Stock Code: 2324
Compal Electronics, Inc.
2018 Annual Report
Notice to readers
This English version annual report is a translation of the Mandarin version. This document is
created for the sole purpose of the convenience for its non-Mandarin readers and is not an official
document to represent the financial status of the Company per Taiwan laws. Should any
discrepancy arise between the English and Mandarin versions, the Mandarin version shall prevail.
Taiwan Stock Exchange Market Observation Post System:
http://newmops.twse.com.tw
The Company's Annual Report is available at:
http://www.compal.com
Printed on May 13, 2019
Spokesperson
I.
Spokesperson: Ching-Hsiung Lu/Vice President
Deputy Spokesperson: Cheng-Chiang Wang /Vice President 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 Taiwan
Auditors: Chien, Szu Chuan 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
4
I. Letter to Shareholders
II. Company Profile
6
6
2.1 Date of Incorporation
2.2 Company History
III. Corporate Governance Report
7
9
31
83
84
85
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 Replacement of CPA
3.6 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
85
3.7 Changes in Shareholding of Directors, Supervisors, Managers and Major
Shareholders
88
89
3.8 Relationship among the Top Ten Shareholders
3.9 Ownership of shares in Affiliated Enterprises
IV. Capital Overview
91
96
96
96
98
98
98
98
4.1 Capital and Shares
4.2 Bonds
4.3 Preferred shares
4.4 Global Depository Receipts
4.5 Employee Warrants
4.6 Subscription of New Shares by Employees and Restricted Shares
4.7 New Share Issuance in Connection with Mergers and Acquisitions
4.8 Financing Plans and Implementation
V. Operational Highlights
99
114
131
132
132
134
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
2
VI. Financial Information
135
139
143
144
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
(Attachment I)
144
6.5 Parent-Company-Only Financial Statements and Independent Auditors’ Report
(Attachment II)
144
6.6 Status of financial difficulties for the Company and its subsidiaries
VII. Review of Financial Position, Operating Results, and Risk Management
145
146
147
148
148
150
154
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
7.6 Analysis of Risk Management
7.7 Other material issues
VIII. Special Disclosure
155
185
185
185
185
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 Other supplementary notes, where applicable
8.5 Events with Significant Impacts
Attachment
I
II
Consolidated Financial Statements and Independent Auditors’ Report
Parent-Company-Only Financial Statements and Independent Auditors’ Report
3
I. Letter to Shareholders
Dear Shareholders,
First of all, we would like to express our sincere gratitude for your long-term support to the company! 2018
was a challenging year given external noises concerning trade conflicts between US and China, Brexit
events and China economy fluctuations, whereas the industry was also impacted by the rising prices of
components and supply shortage. Despite the prevailing challenges, Compal still made some
accomplishments last year and successfully completed the re-election of the board of directors that
symbolizes transition into a new generation. Please refer to the following for a summary of last year's
financial and business performance and this year's prospect.
2018 Financial Results
In 2018, Compal generated consolidated revenues totaling NT$967,706 million, up NT$80,049 million or
9% from the previous year. Driven by the market's growing demand for PC products and Smart Devices,
total shipment of 5C electronics increased to 83 million units. Consolidated operating profit amounted to
NT$9,262 million, up 1% from the previous year. In addition, the Company sold equity interest in LCFC, it
recognized NT$2,511 million of non-operating income to conclude net income attributable to parent
company totaling NT$8,913 million, up NT$3,164 million or 55% from the previous year. After-tax EPS is
concluded at NT$2.05.
Steady Growth of Core Business
In terms of business development, Compal made several accomplishments in 2018 including: record-high
consolidated revenues, more than 30% revenue contribution from non-PC segments, and reclaiming of its
position as the No. 1 Notebook PC designer and manufacturer. With respect to PC products, we continue
to strengthen our relationship with brand companies by bringing added value to customers through quality
and innovative design. Apart from existing product lines, we are also increasing our investments in Server
and Edge Computing products. As for Smart Devices, development of AI, IoT and wearable technology has
progressed to the point capable of contributing rapid growth to Compal's non-PC segment.
Progress in Smart Medical
Compal has made significant progress in smart medical, one of its new business segments, over the last
three years and invested into several different fields from remote healthcare, electronic medical records,
smart ward, smart medical terminal, to cancer immunotherapy. The company is currently working with
multiple medical institutions to develop AI-based smart medical solutions. Ongoing projects include: "
iDiabCare®" – the tele health management and care ICT solution for chronic conditions that is being
promoted in joint effort with Changhua Christian Hospital, Yeezen General Hospital and Wei Gong
Memorial Hospital and has so far accumulated more than 1,700 active users; "Compal iCare" – the tele
healthcare service currently being used in collaboration with 120 institutions nationwide; Compal "Smart
Ward Total Solution" currently in development with Taipei City Hospital Zhongxiao Branch; and IOT
“BoostFix – tele-rehabilitation solution” that completed its clinical trial with Taipei Municipal Wanfang
Hospital and obtained TFDA permit.
Furthermore, Compal is participating in the Smart City project introduced by the Ministry of Economic
Affairs and assisting the government in the establishment of smart healthcare service centers at Chiayi City,
Chiayi County, Yunlin County and Penghu County by offering Compal's proprietary software and hardware
integrated systems. Meanwhile, one of Compal's investments - General Life Biotechnology has made
promising progress last year, with the product of 3-in-1 multi-function monitoring system for glucose, total
4
cholesterol, and uric acid.
Corporate Governance and Business Sustainability
Compal has always made sustainability the goal of business management. We approach environmental,
social and corporate governance issues with an emphasis towards innovation, harmony and ongoing
improvement, and execute a sustainable talent training program. Compal was honored to receive "Taiwan
Corporate Sustainability Awards" from Taiwan Institute for Sustainable Energy in 2018, and has maintained
its ranking in the top 6%-20% among the listed companies during the latest "Corporate Governance
Evaluation." Compal has been selected as a composition of FTSE4GOOD Index for 3 consecutive years, and
for 12 consecutive years, the company has been selected as a composite of the MSCI ESG Leaders Index.
They represent how international institutions have long recognized Compal's sustainable value as an
investment. In the future, we shall continue giving back to our employees, shareholders and the society
through acts of sharing and mutual benefit.
