Meetings”.
5. Approved the proposal to partially amend the “Audit Committee Procedures”.
6. Approved the proposal to partially amend “The Responsibilities and Rules for Independent
Directors”.
7. Approved the loan to Henghao Technology Co., Ltd.
8. Approved the “2018 Audit Plan”.
9. Approved the financing of the re-investment company through the issue of a Company Letter of
Support.
12th Term
15th Meeting
2017.11.9
10. Approved of the Company’s financing authorization from the financial institute.
1. Approved the promotion of Managers.
2. Approved the cancellation of restricted employee warrant shares where conditions had not been
met by the intended employee.
12th Term
16th Meeting
3.6.2018
3. Approved the CSR Committee Procedure.
4. Approved the change in the Head of the Company’s CSR Committee.
5. Approved the Company’s CSR Promotion Plan for 2018.
6. Approved the financing of the re-investment company through the issue of a Company Letter of
12th Term
17th Meeting
3.19.2018
12th Term
18th Meeting
5.9.2018
Support.
7. Approved of the Company’s financing authorization from the financial institute.
1. Approved the 2017 employee and Director compensation.
2. Approved the 2017 Consolidated and Individual Financial Statements.
3. Approved 2017 Statement of Internal Control System.
4. Approved the evaluation of the independence and suitability of the Company CPA.
5. Approved the call of 2018 Shareholders’ Meeting.
6. Approved of the Company’s financing authorization from the financial institute.
7. Approved the election of the 13th Term Directors.
1. Approved the appointment of the Manager.
2. Approved the change of the Company CPA.
3. Approved the evaluation of the independence and suitability of the Company CPA.
4. Approved the 2017 Operation Report.
5. Approved the 2018 Operation Plan.
6. Approved the 2017 Distribution of Earnings.
7. Approved the distribution of capital surplus to Shareholders.
8. Approved the review of eligibility for the 13th Term Director and Independent Director nominees.
9. Resolved to remove non-competition for Managers.
10. Resolved to remove non-competition for the 13th Term Director and Independent Director
eligible nominees.
11. Approved the distribution of the first 2018 mid-year bonus.
12. Approved the 2018 salary adjustment.
13. Approved the 2018 appropriation of Director and employee compensation ratio.
14. Approved the cancellation of restricted employee warrant shares where conditions had not been
met by the intended employee.
15. Approved of the Company’s financing authorization from the financial institute.
65
3.3.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting
to Important Resolutions Passed by the Board of Directors: None.
3.3.13 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO,
and Heads of Accounting, Finance, Internal Audit and R&D: None.
66
3.4
Information Regarding the Company’s Audit Fee and Independence
3.4.1 Audit Fee
Accounting Firm
Name of CPA
Period Covered by CPA’s Audit
Remarks
KPMG
Kuo, Kuan-Ying
Au, Yiu Kwan
2017.01.01~2017.12.31
Fee Range
1 Under NT$ 2,000,000
2 NT$2,000,000 ~ NT$4,000,000
3 NT$4,000,000 ~ NT$6,000,000
4 NT$6,000,000 ~ NT$8,000,000
5 NT$8,000,000 ~ NT$10,000,000
6 Over NT$100,000,000
Fee Items
Audit Fee
Non-audit Fee
-
-
-
-
-
10,420
-
-
4,588
-
-
-
Unit: NT$ thousands
Total
-
-
4,588
-
-
10,420
(1) Non-audit fees paid to CPA, accounting firm and affiliated companies thereof that amount to
more than 1/4 of audit fees:
Unit: NT$ thousands
Firm
Name of
CPA
Audit
Fee
Non-audit Fee
Period Covered by
System
Design
Company
Registration
Human
Resource
Others Subtotal
CPA’s Audit
Remarks
KPMG
Kuo,
Kuan-Ying
Au,
Yiu-Kwan
10,420
-
340
-
4,248 4,588 2017.01.01~2017.12.31
Note: Other non-audit fees: Transfer pricing report of $565,000, tax consultation of $3,573,000, and others of
$110,000.
(2) Changes in the accounting firm that result in lesser audit fees paid in comparison to the previous
year: None
(3) Reduction of audit fees by more than 15% compared to the previous year: None
67
3.4.2 Replacement of CPA
(1) About the former CPA
Date of replacement
Approved by the Board of Directors on May 11, 2016
Reason and explanation for
replacement
Due to adjustments in work and duties at KPMG in 2016, the CPAs were changed
from Kuo, Kuan-Ying and Lo, Jui-Lan to Kuo, Kuan-Ying and Au, Yiu-Kwan.
Party involved
Situation
Voluntarily terminated
the commission
Will no longer accept
(continue) the
commission
CPA
Commissioner
Not applicable
Not applicable
Not applicable
Not applicable
State whether the commissioner
or the CPA terminated the
service or declined the
commission
Other audit report opinions and
causes issued within the last
two years other than unqualified
opinion
Did he/she have opinions that
differed from that of the
publisher?
Yes
N/A
Description
Other items of disclosure
(Contents that should be
disclosed as covered in Clauses
1.4~1.7, Section 6, Article 10 of
this guideline)
N/A
Accounting principles or practices
Disclosure of financial report
Scope or step of auditing
Other
V
N/A
Date of replacement
Approved by the Board of Directors on May 9, 2018
Reason and explanation for
replacement
State whether the commissioner
or the CPA terminated the
service or declined the
commission
Other audit report opinions and
causes issued within the last
two years other than unqualified
opinion
Due to adjustments in work and duties at KPMG, the CPAs were changed from
Kuo, Kuan-Ying and Au, Yiu-Kwan to Chien, Szu Chuan and Au, Yiu-Kwan
starting from 1Q 2018.
Party involved
Situation
Voluntarily terminated
the commission
Will no longer accept
(continue) the
commission
CPA
Commissioner
Not applicable
Not applicable
Not applicable
Not applicable
N/A
68
Accounting principles or practices
Disclosure of financial report
Scope or step of auditing
Other
V
N/A
Did he/she have opinions that
differed from that of the
publisher?
Yes
N/A
Description
Other items of disclosure
(Contents that should be
disclosed as covered in Clauses
1.4~1.7, Section 6, Article 10 of
this guideline)
(II) About the succeeding CPA
Name of accounting firm
KPMG
Name of CPA
Date commissioned
Items of consultation and
results on the accounting
methods for specific
transactions, accounting
principles and potential
opinions for financial report
prior to commissioning
Written opinion from
succeeding CPA on items of
disagreement with the former
CPA
Kuo, Kuan-Ying, Au, Yiu-Kwan
Approved by the Board of Directors on May 11, 2016
N/A
N/A
Name of accounting firm
KPMG
Name of CPA
Date commissioned
Chien, Szu Chuan, Au, Yiu-Kwan
Approved by the Board of Directors on May 9, 2018
N/A
Items of consultation and
results on the accounting
methods for specific
transactions, accounting
principles and potential
opinions for financial report
prior to commissioning
Written opinion from
succeeding CPA on items of
disagreement with the former
CPA
(3) Response from the former CPA on Clauses 1 and Clause 2.3, Section 6, Article 10 of this guideline:
N/A
None.
3.4.3 If the chairman, president, and financial or accounting manager of the Company had worked
for the accounting firm or related parties thereof in the most recent year, the name, title, and
the term of service with the accounting firm or the related party must be disclosed: None.
69
3.5 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders
Title
Name
2017
Up till April 24, 2018
Shares held
Increase
(Decrease)
Shares pledged
Increase (Decrease)
Shares held
Increase (Decrease)
Shares pledged
Increase
(Decrease)
Unit: shares
Chairman Rock Hsu
(8,800,000)
Director and
President
Jui-Tsung Chen
(15,230,000)
0
0
0
0
0
0
(5,200,000)
(1,161,000)
1,020,000
0
1,020,000
0
0
0
0
420,000
42,000
Director Wen-Being Hsu
Yung-Ching Chang
Chao-Cheng Chen
Director
Duei Tsai
Chiung-Chi Hsu
Min-Chih Hsuan
Chung-Pin Wong
Kinpo Electronics
, Inc.
Representative:
Shyh-Yong Shen
Chang Chi Ko
Director
Sheng Chieh Hsu
Director
Yung-Chia Chou
Director
Director Wen-Chung Shen
Director
Director and
Executive
Vice President
Director
Director and
Executive
Vice President
Independent
Director
Independent
Director
Independent
Director
Executive
Vice President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Kuo-Chuan Chen
Chen Chang Hsu
Sheng-Hua Peng
Duh Kung Tsai
Pei-Yuan Chen
Chun-De Shen
Chiu-Rui Wei
Wen-Da Hsu
Ying Chang
Ming-Chih Chang
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(207,000)
765,000
0
765,000
0
0
0
0
315,000
240,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
750,000
0
1,210,000
200,000
420,000
0
420,000
320,000
70
0
0
0
0
0
150,000
315,000
0
315,000
240,000
0
0
0
0
0
Title
Name
2017
Up till April 24, 2018
Shares held
Increase
(Decrease)
Shares pledged
Increase (Decrease)
Shares held
Increase (Decrease)
Shares pledged
Increase
(Decrease)
Wei-Cheng Chen
240,000
Senior Vice
President
Senior Vice
President
Senior Vice
President
Hsi-Kuan Chen
Chih-Wei Wen
Vice President Chih-Chuan Cheng
Vice President
and Head of
Finance
Gary Lu
Vice President Shih-Tung Wang
Vice President Bo-Hsiung Chang
Vice President Bo-Tang Wang
Vice President Zong-Ming Wang
Vice President Fu-Chuan Chang
Vice President Chi-Hsiang Ma
Vice President Yung-Nan Chang
Vice President Sheng-Hung Li
Vice President Yung-He Su
Vice President Chih-Hsien Liang
Vice President Ming-Dong Wong
Vice President Yue-Chun Li
Vice President Chiao-Lieh Huang
Vice President Chung-Hsing Tan
Vice President Yi-Yun Chang
Vice President Hsin-Kung Mao
Vice President Hsin-Hsiung Huang
Vice President Shih-Hung Huang
Vice President Yi-Chiang Chiu
Vice President Ching-Fa Li
Vice President Bo-Heng Chen
Vice President Jui-Chun Hsu
Vice President Shih-An Li
Vice President Ta-Chun Wang
Vice President Fei-Lung Chen
Vice President Jen-Liang Lin
Chief Legal
Officer
Head of
Auditing
Advisor
Peng-Hong Chan
Bo-Wen Hsieh
Tian-Yuan Tsai
0
0
240,000
120,000
0
0
150,000
140,000
(10,000)
0
0
240,000
200,000
0
320,000
240,000
5,000
0
10,000
240,000
160,000
160,000
160,000
160,000
160,000
0
0
0
0
-
-
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-
-
0
180,000
0
0
180,000
65,000
0
0
180,000
150,000
(4,000)
0
180,000
180,000
180,000
120,000
240,000
180,000
120,000
170,000
180,000
180,000
120,000
120,000
120,000
0
120,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Vice President Ming-Hsiang Kan
Vice President Lung-Hua Shen
Vice President Ling-Sheng Wu
Vice President Chi-Hsiang Ma
Note: Senior Advisors Wen-Chung Shen, Yung-Ching Chang and Advisor Tian-Yuan Tsai retired in 2017; Vice
President Ming-Hsiang Kan retired in 2017. Vice Presidents Liang-Jen Lin and Peng-Hong Chan were promoted and
took office respectively in 2018, while Vice Presidents Lung-Hua Shen, Ling-Sheng Wu and Chi-Hsiang Ma resigned
in 2018.
(5,000)
0
-
-
-
0
0
0
0
0
0
0
240,000
(65,000)
0
-
-
-
0
0
71
3.5.1 Shares Trading with Related Parties:
Name
Reason
for
transfer
Transaction
date
Counterparty
Counterparty's relationship with
the Company, Directors,
Supervisors, and shareholders
with more than 10% ownership
interest
Shares
Transaction
price
Jui-Tsung Chen
Wen-Chung Shen
Kuo-Chuan Chen
Gary Lu
Gary Lu
Gift
Gift
Gift
Gift
Gift
2017.03.24
Hsin-Chong
Chen
Farther and Son
10,230,000
19.15
2017.07.06
Su-Wen Teng
Husband and Wife
5,200,000
-
2017.06.16 Chao-Chuan Chen
Farther and Son
2017.11.28
2018.03.30
Shao-Hsuan Lu
Father and Daugher
Shao-Hsuan Lu
Father and Daugher
107,000
120,000
115,000
20.55
20.45
19.95
3.5.2 Shares Pledge with Related Parties: None
3.6 Relationship among the Top Ten Shareholders
April 24, 2018
Name
Self
Shares held
Shareholdings of spouse and
underage children
Total shares held in the
names of others
Shares held
Unit: Shares
Spouse, relative of
second degree or closer,
and relationships among
top 10 shareholders
Name Relationship
Shares
Shareholding
Percentage
Shares
Shareholding
Percentage
-
0
0% N/A
N/A
Shares
188,272,000
Bank of Taiwan in
custody for Silchester
International Investors
International Value
Equity Trust
Investment Account
Kinpo Electronics Inc. 151,628,692
Shareholding
Percentage
4.26%
3.43%
-
-
-
Representative: Rock
Hsu
Bank of Taiwan in
custody for Silchester
International Investors
International Value
Equity Group Trust
Investment Account
Standard Chartered in
custody for Vanguard
Stock Index Fund
Standard Chartered in
custody for Fidelity
Puritan Fund: Fidelity
Low-Priced Stock
Fund
Yung-Kun Hsieh
Citi (Taiwan)
Commercial Bank in
custody for
Dimensional
8,975,401
0.20% 17,107,025
0.39%
102,199,000
2.31%
71,028,410
1.61%
68,000,000
1.54%
66,516,000
64,250,333
1.51%
1.45%
-
-
-
-
-
-
-
-
72
0
0
0
0
0
0% N/A
0%
N/A
0% N/A
N/A
0% N/A
N/A
0% N/A
N/A
(Note)
0
0% N/A
N/A
Name
Self
Shares held
Shareholdings of spouse and
underage children
Total shares held in the
names of others
Shares held
Shares
Shareholding
Percentage
Shares
Shareholding
Percentage
Shares
Shareholding
Percentage
Spouse, relative of
second degree or closer,
and relationships among
top 10 shareholders
Name Relationship
Emerging Markets
Value Fund
FuBon Insurance
64,200,991
1.45%
-
-
0
0% N/A
N/A
0
0
0%
64,089,697
Representative:
Ming-Hsing Tsai
Citi (Taiwan)
Commercial Bank in
custody for Norges
Bank
Note: The Company has sent the request to Yung-Kun Hsieh for the relevant infoamtion, but did not receive the reply
until the annual report was published.
0% N/A
1.45%
N/A
0%
0%
0
0
-
-
3.7 Ownership of Shares in Affiliated Enterprises
December 31, 2017
Investees (Note)
Invested by the Company
Held by directors,
supervisors, managers, and
directly/indirectly
controlled entities
Unit: Shares; %
Aggregate investment
Shares
Shareholding
percentage
Shares
Shareholding
percentage
Shares
Shareholding
percentage
Panpal Technology Corp.
500,000,000
100.00
Gempal Technology Corp.
90,000,000
100.00
Hong Ji Capital Co., Ltd.
100,000,000
100.00
Hong Jin Investment Co., Ltd.
29,500,000
100.00
Zhaopal Investment Co., Ltd.
135,800,000
100.00
Yongpal Investment Co., Ltd.
118,850,000
100.00
Kaipal Investment Co., Ltd.
51,050,000
100.00
Rayonnant Technology Co., Ltd.
29,500,000
100.00
RiPAL Optotronics Co., Ltd.
6,000,000
100.00
Unicom Global Inc.
10,000,000
100.00
Huang Feng Communication
Co., Ltd.
10,000,000
100.00
Henghao Technology Co., Ltd.
131,498,746
100.00
-
-
-
-
-
-
-
-
-
-
-
-
- 500,000,000
-
90,000,000
- 100,000,000
-
29,500,000
- 135,800,000
- 118,850,000
51,050,000
29,500,000
6,000,000
10,000,000
-
-
-
-
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
10,000,000
100.00
- 131,498,746
100.00
Compal Broadband Networks
Inc.,
29,060,176
48.15 14,172,854
23.48 43,233,030
71.63
Crownpo Technology Co., Ltd.
3,738,668
33.23 6,185,465
54.97
9,924,133
88.20
Kinpo Group Management
Consultant Company
300,000
37.50
300,000
37.50
600,000
75.00
Mactech Co., Ltd.
21,756,192
52.88
274,954
0.67
22,031,146
53.55
73
Investees (Note)
Invested by the Company
Held by directors,
supervisors, managers, and
directly/indirectly
controlled entities
Aggregate investment
Shares
Shareholding
percentage
Shares
Shareholding
percentage
Shares
Shareholding
percentage
General life Biotechnology Co.,
Ltd.
Li Hong Optoelectronic Co.,
Ltd.
15,000,000
50.00
2,772,000
42.00
Infinno Technology Corporation
5,649,625
27.20
-
-
-
-
15,000,000
50.00
- 2,772,000
42.00
-
5,649,625
Accesstek Inc.
899,160
27.78
319,707
9.88
1,218,867
Allied Circuit Co., Ltd.
10,157,730
20.42 7,317,295
14.71 17,475,025
Arcadyan Technology Corp.,
41,304,504
21.84 27,156,180
14.36 68,460,684
Maxima Ventures I, Inc.
126,000
22.55
3,000
0.54
129,000
Avalue Technology Inc.
15,240,070
21.99
672,000
0.97
15,912,070
Core Profit Holdings Ltd.
147,000,000
100.00
Flight Global Holding Inc.
89,755,495
100.00
Just International Ltd.
48,010,000
100.00
High Shine Industrial Corp.
42,700,000
100.00
Compal International Holding
Co., Ltd.
Big Chance International Co.,
Ltd.
Compal Rayonnant Holdings
Limited
Auscom Engineering Inc.
Compal Europe (Poland) Sp. z
o.o.
Bizcom Electronics, Inc.
Compal Electronics (Holding)
Ltd.
53,001,000
100.00
90,820,000
100.00
12,500,000
100.00
3,000,000
100.00
136,080
100.00
100,000
100.00
1,000
100.00
Compalead Electronics B.V.
6,426,516
100.00
-
-
-
-
-
-
-
-
-
-
-
-
27.20
37.66
35.13
36.20
23.09
22.96
100.00
100.00
100.00
100.00
-
-
-
-
-
-
-
-
-
-
-
- 147,000,000
89,755,495
48,010,000
42,700,000
53,001,000
100.00
90,820,000
100.00
12,500,000
100.00
3,000,000
100.00
136,080
100.00
100,000
100.00
1,000
100.00
6,424,516
100.00
100.00
Etrade Management Co., Ltd.
46,900,000
75.77 15,000,000
24.23
61,900,000
Webtek Technology Co., Ltd.
100,000
100.00
Forever Young Technology Inc.
50,000
100.00
-
-
-
-
100,000
100.00
50,000
100.00
Lipo Holding Co., Ltd.
98,000
49.00
102,000
51.00
200,000
100.00
Ascendant Private Equity
Investment Ltd.
31,253,125
34.72 37,253,825
42.50 68,506,950
77.22
UniCore Biomedical Co., Ltd.
20,000,000
100.00
20,000,000
100.00
Note: Investments made by the Company using the Equity Method.