2019 Prospects
Year 2019 presents us with many economic uncertainties, which we have responded actively by
undertaking new measures and plans. In terms of manufacturing, in response to customer demand, we not
only invested into the expansion of the Chongqing Plant in China, but also re-activated investments in
Taiwan and Vietnam. Apart from process optimization and productivity improvement, we will also focus on
speeding up automation and digitalization of our production processes. Technology-wise, we have invested
in the development of new technologies such as AI, AR and 5G communication, and thereby prepare
ourselves for the next wave of industrial competition.
Although the macro environment is still full of challenges, we still expect 5C electronics shipments to
continue last year's momentum after taking into account the market condition and Compal's business
plans for 2019, and exhibit another year of growth. As for the non-PC segment, Compal aims to increase
revenue contributions toward 40% in the mid-to-long run. In the meantime, we will place additional focus
on profitability and raise Compal's stature and value within the industry. Once again, we thank the
shareholders for their support and guidance to Compal.
Yours truly,
Chairman: Sheng-Hsiung Hsu (Rock Hsu)
CEO: Chung-Pin Wong (Martin Wong)
Head of Accounting: Cheng-Chiang Wang (Jack Wang)
5
II. Company Profile
2.1
Date of Incorporation: June 1, 1984
2.2
Company History
Company history in the past two years:
Year
2017
•
Chairman Rock Hsu received the “Pan Wen Yuan Award” – the most prestigious award for
technology in Taiwan.
Milestones
•
•
•
•
•
• Won 4 awards at the 2017 “iF design” awards and ranked 27th in Global Innovation.
•
Ranked within the top 6%~20% of TWSE-listed companies in the “Third Round of Corporate
Governance Evaluations” 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 at the “2017 TCSA” – ICT Manufacturing
– The Gold Medal.
The Company’s share capital reached NTD 44.2 billion by 2017.
The Company earned NTD 887.7 billion in consolidated revenues in 2017.
•
•
• Won 11 awards at the 2018 “iF design” awards and ranked 18th in Global Innovation.
•
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.
Ranked within the top 6%~20% of TWSE-listed companies in the “4th Round of Corporate
Governance Evaluations” by TWSE
Chairman Rock Hsu received the Economic Profession Medal (First Rank).
Ranked 6th in CommonWealth Magazine’s “Top-2000 Manufacturers”.
Ranked 59th in CommonWealth Magazine’s “Cross-strait Top 1000 Survey”.
Ranked 404th on the Fortune Global 500.
Ranked 1500th on the Forbes Global 2000.
Received Taiwan Corporate Sustainability Report Awards at the “2018 TCSA” – ICT
Manufacturing – The Platinum Medal.
The Company’s share capital reached NTD 44.1 billion by 2018.
The Company earned NTD 967.7 billion in consolidated revenues in 2018.
•
•
• Won 13 awards at the 2019 “iF design” awards and ranked 17th in Global Innovation.
•
•
•
•
•
•
•
Ranked World Design Index - TOP 3 Taiwan , Top 10 Asia, Top 10 Computer and Top 25
Companies 2015~2019
Selected to take part in the CDP climate change program for five consecutive years
(2014-2018) and received an overall CDP rating of B- at the Management Level for 2018.
Ranked within top the 6%~20% TWSE-listed companies of the “5th Round of Corporate
Governance Evaluations” by TWSE.
Ranked 6th in CommonWealth Magazine’s “Top-2000 Manufacturers”.
Ranked 62nd in CommonWealth Magazine’s “Cross-strait Top 1000 Survey”.
•
•
•
•
6
2018
2019
III. Corporate Governance Report
3.1
Organization
3.1.1 Organizational Chart (As of Jan 1, 2019)
Shareholders
Board of Directors
President Office
Remuneration
Committee
Audit
Committee
Auditing Office
Personnel Evaluation Committee
Top Management Committee
Investment Planning &
Management Office
Legal Affairs Office
Insider Trading Prevention Office
Green Sustainability Office
Corporate Social
Responsibility Office
PCBG
GOBG
SDBG
HR & ADM Group
Accounting Group
7
3.1.2 Major Corporate Functions
Department
Functions
President’s Office
Responsible for the Company’s operation
Investment Planning &
Management 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
PCBG
GOBG
SDBG
Implements preventive measures against insider trading
Promotes and executes CSR-related affairs
Responsible for the R&D, production, quality control and sale of PC products
Responsible for production, quality control of All Products
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
Term
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
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Shares
Major career (academic)
achievements
Shareholdin
g
Percentage
(%)
1984.04.16 8,975,401
0.20%
8,975,401
0.20%
17,107,025 0.39%
0
0.00%
Chairman
Sheng-Hsiung Hsu
2018.6.22
Vice Chairman Jui-Tsung Chen
2018.6.22
3
years
3
years
1992.04.30 35,352,587
0.80%
35,352,587
0.80%
1,069,405
0.02%
Binpal Investment Co., Ltd.
2018.6.22
5,000,000
0.11%
5,000,000
0.11%
Director
Representative:
Wen-Being Hsu
2018.6.22
3
years
1984.04.16 4,000,000
0.09%
5,000,000
0.11%
Kinpo Electronics, Inc.
1990.06.22 151,628,692 3.43%
151,628,692 3.44%
Director
Representative: Shyh-Yong
Shen
2018.6.22
3
years
2012.03.14 0
0.00%
0
0.00%
-
0
-
0
-
0.00%
-
0.00%
0
0
0
0
0
0.00%
0.00%
0.00%
0.00%
0.00%
Director
Charng-Chyi Ko
2018.6.22
3
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
2018.6.22
Director
Yen-Chia Chou
2018.6.22
Director
Chung-Pin Wong
2018.6.22
3
years
3
years
3
years
1997.05.29 9,119,297
0.21%
8,894,297
0.20%
8,152,928
0.18%
(Note
2)
(Note 2)
1987.06.13 8,022,874
0.18%
8,022,874
0.18%
2,502,768
0.06%
0
0.00%
2007.06.15 6,618,618
0.15%
6,618,618
0.15%
1,398
0.00%
0
0.00%
9
Spouse or relatives of second degree or closer
acting as Directors, Supervisors, or
department heads
Title
Name
Relationship
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
Sheng-Hsiung
Hsu
Father and son in
law
(Note 4)
N/A
N/A
N/A
(Note 4)
Chairman
Sheng-Hsiung
Hsu
Brothers
(Note 4)
N/A
N/A
N/A
(Note 4)
N/A
N/A
N/A
Honorary Doctorate, National
Taiwan Normal University
Chairman of Kinpo and Compal
Electronics Inc.
Honorary Doctorate, National
Cheng Kung University
Chairman of Compal
Communication Inc. &
Arcadyan Technology Corp.
National Tao-Yuan Sr.
Vocational Agricultural &
Industrial School
Director of BAOTEK, Inc.
MBA, University of Southern
California, USA, Ph.D, Law,
Whittier Law School, USA
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.
Graduate Institute of
Management Science, National
Chiao Tung University
Chairman of Compal
Broadband Networks, Inc.
Title
Name/
Nationality/Gender
(Note 1)
Elected
Date
Term
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
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Shares
Major career (academic)
achievements
Shareholdin
g
Percentage
(%)
Director
Chiung-Chi Hsu
2018.6.22
Director
Ming-Chih Chang
2018.6.22
Director
Anthony Peter Bonadero
2018.6.22
Director
Sheng-Hua Peng
2018.6.22
Independent
Director
Min-Chih Hsuan
2018.6.22
3
years
3
years
3
years
3
years
3
years
1994.04.23 2,000,731
0.05%
2,117,731
0.05%
30,000
0.00%
0
0.00%
2018.6.22
1,919,489
0.04%
1,919,489
0.04%
2018.6.22
0
0.00%
0
0.00%
2018.6.22
835,000
0.02%
835,000
0.02%
0
0
0
0.00%
0.00%
0
0
0.00%
0.00%
0.00%
0
0.00%
2012.6.22
0
0.00%
0
0.00%
0
0.00%
0
0.00%
Independent
Director
Duei Tsai
2018.6.22
3
years
2012.6.22
0
0.00%
0
0.00%
0
0.00%
0
0.00%
Independent
Director
Duh-Kung Tsai
2018.6.22
3
years
2012.6.22
0
0.00%
0
0.00%
0
0.00%
0
0.00%
Note: 1. All directors are male; except that Anthony Peter Bonadero is citizen of U.S, the remainders are ROC nationals.
2. Director Sheng-Chieh Hsu held 3,500,000 shares (0.08%) through proxies.
3. Directors Wen-Chung Shen, Yung-Ching Chang and Chao-Cheng Chen left office on June 22, 2018.
Master’s Degree, Golden Gate
University, San Francisco, USA
Director of I PAO Bearing Co.,
Ltd.
Master’s degree in San
Francisco Golden Gate
University.
Director of Mactech Co., Ltd.
Texas A&M University
EVP of Auscom Engineering
Inc.
Graduate Institute of
Electronics Engineering of
National Taiwan University
Director of Arcadyan
Technology Corp.
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.
Spouse or relatives of second degree or closer
acting as Directors, Supervisors, or
department heads
Title
Name
Relationship
Selected
Current
Positions held
concurrently
in the
company
and/or any
other
companies
(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
(Note 4)
N/A
N/A
N/A
10
4. Selected Current Positions as below:
Title
Name
Chairman Sheng-Hsiung Hsu
Selected Current Positions
Chairman：Kinpo Electronics, Inc., AcBel Polytech Inc., Cal-Comp Electronics(Thailand) Public Company Limited, Teleport Access Services, Inc., AcSacca Solar
Energy Co., Ltd., Cal-Comp Electronics And communications Co., Ltd., Gempal Technology Corp., Panpal Technology Corp., Hong Ji Capital Co.,
Ltd., Hong Jin Investment Co., Ltd., Jipo Investment Inc., Kinpo Group Management Consultant Company, Breeze Integrated Development Co.,
Ltd., NTNU Innovation Investment Holding Company, 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.,
Compal Smart Device (Chongqing) Co., Ltd., Compal Investment (Sichuan) Co., Ltd., Compal Investment (Jiangsu) Co., Ltd., Compal
Management (Chengdu) Co., Ltd., Kinpo Electronics (China) Co., Ltd.
Managing Director：Taiwan Biotech Co., Ltd.
Director：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 Communications (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： Honorary Chairman of Chinese National Federation of Industries, Honorary Chairman of Importers & Exporters Association of Taipei, Chairman of
The Third Wednesday Club-Young Entrepreneur Group, Policy Consultant of Taiwan Electric & Electronic Manufacturers’ Association, Chairman of
China Productivity Center, Vice Chairman of Straits Exchange Foundation, Vice Chairman of Sinocon Industrial Standards Foundation, Managing
Director of Taiwan Design Center, Director of Management Institute in Taipei
Vice
Chairman
Jui-Tsung Chen
Chairman：Arcadyan Technology Corporation, Ripal Optotronics Co., Ltd., Palcom International Corporation, Unicom Global, Inc., General Life Biotechnology
Co., Ltd., Rally Biopharma Co., Ltd., Ray-Kwong Medical Management Consulting 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., Gempal Technology Corp., Panpal
Technology Corp., Hong Ji Capital Co., Ltd., Hong Jin Investment Co., Ltd., Kinpo Group Management Consultant Company, 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 Networking (Kunshan) Co., Ltd., Kunshan Botai Electronics Co., Ltd., Compal Smart Device
(Chongqing) Co., Ltd., Compal Investment (Sichuan) Co., Ltd., Compal Investment (Jiangsu) Co., Ltd., Compal Management (Chengdu) Co., Ltd.,
Compal (Vietnam) Co., Ltd., Compal Development & Management (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
11
Title
Name
Selected Current Positions
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., High Shine
Industrial Corp., Intelligent Universal Enterprise Ltd., Jenpal International Ltd., Just International Ltd., Prospect Fortune Group Ltd., Prisco
International Co., Ltd., Smart International Trading Ltd., Sinoprime Global Inc., Wah Yuen Technology Holding Ltd., Webtek Technology Co., Ltd.
Chief Strategy Officer：Compal Electronics, Inc.
President：Gempal Technology Corp., Panpal Technology Corp., Hong Ji Capital Co., Ltd., Hong Jin Investment Co., Ltd.