74
IV. Capital Overview
4.1 Capital and Shares
4.1.1 Source of Capital
Authorized capital
Paid-up capital
Year Month
Issuance
Price
Shares
Amount (NTD)
Shares
Amount (NTD)
Source of capital
2015
1
10
6,000,000,000 60,000,000,000
2015
2
10
6,000,000,000 60,000,000,000
4,423,236,625 44,232,366,250 Exercise of employee warrants totaling NTD
4,472,596,625 44,725,966,250 Issuance of employees’ restricted shares
20,266,000
NTD493,600,000
Cancellation of Restricted Employee Shares of
$4,000,000
2015
8
10
6,000,000,000 60,000,000,000 4,472,196,625 44,721,966,250
2015
9
10
6,000,000,000 60,000,000,000 4,471,126,625 44,711,266,250
2016
2016
2
5
10
10
6,000,000,000 60,000,000,000
6,000,000,000 60,000,000,000 4,470,636,625 44,706,366,250
2016
6
10
6,000,000,000 60,000,000,000
2016
8
10
6,000,000,000 60,000,000,000
2016
11
10
6,000,000,000 60,000,000,000
2017
2
10
6,000,000,000 60,000,000,000
$4,900,000
4,470,486,625 44,704,866,250 Cancellation of Restricted Employee Shares of
$1,500,000
4,426,670,625 44,266,706,250 Retirement of treasury stock $438,160,000
4,424,680,625 44,246,806,250 Cancellation of Restricted Employee Shares of
$19,900,000
4,424,510,625 44,245,106,250 Cancellation of Restricted Employee Shares of
$1,700,000
4,422,464,625 44,224,646,250 Cancellation of Restricted Employee Shares of
$20,460,000
2017
2017
5
8
2017
11
2018
3
10
10
10
10
6,000,000,000 60,000,000,000 4,422,152,625 44,221,526,250 Cancellation of Restricted Employee Shares of
$3,120,000
6,000,000,000 60,000,000,000 4,421,870,625 44,218,706,250 Cancellation of Restricted Employee Shares of
$2,820,000
6,000,000,000 60,000,000,000 4,420,280,625 44,202,806,250 Cancellation of Restricted Employee Shares of
$15,900,000
6,000,000,000 60,000,000,000 4,419,191,625 44,191,916,250 Cancellation of Restricted Employee Shares of
May 9, 2018
Remarks
Paid in
properties other
than cash
Others
N/A
N/A
N/A
Change of capital approved by the Ministry of Economic Affairs on
February 10, 2015
Change of capital approved by the Ministry of Economic Affairs on
March 23, 2015
Change of capital approved by the Ministry of Economic Affairs on
September 2, 2015
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
March 14, 2016
Change of capital approved by the Ministry of Economic Affairs on
June 2, 2016
Change of capital approved by the Ministry of Economic Affairs on
July 21, 2016
Change of capital approved by the Ministry of Economic Affairs on
August 29, 2016
Change of capital approved by the Ministry of Economic Affairs on
November 29, 2016
Change of capital approved by the Ministry of Economic Affairs on
February 24, 2017
Change of capital approved by the Ministry of Economic Affairs on
June 3, 2017
Change of capital approved by the Ministry of Economic Affairs on
August 29, 2017
Change of capital approved by the Ministry of Economic Affairs on
November 29, 2017
Change of capital approved by the Ministry of Economic Affairs on
Cancellation of Restricted Employee Shares of
N/A
Change of capital approved by the Ministry of Economic Affairs on
$10,700,000
December 11, 2015
Cancellation of Restricted Employee Shares of
N/A
Change of capital approved by the Ministry of Economic Affairs on
$10,890,000
March 21, 2018
75
Share
Type
Ordinary
shares
Outstanding shares (public listed)
Unissued shares
Total
Authorized capital
4,419,191,625 (Note)
1,580,808,375
6,000,000,000
Note: Unconcealed restricted employee shares (RSA) are 12,045,000 shares.
Approved to include 100,000,000 shares of employees shares and corporate bonds
with warrant in capital.
Remarks
■ Shelf registration system information: None
76
4.1.2 Status of Shareholders
Analysis
Government
Agencies
Financial
Institutions
Other
Institutions
Foreign
Institutions &
Natural Persons
Domestic
Natural
Persons
Treasury
stocks
Total
Number of
Shareholders
Shareholding
(shares)
Percentage
3
36
232
1,073
157,333
1
158,678
8
128,270,598
343,642,395
2,553,031,767 1,382,201,857 12,045,000
4,419,191,625
0.00%
2.90%
7.78%
57.77%
31.28%
0.27%
100.00%
April 24, 2018
4.1.3 Share Ownership Distribution
April 24, 2018
Range of Shareholding
(Unit: Shares)
Number of
Shareholders
Shareholding (Shares)
Percentage
1 ~ 999
1,000 ~ 5,000
5,001 ~ 10,000
10,001 ~ 15,000
15,001 ~ 20,000
20,001 ~ 30,000
30,001 ~ 40,000
40,001 ~ 50,000
50,001 ~ 100,000
100,001 ~ 200,000
200,001 ~ 400,000
400,001 ~ 600,000
600,001 ~ 800,000
800,001 ~ 1,000,000
1,000,001 and over
Total
47,644
73,841
18,290
6,490
3,305
3,068
1,453
895
1,715
826
436
158
96
62
399
158,678
9,267,681
166,330,884
132,791,010
78,255,823
59,509,247
75,934,903
51,078,215
40,998,878
121,481,074
115,738,024
122,303,380
77,664,185
65,914,027
55,373,899
3,246,550,395
4,419,191,625
0.21%
3.76%
3.00%
1.77%
1.35%
1.72%
1.16%
0.93%
2.75%
2.62%
2.77%
1.76%
1.49%
1.25%
73.46%
100.00%
4.1.4 List of Major Shareholders
Shares
Shareholder’s name
Bank of Taiwan in custody for Silchester International Investors International
Value Equity Trust Investment Account
Kinpo Electronics Inc.
Bank of Taiwan in custody for Silchester International Investors International
Value Equity Group Trust Investment Account
Standard Chartered in custody for Vanguard Stock Index Fund
Standard Chartered in custody for Fidelity Puritan Fund: Fidelity Low-Priced
Stock Fund
Bank of Taiwan in custody for Silchester International Investors International
Value Equity Taxable Trust Investment Account
Yung-Kun Hsieh
Citi (Taiwan) Commercial Bank in custody for Dimensional Emerging
Markets Value Fund
Fubon Insurance
Citi (Taiwan) Commercial Bank in custody for Norges Bank
April 24, 2018
Shares held
Percentage (%)
188,272,000
151,628,692
102,199,000
71,028,410
68,000,000
67,439,000
66,516,000
64,250,333
64,200,991
64,089,697
4.26%
3.43%
2.31%
1.61%
1.54%
1.53%
1.51%
1.45%
1.45%
1.45%
77
4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share
Measurement
Year
Per-share
market
price
Per-share
net worth
(Note)
Earnings
per share
High
Low
Average
Before dividend
After dividend
Before
adjustment
After
adjustment
Weighted average
outstanding shares
Earnings per share
Weighted average
outstanding shares
Earnings per share
Cash dividends
Per-share
dividend
Stock
dividends
From earnings
From capital
reserves
Cumulative unpaid
dividends
P/E ratio
Price to dividends ratio
Cash dividend yield
Analysis
of
investment
returns
2016
21.65
16.55
19.24
24.19
22.98
2017
22.90
18.45
20.50
23.32
22.12
Year-to-date
March 31, 2018
22.15
19.55
20.55
23.35
-
4,329,403,194
4,344,645,129
4,354,402,613
1.88
1.32
0.32
4,329,403,194
4,344,645,129
1.88
1.20
-
-
-
10.23
16.03
6.24%
1.32
1.20
-
-
-
15.53
17.08
5.85%
-
-
-
-
-
-
-
-
-
Note: The 2017 distribution of earning was resolved at the May 9, 2018 Board of Directors’ Meeting and will be
submitted to the 2018 shareholders’ meeting for final approval.
78
4.1.6 Dividend Policy and Implementation Status
(1) Dividend Policy
When the Company makes a profit during the year, 10% of annual net income after appropriating income tax
expense, offsetting any prior deficit, is to be set aside as legal reserve and a special reserve is set aside or reserved
in accordance with pertinent laws and regulations. The balance of earning available for distribution is composed
of the remainder of the said profit and the retained earning from previous years. The earnings appropriation,
distribution of dividends and bonuses shall be proposed by the Board of Directors and approved at a
Shareholder’s Meeting. The rest of the unappropriated earning shall be reserved.
The Company is in a growth period of its life cycle. And as such, for the consideration of future capital needs and
to meet cash flow needs of its shareholders, the Company’s distribution of cash dividend, after closing and has
distribution of earning, shall be no less than 10% of the total cash and stock dividends.
Although a dividend ratio has not been specified in the Company’s articles of incorporation, the Company shall
not appropriate less than 30% of its income after tax for dividends, after taking into account factors such as the
Company’s capital needs, the capital budget, long term financial plans, domestic and international competition
and the interests of the shareholders. The board of directors shall propose the distribution of earnings and submit
them to the shareholders’ meeting for approval.
(2) Proposed Distribution of Dividend
The proposed 2017 distribution of earning of shareholders’ dividend in the amount of NTD 4,407,146,625 will
be discussed at the 2018 shareholders’ meeting. The aforementioned amount is set to be distributed as an all cash
dividend of NTD 1 per share and incurred capital surplus generated from the excess of the issuance price over
the par value of the capital stock in the amount of NTD 881,429,325, or NTD 0.2 per share. The total cash
distribution amounts to NTD 5,288,575,950.
Should the Company decide to buy back/recover outstanding shares, transfer treasury stock to employees, reduce
share capital or in any other way alter the number of outstanding shares sometime later, the Board of Directors
shall be authorized to adjust the payment rate of cash dividends and cash capital surplus as deemed necessary at
its discretion.
(3) Impact to 2016 Business Performance and EPS resulting from Stock Dividend Distribution:
Not Applicable.
79
4.1.7 Employees’ and Directors’ Compensation
(1) Employees’ and directors’ compensation policies as stated in the Articles of Incorporation
When the Company makes a profit in a fiscal year, the Company’s pre-tax profits in such fiscal year, prior to the
deduction of compensation to employees and directors, shall be distributed to employees as compensation in the
amount of no less than two percent (2%) thereof and to director as compensation in an amount of no more than
two percent (2%) of such profits. In the event that the Company has accumulated losses, the Company shall
reserve an amount to offset the accumulated losses.
The compensation to employees as mentioned above may be distributed in the form of stock or cash and
employees entitled to receive said stock/cash may include the employees of the Company’s subordinate companies
pursuant to the Company Act.
(2) Basis for estimating employees’and directors’ compensation and stock dividends, and accounting treatments for
any discrepancies between the amounts estimated and the amounts paid.
Compensation to directors and employees, as denoted in the Articles of Incorporations, shall be estimated
based on income before tax prior to the subtraction of directors and employees compensation during the
current year and multiplied by the ratio as denoted in the Article of Incorporation (shall not be more than
2% or less than 2% of the remainder, respectively.)
If the compensation approved for distribution to employees is to be in the form of common shares, the
number of shares is determined by dividing the amount of the compensation by the closing price of the
shares on the day preceding the Board of Directors’ meeting.
If the actual amounts differ from the amounts estimated, the differences are recorded as gains/losses in the
subsequent year as a change in accounting estimate.
(3) 2017 employees compensation proposal passed by the board of directors
Accrued employees compensation is NTD $624,296,016 and directors compensation is NTD $33,012,128.
If the estimated distribution amount differs from the amounts estimated in accrued expense, the variance,
reason and resolution should be disclosed: No variance.
The proposed distribution of employee stock compensation, and the size of such an amount as a percentage
of the sum of the after-tax net income stated in the individual financial reports for the current period and
total employee compensation: Not applicable (no employee stock compensation).
(4) Actual distribution of 2016 employee and directors compensation:
The employee compensation is NTD $876,027,690 and the directors compensation is NTD $46,323,438.
The 2016 actual distribution of employee and directors compensation was approved at the 2016
shareholders’ meeting and remained as proposed by the board of directors.
4.1.8
Company Buyback of Own Shares: None
80
4.2
Bonds: None
4.3 Global Depository Receipts
Date of issue:
Details
November 9, 1999
May 21, 2001
Issuance and trading location
Total sum issued
Issuance price per unit
Number of units issued
Luxembourg
USD 122,160,000
USD 15.27
8,000,000 units
Source of represented
securities
Participating shareholder(s):
Kinpo Electronics, Inc.
Quantity of represented
securities
40,000,000 ordinary shares of Compal
Electronics
1. Voting rights:
Luxembourg
USD 174,816,000
USD 6.07
28,800,000 units
1. Participating shareholder(s):
44,000,000 shares contributed by
(1) Kinpo Electronics, Inc.
(2) Panpal Technology Corporation
(3) Gempal Technology Corporation
2. New cash issue of Compal shares:
1,000,000,000 shares
144,000,000 ordinary shares of Compal
Electronics
GDR holders’
rights and obligations
Trustee
Depository bank
Custodian
Unredeemed balance
Allocation of expenses
incurred at issuance and over
the duration
Key terms of the depository
and custodian agreements
Per
Unit
Market
Price
2017
Year-to-date
May 9, 2018
High
Low
Average
High
Low
Average
According to the terms of the depository agreement and the laws of the
Republic of China, the beneficiary certificate holder is entitled to the voting
rights of shares represented under the beneficiary certificate.
2. Rights to dividend distribution, share subscription and other rights:
Unless otherwise specified in the agreement, the GDR carries identical
rights as do ordinary shares
N/A
The Bank of New York
Mega International Commercial Bank Mega International Commercial Bank
7,733,638 units (May 9, 2018)
N/A
The Bank of New York
Borne by participating shareholder(s)
Allocated proportionally between the
Company and participating shareholders
See descriptions below
USD $3.775
USD $2.88
USD $3.589
USD $3.75
USD $3.22
USD $3.44
4.4
Employee Warrants: None
4.5
Subscription of New Shares by Employees and Restricted Shares: None
4.6
Status of New Shares Issuance in Connection with Mergers and Acquisitions: None
4.7
Financing Plans and Implementation: None
81
V. Operational Highlights
5.1
Business Activities
5.1.1 Business Scope
(1) Main areas of business operations
The development, designed, manufacture and sales of Notebook PCs, Ultrabook PCs, 2-in-1 PCs, AIO PCs,
Tablet PCs, Server, AE, Smart Home, LCD TVs, LCD Monitor, Public Display, Smart Phone and other Smart
Accessory and Wearable Devices.
(2)
Revenue distribution
Major Divisions
5C electronics
Other products
Total
(3) New products development
Unit: NTD thousands
(%) of Total Sales in 2017
99.7%
0.3%
100.0%
The development and design of IoT Vertical Solution, Electronic Medical Record (EMR), and hospital
management system, Point of Care solution, and smart Sport.
■ Notebook PCs
For notebook PC hardware, Compal has adopted the most efficient R&D methods in 2017 to launch the
latest (8th generation) Intel Core i3, i5 and i7 series processors and AMD central processors, with graphics
incorporated in single silicon chip in the development of the APU on top of launching a new generation of laptop
which is compatible with the Windows 10 operating system. Compal possesses special expertise in system
integration, R&D and manufacturing to assist customers in developing and mass-producing new products with
the latest specifications under relatively short time. Compal's price-competitive, slim-type notebooks were
launched a time when the market favored more affordable and portable devices, and for which it received positive
responses from consumers. The purchase signal in high-end gaming laptop market has been relatively stable,
making gaming laptops a new ground for brand name companies to vie for growth. These companies have
injected more investments in the gaming notebook market and launched the global market for gaming notebook
into intense competition. After years of operation as an OEM of gaming notebooks for our brand partners,
Compal has accumulated profound experience in design and development and in 2018, the Company shall
continue to keep up with the market trends by introducing high-end technical specifications, multi-dimensional
graphics chips and Intel’s 7th generation high-end H series central processor to launch a new brand of gaming
computer. Together with our clients, we shall secure our share in the gaming laptop market. Compal has also been
improving its ability to design customized models for customers across different countries and markets. A
significant amount of resources has been devoted to developing commercial notebooks, given how their demands
are resilience against economic downturns. Overall, Compal aims to attain industry-leading R&D capabilities in
both consumer and commercial markets.
■ Ultrabook PCs
Innovative technology and extensive R&D capabilities allow Compal to maintain a leading position in the
industry. Compal produces an ultra-thin notebook (Ultrabook), that uses the latest generation of the Intel
industry-leading 15 Watt standard voltage processor. Not only is it slim and light but it has the most excellent
82
performance and allows users to stay productive. More Windows 10 Ultrabooks equipped with standard voltage
processors are scheduled for launch in 2018. Apart from compatibility with Intel’s design specifications for its
latest generation products, we will also be introducing products of a slimmer design at a lower price to meet
market demand. The product will feature the stylish and elegant body that is typical of Compal products yet offer
powerful computing power that can rival high-performance PCs. Compal will also continue to develop newer and
more competitive technologies so that not only consumers around the world will get to enjoy Compal’s
innovations but also enables our customers to access this market more quickly.
■ 2-in-1 PCs
The 2-in-1 laptop is a novel product that borrows the concept of “Transformers” – in addition to having a
standard laptop keyboard for diverse functional operations, the product also features Tablet PC touch versatility.
With a touch-sensing display module coupled with Microsoft’s latest Windows 10 OS, the product is aimed at
attracting the consumer base for standard laptops and tablet PCs. Utilizing our rich R&D experience, Compal has
presented a number of innovative concepts to incorporate the Company’s exclusive technologies, materials and
fan-less design in 2-in-1 PCs of different designs and form factors, the Company is poised to create new market
demands and earn unanimous praises from customers and consumers alike.
■ AIO PCs
AIO has been on the market for years. It is an elegant combination of screen and computer with a thin,
special shape, and elegant design. The product has replaced the desktop in many households and corporations.
Compal has also enhanced the design to allow the AIO to lie flat and also be portable (Portable AIO). Since
Compal possess the fundamental technical capabilities required for notebook PCs featured in the AIOs, the
Company is therefore able to commence production in the shortest time possible. Our AIO product lines have
been very well received by clients.
■ Smart Home
Smart Home has been in development for many years and with the dawn of the IoT (Internet of Things) era,
the central control platform for smart home will no doubt become the focal point of competition for relevant
industries. Compal has ventured into the development of Home Gateway platform using our production and
design capacity for mobile computers and devices. We have also developed new products and business lines by
cultivating wireless technology and sensor network technologies, integrating background cloud computing
services and focusing on smart energy saving, smarter safety and smart home care. In the future, Compal will also
rely on its core capabilities to gradually expand its products width and depth in different domains of IoT in order
to locate corresponding niche markets to expand product coverage.
■ Server
Cloud application has been a growing market. A significant portion of data storage and computing analytics
have shifted to cloud servers in the back-end. In order to meet the demand from both Enterprises and Data
Centers, Compal has mastered the R&D of High-density computing power and precision performance
management, with the capacity to design and manufacture servers of higher C/P value.
■ Tablet PCs
Compal has long cultivated tablet PC technology for industrial, commercial and consumer users. We will
continue to develop a series of tablet PCs and LTE compatible products at affordable price points in order to
satisfy the needs of our clients while winning the support and recognition from consumers. We will also extend
our product lines to eBooks and deliver more competitive solutions to name brand clients.
■ LCD TVs
As consumers change their viewing habits, the interaction experience between users of Smart TVs (or smart
phones) is also redefined by seamless extension of the content on the devices, such as simplification of TV
network setup. This improves user convenience to meet new expectations from such devices as smart TVs.
83
■ LCD Monitor
Develope UHD products from 32-inch to 98-inch and have advanced to HDMI 2.0 specification and now
supports up to 4K2K 60Hz input signal and USB Type-C connectivity to achieve comprehensive connection
interface in order to accommodate the demand for professional graphics design and B2B market. Also intergrate
with smart plateform to develop 65-inch above interactive whiteboard.
■ Smartphone
Compal continues to strengthen the operational efficiency of R&D, develop core communications
technologies, and continue the development of innovative technologies to maintain an industry-leading position.