Director
Binpal Investment Co.,
Ltd.
Representative:Wen-Being
Hsu
Chairman：Binpal Investment Co., Ltd.
Director：Baotek Industrial Materials Ltd.
Kinpo Electronics
Inc.
Director
Kinpo Electronics Inc.
Representative:
Shyh-Yong Shen
Director：AcBel Polytech Inc., CastleNet Technology Inc., Teleport Access Services, Inc., Crownpo Technology Inc., Cal-Comp Biotech Co., Ltd., iHELPER Inc.,
Cal-Comp Big Data, Inc., XYZprinting, Inc., Norm Pacific Automation Corp., Kinpo Group Management Consultant Company, Jipo Investment
Inc., PK Venture Capital Corp., Prudence Venture Investment Corp., NTNU Innovation Investment Holding Company
Supervisor：Cal-Comp Biotech Co., Ltd., Jipo Investment Inc.
Chairman：CastleNet Technology Inc., Cal-Comp Biotech Co., Ltd., QBit Semiconductor Ltd., Jipo Investment Inc., New Era AI Robotic Inc., iHELPER Inc.,
Cal-Comp Big Data, Inc., XYZprinting, Inc., Tung-WAN Kai-Bao Co., Ltd., Cal-Comp Optical Electronics (Suzhou) Co., Ltd., Cal-Comp Technology
(Suzhou) Co., Ltd., Cal-Comp Electronics and Communications (Suzhou) Co., Ltd., Cal-Comp Optical Electronics (Yueyang) Co., Ltd., Cal-Comp
Precision (Yueyang) Co., Ltd., CastleNet Technology Inc (Kunshan)., XYZprinting (Shanghai) Cloud Technology Co., Ltd., Cal-Comp Precision
(Wujiang) Co., Ltd., Cal-Comp Precision (Dongguan) Co., Ltd., XYZprinting (Suzhou) Co., Ltd., ICKP(Beijing) Technology Development Co., Ltd.,
Cal Comp (Malaysia) SDN. BHD., Cal-Comp Electronics de Mexico Co. S.A. de C.V., Cal-Comp Precision (Philippines) Inc., Cal-Comp Technology
(Philippines), Inc., Kinpo Electronics (Philippines) Inc., New Era AI Robotic Ltd., XYZLife (Philippines) Inc., XYZprinting Japan, Inc.
Vice Chairman：Cal-Comp Electronics(Thailand) Public Company Limited, PChome (Thailand) Co., Ltd.
Director：Kinpo Electronics, Inc., AcBel Polytech Inc., Cal-Comp Electronics And communications Co., Ltd., Kinpo Group Management Consultant Company,
Kinpo Electronics (China) Co., Ltd., Ascendant Private Equity Investment Ltd., Cal-Comp Big Data International Ltd., Cal-Comp Electronics (USA)
Co., Ltd., Cal-Comp (India) Private Ltd., Cal-Comp Automation and Industrial 4.0 Service (Thailand) Co., Ltd., Cal-Comp Holding (Brasil) S.A.,
Cal-Comp Industria De Semicondutores S.A., Cal-Comp Precision (Malaysia) SDN. BHD., Cal-Comp Precision (Singapore) Ltd., Cal-Comp
Precision (Thailand) Ltd., Cal-Comp USA (Indiana), Co., Inc., Cal-Comp USA (San Diego), Co., Inc., Castlenet Technology (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：Kinpo Electronics, Inc., Cal-Comp Electronics And communications Co., Ltd., Kinpo Electronics (China) Co., Ltd., Cal-Comp Optical Electronics
(Suzhou) Co., Ltd., Cal-Comp Technology (Suzhou) Co., Ltd., Cal-Comp Electronics and Communications (Suzhou) Co., Ltd., Cal-Comp Optical
Electronics (Yueyang) Co., Ltd., Cal-Comp Precision (Yueyang) Co., Ltd., XYZprinting (Shanghai) cloud technology 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. (USA)
Director
Charng-Chyi Ko
Chairman：Taiwan Biotech Co., Ltd., Evergene Biotech Industrial Co., Ltd., Weck Tech Biotech Co., Ltd., Global BioPharma, Inc., Genhealth Pharma Co.,
Ltd., Taiwan Veterans Pharmaceutical Co., Ltd., Aseptic Innovative Medicine Co., Ltd., Young & Health Care Resorts Inc., Taiwan Venture
Capital Co., Ltd., Long Yee Investment Co. Ltd., Yinfeng International, Inc., Taiwan Chariston AMC Corp., Ltd., Twin Luck Global Company Ltd.
Director：Kinpo Electronics, Inc., Baotek Industrial Materials Ltd., Formosan Union Chemical Corp., Chang Yao Technology Inc., OmniHealth Group, Inc., All
12
Title
Name
Selected Current Positions
Information Inc., Spiregene Biotech Co., Ltd., Chipgene International Enterprise Co., Ltd., Minsheng Medical Holding Inc., Global Strategic
Investment Inc. (Samoa), Gold Precision Ltd., KKXC Intergrated Management Holding (CYPRUS) Ltd., Optics Lab Inc., Syn Pharm Inc.
Supervisor：Teleport Access Services, Inc., Kenly Precision Industrial Co., LTD., Sunny Special Dyeing & Finishing Co. Ltd., Kaipal Investment Co., Ltd.,
Commonwealth Magazine Co, Ltd.
Other：Managing Supervisor of Cross-Strait Health Care and Leisure Activities Association, Director of Health, Welfare & Environment Foundation,
Chairman of Yang Bi Li Education Foundation Of Management
Chairman：Integrate Investment Corp.
Director：Kinpo Electronics, Inc., Cal-Comp Electronics(Thailand) Public Company Limited, Cal-Comp Electronics And communications Co., Ltd., Jipo
Investment Inc., Kinpo Electronics (China) Co., Ltd., Tung-WAN Kai-Bao Co., Ltd., Kinpo International Ltd.
Supervisor：Gempal Technology Corp., Panpal Technology Corp., Hong Ji Capital Co., Ltd., Hong Jin Investment Co., Ltd.
Chairman：Sceptre Industry Co., Ltd.
Director：Kinpo Electronics, Inc., Micro Metal Electronics Co., Ltd.
Supervisor：Full Power Investment Co., Ltd.
President：Sceptre Industry Co., Ltd.
Chairman：Compal Broadband Networks, Inc., HengHao Technology Co. Ltd., Rayonnant Technology Co., Ltd., Auscom Engineering Inc., Wah Yuen
Technology Holding Ltd.
Executive Director：Compower Global Service Co., Ltd.
Director：Arcadyan Technology Corporation, Mactech Co., Ltd., Panpal Technology Corp., Ripal Optotronics Co., Ltd., Unicom Global, Inc., General Life
Biotechnology Co., Ltd., UniCore Biomedical Co., Ltd., Kinpo Group Management Consultant Company, Taiwan Sanga Co., Ltd., Hong Jin
Investment Co., Ltd., Maxima Ventures I, Inc., Infinno Technology Corp.,Taiwan, 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 Electronics (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., Shennona Corporation, Speedlink Tradings Limited, Sirqul Inc.
Supervisor：Hong Ya Technology Corporation
President：Compal Electronics, Inc.
Chairman：Full Power Investment Co., Ltd.
Director：Plank Optoelectronics Inc., E-Bow Bearing Co., Ltd., Juan Hsin Bao Hardware co., Ltd.
Director：Mactech Co., Ltd., Kunshan Botai Electronics Co., Ltd.
President：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 Electronics (ChongQing) Co., Ltd., Compal
Digital Technology (Kunshan) Co., Ltd., Kunshan Botai Electronics Co., Ltd., Compower Global Service Co., Ltd., Compal Investment (Sichuan)
Co., Ltd., Compal Management (Chengdu) Co., Ltd.
Executive Vice President：Compal Electronics, Inc.
Director
Sheng-Chieh Hsu
Director
Yen-Chia Chou
Director
Chung-Pin Wong
Director
Chiung-Chi Hsu
Director Ming-Chih Chang
Director
Anthony Peter
Bonadero
Executive Vice President: Auscom Engineering Inc.
Director
Sheng-Hua Peng Chairman：Compal Wireless Communications (Nanjing) Co., Ltd., Compal Digital Communications (Nanjing) Co., Ltd., HANHELT Communications (Nanjing)
13
Title
Name
Selected Current Positions
Co., Ltd, Compal Communications (Nanjing) Co., Ltd.
Director：Arcadyan Technology Corporation, Gempal Technology Corp., Palcom International Corporation, Ripal Optotronics Co., Ltd., General Life
Biotechnology Co., Ltd., UniCore Biomedical Co., Ltd., Hong Ji Capital Co., Ltd., Compal Optoelectronics (Kunshan) Co., Ltd., Compal Display
Electronics (Kunshan) Co., Ltd., Compal Electronics, (China) Co., Ltd., Compal Smart Device (Chongqing) Co., Ltd., Compal Investment (Jiangsu)
Co., Ltd., Amexcom Electronics, Inc., Bizcom Electronics, Inc., CENA Electromex S.A. de C.V.,
President：Palcom International Corporation, Compal Investment (Jiangsu) Co., Ltd., Compal Display Electronics (Kunshan) Co., Ltd., Compal Wireless
Communications (Nanjing) Co., Ltd., Compal Digital Communications (Nanjing) Co., Ltd., HANHELT Communications (Nanjing) Co., Ltd, Compal
Smart Device (Chongqing) Co., Ltd., Compal Communications (Nanjing) Co., Ltd.
Executive Vice President：Compal Electronics, Inc.
Chairman：Taiwan Memory Company, Meridigen Biotech Co., Ltd., Fusionvax, Inc., TC-1 Culture Fund, Vital First Investment Corporation, Maxima
Independent
Director
Min-Chih Hsuan
Independent
Director
Duei Tsai
Independent
Director
Duh-Kung Tsai
Ventures I, Inc., Taiwan, Maxima Ventures II, Inc.
Director：General Biologicals Corporation, SIPP, Inc., Clientron Corp., Elevant Biopharma Co., Ltd., Tonghua United Capsules Co., Ltd., Angeluca Science
Ltd. (Republic of Seychelles), Ikala Global Online Corp., Pacgen Biopharmaceuticals Corporation (Canada)
Supervisor：Meribank Biotech Co., Ltd.
Remuneration Committee Member：Compal Electronics, Inc.
Audit Committee Member：Compal Electronics, Inc.
Independent Director：Getac Technology Corp., Taiwan Taxi Co., Ltd., TTY Biopharm Company Ltd.
Remuneration Committee Member：Compal Electronics, Inc., Getac Technology Corp., Taiwan Taxi Co., Ltd., TTY Biopharm Company Ltd.
Audit Committee Member：Compal Electronics, Inc., TTY Biopharm Company Ltd.
Chairman：Powertech Technology Inc., Greatek Electronics Inc.
Director：Powertech Technology (Suzhou) Ltd., Powertech Technology Akita Inc., Powertech Holding (B.V.I.) Inc., Powertech Technology (Singapore) Pte.
Ltd., PTI Technology (Singapore) Pte. Ltd., Tera Probe, Inc.
Business Executive Representative：Powertech Technology Japan Ltd.
Independent Director：Chicony Power Technology Co., Ltd.
Remuneration Committee Member：Compal Electronics, Inc., Chicony Power Technology Co., Ltd.
Audit Committee Member：Compal Electronics, Inc., Chicony Power Technology Co., Ltd.
Chief Executive Officer：Powertech Technology Inc.
14
Major shareholders of the Company’s corporate shareholders
Name of corporate shareholder
Major shareholders of the corporate shareholder (Note)
Kinpo Electronics, Inc.
Bank Custodian for Norges Bank (2.40%), Panpal Technology Corp. (1.60%), Ho Bao Investment Co., Ltd. (1.50%), Li-Chu Tsai (1.49%), Shyh-Yong Shen
Compal Electronics, Inc. (8.54%), Jipo Investment Inc. (3.18%), Lai-Shun Shen, Tsai (2.88%), Nan Shan Life Insurance Co., Ltd. (2.82%), Citi (Taiwan)
April 26, 2019
Note: If the major shareholder is also a corporate entity, please refer to the following table.