In the near future, we will continue to develop mid-end and high-end smart mobile devices that feature multi-core,
frameless, multi-camera image integration and special feature camera. We will also increase the speed for
TDD-LTE/ FDD-LTE carrier aggregation. Apart from continuing to strengthen the R&D competitiveness, we will
also invest in the 5G communication technology and actively developcost-effective, visually appealing products
to cope with the rapid growth and customer needs in emerging markets.
■ Smart Accessory+Wearable Devices
Compal began shipping its wearable devices in 2016 and with our design capacity for smart products and
capabilities for mass production, we have made significant progress in terms of shipping quantity for Android
Wear smart watches. Apart from continuing to develop even more compact and energy efficient smart watches in
the near future, we will also aggressively expand our production lines for other wearable products in the hopes of
achieving greater success in the future.
■ AE
Car PCs consists of in-car communication system (Telematics) and in-car AV entertainment system
(in-Vehicle-Infotainment). As
telematics systems are governed by special regulations on safety and
communication control, we have long been working with car manufacturers to ensure relevant processes were in
sync. Due to the similiarity in system framework between in-car AV entertainment and PCs, the field became a
natural starting point for Compal’s foray into the car PC market. After years of hard work in the field, Compal
products have been adopted by several major car manufacturers around the world.
■ IoT Vertical Solution
Vertical solutions have been one of the key demands in the development of IoT with an extensive range of
applications covering smart cities, Industry 4.0, smart buildings, smart retail and smart medical care. Such
solutions feature integrated software and hardware and are designed specifically to accommodate clients’ needs.
Demands from B2B customers not only account for a higher portion in the existing IoT market but also bring
Compal more immediate profit. Compal offers competitive products to address the primary needs of development
in many different fields not just as a hardware manufacturer, but also as a full Service Provider.
■ Smart Medical and Healthcare
The aging population, China’s new two-child policy, the flourishing health care industry, and the rise of
sports fashion, especially the popularity of convenience smart devices, have all contributed to smart healthcare
becoming a focus of attention. It has also become a major matter of cross industry cooperation. Compal has
responded to market demand and the rapid advent of the IoT era by actively foraying into the healthcare market
by reaching out to major hospitals and point of care (POC)s such as long-term care centers and post-partum care
centers through our strengths in integration and profound experience in product development. The designs, which
include science, technology, and humanity, help caregivers to provide higher quality services and also give hope
of a better quality of life and personal dignity to those who need healthcare.
5.1.2 Industry Overview
Please refer to page 78-86 of the Chinese annual report.
84
5.1.3 Research and Development
Research and Development Expenses in the past year:
Year
R&D expenses
Operating revenues
Unit: NTD thousands; %
R&D expenses as a percentage
to operating revenues
2017
2018 first quarter
11,538,651
2,685,529
887,656,959
196,111,962
1.3 %
1.4 %
5.1.4 Long-term and Short-term Development
(1) Short-term Development
• We will adapt to market changes, follow current trends, strengthen new design concepts, maintain the focus on
product difference, and launch ahead of our competitors.
• We will enhance operation efficiency, to further increase our product competitiveness and push the sales
growth rate higher than the market average.
• We will improve logistics management and flexibility to shorten delivery time.
• We will elaborate different market strategies for different product markets. Main stream products will be
bundled with new technology and modular features to boost the added value and diversity of products. For
featured products, we will adopt a prospective standpoint in our design concept for new products in order to
become the focal point of the product market. For low-price products, apart from pricing competitiveness, user
functionality should also be taken into consideration.
• Production bases will be diversified to spread the risk of a single production, reduce the cost of manufacturing
and improve product competitiveness.
• We will pay closer attention to market trends and evolution in smart devices and develop product concepts
suitable for OEM customers and the market. We will help customers create differentiated products with
feasible designs.
• Product development times will be further shortened to optimize supply chain management, maintain persistent
high quality, and provide customers with more competitive products.
• More effort will be made to maintain existing customer relations. Apart from maintaining a high degree of
customer satisfaction, we will work towards increasing the volume of product cooperation. We will also seek
other opportunities for cooperation with new customers in order to achieve a growth rate that is superior to the
market average for smart device products.
• We will improve product profitability to achieve the maximum utilization of capacity and enhance overall
operational efficiency and profitability.
• We will tap our accumulated communications industry R&D energy resources to quickly and efficiently cut
into the high-growth networking market.
• A number of different industry alliance strategies will be used for the rapid development of a diversified
product line that will strengthen customer relationships in the shortest possible time.
(2) Long-term Development
• A spirit of innovation will strengthen the value-added Company products and improve long-term core
competitiveness.
• Cooperation with our customers will be improved to allow better product planning, development and
manufacture as well as comprehensive after-sales service.
• Horizontal and vertical integration of all parts and products of the Group’s affiliates will be strengthened
strategically and aligned with customers, to give them more convenient and complete services.
• Optimization of the quality of sophisticated products will be enhanced by new development and cost structures
and strategic alliances with main parts providers in the supply chain to give customers better and more
85
competitive products and services.
• Closer horizontal and vertical integration will be made with affiliates in the Group to create and improve the
loyalty of long-term customers.
• Our ability to innovate will be further cultivated, aiming to be able to more accurately predict market trends,
before the client does, and provide them with products and services and high value-added solutions to improve
long-term core competitiveness.
• The Company has established a service-oriented business model and new revenue sources through careful
long-term upstream and downstream integration and cooperation.
• We are strengthening the breadth of learning of our team in preparation for future new business and product
development through cross-industry alliances.
• We are cultivating the ability to control key technology, strategize high-end product lines, and gain cooperation
opportunities with big manufacturers around the world.
• In addition, we will continue to strengthen our core R&D capability and capacity for technical services for
smart devices
5.2 Market and Sales Overview
5.2.1 2017 Sales (Service) by Regions
Area
Americas
Europe
Asia (Including Taiwan)
Other Area
Total
(1) Market Share
Percentage
41.6%
29.0%
20.9%
8.5%
100.0%
According to the statistics from IDC, the total number of notebook PCs sold around the world in 2017 came to
approximately 160 million units. In terms of total shipping quantity, Compal’s notebook PCs have
approximately 25% of the global market share and the Company remains a leading manufacturer of notebook
PCs in the world. As the market for notebook PCs is entering the era of vertical integration, Compal will
continue to improve upon its technological capabilities, broaden the scope of its influence, and expand the
market scale while challenging the limits and striving for continual improvement so as to maintain our leading
edge over our competitors.
(2) Future Supply and Demand Situation and Growth of the Market
■ Notebook PCs
According to IDC’ statistics, the global shipping quantity for notebook PCs in 2017 grew by 3%. Looking
towards 2018, with the demand for notebook PC replacement in the Windows 10 market, we expect the global
shipping quantity for notebook PCs in 2018 to remain at the same level as that of 2017.
■ Ultrabook PCs
After the launch of ultrabook PCs, the product has been well-received by the market. Ultrabook PCs are not
only limited to the high-end market and more and more mid-line models have also shifted towards compact
designs. According to IDC’s statistics, the global shipping quantity for ultrabook PCs (no thicker than 21mm)
in 2017 came to approximately 55 million units and it is expected to reach close to 16% in annual growth rate
in 2018 with total shipping quantity exceeding 63 million units.
86
■ 2-in-1 PCs
With much effort and hard work from the industrial chain, the costs and prices for 2-in-1 PCs have lowered
substantially and consumers have gradually become familiar with and accepted the product. Based on the
statistics from IDC, the global shipping quantity for 2-in-1 PCs in 2017 came to approximately 34 million
units. It is expected by that 2018, different manufacturers will offer more diversified products to contribute to
an annual growth rate of close to 13%, with global shipping quantity exceeding 38 million units. 2-in-1 PCs
will inject new vitality into the notebook PC market.
■ AIO PCs
Based on the statistics from IDC, the global shipping quantity for AIO PCs in 2017 came to 12.77 million
units and the number is expected to reach 13.07 million units in 2018. Compal will continue to cultivate the
market.
■ Smart Home
According to the forecasts by Gartner, participation in the domain of smart family will be most active in the
future when it comes to smart city solutions and as such, it will be the target for the most investments from
relevant manufacturers. In 2017, the total number of smart family appliances connected to IoT came to 530
million units and the number is expected to reach 2.5 billion units by 2020. Compal will inject relevant
resources into the area and actively establish its presence in the market.
■ Server
According to the statistics from IDC, the demand for x86 servers will reach 10.1 million units in 2017 and
approach 10.6 million units in 2018. The market for servers is expected to grow in the next few years, with the
main driving force coming from the demand from cloud applications. The bulk of servers shipped came from
x86 servers, which make up approximately 99% of all servers shipped. As rack servers have a greater market
share, Compal will seize the opportunity to foray into the server market.
■ Tablet PCs
Forecasts predict a continued decline in terms of shipping quantity for tablet PCs in 2017. Nonetheless, given
the growing coverage of network signals from the increasing prevalence of telecommunication facilities and
active promotion by telecommunication service providers in emerging regions, Compal anticipates a gradual
growth in demand for tablet PCs with 4G connectivity features. Compal will convert its experience in
smartphone design into the driving force for the development of tablet PCs with carrier access and design
entry-level tablet PCs with carrier access to accommodate the growing demands.
■ LCD TVs
With regards to the prospects for 2018, new panel fabs have commenced shipping and with the market
economy in recovery along with major sports events to propel the demand for TV replacement, there is a good
chance that the global total shipping quantity for LCD TVs this year will reach the heights that we saw in
2016. The development of new LCD TV products will shift towards high end specifications such as ultra
high-resolution, local dimming, built-in voice assistant and so forth with dimensions reaching 65” and above;
coupled with high dynamic contrast and wide color gamut, next-gen TV products will be able to render even
more realistic images and deliver superior audio-visual enjoyment for consumers.
■ LCD Monitors
LCD monitors have become a mature product and the Company will focus on professional graphic design,
commercial, educational and special applications for product development.
■ LCD TV BM
Due to the strong demand for low-price edge backlight products, in order to accommodate the massive market
demand, Compal plans to adjust its production lines accordingly and complete relevant preparations to
respond to the unexpected surge in demand and growth.
■ Smartphone
87
According to IDC, the smartphone market is expected to achieve an annual growth rate of 2% in 2018. The
global shipping quantity for the year will continue to benefit from high growth in emerging markets and
Compal will continue to focus on models with high cost-performance ratio and models with special features
while seeking collaborations with new customers to ensure steady momentum in terms of sales.
■ Smart Accessories+Wearable Devices
Estimates from IDC predict that the total shipping quantity for wearable devices will continue to grow until
2021; the CAGR is expected to reach 18.4% with a total shipping volume at 206 million units. Given the
substantial momentum in the growth of smart wearable devices, apart from developing more suitable sensor
chipsets to accommodate consumers’ vital needs, Compal will also incorporate 3G/4G and other
telecommunication technologies for more diverse applications. Not only that, voice control and integration of
AI will also serve as a potential source of momentum that could keep the market growing. Therefore, Compal
will continue to accumulate relevant technologies and experiences in order to extend its reaches to more
diversified product lines for wearable devices.
■ AE
According to statistical data from internationally renowned survey organization Focus2move, the volume of
new vehicle sales exceeded the threshold of 90 million cars in 2017 and reached the scale of 94.5 million, with
the top three markets being China (27.55 million cars at 29%), north America (21%) and western Europe
(16%). It is estimated that the market will continue to grow to 98 million cars (CAGR 2.5%) in 2018. While
the expected growth margin is modest, with the boisterous development of IoV, electric cars and self-driving
cars, the automobile industry has already drawn high-tech industries into the market.
■ IoT Vertical Solution
Based on the latest statistics from Gartner, the IoT B2B market is growing close to USD 480 billion in value,
with smart government, smart manufacturing, smart transportation & logistics, and smart retail accounting for
approximately 50% of the market. And as such, Compal will inject resources into the development of
application products for specific domains.
■ Smart Medical and Healthcare
(1) .Management Systems:
‧Electronic Medical Record (EMR) and Smart Ward Solutions: According to estimates by FMI, the global
market for Electronic Medical Record (EMR) and management systems is expected to grow from USD 11.4
billion in 2015 to USD19.7 billion by 2025, with an annual growth rate of 5.6%.
‧Point of Care Solutions: Based on a report published by Markets and Markets, due to factors such as aging
populations and digital medical services, the global market for patient and point of care solution related
management systems is expected to reach USD 16 billion by 2020 with an annual growth rate of 19.7%.
(2). Instruments, Equipment and Accessories:
‧Smart Sports: According to the forecasts of Market Reports Hub, the market for smart sports related
products is poised to reach USD 15 billion in 2021, with professional athletes/professional teams/amateurs and
enthusiasts with high commitment being the main consumer demographics.
‧Medical Equipment and Healthcare Related Products: According to the estimates of Global Data, the global
market for medical equipment was worth approximately USD 400 billion in 2015 and the figure is expected to
exceed USD 500 billion in 2019 at an annual growth rate of 6%.
88
5.2.2 Major Products and Their Main Uses
■ Notebook PCs
Analog-digital application hardware platform combined with dedicated software to enable a variety of
applications such as data editing/processing, word processing, layout, graphics application, web browsing,
communications, digital multimedia entertainment, gaming and so forth.
■ Ultrabook PCs
Emphasize laptop that is thin and light-weighted and take into account the performance of the battery
performance to meet the consumer’s needs of portable and productivity.
■ 2-in-1 PCs
The device uses the Windows 10 operating system, has an optional stylus, and satisfies the growing consumer
demand for mobile computing. In addition to multiple operating modes, the laptop has a touch screen that
enables it to be used as a tablet.
■ AIO PCs
Beautiful aesthetics suited for home use, with emphasis on touch screen input interface, software applications
and high computing power.
■ Smart Home
Smart appliances, controls and sensors that provide users with diversified services for smart lifestyle.
■ Server
Designed with high computing power, capable of storing massive amount of data and compatible with
different processing programs for data analysis; built to accommodate different applications required at
enterprises, data centers and cloud platforms.
■ Tablet PCs
Portable touch screen multimedia, mobile viewing and online information applications.
■ Displays
Graphics display and audio output.
■ Smartphone
Personal communication and internet access.
■ AE
‧Touch screen Car multimedia player
‧Vehicle communication (3G/4G) system.
‧Voice controlled natural sound navigation.
‧Android Auto/Carplay connection. Smartphoen Connection.
‧Accident alarm.
‧Integrated peripheral safety warning systems such as wireless tire pressure and collision avoidance radar.
■ IoT Vertical Solution
Through flexible hardware design and a range of customized software applications along with cloud and big
data analysis for horizontal alliance, we offer clients with complete solutions and services by creating novel
applications.
■ Smart Medical and Healthcare
The penetration of households and point-of-care areas using technology, including that of the IoT, and gradual
integration with our own peripheral software products to provide comprehensive solutions, and give
89
convenient and instant smart health care that will enhance dependence on the products as well as user brand
loyalty.
5.2.3 Supply Status of Main Materials
Main materials include CPU/Chipset, HDD, Memory, ODD, Battery, LCD Panel, and Touch Panel Module. Regarding
their supply status, please refer to page 101-104 of the Chinese annual report.
90
5.2.4 Major Suppliers and Clients
(1) Major Suppliers in the Last Two Calendar Years
Party
Name
Amount
2016
As a
percentage to
2015 net
purchases
(%)
2017
2018 first quarter
Unit: NTD thousand
Relationship
with the issuer
Name
Amount
As a
percentage
to 2016 net
purchases
(%)
Relationship
with the issuer
Name
Amount
As a
percentage to
2017 first
quarter net
purchases (%)
Relationship
with the issuer
1 Company E
2 Company B
Others
Net Purchase
235,953,445
102,218,447
369,220,575
707,392,467
33.36
14.45
52.19
100.00
N/A
N/A
Company E
Company B
Others
Net Purchase
278,237,309
107,522,344
439,304,387
825,064,040
33.72
13.03
53.25
100.00
N/A
N/A
Company E
Company B
Others
Net Purchase
64,986,855
25,061,107
90,960,085
181,008,047
N/A
N/A
35.90
13.85
50.25
100.00
(2) Major Clients in the Last Two Calendar Years
2016
2017
2018 first quarter
Unit: NTD thousand
Party
Name
Amount
As a
percentage to
2015 net
sales (%)
Relationship
with the issuer
Name
Amount
As a
percentage to
2016 net sales
(%)
Relationship
with the
issuer
Name
Amount
As a
percentage to
2017 first
quarter net
sales (%)
Relationship
with the issuer
1 Company a
2 Company d
3 Company e
4 Company f
Others
Net sales
119,219,545
306,571,029
93,254,993
95,357,708
152,406,760
766,810,035
N/A
N/A
N/A
N/A
15.55
39.98
12.16
12.44
19.87
100.00
Company a
Company d
Company e
Company f
Others
Net sales
126,400,242
353,750,583
97,284,723
154,122,521
156,098,890
887,656,959
N/A
N/A
N/A
N/A
14.24
39.85
10.96
17.36
17.59
100.00
Company a
Company d
Company e
Company f
Others
Net sales
28,430,380
83,951,234
15,813,756
35,513,281
32,403,311
196,111,962
N/A
N/A
N/A
N/A
14.50
42.81
8.06
18.11
16.52
100.00
91
5.2.5 Production in the Last Two Years
Year
Production
volume/
2016
2017
Unit: thousand devices; NTD thousands
Production
Production
Production
Production
Production
Production
value
capacity
volume
value
capacity
volume
value
Main products
5C electronics
125,442
100,575
734,512,835
118,701
99,257
881,078,686
5.2.6 Shipments and Sales in the Last Two Years
Year
2016
Unit: devices; NTD thousands
2017
Sales volume
Domestic sales
Export sales
Domestic sales
Export sales
Main products
Volume
Value
Volume
Value
Volume
Value
Volume
Value
5C electronics
456
1,938,470
100,429 764,871,565
450
2,211,434
97,512 885,445,525
5.3 Human Resources
Year
December 31, 2016
December 31, 2017
March 31, 2018
Number of employees
Average age
Average years of service
Academic
qualifications
Doctoral Degree
Master Degree
University
High school / Below/
others
64,728
27.36
1.99
0.07%
4.24%
21.81%
73.88%
5.4
Environmental Protection Expenditure
75,392
27.53
1.97
0.06%
3.78%
18.83%
77.33%
76,597
28.24
1.95
0.06%
3.67%
18.36%
77.91%
(1) The Company is an assembler of electronic products, and produces no significant pollution:
To protect the environment and fulfill our social responsibility as well as reduce carbon emissions and the impact
on global warming. The Taiwan and Mainland China plants together incurred expenses of NT$43,200 thousand
(excluding regular maintenance and green R&D) in 2017. We are keeping the promises we made as an earth
citizen, hoping to make substantial contribution to protection of the global environment. We will continue our
commitment to efforts in this respect.
(2) Compliance with EU RoHS directives:
All Compal products are 100% compliant with EU RoHS Directives. There have been no cases of any
returns for non-compliance with RoHS standards. In addition, Compal has begun demanding that suppliers
make timely adjustments for any RoHS exclusions that are scheduled for the near future and restrict the use
of substances such as DEHP, BBP, DBP and DIBP, the ban on these comes into effect in 2019.
In order to manufacture environmentally friendly green products and meet the requirements of both
92
international environmental laws and client demand, the Company has implemented “Management
Standards for the Control of Environment-Related Substances in Parts and Materials” that covers all
hazardous substances currently prohibited by law and banned by customers. We have implemented efficient
and effective methods of inspection for hazardous substances using recognized component classification
and risk control to establish a plant monitoring mechanism for oversight and verification. All the products
manufactured by the Company comply with the validation IECQ QC 080000 Electrical and Electronic
Components and Products Hazardous Substance Process Management System Requirements.
(3) Responsive strategies and possible expenses:
In the future, the Company will continue to implement its environmental responsibilities including the
boosting of staff knowledge of environmental matters, the advocation of updated green living knowledge,
Company response to government policy with respect to green consumption, and the regular priority
assessment of green product content in procurement as well as continuous improvement in the energy
efficiency of our plants. This includes scrutiny for all kinds of possible violations of environmental
regulations in the operations management system, and the mandate to make timely response to all
environmental laws.
5.5
Labor Relations
(1) Availability and execution of employee welfare, education, training and retirement policies. Elaborate on
the agreements between employers and employees, and protection of employees’ rights
■ Employee welfare:
In addition to all their statutory labor rights and to help employees find a balance between work and
personal life, both physical and mental, and to improve their vitality in the workplace, the Company has
established an Employee Benefits Committee, a Life Committee, and other groups responsible for
promoting worker welfare. The employee health benefits and activities include a fitness center, a medical
facility, periodic health checks, recreational team competitions, family activities, travel, the arts, and
leisure and all kinds. Group Life Insurance is covered by the Company that includes accident, medical,
and cancer. The employees’ dependants may also join the scheme at a discounted rate, but at their own
expense. We also have benefits such as scholarships for employees and their children.
The Company actively supports the government in resolving the low birth rate crisis and childcare
policy in Taiwan. Since 2011, we have provided generous maternity grants for employees and their
spouses and children. By the end of 2017, the Company had provided NT$133.91 million in maternity
allowances and bonuses. There were 55 counts of employees who took parenting leave, with the right to
return, in 2017.
■ Education and training:
The Company set training credits and outlined the credit system according to the needs of each level.
The Company also integrates all training records in online learning platform to further assist the
competent staff in keeping abreast of the learning progress.
In 2017, a total of 1,840 training sessions (both internal and external) were organized; these courses
delivered 110,770 hours of training and 34,245 persons enrolled. The total training expenses were
NT$14,604 thousand. The training courses included:
Orientation: Organized new hire seminars and corporate culture experience camp to help the new hires
better understand the Company’s culture, the current status of the industry, and the Company strategy and
visions.
Language training: Basic to advance English and Japanese courses that train the employees’ ability to
respond to customers and equip them with a global vision through workspace situational training.
93
Managerial skills Training: To establish a comprehensive blueprint of development level, strengthen the
core competency at all levels in such aspects as teamwork, problem analysis, innovative thinking... and
soon, and also to conduct planning for Company talent training in various stages.
Professional training: Categorized new professional knowledge lectures, courses, and experiences
heritage job training to enhance employees’ expertise and technology. Also enhance the Company’s core
competitiveness through systematic management.
E-learning: Offers related courses in new hire requisites, IT, 6 sigma, language, management, CSR and
occupational safety. The Company uses Internet learning and resource sharing to offer real-time learning,
maximizing the effect with a complete learning and training mechanism that utilizes a comprehensive
knowledge management system.
■ Retirement system
The Company has developed its retirement system in accordance with the Labor Standards Act and
the Labor Pension Act. For employees who are transferred to affiliated companies, pension benefits are
paid according to employees’ years of service in their respective departments, and out of pension fund
accounts that each department has contributed over the course of employees’ service.
■ Employer-employee communications and enforcement of workers’ rights
The Company has always valued employer-employee relations, and has communication channels
available to facilitate two-way communication between the two parties, thereby allowing the Company to
respond to employees’ thoughts and opinions in a prompt manner. The Company not only has policies in
place to protect employees’ rights, but also makes decisions in the best interests of its employees.
(2) Personnel management
The Company has clear policies in place to manage human resources and to guide employees’
behaviors. There are specific levels of approval authority and detailed rules to guide decisions concerning
employees’ recruitment, promotion, appraisal, assignment, leave of absence, resignation, confidentiality
agreement, reward and discipline. These policies and rules exist to eliminate subjective judgments and to
create a fair, open, and systematic corporate culture.
(3) Work environment
• Buildings are subjected to annual fire safety inspections and reports.
• Buildings, plants and equipment are inspected daily and maintained on a regular basis.
• The Company hires regular cleaning services to ensure the cleanliness of its work environment.
(4) Employees’ safety
• Personnel entry and exit are controlled by security system.
• Security personnel are stationed 24 hours a day to patrol plant premise and monitor the surveillance
system.
• Lectures and rehearsals are organized annually to demonstrate the proper responses in case of an
emergency.
(5) Actual or estimated losses arising as a result of employment disputes in the recent year up till the
publication date of this annual report, and any responsive measures taken:
• The Company did not suffer any losses due to employment dispute in the recent year, and nor does it
expect any occurrence in the coming year.
• Responsive strategies and possible expenses: none.
94
5.6
Important Contracts
Agreement
Counterparty
Patent
licensing
agreement
Trading and
manufacturing
agreement
Phoenix Technologies Ltd.
Dell Products L.P.
Trading
agreement
Toshiba Co.
Trading and
manufacturing
agreement
Acer Inc.
Period
Since
2010.1.1
Auto-renewed
upon expiry
Since
1997.06.26
Auto-renewed
upon expiry
Since
1999.09.09
Yearly
Auto-renewed
upon expiry
Since
2001.10.01
Yearly
Auto-renewed
upon expiry
Major Contents
Restrictions
1. Tool Licenses
2. Source Code licenses
3. Maintenance
Under this agreement, the buyer will
procure computer products developed
and manufactured by the seller, while the
seller will give the buyer proper licenses
to use the products and provide after-sale
technical services thereafter.
Under this agreement, the buyer will
procure computer products developed
and manufactured by the seller, along
with after-sale technical services
provided by the seller.
Under this agreement, the buyer will
procure computer products developed
and manufactured by the seller, along
with after-sale technical services
provided by the seller.
N/A
N/A
N/A
N/A
95
VI. Financial Information
6.1
Five-Year Financial Summary
(1) Consolidated Condensed Balance Sheet – Based on IFRS
Year
Financial Summary for The Last Five Years (Note 1)
Unit: NT$ thousands
As of March 31, 2018
Analysis
2013
2014
2015
2016
2017
Current assets
287,380,820
324,845,249
277,783,476
300,469,007
321,782,654
308,322,879
Property, plant, and
21,209,228
24,472,732
24,308,631
20,952,677
18,179,367
equipment
Intangible assets
1,293,643
1,035,162
1,194,193
1,291,281
1,284,660
17,527,775
1,339,493
16,488,912
26,219,123
28,397,575
24,639,275
24,303,146
22,109,740
336,102,814
378,750,718
327,925,575
347,016,111
363,356,421
343,679,059
220,597,261
250,264,267
202,757,075
209,232,199
231,955,732
213,916,948
224,902,606
256,832,412
208,009,032
214,478,756
(Note 2)
-
Non-current assets
15,314,137
22,266,514
15,570,384
25,500,097
22,752,717
21,122,145
235,911,398
272,530,781
218,327,459
234,732,296
254,708,449
235,039,093
240,216,743
279,098,926
223,579,416
239,978,853
(Note 2)
-
95,102,289
101,386,923
103,775,795
105,804,389
101,895,584
101,734,660
Other assets
Total assets
Prior to
Current
distribution
liabilities
After
distribution
Total liabilities
Prior to
distribution
After
distribution
Equity attributable to
parent company
shareholders
Ordinary shares
Capital reserves
16,193,087
14,296,445
12,838,638
11,779,274
44,134,467
44,232,366
44,711,266
44,241,606
44,191,916
10,938,773
44,071,466
10,787,337
Prior to
Retained
distribution
earnings
After
distribution
44,489,978
47,721,872
51,877,511
55,289,409
56,557,146
58,508,748
42,312,310
43,293,091
47,450,840
50,867,256
(Note 2)
-
Other equity interests
(7,707,518)
(3,139,021)
(3,926,881)
(4,624,653)
(8,911,004)
(10,751,644)
Treasury stock
(2,007,725)
(1,724,739)
(1,724,739)
Non-controlling interests
5,089,127
4,833,014
5,822,321
(881,247)
6,479,426
(881,247)
6,752,388
(881,247)
6,905,306
Total equity Prior to
distribution
After
distribution
100,191,416
106,219,937
109,598,116
112,283,815
108,647,972
108,639,966
95,886,071
99,651,792
104,346,159
107,037,258
(Note 2)
-
Note: 1. The financial information is audited and certified by the CPA every year. The financial information as of March 31,
2018, has not yet been audited by the CPA.
2. 2017 annual financial statements have not been approved at a shareholders’ meeting. Therefore, the amount after
allocation is not listed.
3. The Company has retroactively adjusted previous amounts in the financial statements effective January 1, 2015, due to
the adoption of the 2013 International Accounting Standards endorsed by the Financial Supervisory Commission of the
ROC as of January 1, 2014.
96
(2) Consolidated Condensed Statement of Comprehensive Income – Based on IFRS
Year
Analysis
Financial Summary for The Last Five Years (Note 1)
2013
2014
2015
2016
2017
Unit: NT$ thousands
As of March 31, 2018
Net sales revenue
692,748,293
845,700,752
847,305,698
766,810,035
887,656,959
196,111,962
Gross profit
28,110,391
32,364,662
33,378,357
32,836,970
31,964,569
Net operating income
9,234,044
11,664,922
11,312,452
11,063,645
9,208,429
6,623,203
2,054,069
Non-operating income and
expense
(4,873,662)
(1,937,570)
479,641
749,700
(1,094,152)
(132,058)
Net income before tax
4,360,382
9,727,352
11,792,093
11,813,345
8,114,277
1,922,011
Net income from continuing
operations
Net loss from discounting
operations
2,903,732
7,545,381
9,007,147
8,968,006
6,158,037
1,582,796
-
-
-
-
-
-
Net income (loss)
2,903,732
7,545,381
9,007,147
8,968,006
6,158,037
1,582,796
Other comprehensive income
(loss)
(net of tax)
711,298
4,555,499
(101,970)
(1,265,546)
(4,604,412)
(1,434,129)
Comprehensive income
3,615,030
12,100,880
8,905,177
7,702,460
1,553,625
148,667
Net income attributes to
shareholders of the Parent
Net income attributes to
non-controlling interests
Comprehensive income
attributed to owners of parent
Comprehensive income
2,467,211
7,024,461
8,684,610
8,130,890
5,749,525
1,393,302
436,521
520,920
322,537
837,116
408,512
189,494
3,160,663
11,548,480
8,552,926
6,916,562
1,189,818
(5,035)
attributed to non-controlling
454,367
552,400
352,251
785,898
363,807
153,702
interests
Earning per share (unit: dollar)
0.57
1.63
2.01
1.88
1.32
0.32
Note: 1. The financial information is audited and certified by the CPA every year. The financial information as of March 31, 2018,
has not yet been audited by the CPA.
2. The 2017 annual financial statement for the current year has not yet been approved at a shareholders’ meeting
3. The Company has retroactively adjusted previous amounts in the financial statements effective January 1, 2015, due to
the adoption of the 2013 International Accounting Standards endorsed by the Financial Supervisory Commission of the
ROC as of January 1, 2014.
97
(3) Parent-Company-Only Condensed Balance Sheet – Based on IFRS
Year
Financial Summary for The Last Five Years (Note 1)
Analysis
Current assets
Property, plant, and
equipment
Intangible assets
Other assets
Total assets
Current
liabilities
Prior to
distribution
After
distribution
2013
2014
2015
2016
2017
210,646,593
255,609,554
207,496,808
237,412,415
240,677,588
2,218,316
2,230,023
2,181,737
2,132,114
2,092,272
617,739
412,185
378,454
268,316
146,813
82,728,525
85,179,353
86,182,040
88,808,075
85,179,393
296,211,173
343,431,115
296,239,039
328,620,920
328,096,066
187,574,634
220,791,532
177,664,877
197,566,162
203,492,102
191,929,970
227,434,703
182,976,882
202,872,746
(Note 2)
Unit: NT$ thousands
As of March
31, 2018
Non-current assets
13,534,250
21,252,660
14,798,367
25,250,369
25,250,369
Total liabilities
Prior to
distribution
After
distribution
Equity attributable to parent
company shareholders
201,108,884
242,044,192
192,463,244
222,816,531
226,200,482
205,464,220
248,687,363
197,775,249
228,123,115
(Note 2)
-
-
-
-
-
N/A
Ordinary shares
44,134,467
44,232,366
44,711,266
44,241,606
44,191,916
Capital reserves
16,193,087
14,296,445
12,838,638
11,779,274
10,938,773
Retained
earnings
Prior to
distribution
After
distribution
44,489,978
47,721,872
51,877,511
55,289,409
56,557,146
42,312,310
43,293,091
47,450,840
50,867,256
(Note 2)
Other equity interests
(7,707,518)
(3,139,021)
(3,926,881)
(4,624,653)
(8,911,004)
Treasury stock
(2,007,725)
(1,724,739)
(1,724,739)
(881,247)
(881,247)
Non-controlling interests
-
-
-
-
-
Total equity
Prior to
distribution
After
distribution
95,102,289
101,386,923
103,775,795
105,804,389
101,895,584
90,796,944
94,818,778
98,523,838
100,557,832
(Note 2)
Note: 1.The financial information is audited and reviewed by the CPA every year.
2. The 2017 annual financial statements have not been approved at a shareholders’ meeting. Therefore, the amount after
allocation is not listed.
3. The Company retroactively adjusted previous amounts in the financial statements effective January 1, 2015, due to the
adoption of the 2013 International Accounting Standards endorsed by the Financial Supervisory Commission of the
ROC as of January 1, 2014.
98
(4) Parent-Company-Only Condensed Statement of Comprehensive Income – Based on IFRS
Unit: NT$ thousands
As of March 31, 2018
Year
Financial Summary for The Last Five Years (Note 1)
Analysis
Net sales revenue
Gross profit
Net operating income
Non-operating income and
expense
Net income before tax
Net income from continuing
operations
Net loss from discounting
operations
Net income (loss)
Income (loss) from other
comprehensive income (net after
tax)
Comprehensive income
Net income attributes to
shareholders of the Parent
Net income attributes to
non-controlling interests
Comprehensive income
attributed to owners of parent
Comprehensive income
attributed to non-controlling
interests
Earning per share(unit: dollar)
2013
632,622,772
16,359,240
5,505,654
2014
2015
2016
803,504,061
21,288,913
7,291,756
802,994,930
22,737,590
7,305,278
725,653,095
21,281,171
5,972,854
(2,503,176)
286,853
2,857,612
3,398,892
3,002,478
7,578,609
10,162,890
9,371,746
2,467,211
7,024,461
8,684,610
8,130,890
2017
841,309,602
21,544,440
5,170,549
1,508,171
6,678,720
5,749,525
-
-
-
-
-
2,467,211
7,024,461
8,684,610
8,130,890
5,749,525
693,452
4,524,019
(131,684)
(1,214,328)
(4,559,707)
N/A
3,160,663
11,548,480
8,552,926
6,916,562
1,189,818
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.57
1.63
2.01
1.88
1.32
Note: 1.The financial information is audited and reviewed by the CPA every year.
2. The 2017 financial statement has not yet approved by the shareholders’ meeting.
3. The Company retroactively adjusted previous amounts in the financial statements effective January 1, 2015, due to the
adoption of the 2013 International Accounting Standards endorsed by the Financial Supervisory Commission of the
ROC as of January 1, 2014.
(5) Auditors’ Opinions
Accounting Firm
Year
2013 KPMG
2014 KPMG
2015 KPMG
2016 KPMG
2017 KPMG
CPA
Kuo, Kuan Ying; Lo, Jui Lan
Kuo, Kuan Ying; Lo, Jui Lan
Kuo, Kuan Ying; Lo, Jui Lan
Kuo, Kuan Ying; Au, Yiu Kwan
Kuo, Kuan Ying; Au, Yiu Kwan
Audit Opinion
Modified unqualified opinion (Note 1)
Modified unqualified opinion (Note 1)
Modified unqualified opinion (Note 2)
Unqualified opinion
Unqualified opinion
Note: 1. Brief disclosures of Company disposal of the equity investment of VIBO Telecom Inc and a record of the
impairment of equity investment in Chunghwa Picture Tubes, Ltd.
2. Impact of retroactive adjustments to the 2014 financial statement due to adoption of the 2013 version of the
International Financial Reporting Standards (IFRS) endorsed by the Financial Supervisory Commission (FSC)
of the ROC.
99
6.2
Five-Year Financial Analysis
A.
Consolidated Financial Analysis – Based on IFRS
Year
Financial Analysis for the Last Five Years
2013
2014
2015
2016
2017
As of
March 31,
2018
Debt ratio
70.19
71.96
66.58
67.64
70.09
68.38
Analysis
Capital Structure
(%)
Long term fund to property, plant and
equipment ratio
Current ratio (%)
Liquidity analysis
Quick ratio (%)
Interest coverage
Account receivable turnover (times)
Average collection turnover
Operating
Inventory turnover (times)
Performance
Account payable turnover (times)
Analysis
Average inventory turnover days
Profitability
Analysis
Fixed assets turnover (times)
Total assets turnover(times)
Return on total assets (%)
Return on equity (%)
Operating income to paid-in capital ratio (%)
Net margin (%)
Earning per share (dollar)
Cash flow ratio (%)
Cash flow
Cash flow adequacy ratio (%)
Cash reinvestment ratio (%)
Leverage
Operating leverage
Financial leverage
Note: 1.The ratio is negative.
544.60
525.02
514.91
657.59
722.80 740.32
130.27
106.85
9.83
4.02
90.76
12.91
4.67
28.26
33.00
2.14
1.00
2.70
9.88
0.42
0.57
0.25
(Note2)
(Note1)
1.66
1.06
129.80
102.70
10.54
4.66
78.25
13.73
5.13
26.59
37.03
2.37
2.33
7.31
21.99
0.89
1.63
13.51
(Note2)
19.59
1.57
1.10
137.00
113.71
14.11
4.93
74.03
14.31
5.42
25.50
34.74
2.40
2.74
8.35
26.37
1.06
2.01
4.70
(Note2)
1.95
1.58
1.09
143.60
120.22
13.47
4.50
81.11
15.51
5.68
23.53
33.88
2.27
2.87
8.08
26.70
1.16
1.88
0.61
42.42
(Note1)
1.57
1.09
138.72 144.13
108.19 111.66
5.34
4.70
77.65
11.02
5.82
33.12
43.93
2.21
0.55
1.45
4.36
0.80
0.32
-
-
-
-
-
7.25
5.03
72.56
14.55
6.30
25.08
45.36
2.49
2.01
5.57
18.36
0.69
1.32
(Note1)
48.05
(Note1)
1.63
1.16
2. Not applicable as the financial information, for more than five years, in accordance with IFSR has not yet
been disclosed.
3. The financial ratio has changed by up to 20% in the past two years:
‧Interest Coverage: Mainly due to the increase in interest expenses compared to the earlier period.
‧Fixed Asset Turnover: Mainly due to the increase in net sales compared to the earlier period.
‧Return on Total Assets: Mainly due to the increase in average asset balance compared to the earlier period.
‧Return on Equity: Mainly due to the decrease in income before tax compared to the earlier period.
‧Operating Income to Paid-in Capital Ratio: Mainly due to the decrease in income before tax compared to
the earlier period.
‧Net Margin: Mainly due to the decrease in income before tax compared to the earlier period.
‧Earnings Per Share: Mainly due to the decrease in income before tax.
‧Cash Flow Ratio: Mainly due to cash inflow from operating activities.
‧Cash Reinvestment Ratio: Mainly due to cash inflow from operating activities.
4. The financial information is audited and certified by the CPA every year. The financial information as of
March 31, 2018, has not yet audited by the CPA.