(1.46%), Standard Charter Bank Custodian for Nattis Investment Account (1.44%)
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%)
First Commercial Bank Trustee Account For Representative of Ruen Chen Investment Holding Co., Ltd. (68.17%), Representative of Ruen Chen
Nan Shan Life Insurance Co., Ltd.
Investment Holding Co., Ltd. (22.46%), Ying-Tsong Du (3.25%), Ruen Hua Dyeing & Weaving Co., Ltd (0.28%), Ruentax Leasing Co., Ltd. (0.13%), Chi-Pin
Investment Company (0.11%), Boon-Teik Koay (0.10%), Pou Chi Investments Co., Ltd. (0.05%), Pou Yih Investments Co., Ltd. (0.05%), Pou Huei
Panpal Technology Corporation
Compal Electronics, Inc. (100%)
Investments Co., Ltd. (0.05%), Pou Hwang Investments Co., Ltd. (0.05%)
Ho Bao Investment Co., Ltd.
Chieh-Li Hsu (41.52%), Li-Chu Tsai (27.83%), Chun-Chi Hsu (13.91%), Yung-Hsu Hsu (12.50%), Hsin Hsu, Huang (2.83%), Yueh-Hsia Huang, Hsu (1.41%)
15
Criteria
Professional qualifications and independence analysis of directors and supervisors
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
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
Having Work Experience
in the Areas of
Commerce, Law,
Finance, or Accounting,
or Otherwise Necessary
for the Business of the
Company
Name
Independence Criteria (Note)
1
2
3
4
5
6
7
8
9
10
(cid:1) (cid:1)
(cid:1) (cid:1)
(cid:1)
(cid:1) (cid:1)
(cid:1) (cid:1) (cid:1) (cid:1)
(cid:1)
(cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1)
(cid:1) (cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1) (cid:1) (cid:1) (cid:1)
(cid:1) (cid:1)
(cid:1)
(cid:1) (cid:1)
(cid:1) (cid:1)
(cid:1) (cid:1) (cid:1) (cid:1)
(cid:1) (cid:1)
(cid:1) (cid:1) (cid:1) (cid:1)
(cid:1) (cid:1) (cid:1)
(cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1)
(cid:1) (cid:1) (cid:1) (cid:1)
(cid:1) (cid:1) (cid:1)
(cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1)
(cid:1) (cid:1) (cid:1) (cid:1)
(cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1)
(cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1)
(cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1)
(cid:1) (cid:1) (cid:1)
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
0
3
1
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
Sheng-Hsiung Hsu
Jui-Tsung Chen
Representative of Binpal
Investment Co., Ltd.:
Wen-Being Hsu
Representative of Kinpo
Electronics Inc.:
Shyh-Yong Shen
Charng-Chyi Ko
Sheng-Chieh Hsu
Yen-Chia Chou
Chung-Pin Wong
Chiung-Chi Hsu
Ming-Chih Chang
Anthony Peter
Bonadero
Sheng-Hua Peng
Min Chih Hsuan
Duei Tsai
Duh-Kung Tsai
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 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
16
someone else's name(s), 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.
17
3.2.2 Management Team
Title
Name/
Nationality/
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
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Major career (academic) achievements
April 23, 2019
Spouse or relatives of second degree or
closer acting as managers
Title
Name
Relationship
Selected
Current
Positions
Chief Strategy
Officer
Jui-Tsung Chen
2018.07.04
35,352,587
0.80%
1,069,405
0.02%
0
0.00%
Honorary Doctorate, National Cheng Kung
University
Chairman of Compal Communication Inc. &
Arcadyan Technology Corp.
Refer to
Page11-12
Vice
President
Po-Tang
Wang
Relative by
affinity
President
Chung-Pin Wong
2018.07.04
6,618,618
0.15%
1,398
0.00%
Executive Vice
President
Executive Vice
President
Executive Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Ming-Chih Chang 2018.07.04
1,919,489
0.04%
Sheng-Hua Peng
2018.07.04
835,000
0.02%
Chen-Chang Hsu
2011.08.31
0
0.00%
0
0
0
0.00%
0.00%
0.00%
Chun-Te Shen
2007.01.01
2,953,700
0.07%
900,000
0.02%
Kuo-Chuan Chen
2007.01.01
991,823
0.02%
10,924
0.00%
Pei-Yuan Chen
2009.10.06
3,487,698
0.08%
1,045,585
0.02%
Chyou-Jui Wei
2010.03.18
0
0.00%
142,966
0.00%
0.00%
Graduate Institute of Management Science,
National Chiao Tung University
Chairman of Compal Broadband Networks, Inc.
0.00%
Department of Electrical Engineering, Ming Chi
University of Technology
Director of Mactech Co., Ltd.
0.00%
Graduate Institute of Electrical Engineering,
National Taiwan University
Director of Arcadyan Technology Corp.
Refer to
Page 13
Refer to
Page 13
Refer to
Page 14
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0.00%
National Chiao Tung University EMBA
Executive Vice President of WINTEK
Corporation
0.00%
Graduate Institute of Electrical Engineering,
National Taiwan University
Director of Kinpo Electronics Inc.
0.00%
Department of Physics, Chung Yuan Christian
University
Senior Vice President of Compal
Communication Inc.
0.00%
Department of International Trade, Hsingwu
College
Director of Kinpo Electronics Inc.
0.00%
Master of Business Administration, University
of Washington, USA
Senior Vice President of Toppoly
Optoelectronics Corp.
(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
0
0
0
0
0
0
0
0
18
Title
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Name/
Nationality/
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
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Major career (academic) achievements
Ying Chang
2011.02.24
735,000
0.02%
Wen-Da Hsu
2014.02.27
1,333,000
0.03%
Wei-Chang Chen
2004.04.01
810,656
0.02%
Shi-Kuan Chen
2009.05.01
Chi-Wai Wan
2017.05.10
0
0
0.00%
0.00%
0
0.00%
0
0
0
0
0.00%
0.00%
0.00%
0.00%
0
0
0
0
0
0.00%
MBA, University Of Georgia
President of Swenc Technology Co., Ltd.
0.00%
Department of Media Administration, Shih
Hsin University
Senior Vice President of Compal
Communication Inc.