5. The Company made retroactive adjustment to previous amounts in the financial statements effective January
1, 2015, due to the adoption of the 2013 International Accounting Standards endorsed by the Financial
Supervisory Commission of the ROC as of January 1, 2014.
6. The 2017 financial statement has not yet been approved at a shareholders’ meeting.
100
B.
Parent-Company-Only Financial Analysis – Based on IFRS
Year
Financial Analysis for the Last Five Years
2013
2014
2015
2016
2017
As of
March 31,
2018
Debt ratio
67.89
70.48
64.97
67.80
68.94
Analysis
Capital Structure
(%)
Long term fund to property, plant and
equipment ratio
Current ratio (%)
Liquidity analysis
Quick ratio (%)
Interest coverage
Account receivable turnover (times)
Average collection turnover
Operating
Inventory turnover (times)
Performance
Account payable turnover (times)
Analysis
Average inventory turnover days
Profitability
Analysis
Fixed assets turnover (times)
Total assets turnover(times)
Return on total assets (%)
Return on equity (%)
Operating income to paid-in capital ratio (%)
Net margin (%)
Earning per share (dollar)
Cash flow ratio (%)
Cash flow
Cash flow adequacy ratio (%)
Cash reinvestment ratio (%)
Leverage
Operating leverage
Financial leverage
Note: 1.The ratio is negative.
4,897.25 5,499.48 5,434.85 6,146.71 5,955.44
112.30
98.09
26.14
3.99
91.54
22.54
4.29
16.19
280.31
2.22
0.90
2.45
6.80
0.39
0.57
(Note1)
(Note2)
(Note1)
2.33
1.02
115.77 116.79
96.83 102.28
17.81
15.70
5.03
4.72
72.57
77.25
23.34
23.04
5.16
4.88
15.84
15.64
361.26 364.02
2.51
2.87
8.47
22.73
1.08
2.01
15.13 (Note1)
(Note2)
23.48 (Note1)
2.41
1.09
2.51
2.33
7.15
17.13
0.87
1.63
2.42
1.08
(Note2)
N/A
120.17
105.89
14.03
4.61
79.14
26.42
5.16
13.81
336.43
2.32
2.79
7.76
21.18
1.12
1.88
3.15
38.20
0.68
2.74
1.14
118.27
96.92
7.85
5.06
72.13
23.11
5.65
15.79
398.31
2.56
2.00
5.54
15.11
0.68
1.32
(Note1)
11.48
(Note1)
2.86
1.23
2. Not applicable as the financial information, for more than five years, in accordance with IFSR has not yet
been disclosed.
3. The financial ratio has changed by up to 20% in the past two years:
‧Interest Coverage: Mainly due to the increase in interest expenses compared to the earlier period.
‧Return on Total Assets: Mainly due to the decrease in income before tax compared to the earlier period.
‧Return on Equity: Mainly due to the decrease in income before tax compared to the earlier period.
‧Operating Income to Paid-in Capital Ratio: Mainly due to the decrease in income before tax compared to
the earlier period.
‧Net Margin: Mainly due to the decrease in income before tax compared to the earlier period.
‧Earnings Per Share: Mainly due to the decrease in income before tax compared to the earlier period.
‧Cash Flow Ratio: Mainly due to cash inflow from operating activities being higher than the earlier period.
‧Cash Flow Adequacy Ratio: Mainly due to cash inflow from operating activities being higher than the
earlier period.
‧Cash Reinvestment Ratio: Mainly due to cash inflow from operating activities being higher than the earlier
period.
4. The financial information is audited and certified by the CPA every year.
5. The Company made retroactive adjustment to previous amounts in the financial statements effective January
1, 2015, due to the adoption of the 2013 International Accounting Standards endorsed by the Financial
Supervisory Commission of the ROC as of January 1, 2014.
6. The 2017 financial statement has not yet been approved at a shareholders’ meeting.
101
Formula:
1. Financial Structure
(1) Debt Ratio = Total liabilities / Total assets
(2) Ratio of long-term capital to property, plant and equipment = (Net shareholders’ equity + Long-term liability) /
Net property, plant and equipment
2. Solvency
(1) Current ratio = Current Assets / Current liability
(2) Quick ratio = (Current assets - Inventory - Prepaid expenses) / Current liability
(3) Interest coverage ratio = Net income before income tax and interest expense / Interest expense
3. Operating Efficiency
(1) Account receivable (including account receivable and notes receivable from business activities) turnover
= Net sales / Average account receivable balance (including account receivable and notes receivable from
business activities)
(2) A/R turnover days = 365 / account receivable turnover
(3) Inventory turnover = Cost of Goods Sold / Average inventory balance
(4) Account payable (including account payable and notes payable from business activities) turnover = Cost of goods
sold / Average account payable balance (including account payable and notes payable from business activities)
(5) Inventory turnover days = 365 / Inventory turnover
(6) Property, plant and equipment turnover = Net sales / Average Net property, plant and equipment
(7) Total assets turnover = Net sales / Average Total assets
4. Profitability
(1) Return on assets = [PAT + Interest expense × (1 - interest rate)] / average asset balance
(2) Return on equity = PAT / average net equity
(3) Pre-tax income to paid-in capital = Net income before tax / Issued capital stock
(4) Net profit ratio = PAT / Net sates
(5) EPS = (PAT - preferred stock dividends) / weighted average outstanding shares
5. Cash Flow
(1) Cash flow ratio = Cash flow from operating activities / Current liability
(2) Cash flow adequacy ratio = Most recent 5-year Cash flow from operating activities / Most recent
5-year (Capital expenditure + increases in inventory + cash dividend)
(3) Cash reinvestment ratio = (Cash flow from operating activities - cash dividend) / (Gross fixed assets + long-term
investment + other assets + working capital)
6. Leverage
(1) Operating leverage = (Nest revenue - variable cost of goods sold and operating expense) / operating income
(2) Financial leverage = Operating income / (Operating income - interest expenses)
102
6.3 Audit Committee’s Report for the Most Recent Year
Audit Committee’s Review Report
The Company’s 2017 financial statements have been approved by the Audit Committee and
by the Board of Directors. Kuan-Ying Kuo and Yiu-Kwan Au, certified public accountants of
KPMG, have completed the audit of the financial statements and issued an audit report
relating thereto. In addition, the Board of Directors has prepared and submitted to us the
Company’s 2017 business report and proposal for distribution of earnings. We, the Audit
Committee members, have duly examined and determined such business report and proposal
for distribution of earnings to be in line with the requirements under the Company Law and
relevant laws and regulations. According to Article 14-4 of the Securities and Exchange Act
and Article 219 of Company Law, we hereby submit this report.
Compal Electronics, Inc.
Chairman of the Audit Committee:
May 9, 2018
103
6.4 Consolidated Financial Statements and Independent Auditors’ Report
Please refer to Attachment I.
6.5
Parent-Company-Only Financial Statements and Independent Auditors’ Report
Please refer to Attachment II.
6.6
Status of Financial Difficulties for the Company and its Subsidiaries
Incidence of financial difficulties for the Company and its subsidiaries in between the period of 2017
to the publication date of this annual report: None.
104
VII. Review of Financial Conditions, Financial Performance, and
Risk Management
7.1 Analysis of Financial Status
Unit: NT$ thousands
Analysis
Year
2017
2016
Difference
Amount
Current Assets
Funds & Investments
Property, plant and equipment
Other Assets
Total Assets
Current Liabilities
Other Liabilities
Total Liabilities
Share capital
Capital reserves
Retained Earnings
Other Equity Interests
Treasury stock
Non-controlling Equity
321,782,654
300,469,007
21,313,647
11,807,622
18,179,367
11,586,778
11,726,370
20,952,677
13,868,057
363,356,421
347,016,111
231,955,732
209,232,199
81,252
(2,773,310)
(2,281,279)
16,340,310
22,723,533
254,708,449
234,732,296
19,976,153
44,191,916
10,938,773
56,557,146
44,241,606
11,779,274
55,289,409
(8,911,004)
(4,624,653)
(881,247)
6,752,388
(881,247)
6,479,426
(49,690)
(840,501)
1,267,737
(4,286,351)
-
272,962
22,752,717
25,500,097
(2,747,380)
(10.77)
%
7.09
0.69
(13.24)
(16.45)
4.71
10.86
8.51
(0.11)
(7.14)
2.29
92.68
-
4.21
(3.24)
Total Shareholders’ Equity
Note: Analysis of variations exceeding 20% and amounting to more than NTD10 million:
108,647,972
112,283,815
(3,635,843)
Decrease in Other Equity Interests: Mainly due to the increase of exchange loss arising from the conversion of
financial statements of foreign operations
Effect of changes on the company’s financial position: Judging from the aforementioned causes, the effect
from changes on the Company’s financial position in the last two years are normal outcomes from standard
operating activities.
Future response actions: Not applicable
105
7.2 Analysis of Financial Performance
Analysis
Year
2017
2016
Net Sales
Cost of Sales
Gross Profit
Operating Expenses
Operating Income
Non-operating Income and Expenses
Income Before Tax
Less: Tax Expense
Net Income (loss)
Other comprehensive Income (after
tax)
Total comprehensive Income
Unit: NT$ thousands
Difference
Amount
120,846,924
(872,401)
982,815
%
15.76
16.58
(2.66)
4.51
733,973,065
121,719,325
766,810,035
32,836,970
21,773,325
11,063,645
(1,855,216)
(16.77)
749,700
(1,843,852)
(245.95)
11,813,345
2,845,339
8,968,006
(3,699,068)
(889,099)
(2,809,969)
(31.31)
(31.25)
(31.33)
887,656,959
855,692,390
31,964,569
22,756,140
9,208,429
(1,094,152)
8,114,277
1,956,240
6,158,037
(4,604,412)
(1,265,546)
(3,338,866)
263.83
1,553,625
7,702,460
(6,148,835)
(79.83)
Note: The analytics for change of more than 20%:
Decrease in Net Operating Income and Expenses: Mainly due to the decrease of profit recognition in
affiliates and joint ventures using the equity method, increase in foreign exchange currency losses,
decrease in gains from investments, decrease in losses and other incomes.
Decrease in Income Before Tax: Mainly due to the decrease of non-operating income and expenses.
Decrease in Tax Expenses: Mainly due to the decrease in income before tax.
Decrease in Net Income: Mainly due to the decrease in income before tax.
Increase in Other Comprehensive Income (after tax): Mainly due to the decrease of exchange differences
arising from the conversion of financial statements of foreign operations, increase in unrealized valuation
loss of available-for-sale financial assets, the decrease of profit recognition in affiliates and joint ventures
using the equity method, and increase in other comprehensive losses.
Decrease in Total Comprehensive Income: Mainly due to the decrease in Net Income and Other
Comprehensive Income.
■ Forecast for sales for next year and basis for the forecast; potential impact on the Company’s
finances and sales in the future and response plan:
Forecast for sales for next year and basis for the forecast
According to the estimates from market intelligence service provider IDC, with regards to PC related
products, the global NB PC market, desktop PC market and server market will grow/decline by -1%, -3% and
+6% respectively in 2018 compared to the previous year; as for smart wearable products, the global smart phone
market, tablet PC market and smart wearable device market will grow/decline by +2%, -6% and +30% in 2018
compared to the previous year. Looking forward 2018, we believe that many factors of uncertainty still remain
in the global economic outlook. Considering the state of the market and development of Compal’s main lines of
business, we predict that there is a fair chance that Compal’s total shipped quantity of 5C related products for
2018 will still exceed 80 million units (for 2017) and grow beyond that. In addition, we also anticipate the
contribution of non-NB PC products to the Company’s revenue to grow further.
Potential impact on the Company’s finances and sales in the future and response plan:
In light of the growth in operation and future investments, the Company has established relevant financial
strategies. For Compal’s funding needs for the year, please refer to the section on cash flow analysis for 2018.
106
7.3 Analysis of Cash Flow
7.3.1 Cash Flow Analysis for the Current Year
Cash and Cash
Equivalents,
Beginning of Year
(1)
Net Cash Flow
from Operating
Activities
(2)
Cash
Inflow
(Outflow)
(3)
Cash Surplus
(Deficit)
(1)+(2)+(3)
72,950,596
(2,181,002)
(706,881)
70,062,713
Financing of Cash Deficit
Investment Plans
-
Financing Plans
-
Note: 1. Cash Inflow (Outflow) includes the cashflow in investing activities, financing activities, and foreign
exchange impacts.
Unit: NT$ thousands
2. Analysis of the change of 2017 cash flow changes:
•
•
Net cash outflow in operating activities of $2,181,002 thousand: mainly due to a decrease in profit from
operating and net changes of assets and liabilities from operating activities.
Net cash outflow in investing activities of $874,933 thousand: mainly due to the purchase of real-estate
property, plant and equipment, and the disposal of equity investments and avalible-for-sale financial
assets.
Net inflow of financing activities of $3,262,861 thousand: mainly due to the increase in loan and
distribution of cash dividend.
3. Financing of cash deficits: not applicable.
4. Liquidity analysis: current asset to current liability ratio is 138.7% and liquidity is healthy.
•
7.3.2 Cash Flow Analysis for the Coming Year
Unit: NT$ thousands
Estimated
Cash and Cash
Equivalents,
Beginning of
Year
(1)
Estimated Net
Cash Flow from
Operating
Activities
(2)
Estimated Cash
Inflow
(Outflow)
(3)
Cash Surplus
(Deficit)
(1)+(2)+(3)
70,062,713
5,343,575
(5,400,208)
70,006,080
Financing of Cash Surplus (Deficit)
Investment Plans
-
Financing Plans
-
Note: 1. Estimated Cash Inflow (Outflow) includes the cashflow in investing activities, financing activities, and
foreign exchange impacts.
2. Analysis of the 2018 cash flow changes:
•
Net cash inflow in operating activities of $5,343,575 thousand: expect sales growth and profit from the
operation.
Net cash outflow in investing activities of $6,267,612 thousand: expect to increase investment
expenditures next year.
Net cash inflow in financing activities of $1,795,602 thousand: expect to distribute cash dividend and
increase/decrease in long-term and short-term debt next year.
•
•
3. Financing of cash deficits: not applicable.
4. Liquidity analysis: The Company should be able to mainly sound liquidity, as opening cash balance plus net
cash inflows from operating activities are adequate in meeting the Company's investing and financing needs.
107
7.4 Major Capital Expenditures
7.4.1 Major Capital Expenditures and Sources of Capital
Project
Actual or Planned
Source of Capital
Actual or Planned
Date of Completion
Total Capital
Actual or Expected Capital Expenditure
2017
Unit: NT$ thousands
Acquisition of
exclusive agency
rights to structured
Electronic Medical
Record (EMR)
system solution in
Southeast Asia
Private Capital
2017
180,900
180,900
7.4.2 Expected Benefits
In light of the opportunities brought by IoT, Compal is in a good position to leverage its hardware
manufacturing advantages with its ICT supply chain to develop application service systems with integrated
software/hardware and cloud computing to target the domestic market in Taiwan; by creating a classic
paradigm from which we optimize relevant software, hardware and service processes, we will be able to
build a suite of comprehensive IoT application services. On the other hand, the medical/healthcare industry
is still one of the key domains of applications that Compal has been aggressively cultivating. With the
experience and capabilities that Compal has accumulated in the domain of ICT in the past, coupled with the
investments made in the cultivation of medical and biotechnological talents, the Company has not only
established relevant R&D teams in the Company to specialize in the development of smart medicine/fitness
equipment/mobile devices and service platforms but also acquired exclusive agency rights to a structured
Electronic Medical Record (EMR) system solution in Taiwan (and Southeast Asia) in December 2015.
Through the solution, we will be able to acquire relevant big data and apply AI analytics to help doctors
make faster and more accurate clinical diagnoses and provide more efficient patient ward services. This will
in turn lighten the work load for medical staff, and improve the efficiency and quality of medical care to
achieve the vision of digital medical service. As telecommunication technologies become more mature in
the foreseeable future, through the application of mobile care, remote consultation and mobile ward rounds
combined with wearable devices for biomedical signal monitoring and personal health management, we will
be able to build a complete platform for smart medical care. Ultimately, this will help to further the
optimization of medical resource allocation and facilitate the integration of medical resources and the
realization of precision medical care.
7.5
Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and
Investment Plans for the Coming Year
(1)
Investment policy
1. Competition in the industry has accelerated and Compal is in full thrust integration mode. “Enlightened
Living and Computing with a Green Connection” is the Compal vision. Our long-term investment
strategies are to focus on products that relate to our core business, to provide the best quality in
computing, communications, consumer, cloud and connection, to provide full solutions in cost and
technology, and to put emphasis on our partner’s compliance with labor regulations, and the avoidance of
human trafficking and slavery. Strengthen the core resources, through vertical integration, diversification,
and strategic investments or acquisitions as well as integration and horizontal competition.
2. Improve post investment performance, strengthen the integration of Group resources and strategic
partnerships with investment businesses, facilitate the cooperation between the Company and invested
108
business, and require their full compliance with labor regulations and those against human trafficking and
slavery. Connect related customers to an information network, and form strategic alliances with other
industries. Sustain the performance of operating output in social, economic and environmental aspects
using a high standard of specification. This includes increasing the efficiency and productivity, improving
the rights of the workers, proper economic development, and environmentally friendly production in a
clean operating base. The Company fully supports investment companies with good performance to plan
for IPO to accelerate the realization of good return on investment.
(2) Main causes of profits or losses incurred on investments, and any corrective actions planned
The 2017 consolidated profits from investment using the equity method came to approximately NTD
606 million, coming mainly from the performance of Compal Precision Module Co., Ltd and Allied Circuit
Co., Ltd.
(3) 2018 investment plans
The long-term investment plan next year will be based on the Company’s operating policy to position
ourselves as the pioneer provider of the mobile device solution and provide products, through the integration
of R&D resources and clients, of an all-in-one computer, TV, AE and enterprise servers. The Company
follows the principle of steady operation and always focuses on our core businesses. We expand on the
foundation of our existing businesses, make some vertical integration where appropriate and expand
horizontally into related activities, while continuing to grow our core business.
In the vertical integration of upstream and downstream businesses, not involved in hardware production,
we also expand the size of our developers and the proportion of softwareand firmware, to increase the value
of their tangible assets and bring in value from additional sales.
We expect horizontal mergers and expansions to provide full IoT solutions for our clients which include
applications in cross-industry automation, industrial computers, security control, the healthcare industry, cars,
smart cities, smart buildings, restaurants and retail outlets, with the primary aim of providing new
investment opportunities and challenges.
In practice, apart from achieving internal growth under the existing business framework, we also accept
the possibility of mergers, acquisitions, joint ventures, technical calibrations and investment activities
through bilateral or multi-lateral collaboration between business entities.
The Company and its affiliates will proceed with the aforementioned expansion based on the
consideration of whether the expansion can strengthen the Group’s advantage and assessment of reasonable
risks. In terms of reinvestments, we follow the above mentioned principles and set basic principles in the
following three directions:
1. The vertical integration of upstream and downstream businesses to increase the proportion of self-made
parts and improve overall competitiveness.
2. Horizontal mergers and expansion of related products and services as well as other industries that provide
prominent synergy or growth.
3. Develop technology which is beneficial to the Company or its affiliates, or invest in assets that provide
synergy or growth.
109
7.6 Analysis of Risk Management
7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate
Finance, and Future Response Measures
Net interest revenue and expense
Items
Net gain on exchange (including valuation of financial instruments)
Net revenues
Pre-tax income (Note)
Net interest revenue/expense to net revenues
Net interest revenue/expense to pre-tax income
Net exchange gains to net revenues
Net exchange gains to pre-tax income
1. Interest rate changes:
Unit: NTD thousand; %
2017
(420,595)
(2,003,666)
887,656,959
8,114,277
(0.047%)
(5.183%)
(0.226%)
(24.69%)
The most recent U.S. Fed meeting statement revealed steady momentum in the U.S. labor market and that the
national economy has been growing at a moderate pace. As such, the federal fund rate has been increased by one
quarter point from 1.5% to 1.75% and the market is expecting the Fed to raise the rate further by 2-3 points later in
2018. With regards to the interest rate for NTD, the Central Bank of Taiwan has noted that in light of the steady
growth in the domestic economy, relatively mild inflation, and ample market liquidity that contributed to the strength
of the currency, the Board of Central Bank of Taiwan has resolved that the bank will maintain the current rate at
1.375%. As of the end of 2017, the Company’s cash balance came to approximately NTD 70.063 billion. The long and
short-term bank loans came to about NTD 83.968 billion, with net interest expenses for the year at NTD 420,595
thousand. The amount accounted for 0.047% and 5.183% of the Company’s net sales and income before tax
respectively. As of December 31, 2017, should all other factors remain unchanged, the increase of 0.25% in interest
will cause a decrease in income before tax of NTD 36,326 thousand. The Company will continue to monitor the
change of interest rate closely and respond in a timely manner.
2. Exchange rate changes:
The Company is export-oriented. And as such, the change and movement of exchange rate have a considerable
impact on annual profit and loss. To mimimize the impact on the Company’s operating profit/loss, the Company
mainly utilizes hedging such as forward foreign exchange contracts and swaps to minimize the risks of exchange rate
movements.The full year net exchange gains and losses, including the valuation of financial assets, came to
$(2,003,666) thousand, accounting for (0.226%)and (24.69%) of net revenue and net profit before tax respectively. As
of December 31, 2017, with all other factors remain unchanged, a 5% appreciation of USD/TWD will increase income
before tax by $705,944 thousand. We will take all necessary actions based on the fluctuation of the exchange rate in
the future.
3. Inflation:
According to relevant data published by the Central Bank, while imported raw materials such as crude oil are
expected to increase in prices this year, the recent growth in NTD has effectively alleviated imported inflation. With
domestic demand gradually dwindling, the output gap remained in the negative. The CPI for the year was expected to
grow by 1.27% and while CP outlook should remain stable, we will continue to watch for potential impact on prices.
110
7.6.2 Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to
High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives
Transactions
1. The Company does not make high-risk, high-leveraged investments.
2. The Company only offers financing to its related parties, mainly providing short-term financing for their
operating needs.
3. The Company is engaged in endorsement and guarantee activities which are only negotiated between
subsidiaries and the parent company. The arrangements are covered by proper Endorsement and Guarantee
Procedures.
4. The Company uses hedging strategy for assets and liabilities valued in foreign currencies. Such hedging,
done through forward foreign exchange contracts and swap trading, covers the amount of net assets and
liabilities to achieve the objective of risk aversion. At the end of 2017, the Company’s position in open
forward foreign exchange contracts amounted to USD$ 68,500 thousand, EUR 46,000 thousand, and swap
contracts of USD$ 29,600 thousand. The Company will continue to pay close attention to changes in
exchange rates and execute timely hedging in the future.
5. In addition to prudent evaluation and control of the execution of related policies, the Company also relies
on regulations such as “Guidelines for Handling Acquisition and Disposal of Assets”, “Endorsement and
Guarantee Procedures”, “Third Party Lending Procedures” and “Procedures for the Handling of Derivatives
Trading”.
7.6.3 Future Research & Development Projects and Corresponding Budget
Other than the Company’s efforts in innovation and improvement of computers, TVs, and other peripheral
products, the Company also deems innovative research and development works as the niche for the Company’s
sustainable growth. Various R&D programs are developed and proposed by R&D team based on their forecast of new
technologies, understand of market trends, and intergration of add-on function. They also team with clients to meet
their market planning and detail product developments.
In general, the Company’s usually has less than one year product development cycle and aim to shorten the R&D
cycle year after year. The IT industry is highly competitive, and the timing of product development is of vital
importance. The rapid growth of sales has made the quality, experience and capacity of R&D a decisive factor that
will become the key as to whether the Company can achieve its sales target in 2018 and whether the existing clients
will renew their contracts. The 2018 R&D expense is expected to be more than NT$ 13.2 billion.
7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance
and Sales
The Company’s management team is paying close attention to any policies or regulations that may impact the
Company’s operation. In 2017, the Company made all the necessary responses to significant change in international
and domestic policies and regulations, without significant impact on Company operation.
7.6.5 Effects of and Response to Changes in Technology and the Industry Relating to Corporate
Finance and Sales
The constant arrival of new technology products to replace dated ones has changed the habits of users. This has
consequently led to the emergence of different demands, and the development of ARM and Android has also impacted
Wintel, which used to monopolize the market. Not only that, the emergence of cloud applications has also resulted in
significant changes in the traditional PC market. To cope with these changes, the Company has expanded new
businesses to its existing product lines to embrace the latest industrial trends. As such, the Company has established its
Innovation Center that is responsible for following and studying the latest developments in market trends. Not only
that, the Center is also involved involved in the development of innovative products, technologies and designs to
111
strengthen the Company’s research on consumer behavior and thereby provide more accurate market segregation and
product positioning to satisfy user needs. At the same time, we will also focus on boosting our innovative technology
capabilities and plans for future product and market opportunities.
7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the
Company’s Response Measures
Compal has concentrated on the IT and Communications industry for many years and has firmly adhered to our
business philosophy of transcendence, sincerity, and harmony in a culture of ethics and honesty. We aim to be the best
in world-class professional design, manufacture and services. As we pursue business growth, we always remember our
obligations as a corporate citizen. We have strengthened corporate governance, fulfilled corporate social responsibility,
and have established a good corporate image. In recent years, Company business has expanded, the number of
employees has increased and our global production branches have increased in number. We have become acutely
aware of the need for periodic checks of the external environment, a self-management system and operational
strategies for the early detection of potential corporate crises and the need for concrete and positive response plans and
corrective measures.
For many years, Compal has placed amongst the top 500, top 2000 businesses and top 2000 manufacturers in
Taiwan by Fortune, Forbes Magazine and CommonWealth Magazine respectively. In 2017, the Company placed
within the top 20% in the TWSE-listed Companies in the 3rd round of “Corporate Governance Evaluation” and the
distinction of the Gold Award in the “Taiwan Corporate Sustainability Award” organized by the Taiwan Institute of
Sustainable Energy. These prestigious awards once again reaffirmed the Company’s corporate image. There had been
no company crisis in 2017 nor was there any significant event that affected the company image in any way.
7.6.7 Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans
In addition to continued cultivation of the existing information and communication technology (ICT) operations
and enhancement of the core profit base, we are actively seeking out upcoming industries for merger, acquisition, joint
venture, technical collaboration and other patterns, with the aim being to move into industrial computing, medical
networking, IoT networking, vehicle networking and the medical equipment market. We will maintain stable
development of existing business and also move ahead of the curve in other areas which have high growth momentum.
The Company will integrate resources to increase R&D capacity, improve operational efficiency, and increase
competitiveness. We expect to benefit from synergy, have positive impact on future shareholder equity, and maintain
adequate control of organizational integration matters and financial risks.
7.6.8 Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans: None
7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and
Excessive Customer Concentration: None
7.6.10 Effects of, Risks Relating to and Response to Large Share Transfers or Changes in
Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10%:
None
7.6.11 Effects of, Risks Relating to and Response to the Changes in Management: None
7.6.12 Litigation or Non-litigation Matters
Qualcomm Inc. filed litigation against the Company and its subsidiaries regarding a dispute over payment of
royalties for a patent licensed on May 17, 2017; in response, the Company and its subsidiaries filed a counter suit
against Qualcomm Inc. in the United States on July 19, 2017 for violation of the antitrust law. The Company has
112
appointed an attorney to handle the aforementioned lawsuit, which is being heard by the United States District Court,
Southern District of California. The final outcome of the lawsuit will depend on the proceeding of the lawsuit in the
future, but will have no major bearing on the Company and its subsidiaries’ existing operations.
7.6.13 Other Major Risks
International conglomerates face many risks such as regulatory compliance, business competition, localization,
and globalization. It is the responsibility of each Company employee to turn such challenges into future opportunity.
Ex ante risk identification, weekly risk assessment and prevention, and post-crisis management, have all been added to
the Company target management cycle (PDCA), key performance indicators (KPI), and control system for internal use.
Such processes allow the dedicated units responsible for these specific risks to establish rigorous and rapid means for
response and a problem-solving culture. By working through regular and irregular reviews and combining education,
training and a performance risk appraisal system, they can cope with significantly different kinds of risk management
based on local conditions. The company was not faced by any significant risk in 2017.
113
VIII. Special Disclosure
8.1
Summary of Affiliated Companies (As of Dec 31, 2017)
114
1 100% 100% 100% 100% 100% Compal Electronics (China) Co., Ltd. Compal Optoelectronics (Kunshan) Compal System Trading (Kunshan) Compal Display Holding (HK) Limited Compal International Ltd. 100% 100% 52.88%%% 59.10% 40.90% 100% 4.94% 4.94% 0.27% 100% 100% 100% 100% 99.73% 27.78% 100% 75.77% 100% 100% 100% 100% 100% 99.90% 0.10% 24.23% 100% 4.15% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 21.84% 100% 100% 100% 100% 100% 75.625% 100% 100% 100% 100% 100% 100% 100% 24.375% 100% 100% 100% 100% 100% 100% 100% 100% 100% 48.15% 100% 100% 23.48% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 3.61% 4.15% 2.29% 100% 100% 100% 100% 100% 100% 50% 100% 100.00% 0.00% 100% 100% 100% Allied Power Holding Corp.△ Bizcom Electronics, Inc. Compal Europe (Poland) Sp.z o.o. Auscom Engineering Inc. Flight Global Holding Inc. Compal Electronics (Holding) Ltd. Huang Feng Communication Co., Ltd. HANHELT Communications (Nanjing) Co., Ltd. UNICOM GLOBAL INC. Giant Rank Trading Limited UniCore Biomedical Co., Ltd.△ Compal Electronics Co., Ltd. Henghao Technology Co., Ltd.△ Jui Hong Technology Co., Ltd. Compalead Eletrônica do Brasil Indústria e Comércio Ltda. 100% Hong Ji Capital Co., Ltd. Hong Jin Investment Co., Ltd. Arcadyan Technology Corp. 36.04% △ Panpal Technology Corporation Gempal Technology Corp Compal Broadband Networks Inc. 71.63% Accesstek Inc. 37.66% Billion Sea Holdings Ltd. Compalead Electronics B.V. Etrade Management Co., Ltd. Webtek Technology Co., Ltd. Kaipal Investment Co., Ltd. Zhaopal Investment Co., Ltd. Yongpal Investment Co., Ltd. Mactech Co., Ltd. Kunshan Botai Electronics Technology Service Co., Ltd. Compal Investment (Jiangsu) Co., Ltd. Compal Display Electronics (Kunshan) Co., Ltd. Compal International Holding Co., Ltd. Just International Ltd. General Life Biotechnology Co., Ltd.△ Prospect Fortune Group Ltd. Ripal Optoelectronics Co., Ltd. Forever Young Technology Inc. Jenpal International Ltd. Compal Electronics India Private Limited Core Profit Holdings Ltd. Speedlink Tradings Ltd. △ See next page Fortune Way Technology Corp. Compal Rayonnant Holdings Ltd. Compal Wireless Communications (Nanjing) Co., Ltd. Compal Communications (Nanjing) Co., Ltd. Compal Digital Communications (Nanjing) Co., Ltd. High Shine Industrial Corp. Compal Display Holding (HK) Limited Compal Information Research & Development (Nanjing) Co., Ltd Compal Information Technology (Kunshan) Co., Ltd. Compal Electronics Technology (Kunshan) Co., Ltd. Compal Information (Kunshan) Co., Ltd. Compal Digital Technology (Kunshan) Co., Ltd. Compal International Holding (HK) Limited Center Mind International Co., Ltd. Compal Electronics (Chengdu) Co., Ltd. Compal Management (Chengdu) Co., Ltd. Compal Electronics (Chongqing) Co., Ltd. Prisco International Co., Ltd. Big Chance International Co., Ltd. Compal Investment (Sichuan) Co., Ltd. Compal Broadband Networks Belgium Compal Development & Management (Vietnam) Co., Ltd. Compal (Vietnam) Co., Ltd. Goal Reach Enterprises Ltd. Intelligent Universal Enterprise Ltd. Smart International Trading Ltd. CENA Electromex S.A de C.V. Amexcom Electronics, Inc. Mexcom Electronics, LLC Mexcom Technologies, LLC Compal Optoelectronics (Kunshan) Co., Ltd. Compal System Trading (Kunshan) Co., Ltd. Compal Electronics (China) Co., Ltd. Kunshan Botai Electronics Co., Ltd. Chongqing Yipal Smart Electronic Device Co., Ltd. Compal Electronics International Ltd. Compal International Ltd.
115
4 Arcadyan Technology Affiliated Business Organization Chart Henghao Technology Co., Ltd. Affiliated Organization Chart Allied Power Affiliatedcal Business Organization Chart General Life Biotechnology Affiliated Business Organization Chart UniCore Biomedical Affiliated Business Organization Chart Great Arch Group Ltd. Leading Images Limited Astoria Networks Inc. Astoria Networks GmbH 31.6% 100% 100% 100% 100% 100% 100% 100% 100% 60.86% 100% 100% 51.08% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 99% 1% 0.88% 22.60% 100% 100% Arcadyan Technology Limited Arcadyan Technology Corp. Arcadyan Technology N.A. Corp. Arcadyan Technology Australia Pty Ltd. Arcadyan Holding (BVI) Corp. ZHI-PAL Technology Inc. Tatung Technology Incorporated AcBel Telecom Inc. Arcadyan Technology Corp. Korea Arcadyan Technology (Shanghai) Corp. Arch Holding (BVI) Corp. Sinoprime Global Inc. Compal Broadband Networks Inc. Quest International Group Co., Ltd. Exquisite Electronic Co., Ltd Tatung Technology (Suzhou) Incorporated Great Arch Group Ltd. Leading Images Limited Astoria Networks GmbH Compal Network Information (Kunshan) Co., Ltd. Arcadyan do Brasil Ltda. Arcadyan Germany Technology GmbH Tatung Technology Japan Inc. Tatung Appliance (Wujiang) Co., Ltd. 100% 100% 100% 100% 100% 51% Primetek Enterprises Ltd. Rayonnant Technology Holdings (HK) Co., Ltd. Allied Power Holdings Corp. Rayonnant Precision Technology (Taicang) Co., Ltd. General Life Biotechnology Co., Ltd. Rapha Bio Ltd. UniCore Biomedical Co., Ltd. Raycore Biotech Co., Ltd. 100% 100% 100% 100% 100% Henghao Technology Co., Ltd. HengHao Holdings A Co., Ltd HengHao Holdings B Co., Ltd Henghao Technology (Kunshan) Co., Ltd. HengHao Trading Co., Ltd. Lucom Display Technology (Kunshan) Ltd.
Overview of Operating Status for Affliated Companies in 2017
Unit: NTD thousand
Company Name
Capital Net asset value Total liabilities Net worth
Operating
revenue
Operating
income
44,191,916
328,096,066 226,200,482 101,895,584
841,309,602
5,170,549
1,787,680
84,258,053
51,493,100
32,764,953
79,522,150
3,382,246
3,357,696
Net loss/profit
for the period
(after tax)
5,749,525
EPS (in NTD)
(After tax)
1.32
63.35
Compal Electronics, Inc.
Compal International Holding Co.,
Ltd. and its subsidiaries
Just International Ltd.
and its subsidiaries
Big Chance International Co., Ltd.
and its subsidiaries
Core Profit Holdings Ltd.
High Shine Industrial Corp.
and its subsidiaries
Panpal Technology Corporation
and its subsidiaries
Gempal Technology Co., Ltd.
Hong Ji Capital Co., Ltd.
Hong Jin Investment Co., Ltd.
Accesstek Inc.
and its subsidiaries
UniCore Biomedical Co., Ltd.
Arcadyan Technology Corp.
and its subsidiaries
Compal Broadband Networks Inc.
and its subsidiaries
Zhaopal Investment Co., Ltd.
Yongpal Investment Co., Ltd.
1,480,509
16,709,920
8,914,356
7,795,564
25,696,091
(381,287)
(289,783)
(6.04)
2,636,051
21,841,891
16,250,045
5,591,846
19,425,080
446,277
466,605
4,318,860
4,817,873
-
4,817,873
1,346,814
1,095,666
321,699
773,967
-
-
-
69,239
(61,085)
(41,434)
(0.97)
5,000,000
9,439,570
3,821,618
5,617,952
8,256,973
122,096
20,130
900,000
1,000,000
295,000
1,949,157
1,057,068
323,456
4,272
80
71
1,944,885
1,056,988
323,385
32,369
38,039
846
37,193
200,000
212,284
3,090
209,194
-
-
-
-
-
(278)
(216)
(206)
(89)
70,013
31,957
12,278
90
(15,590)
(15,190)
(0.76)
1,891,190
15,581,848
6,657,441
8,924,407
20,110,209
918,536
607,243
603,512
4,432,422
2,884,310
1,548,112
6,817,503
183,648
182,145
1,358,000
1,188,500
6,373
5,692
-
-
6,373
5,692
-
-
(71)
(64)
1,324
87
3.21
3.02
0.01
-
116
5.14
0.47
0.04
0.78
0.32
0.42
0.03
Company Name
Capital Net asset value Total liabilities Net worth
Operating
revenue
Operating
income
510,500
3,295
-
3,295
-
(66)
1,314,987
6,130,517
5,523,109
607,408
7,907,599
(606,440)
(677,877)
411,458
60,000
707,764
43,236
213,129
12,380
494,635
30,856
545,911
53,910
102,179
9,336
86,654
9,366
300,000
350,270
95,617
254,653
273,118
7,347
1,868
Net loss/profit
for the period
(after tax)
461
EPS (in NTD)
(After tax)
0.01
(5.16)
2.11
1.56
0.06
Kaipal Investment Co., Ltd.
Henghao Technology Co., Ltd.
and its subsidiaries
Mactech Co., Ltd.
Ripal Optoelectronics Co., Ltd.
General life Biotechnology Co.,
Ltd.
Rayonnant Technology Holdings
Ltd.,
Compal Rayonnant Holdings Ltd.
and its subsidiaries
Bizcom Electronics, Inc.
Compal Europe (Poland) Sp.z o.o.
Auscom Engineering Inc.
Flight Global Holding Inc.
Compalead Electronics B.V.
Etrade Management Co., Ltd and its
subsidiaries
Webtek Technology Co., Ltd
Forever Young Technology Inc. and
its subsidiaries
Unicom Global Inc.,
Huang Feng Communication Co.,
Ltd.
295,000
127,728
37,804
89,924
-
(33,666)
(26,715)
(0.91)
377,328
1,275,054
1,099,683
175,371
1,943,943
(57,072)
(42,535)
(3.40)
3,031
90,156
101,747
2,754,741
197,463
543,144
225,809
174,739
4,539,214
786,542
124,073
192,969
57,438
80,171
265,730
419,071
32,840
117,301
4,459,043
520,812
443,928
671,594
156,181
-
-
13,341
40,700
10,217
(125)
(1,906)
10,651
35,525
8,725
373,048
5,746
106.51
261.06
2.91
4.16
0.89
1,978,429
4,164,499
4,688,348
(523,849)
50,603,909
(323,883)
(432,820)
(6.99)
3,340
9,268,912
8,372,999
895,913
57,727,311
(11,781)
(62,421)
(624.21)
1,575
18,567,374
17,125,496
1,441,878
64,348,303
(331)
4,111
100,000
378,104
610,299
(232,195)
269,513
(106,205)
(101,600)
100,000
166,977
50,498
116,479
192,369
9,981
9,242
82.22
(10.16)
0.92
-
Compal Electronics (Holding) Ltd.