0.00%
Department of Electronic Engineering, Taipei
College of Maritime Technology
Vice President of Cheong Tat Technology
0.00%
Master of Industrial Design, Cranbrook
Academy of Art
Director of Design and Customer Affairs, Philips
(Hong Kong)
0.00%
Department of Electrical Engineering, Fu Jen
Catholic University
Inventec Corp. Vice President
Min-Tung Weng
2018.12.01
623,786
0.01%
0
0.00%
0
0.00%
Lo-Chun Lee
2018.12.01
420,000
0.01%
0
0.00%
0
0.00%
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.
19
Selected
Current
Positions
Spouse or relatives of second degree or
closer acting as managers
Title
Name
Relationship
(Note 3)
N/A
N/A
N/A
(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
Title
Name/
Nationality/
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
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Major career (academic) achievements
Selected
Current
Positions
Spouse or relatives of second degree or
closer acting as managers
Title
Name
Relationship
Vice President Chih-Chuan Cheng 2003.01.01
2,103,786
0.05%
51,194
0.00%
0
0.00%
Department of Electronic Engineering,
Lunghwa University of Science and Technology
Deputy Manager of Research and
Development, Top Information Technologies
Co., Ltd.
Vice President Ching-Hsiung Lu
2003.01.01
7,707,007
0.17%
1,000,000
0.02%
Vice President Po-Hsiung Chang 2006.02.21
0
0.00%
270
0.00%
Vice President Po-Tang Wang
2007.07.10
559,548
0.01%
486
0.00%
Vice President Tzong-Ming Wang 2009.07.16
313,184
0.01%
Vice President Fu-Chuan Chang
2009.07.16
150,662
0.00%
Vice President Yung-Nan Chang
2011.01.01
0
0.00%
Vice President
Sheng-Hung Li
2011.07.01
504,574
0.01%
0
0
0
0
0.00%
0.00%
0.00%
0.00%
Vice President
Yong-Ho Su
2011.07.01
500,401
0.01%
82,000
0.00%
0
0
0
0
0
0
0
0
0.00%
Department of Accounting, Feng Chia
University
Director Compal Communication Inc.
0.00%
Department of Electrical Engineering, National
Taipei Institute of Technology
UNICOM GLOBAL., Inc. Director
0.00%
Department of Computer Science and
Information Engineering, National Taiwan
University
President of Vibo Telecom Inc.
0.00%
National Taipei Institute of Technology
Head of Research and Development, CLEVO
Company
0.00%
National Chin-Yi University of Technology
Production Manager, ADI Corp
0.00%
MBA, Pacific Western University
Factory Manager, Delta Electronics Inc.
0.00%
Department of Electronics, National Taipei
Institute of Technology
0.00%
Department of Electrical Engineering, National
Taipei Institute of Technology
Vice President of Arima Photovoltaic & Optical
Corp.
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
Chief
Strategy
Officer t
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
Vice President
Jyh-Shyan Liang
2011.10.31
120,000
0.00%
0
0.00%
0
0.00%
University of Colorado
Postgraduate Institute of Digital
Communication/Vice President of Wireless
Communication, Altek Corporation
N/A
N/A
N/A
N/A
20
Title
Name/
Nationality/
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
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Major career (academic) achievements
Selected
Current
Positions
Spouse or relatives of second degree or
closer acting as managers
Title
Name
Relationship
Vice President Chiao-Lie Huang 2014.02.27
38,992
0.00%
0
0.00%
Vice President Chung-Hsing Tan
2014.02.27
60,000
0.00%
5,320
0.00%
Vice President
Yi-Yun Chang
2014.08.13
300,246
0.01%
Vice President Hsin-Kung Mao 2014.11.13
420,714
0.01%
Vice President
Hsin-Hsiung
Huang
2015.01.22
419,001
0.01%
Vice President Shih-Hong Huang 2016.02.24
280,000
0.01%
Vice President
Yi-Chiang Chiu
2016.02.24
280,000
0.01%
Vice President
Tsing-Fa Lee
2016.02.24
185,690
0.00%
Vice President Bor-Heng Chen
2016.02.24
280,010
0.01%
Vice President
Jui-Chun Shyur
2016.05.11
0
0.00%
0
0
0
0
0
0
0
0
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Vice President
Shyh-An Lee
2016.06.29
76,071
0.00%
4,259
0.00%
0.00%
Graduate Institute of Electrical Engineering,
National Taiwan University
Vice President of Compal Communication Inc.
0.00%
Department of Electrical Engineering, Tatung
University
Vice President of Compal Communication Inc.
0.00%
Graduate Institute of Electrical Engineering,
National Taiwan University
Senior Manager of Compal Communication Inc.
0.00%
Master of Business Administration, University
of Lincoln
Director of Avalue Technology Inc.
0.00%
Department of Electronics, Chung Yuan
Christian University
Senior Manager of Compal Communication Inc.
0.00%
Master in Control Engineering, National Chiao
Tung University
Director of Coretronic Corporation
0.00%
Master in Earth Sciences, National Central
University
0.00%
Information Engineering Ph.D., National Tsing
Hua University
Vice General Manager – Eten Technology Inc.
0.00%
COLUMBIA UNIVERSITY
Master of Industrial Engineering and
Operations Management
0.00%
PhD, Graduate Institute of Electrical
Engineering, National Taiwan University
Photonics Industries International,
Inc.President
0.00%
Department of Navigation, Taipei College of
Maritime Technology
LCFC Taiwan Branch Vice CEO
(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
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
0
0
0
0
0
0
0
0
0
0
0
21
Title
Name/
Nationality/
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
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Shares
Shareholding
Percentage
(%)
Major career (academic) achievements
Selected
Current
Positions
Spouse or relatives of second degree or
closer acting as managers
Title
Name
Relationship
Vice President Ta-Chun Wang
2016.06.29
204,200
0.00%
4,119
0.00%
Vice President
Fei-Long Chen
2016.06.29
0
0.00%
Vice President
Jen-Liang Lin
2018.03.06
100,500
0.00%
General
Counsel
Peng-Hong Chan 2018.05.09.