34
3,505,330
-
3,505,330
-
-
-
117
8.2
Private Placement of Securities in the Most Recent Year: None
8.3
Company Shares Held or Disposed by Subsidiaries in the Most Recent Year:
Name of
Subsidiary
Share Capital
Acquired
Funding
Source
Percentage
of Shares
Held by the
Company
Date of
Acquisition
or
Disposition
Shares and
Amount
Acquired
Shares and
Amount
Disposed
Investme
nt Gain
(Loss)
Shareholdings and
Amount as of March
31, 2018
Collateraliz
ed
Amount of
Endorsements
Made for the
Subsidiary
Amount
Loaned to
the
Subsidiar
y
Unit: NT$ thousands; Shares; %
NTD 5,000,000,000
Panpal
Technology
Corporation
Gempal
Technology
Co., Ltd.
Note: Impacts on the Company’s financial performance and position: none of the subsidiaries had acquired or disposed the Company’s shares in the current year up till the
18,369,349 shares
NTD 321,435,000
31,648,082 shares
NTD 559,812,000
Proprietary
capital
Proprietary
capital
NTD 900,000,000
100%
100%
N/A
N/A
-
-
-
-
-
-
-
-
-
-
-
-
publication date of this annual report, hence there were no impacts.
8.4
Any Events in 2017 and as of the Date of this Annual Report that had Significant Impacts on Shareholders’ Interests or Security Prices as
Stated in Item 2 Paragraph 2 of Article 36 of Securities and Exchange Law of Taiwan: None
118
Attachment I
4
Independent Auditor’s Report
To COMPAL ELECTRONICS, INC.:
Opinion
We have audited the consolidated financial statements of COMPAL ELECTRONICS, INC. and its subsidiaries
(the “Group”), which comprise the consolidated statement of financial position as of December 31, 2017 and
2016, and the consolidated statement of comprehensive income, consolidated statements of changes in equity
and consolidated statement of cash flows for the years ended December 31, 2017 and 2016, and notes to the
consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as of December 31, 2017 and 2016, and its consolidated financial
performance and its consolidated cash flows for the years then ended in accordance with the Regulations
Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial
Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), interpretation as well as related
guidance endorsed by the Financial Supervisory Commission of the Republic of China.
Basis for Opinion
We conducted our audit in accordance with the “Regulations Governing Auditing and Certification of Financial
Statements by Certified Public Accountants” and the auditing standards generally accepted in the Republic of
China. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in
accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”),
and other ethical responsibilities in accordance with the Code have been fulfilled. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of our
audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
1. Account receivable valuation
Please refer to Note (4)(g) for the accounting policy of accounts receivable. Information of account
receivable valuation are shown in Note (6)(g) of the consolidated financial statements.
4-1
Description of key audit matters:
The Group devotes to develop new product lines and customers in emerging countries, and the credit risks of
these customers are higher than other world leading enterprises. Therefore, valuation of accounts receivable
has been identified as a key audit matter.
Our key audit procedures performed in respect of the above area included the following:
In order to evaluate the reasonableness of the Group's estimations for bad debts, our key audit procedures
included analyzing the aging of accounts receivable, examining the historical recovery records, and the
current credit status of customers, as well as inspecting the amount collected in the subsequent period.
2. Inventory valuation
Please refer to Note (4)(h) and Note (5) for the accounting policy of inventory valuation, as well as the
estimation and assumption uncertainty of the valuation of inventory, respectively. Information of estimation
of the valuation of inventory are disclosed in Note (6)(h) of the consolidated financial statements.
Description of key audit matters:
The inventory is measured at the lower of cost or net realizable value. The short life cycle of electronic
products may cause significant changes in customers’ demand and sales of related products. Consequently,
the book value of inventory may be lower than the net realizable value of inventory. Therefore, the valuation
of inventory is one of the key audit matters.
Our key audit procedures performed in respect of the above area included the following:
In order to verify the rationality of assessment of inventory valuation estimated by the Group, our key audit
procedures included reviewing the consistency of accounting policy, inspecting the Group's inventory aging
reports, analyzing the change of inventory aging, as well as verifying the inventory aging reports and the
calculation of lower of cost or net realizable value.
Other Matter
Compal Electronics Inc, has prepared the annual parent company only financial statements as of and for the
years ended December 31, 2017 and 2016, on which we have issued an unqualified opinion.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs,
IASs, interpretation as well as the related guidance endorsed by the Financial Supervisory Commission of the
Republic of China, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or
has no realistic alternative but to do so.
Those charged with governance (including members of the Audit Committee) are responsible for overseeing the
Group’s financial reporting process.
4-2
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the auditing standards generally accepted in the Republic of China will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we
exercise professional judgment and maintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
The engagement partners on the audit resulting in this independent auditor’s report are Kuan Ying Kuo and Yiu
Kwan Au.
4-3
KPMG
Taipei, Taiwan (Republic of China)
March 19, 2018
The accompanying consolidated financial statements are intended only to present the consolidated statement of financial position,
financial performance and its cash flows in accordance with the accounting principles and practices generally accepted in the Republic of
China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are
those generally accepted and applied in the Republic of China.
Notes to Readers
COMPAL ELECTRONICS, INC. AND ITS SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2017 and 2016
(Expressed in Thousands of New Taiwan Dollars)
5
Assets
Current assets:
December 31, 2017
December 31, 2016
Amount
%
Amount
%
Liabilities and Equity
Current liabilities:
December 31, 2017
December 31, 2016
Amount
%
Amount
%
Short-term borrowings (note (6)(n))
$
56,515,525 15.6
43,480,777 12.5
Current financial liabilities at fair value through profit or loss (note (6)(b))
24,463
-
137,489
-
1100
1110
1125
1147
1170
1180
1200
1310
1470
1550
1523
1543
1546
1600
1780
1840
1985
1990
Cash and cash equivalents (note (6)(a))
$
70,062,713 19.3
72,950,596 21.0
Current financial assets at fair value through profit or loss (note (6)(b))
Current available-for-sale financial assets (note (6)(d))
Current bond investments without active market (note (6)(f))
Notes and accounts receivable, net (notes (6)(g) and 8)
40,706
46,479
-
-
86,440
48,631
-
-
350,000
0.1
350,000
0.1
177,272,731 48.8
175,318,313 50.5
Notes and accounts receivable due from related parties, net (notes (6)(g) and 7)
113,994 -
70,972 -
Other receivables, net (notes (6)(g), 6(k) and 7)
Inventories (note (6)(h))
Other current assets (note 8)
Non-current assets:
Investments accounted for using equity method (note (6)(i))
Non-current available-for-sale financial assets (note (6)(d))
Non-current financial assets at cost (note (6)(e))
Non-current investments without active market (note (6)(f))
Property, plant and equipment (notes (6)(m) and (8))
Intangible assets
Deferred tax assets (note (6)(s))
Long-term prepaid rents (note (6)(q))
Other non-current assets (notes (6)(r) and (8))
988,008
0.3
1,082,607
0.3
69,512,712 19.1
48,105,125 13.9
3,395,311
0.9
2,456,323
0.7
321,782,654 88.5
300,469,007 86.5
11,807,622
3.2
11,726,370
3.4
7,646,667
2.1
9,556,461
2.8
53,982
-
71,820
-
350,000
0.1
700,000
0.2
18,179,367
5.0
20,952,677
6.0
1,284,660
0.4
1,291,281
0.4
1,351,371
0.4
1,262,986
0.4
571,133
0.2
328,965
0.1
594,520
0.2
390,989
0.1
41,573,767 11.5
46,547,104 13.5
2100
2120
2170
2180
2200
2230
2250
2300
2313
2320
2540
2570
2640
2670
3110
3200
3300
3400
3500
Notes and accounts payable
Notes and accounts payable to related parties (note (7))
Other payables
Current tax liabilities
Current provisions (note (6)(p))
Other current liabilities
Unearned revenue
Long-term borrowings, current portion (note (6)(o))
Non-Current liabilities:
Long-term borrowings (note (6)(o))
Deferred tax liabilities (note (6)(s))
Non-current net defined benefit liabilities (note (6)(r))
Non-current liabilities
Total liabilities
Equity attributable to parent company shareholders:
Ordinary share (note (6)(t))
Capital surplus (note (6)(t))
Retained earnings (note (6)(t))
Other equity interest (notes (6)(t) and (6)(u))
Treasury shares (note (6)(t))
140,381,168 38.6
127,523,732 36.7
1,636,656
0.5
1,958,211
0.6
16,318,597
4.5
17,853,264
5.1
4,362,395
1.2
3,795,925
1.1
1,827,439
0.5
1,842,094
0.5
3,071,238
0.8
2,899,674
0.9
1,617,626
0.4
1,774,158
0.5
6,200,625
1.7
7,966,875
2.3
231,955,732 63.8
209,232,199 60.2
21,252,263
5.8
23,954,688
7.0
614,437
0.2
705,810
0.2
180,207
-
746,962
0.2
631,821
0.2
166,626
-
22,752,717
6.2
25,500,097
7.4
254,708,449 70.0
234,732,296 67.6
44,191,916 12.2
44,241,606 12.8
10,938,773
3.0
11,779,274
3.4
56,557,146 15.6
55,289,409 15.9
(8,911,004) (2.5)
(4,624,653) (1.3)
(881,247) (0.2)
(881,247) (0.3)
101,895,584 28.1
105,804,389 30.5
6,752,388
1.9
6,479,426
1.9
108,647,972 30.0
112,283,815 32.4
Total assets
$
363,356,421 100.0
347,016,111 100.0
Total liabilities and equity
$
363,356,421 100.0
347,016,111 100.0
See accompanying notes to financial statements.
36XX
Non-controlling interests
Total equity
COMPAL ELECTRONICS, INC. AND ITS SUBSIDIARIES
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2017 and 2016
(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Share)
6
2017
2016
Net sales revenue (notes (6)(w) and (7))
Cost of sales (notes (6)(h), (6)(r), (7) and (12))
Gross profit
Operating expenses: (notes (6)(q), (6)(r), (6) and (12))
Selling expenses
Administrative expenses
Research and development expenses
Net operating income
Non-operating income and expenses:
Other gains and losses (notes (6)(d), (6)(i), (6)(k) and (6)(y))
Finance costs
Other income (notes (6)(q) and (6)(y))
Miscellaneous disbursements
Impairment loss (notes (6)(d), (6)(e) and (6)(m))
Share of profit of associates and joint ventures accounted for using equity method (note (6)(i))
Total non-operating income and expenses
Profit before tax
Less: Tax expense (note (6)(s))
Profit
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
Other comprehensive income, before tax, remeasurement of defined benefit obligation
Share of other comprehensive income of associates and joint ventures accounted for using equity
method
Income tax relating to items that will not be reclassified (note (6)(s))
Items that will be reclassified subsequently to profit or loss
Items that will be reclassified subsequently to profit or loss
Other comprehensive income, before tax, exchange differences on translation of foreign financial
statement
Other comprehensive income, before tax, available-for-sale financial assets
Gains (losses) on effective portion of cash flow hedges
Other components of other comprehensive income that will be reclassified to profit or loss
Income tax relating to items that will be reclassified to profit or loss (note (6)(s))
Items that will be reclassified subsequently to profit or loss
Other comprehensive income, net
Comprehensive income
Profit, attributable to:
Profit, attributable to parent company shareholders
Profit, attributable to non-controlling interests
Comprehensive income attributable to:
Comprehensive income, attributable to parent company shareholders
Comprehensive income, attributable to non-controlling interests
Earnings per share (note 6(v))
Basic earnings per share
Diluted earnings per share
%
Amount
Amount
$ 887,656,959 100.0 766,810,035 100.0
855,692,390 96.4 733,973,065 95.7
4.3
31,964,569
32,836,970
3.6
%
7,167,461
4,050,028
11,538,651
22,756,140
9,208,429
0.8
0.5
1.3
2.6
1.0
5,270,267
4,541,630
11,961,428
21,773,325
11,063,645
(1,897,072)
(1,297,965)
1,566,475
(52,752)
(19,405)
606,567
(1,094,152)
8,114,277
1,956,240
6,158,037
(0.2)
(0.1)
0.2
-
-
-
(0.1)
0.9
0.2
0.7
(1,042,285)
(946,893)
1,961,554
(54,672)
(239,989)
1,071,985
749,700
11,813,345
2,845,339
8,968,006
0.7
0.6
1.6
2.9
1.4
(0.1)
(0.1)
0.3
-
-
0.1
0.2
1.6
0.4
1.2
(84,394)
(561)
14,348
(70,607)
-
-
-
-
(97,739)
(1,673)
16,616
(82,796)
-
-
-
-
(4,808,866)
(0.5)
(938,426)
(0.1)
326,490
-
(30,076)
(21,353)
(4,533,805)
(4,604,412)
1,553,625
-
-
-
-
(0.5)
(0.5)
0.2
458,015
(21,360)
(702,159)
21,180
(1,182,750)
(1,265,546)
7,702,460
5,749,525
408,512
6,158,037
0.7
-
0.7
8,130,890
837,116
8,968,006
1,189,818
363,807
1,553,625
0.1
-
0.1
6,916,562
785,898
7,702,460
$
$
$
$
$
$
$
1.32
1.31
-
-
(0.1)
-
(0.2)
(0.2)
1.0
1.2
-
1.2
1.0
-
1.0
1.88
1.84
4000
5000
6100
6200
6300
7020
7050
7190
7590
7670
7770
7900
7950
8300
8310
8311
8320
8349
8360
8361
8362
8363
8370
8399
8300
8500
8610
8620
8710
8720
9750
9850
See accompanying notes to financial statements.
COMPAL ELECTRONICS, INC. AND ITS SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the years ended December 31, 2017 and 2016
(Expressed in Thousands of New Taiwan Dollars)
Retained earnings
Total other equity interest
Equity attributable to parent company shareholders
Capital
surplus
12,838,638
Legal
reserve
16,571,311
Special
reserve
Unappropriated
retained earnings
Exchange
differences on
translation of
foreign
financial
statements
Unrealized
gains (losses)
on available-
for-sale
financial assets
Others
Total other
equity interest
2,803,061
-
(1,478,779)
(1,478,779)
(6,010,432)
(719,510)
(3,926,881)
-
346,602
346,602
-
(7,699)
(7,699)
-
(1,139,876)
(1,139,876)
-
-
-
-
-
-
-
-
-
-
1,324,282
-
(4,801,658)
(4,801,658)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
442,104
-
442,104
-
-
-
-
-
(5,663,830)
(285,105)
(4,624,653)
-
310,058
310,058
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
205,249
-
-
(79,856)
-
(4,491,600)
(4,491,600)
-
-
-
-
-
-
-
205,249
-
Total retained
earnings
51,877,511
8,130,890
(74,452)
8,056,438
32,167,179
8,130,890
(74,452)
8,056,438
(868,461)
(60,653)
(4,426,671)
-
(658)
(10,527)
-
-
(4,426,671)
-
(658)
(10,527)
3,671
3,671
-
-
(210,355)
34,649,963
5,749,525
(68,107)
5,681,418
(813,089)
(1,139,875)
(4,422,153)
-
(2,179)
(424)
(194)
11,269
-
-
33,964,736
-
-
(210,355)
55,289,409
5,749,525
(68,107)
5,681,418
-
-
(4,422,153)
-
(2,179)
(424)
(194)
11,269
-
-
Treasury
shares
(1,724,739)
-
-
-
-
-
-
-
-
-
-
-
-
843,492
(881,247)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
868,461
-
-
-
-
-
-
-
-
-
3,139,021
-
-
-
-
60,653
-
-
-
-
-
-
-
-
17,439,772
3,199,674
-
-
-
813,089
-
-
-
-
-
-
-
-
-
-
-
-
-
1,139,875
-
-
-
-
-
-
-
-
7
Total equity
109,598,116
8,968,006
(1,265,546)
7,702,460
-
-
(4,426,671)
(885,334)
(636)
(8,804)
373,429
60,048
(128,793)
-
112,283,815
6,158,037
(4,604,412)
1,553,625
-
-
(4,422,153)
(884,431)
388,151
(282)
14,023
103,356
60,027
Non-controlling
interests
Total equity
attributable to
owners of
parent
103,775,795
8,130,890
(1,214,328)
6,916,562
5,822,321
837,116
(51,218)
785,898
-
-
-
-
-
-
-
-
(128,793)
-
6,479,426
408,512
(44,705)
363,807
-
-
-
-
357,314
-
-
-
-
-
-
(4,426,671)
(885,334)
(636)
(8,804)
373,429
60,048
-
-
105,804,389
5,749,525
(4,559,707)
1,189,818
-
-
(4,422,153)
(884,431)
30,837
(282)
14,023
103,356
60,027
-
10,938,773
18,252,861
4,339,549
56,557,146
(3,477,376)
(5,353,772)
-
(8,911,004)
-
(881,247)
-
101,895,584
(448,159)
6,752,388
(448,159)
108,647,972
Balance at January 1, 2016
Profit for the year ended December 31, 2016
Other comprehensive income
Comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve appropriated
Special reserve appropriated
Cash dividends on ordinary shares
Cash dividends from capital surplus
Changes in ownership interests in subsidiaries
Changes in equity of associates and joint ventures accounted
for using equity method
Share-based payments transaction
Adjustments of capital surplus for company's cash
dividends received by subsidiaries
Changes in non-controlling interests
Retirement of treasury share
Balance at December 31, 2016
Profit for the year ended December 31, 2017
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve appropriated
Special reserve appropriated
Cash dividends on ordinary shares
Cash dividends from capital surplus
Difference between consideration and carrying amount of
subsidiaries acquired or disposed
Changes in ownership interests in subsidiaries
Changes in equity of associates and joint ventures accounted
for using equity method
Ordinary
shares
$ 44,711,266
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(885,334)
22
1,723
(31,500)
-
(40,846)
60,048
-
-
(438,160)
44,241,606
(194,977)
11,779,274
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(884,431)
33,016
142
14,217
Share-based payments transaction
Adjustments of capital surplus for company's cash dividends
(49,690)
-
(63,472)
60,027
received by subsidiaries
Changes in non-controlling interests
Balance at December 31, 2017
-
$ 44,191,916
See accompanying notes to financial statements.
COMPAL ELECTRONICS, INC. AND ITS SUBSIDIARIES
Consolidated Statements of Cash Flows
For the years ended December 31, 2017 and 2016
(Expressed in Thousands of New Taiwan Dollars)
8
Cash flows from (used in) operating activities:
Profit before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation and amortization
Increase (decrease) in allowance for uncollectible accounts
Finance cost
Interest income
Dividend income
Compensation cost of share-based payment
Share of profit of associates and joint ventures accounted for using equity method
Loss (gain) on disposal of property, plant and equipment
Loss (gain) on disposal of investments
Impairment loss on financial assets
Long-term prepaid rents
Adjustments to reconcile profit (loss)
Changes in working capital assets and liabilities:
Changes in working capital assets:
Changes in financial assets at fair value through profit or loss
Decrease (increase) in notes and accounts receivable
Decrease (increase) in other receivable
Decrease (increase) in inventories
Decrease (increase) in other current assets
Decrease (increase) in other non-current assets
Total changes in operating assets
Changes in operating liabilities:
Changes in financial liabilities at fair value through profit or loss
Increase (decrease) in notes and accounts payable
Increase (decrease) in other payable
Increase (decrease) in provisions
Increase (decrease) in unearned revenue
Increase (decrease) in other current liabilities
Others
Total changes in working capital liabilities
Total changes in working capital assets and liabilities
Total adjustments
Cash flows from (used in) operations
Interest received
Dividends received
Interest paid
Income taxes paid
Cash flows from (used in) investing activities:
Net cash flows from (used in) operating activities
2017
2016
$
8,114,277
11,813,345
5,184,672
3,007,185
1,297,965
(877,370)
(169,839)
110,855
(606,567)
(110,846)
4,252
19,405
13,135
7,872,847
45,734
(4,986,899)
(59,604)
(21,407,587)
(974,717)
(90,471)
(27,473,544)
(113,026)
12,535,881
(1,776,989)
(14,655)
(156,532)
171,564
109,229
10,755,472
(16,718,072)
(8,845,225)
(730,948)
884,079
313,738
(1,242,536)
(1,405,335)
(2,181,002)
5,668,112
643,362
946,893
(561,897)
(191,333)
398,302
(1,071,985)
(87,995)
(112,448)
239,989
14,171
5,885,171
(61,028)
(11,651,155)
(306,896)
(1,605,047)
127,598
153,782
(13,342,746)
108,274
953,860
(52,699)
(546,616)
26,584
(607,250)
197,107
79,260
(13,263,486)
(7,378,315)
4,435,030
552,344
313,080
(905,672)
(3,107,120)
1,287,662
Acquisition of investments accounted for using equity method, available-for-sale financial assets and
(97,009)
(186,052)
financial assets at cost
Proceeds from disposal of investments accounted for using equity method and available-for-sale financial
2,265,745
345,026
assets
Redemption from bond investments without active market
Net cash flow from disposal of subsidiaries
Proceeds from capital reduction and liquidation of investments
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Others
Net cash flows from (used in) investing activities
Cash flows from (used in) financing activities:
Increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Cash dividends paid
Acquisition of non-controlling interests
Proceed of disposal of ownership interests in subsidiaries (without losing control)
Change in non-controlling interests
Others
Net cash flows from (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
See accompanying notes to financial statements.
350,000
129,000
28,615
(3,378,053)
183,253
(386,935)
30,451
(874,933)
13,034,748
12,664,420
(17,133,095)
(5,246,557)
(35,699)
413,257
(447,794)
13,581
3,262,861
(3,094,809)
(2,887,883)
72,950,596
70,062,713
350,000
(139,401)
47,695
(3,595,770)
519,243
(579,740)
57,033
(3,181,966)
13,999,601
23,515,000
(20,166,617)
(5,251,957)
(8,643)
-
(153,961)
(20,238)
11,913,185
180,173
10,199,054
62,751,542
72,950,596
$
3
Attachment II
To COMPAL ELECTRONICS, INC.:
Opinion
Independent Auditor’s Report
We have audited the financial statements of COMPAL ELECTRONICS, INC. (“the Company”), which comprise
the statements of financial position as of December 31, 2017 and 2016, and the statements of comprehensive
income, statements of changes in equity and cash flows for the years ended December 31, 2017 and 2016, and
notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2017 and 2016, and its financial performance and its cash flows for
the years ended December 31, 2017 and 2016 in accordance with the Regulations Governing the Preparation of
Financial Reports by Securities Issuers.
Basis for Opinion
We conducted our audit in accordance with the “Regulations Governing Auditing and Attestation of Financial
Statements by Certified Public Accountants” and the auditing standards generally accepted in the Republic of
China. Our responsibilities under those standards are further described in the section of the Auditor’s
Responsibilities for the Audit of the Financial Statements. We are independent of the Company in accordance
with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and other
ethical responsibilities in accordance with the Code have been fulfilled. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis of our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
1. Account receivable valuation
Please refer to Note (4)(f) for the accounting policy of accounts receivable. Information of account receivable
valuation are disclosed in Note (6)(e) of the parent company only financial reports.
Description of key audit matters:
The Company devotes to develop new product lines and customers in emerging countries, and the credit risks
of these customers are higher than other world leading enterprises. Therefore, valuation of accounts
receivable has been identified as a key audit matter.
3-1
Our key audit procedures performed in respect of the above area included the following:
In order to evaluate the reasonableness of the Company’s estimations for bad debts, our key audit procedures
included analyzing the aging of accounts receivable, examining the historical recovery records, and the
current credit status of customers, as well as inspecting the amount collected in the subsequent period.
2. Inventory valuation
Please refer to Note (4)(g) and Note (5) for the accounting policy of inventory valuation, as well as the
estimation and assumption uncertainty of the valuation of inventory, respectively. Information of estimation
of the valuation of inventory are disclosed in Note (6)(f) of the parent company only financial reports.
Description of key audit matters:
The inventory is measured at the lower of cost or net realizable value. The short life cycle of electronic
products may cause significant changes in customers’ demand and sales of related products. Consequently,
the book value of inventory may be lower than the net realizable value of inventory. Therefore, the valuation
of inventory is one of the key audit matters.
Our key audit procedures performed in respect of the above area included the following:
In order to verify the rationality of assessment of inventory valuation estimated by the Company, our key
audit procedures included reviewing the consistency of accounting policy, inspecting the Company’s
inventory aging reports, analyzing the change of inventory aging, as well as verifying the inventory aging
reports and the calculation of lower of cost or net realizable value.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal
control as management determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance (including members of the Audit Committee) are responsible for overseeing the
Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the auditing standards generally accepted in the Republic of China will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
3-2
As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we
exercise professional judgment and maintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the parent company only financial reports, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design 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.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial reports, including the disclosures, and
whether the financial reports represent the underlying transactions and events in a manner that achieves fair
presentation.
6. Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in
other entities accounted for using the equity method to express an opinion on the financial reports. We are
responsible for the direction, supervision and performance of the audit. We remain solely responsible for our
audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be considered to bear on our independence, and where applicable, related safeguards.
3-3
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the parent company only financial reports of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
The engagement partners on the audit resulting in this independent auditor’s report are Kuan Ying Kuo and Yiu
Kwan Au.
KPMG
Taipei, Taiwan (Republic of China)
March 19, 2018
The accompanying financial statements are intended only to present the statement of financial position, financial performance and its cash
flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other
jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the
Republic of China.
Notes to Readers
COMPAL ELECTRONICS, INC.
Balance Sheets
December 31, 2017 and 2016
(Expressed in Thousands of New Taiwan Dollars)
4
Assets
Current assets:
December 31, 2017
December 31, 2016
Amount
%
Amount
%
Liabilities and Equity
Current liabilities:
December 31, 2017
December 31, 2016
Amount
%
Amount
%
1100
Cash and cash equivalents
$
28,343,534
8.6
43,392,135 13.2
2100
Short-term borrowings
$
41,386,000 12.6
30,443,750
9.3
1125
Current available-for-sale financial assets
46,479
-
48,631
-
2170
Notes and accounts payable
1147
Current bond investments without active market
350,000
0.1
350,000
0.1
2180
Notes and accounts payable to related parties
1170
Notes and accounts receivable, net
165,540,785 50.5
162,701,780 49.5
2200
Other payables
1180
Notes and accounts receivable due from related parties, net
2,095,570
0.7
2,177,705
0.7
2230
Current tax liabilities
1200
Other receivables
1310
Inventories
1470
Other current assets
Non-current assets:
711,293
0.2
314,439
0.1
2250
Current provisions
42,985,363 13.1
27,969,011
8.5
2300
Other current liabilities
604,564
0.2
458,714
0.1
2313
Unearned revenue
240,677,588 73.4
237,412,415 72.2
2320
Long-term liabilities, current portion
1550
Investments accounted for using equity method
77,919,870 23.7
80,626,717 24.5
Non-Current liabilities:
1523
Non-current available-for-sale financial assets
5,735,334
1.8
6,349,202
1.9
2540
Long-term borrowings
1543
Non-current financial assets at cost
2,333
-
2,333
-
2570
Deferred tax liabilities
1546
Non-current bond investment without active market
350,000
0.1
700,000
0.2
2640
Non-current net defined benefit liabilities
1600
Property, plant and equipment
2,092,272
0.7
2,132,114
0.8
2670
Other non-current liabilities
1780
Intangible assets
1840
Deferred tax assets
1990
Other non-current assets
146,813
-
268,316
0.1
1,065,112
0.3
1,012,590
0.3
Total liabilities
106,744
-
117,233
-
Equity attributable to parent company shareholders:
87,418,478 26.6
91,208,505 27.8
3110
Ordinary share
3200
Capital surplus
3300
Retained earnings
3400
Other equity items
3500
Treasury shares
Total equity
72,212,035 22.0
72,535,568 22.0
71,456,277 21.9
73,903,066 22.5
7,052,029
2.1
7,725,946
2.4
1,644,175
0.5
1,024,690
0.3
1,440,292
0.5
1,532,250
0.5
664,918
0.2
926,734
0.3
1,617,626
0.5
1,774,158
0.5
6,018,750
1.8
7,700,000
2.3
203,492,102 62.1
197,566,162 60.1
21,114,450
6.4
23,635,000
7.2
543,621
0.2
699,875
0.2
612,131
0.2
541,693
0.2
438,178
0.1
373,801
0.1
22,708,380
6.9
25,250,369
7.7
226,200,482 69.0
222,816,531 67.8
44,191,916 13.5
44,241,606 13.5
10,938,773
3.3
11,779,274
3.6
56,557,146 17.2
55,289,409 16.8
(8,911,004) (2.7)
(4,624,653) (1.4)
(881,247) (0.3)
(881,247) (0.3)
101,895,584 31.0
105,804,389 32.2
Total assets
$
328,096,066 100.0
328,620,920 100.0
Total liabilities and equity
$
328,096,066 100.0
328,620,920 100.0
COMPAL ELECTRONICS, INC.
Statements of Comprehensive Income
For the years ended December 31, 2017 and 2016
(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Share)
5
2017
2016
4000
5000
5910
6100
6200
6300
7020
7050
7190
7370
7900
7950
8300
8310
8311
8330
Net sale revenue
Cost of sales:
Gross profit
Less: Unrealized profit from sales
Gross profit
Operating expenses:
Selling expenses
Administrative expenses
Research and development expenses
Net operating income
Non-operating income and expenses:
Other gains and losses, net
Finance costs
Other income
Share of profit of subsidiaries, associates and joint ventures accounted for using equity method
Total non-operating income and expenses
Profit before tax
Less: tax expense
Profit
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
Other comprehensive income, before tax, remeasurement of defined benefit obligation
Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for
using equity method that will not be reclassified subsequently to profit or loss
8349
Income tax relating to items that will not be reclassified to profit or loss
Items that will not be reclassified subsequently to profit or loss
8360
8361
8362
8380
Items that may be reclassified subsequently to profit or loss
Other comprehensive income, before tax, exchange differences on translation of foreign financial
statements
Other comprehensive income, before tax, available-for-sale financial assets
Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for
using equity method that may be reclassified subsequently to profit or loss
8399
Income tax relating to items that may reclassified to profit or loss
Items that may reclassified subsequently to profit or loss
8300
8500
9750
9850
Other comprehensive income, net of tax
Total comprehensive income
Earnings per share:
Basic earnings per share
Diluted earnings per share
%
%
Amount
Amount
$ 841,309,602 100.0 725,653,095 100.0
819,765,642 97.4 704,371,443 97.1
2.9
-
2.9
21,281,652
481
21,281,171
21,543,960
(480)
21,544,440
2.6
-
2.6
5,979,101
2,100,602
8,294,188
16,373,891
5,170,549
0.7
0.2
1.0
1.9
0.7
4,060,832
2,395,657
8,851,828
15,308,317
5,972,854
(1,615,111)
(975,175)
937,671
3,160,786
1,508,171
6,678,720
929,195
5,749,525
(0.1)
(0.1)
0.1
0.4
0.3
1.0
0.1
0.9
(581,031)
(719,294)
933,004
3,766,213
3,398,892
9,371,746
1,240,856
8,130,890
0.6
0.3
1.2
2.1
0.8
-
(0.1)
0.1
0.5
0.5
1.3
0.2
1.1
(79,683)
(1,970)
13,546
(68,107)
-
-
-
-
(82,021)
(6,375)
13,944
(74,452)
-
-
-
-
(0.5)
(0.1)
(4,606,117)
-
147,849
-
(21,111)
(1,004,076)
-
362,179
-
(521,847)
(12,221)
(4,491,600)
(4,559,707)
1,189,818
$
-
(0.5)
(0.5)
0.4
23,868
(1,139,876)
(1,214,328)
6,916,562
-
(0.1)
(0.1)
1.0
$
$
1.32
1.31
1.88
1.84
COMPAL ELECTRONICS, INC.
Statements of Changes in Equity
For the years ended December 31, 2017 and 2016
(Expressed in Thousands of New Taiwan Dollars)
Retained earnings
Other equity interest
6
Balance at January 1, 2016
Profit for the year ended December 31, 2016
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve appropriated
Special reversal appropriated
Cash dividends on ordinary shares
Cash dividends from capital surplus
Changes in ownership interests in subsidiaries
Changes in equity of associates and joint ventures accounted for using equity method
Share-based payments transaction
Adjustments of capital surplus for company's cash dividends received by subsidiaries
Retirement of treasury share
Balance at December 31, 2016
Profit for the year ended December 31, 2017
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve appropriated
Special reversal appropriated
Cash dividends on ordinary shares
Cash dividends from capital surplus
Difference between consideration and carrying amount arising from acquisition or
disposal of subsidiaries
Changes in ownership interests in subsidiaries
Changes in equity of associates and joint ventures accounted for using equity method
Share-based payments transaction
Adjustments of capital surplus for company's cash dividends received by subsidiaries
$
Balance at December 31, 2017
-
-
(49,690)
-
44,191,916
Ordinary
shares
44,711,266
$
Capital
surplus
12,838,638
Legal reserve
16,571,311
Special
reserve
Unappropriated
retained earnings
32,167,179
8,130,890
(74,452)
8,056,438
3,139,021
-
-
-
Total retained
earnings
-
-
-
-
-
-
-
-
-
(31,500)
-
(438,160)
44,241,606
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(885,334)
22
1,723
(40,846)
60,048
(194,977)
11,779,274
-
-
-
-
-
-
(884,431)
33,016
142
14,217
(63,472)
60,027
10,938,773
-
-
-
868,461
-
-
-
-
-
-
-
-
17,439,772
-
-
-
813,089
-
-
-
-
-
-
-
-
18,252,861
-
60,653
-
-
-
-
-
-
-
3,199,674
-
-
-
-
1,139,875
-
-
-
-
-
-
-
4,339,549
(868,461)
(60,653)
(4,426,671)
-
(658)
(10,527)
3,671
-
(210,355)
34,649,963
5,749,525
(68,107)
5,681,418
(813,089)
(1,139,875)
(4,422,153)
-
(2,179)
(424)
(194)
11,269
-
33,964,736
Exchange
differences on
translation of
foreign
financial
statements
Unrealized
gains (losses)
on
available-for-
sale financial
assets
(6,010,432)
51,877,511
8,130,890
(74,452)
8,056,438
-
-
(4,426,671)
-
(658)
(10,527)
3,671
-
(210,355)
55,289,409
5,749,525
(68,107)
5,681,418
-
-
(4,422,153)
-
-
(2,179)
(424)
(194)
11,269
2,803,061
-
(1,478,779)
(1,478,779)
-
-
-
-
-
-
-
-
-
1,324,282
-
(4,801,658)
(4,801,658)
-
-
-
-
-
-
-
-
-
-
346,602
346,602
-
-
-
-
-
-
-
-
-
(5,663,830)
-
310,058
310,058
-
-
-
-
-
-
-
-
-
56,557,146
(3,477,376)
(5,353,772)
Total other
equity
interest
(3,926,881)
-
(1,139,876)
(1,139,876)
-
-
-
-
-
-
442,104
-
-
(4,624,653)
-
(4,491,600)
(4,491,600)
-
-
-
-
-
Others
(719,510)
-
(7,699)
(7,699)
-
-
-
-
-
-
442,104
-
-
(285,105)
-
-
-
-
-
-
-
-
Treasury
shares
(1,724,739)
-
-
-
-
-
-
-
-
-
-
-
843,492
(881,247)
-
-
-
-
-
-
-
-
-
-
205,249
-
(79,856)
-
-
205,249
-
(8,911,004)
-
-
-
-
(881,247)
Total equity
103,775,795
8,130,890
(1,214,328)
6,916,562
-
-
(4,426,671)
(885,334)
(636)
(8,804)
373,429
60,048
-
105,804,389
5,749,525
(4,559,707)
1,189,818
-
-
(4,422,153)
(884,431)
30,837
(282)
14,023
103,356
60,027
101,895,584
Note: Employee bonuses amounting to $624,296 and $876,028, director's compensation amounting to $33,012 and $46,323 were recognized in the statements of comprehensive income for the years ended December 31, 2017 and 2016, respectively.
COMPAL ELECTRONICS, INC.
Statements of Cash Flows
For the years ended December 31, 2017 and 2016
(Expressed in Thousands of New Taiwan Dollars)
Cash flows from (used in) operating activities:
Profit before tax
Adjustments:
Depreciation and amortization
Increase in allowances for uncollectible accounts
Finance costs
Interest income
Dividend income
Compensation cost arising from share-based payment transaction
Share of profit of subsidiaries, associates and joint ventures accounted for using equity method
Loss on disposal of investments
Impairment loss on financial assets
Adjustments to reconcile profit
Changes in working capital assets and liabilities:
Changes in working capital assets:
Decrease (increase) in notes and accounts receivable
Decrease (increase) in other receivables
Decrease (increase) in inventories
Decrease (increase) in other current assets
Total changes in operating assets
Changes in operating liabilities:
Increase (decrease) in notes and accounts payable
Increase (decrease) in other payables
Increase (decrease) in provisions
Increase (decrease) in unearned revenue
Increase (decrease) in other current liabilities
Others
Total changes in working capital liabilities
Total changes in working capital assets and liabilities
Total adjustments
Cash flows from (used in) operations
Interest received
Dividends received
Interest paid
Income taxes paid
Net cash flows from (used in) operating activities
Cash flows from (used in) investing activities:
Redemption from bond investment without active market
Acquisition of investments accounted for using equity method and available-for-sale financial assets
Proceeds from disposal of available-for sale financing assets
Proceeds from capital reduction and liquidation of investments
Acquisition of property, plant and equipment
Decrease (Increase) in other receivables due from related parties
Acquisition of intangible assets
Others
Net cash flows from (used in) investing activities
Cash flows from (used in) financing activities:
Increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Cash dividends paid
Others
Net cash flows from (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
7
2017
2016
$
6,678,720
9,371,746
480,523
2,928,547
975,175
(239,394)
(117,742)
103,356
(3,160,786)
1,804
-
971,483
(5,685,417)
(223,698)
(15,016,352)
(145,850)
(21,071,317)
(2,770,322)
(686,997)
(91,958)
(156,532)
(261,816)
(9,639)
(3,977,264)
(25,048,581)
(24,077,098)
(17,398,378)
221,027
660,913
(962,095)
(517,161)
(17,995,694)
350,000
(503,112)
809,196
1,459,043
(126,108)
(293,029)
(193,154)
10,495
1,513,331
10,942,250
12,691,630
(16,893,430)
(5,306,584)
(104)
1,433,762
(15,048,601)
43,392,135
28,343,534
609,655
714,682
719,294
(119,754)
(133,485)
373,429
(3,766,213)
-
13,403
(1,588,989)
(15,775,684)
175,486
(2,624,036)
144,401
(18,079,833)
20,079,788
(1,220,679)
(502,427)
26,584
498,132
(9,738)
18,871,660
791,827
(797,162)
8,574,584
110,209
359,324
(730,294)
(2,097,820)
6,216,003
350,000
(303,702)
-
25,630
(159,703)
(20,939)
(290,200)
(11,811)
(410,725)
8,356,550
23,515,000
(19,770,000)
(5,312,005)
-
6,789,545
12,594,823
30,797,312
43,392,135
$
Compal Electronics, Inc.
Chairman: Sheng-Hsiun Hsu (Rock Hsu)
Chief Executive Officer (CEO): Jui-Tsung Chen (Ray Chen)