0
0.00%
Vice President Wei-Chia Wang
2018.12.01
120,000
0.00%
0
0
0
0
0.00%
0.00%
0.00%
0.00%
Accounting &
Corporate
Governance
Officer
Cheng-Chiang
Wang
2018.07.04
2019.05.13
955,808
0.02%
30
0.00%
Vice President
Cheng-Hui Su
2018.12.01
Vice President
Tu-Chuan Tu
2018.12.01
Vice President Chang-Chieh Tien 2018.12.01
105,000
593,081
403
0.00%
0.01%
0.00%
Internal Audit
Officer
Po-Wen Hsieh
2010.10.27
0
0.00%
0
62,105
0
0
0.00%
0.00%
0.00%
0.00%
0
0
0
0
0
0
0
0
0
0
0.00%
Master of Industrial Engineering, University of
Illinois
Shanghai Real Industrial Co., Ltd. Managing
Vice President
0.00%
PhD, Industrial Engineering, Auburn Uni., USA
Kunshan MYZY Technology Co., Ltd. CTO
0.00%
Department of Industrial Engineering, Feng
Chia University
Director of Operations Division, Compal Fab
No. 2
0.00%
Master of Cornell University Law School
CSO, Pou Chen Group
0.00%
Chung Yuan Christian University, Electrical
Engineering
Senior Director of LCFC
0.00%
Fu Jen Catholic University, Department of
Accounting
Financial officer of Allied Circuit Co., Ltd.
0.00% Tulane University Master of MBA
0.00% Vanung University, Electrical Engineering
0.00%
National Chiao Tung University,Transportation
Management
0.00%
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 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: 1. All managers are ROC nationals; except for Senior Vice President Chyou-Jui Wei, all other managers are male.
2. Executive Vice President Chao-Cheng Chen, Vice Presidents Ling-Sheng Wu, Chi-Hsiang Ma and Shih-Tung Wang resigned in 2018.
3. Concurrent positions in other companies
22
Title
Name
Concurrent positions in other companies
Executive
Vice
President
Senior Vice
President
Senior Vice
President
Chen-Chang Hsu
Chun-Te Shen
Chairman：HengHong Optoelectronics Technology (Kunshan) Co., Ltd., LUCOM Display Technology (KunShan) Limited
Vice Chairman：HengHao Technology Co. Ltd., LUCOM Display Technology (KunShan) Limited
Director：Mactech Co., Ltd.
President：HengHao Technology Co. Ltd., HengHong Optoelectronics Technology (Kunshan) Co., Ltd., LUCOM Display Technology (KunShan) Limited
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, Inc., Infinno Technology Corp., Full Power Investment Co., Ltd.
Senior Vice
President
Chyou-Jui Wei
Chairman：Rapha Bio Ltd.
Director：Taiwan Star Telecom Co., Ltd., UniCore Biomedical Co., Ltd., Trust Bio-sonics, Inc., Raycore Biotech Co., Ltd., Maxima Ventures I, Inc., Taiwan,
Hua Vi Venture Capital Corporation, Hua VII Venture Capital Corporation, Cdib & Partners Investment Holding Corp., Compal Electronic
Technology (Chongqing) Co., Ltd., ZhengYing Electronics (Chongqing) Co., Ltd., Compal Precision Module(Jiangsu) Co., Ltd., ShengBao
Precision Electronics (Taicang) Ltd., Rayonnant Technology (HK) Holdings Limited
Supervisor：HengHao Technology Co. Ltd., Infinno Technology Corp., Rayonnant Technology Co., Ltd., Ripal Optotronics Co., Ltd., Mactech Co., Ltd.,
Unicom Global, Inc., General Life Biotechnology Co., Ltd., Global BioPharma, Inc., Ray-Kwong Medical Management Consulting Co., Ltd.,
Rayonnant Technology (Taicang) Co., Ltd.
Independent Director：SYNergy ScienTech Corp.
Remuneration Committee Member：SYNergy ScienTech Corp.
Audit Committee Member：SYNergy ScienTech Corp.
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Vice
President
and head of
finance
Vice
President
Vice
Ying Chang
Director：Allied Circuit Co., Ltd.
Wen-Da Hsu
Director：HANHELT Communications (Nanjing) Co., Ltd
Wei-Chang
Chen
Director：Shennona Corporation
Hsi-Kuan Chen Director：Rayonnant Technology Co., Ltd., Rayonnant Technology (Taicang) Co., Ltd.
Ming-Dong
Wong
Ching-Hsiung Lu
Director：Auscom Engineering Inc.
President：Auscom Engineering Inc.
Director：Zhi-Bao Technology Corporation, Arcadyan Technology (Shanghai) Corp., Compal Wireless Communications (Nanjing) Co., Ltd., Compal Digital
Communications (Nanjing) Co., Ltd., Compal Communications (Nanjing) Co., Ltd., Great Arch Group Ltd., Leading Images Limited
Supervisor：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 Electronics (Chengdu) Co.,
Ltd., Compal Electronics (ChongQing) Co., Ltd., Compal Optoelectronics (Kunshan) Co., Ltd., Compal Display Electronics (Kunshan) Co., Ltd.,
Compal Networking (Kunshan) Co., Ltd., Kunshan Botai Electronics Co., Ltd., Compal Investment (Sichuan) Co., Ltd., Compal Investment
(Jiangsu) Co., Ltd., Compal Management (Chengdu) Co., Ltd.
Fu-Chuan Chang President：Compal Optoelectronics (Kunshan) Co., Ltd., Compal Electronics, (China) Co., Ltd.
Chiao-Lieh Huang Supervisor：HANHELT Communications (Nanjing) Co., Ltd
23
Title
President
Vice
President
Vice
President
Vice
President
Vice
President
Accounting &
Corporate
Governance
Officer
Name
Chung-Shing
Tan
Hsin-Kung Mao
Hsin-Hsiung
Huang
Shyh-An
Lee
Cheng-Chiang
Wang
Concurrent positions in other companies
Director：HANHELT Communications (Nanjing) Co., Ltd
Director：Avalue Technology Inc., Unicom Global, Inc., Amexcom Electronics, Inc., CENA Electromex S.A. de C.V., Compalead Electronics B.V., Mexcom
Electronics, LLC, Mexcom Technologies, LLC
President：Amexcom Electronics, Inc.
Director：Compal Wireless Communications (Nanjing) Co., Ltd., Compal Digital Communications (Nanjing) Co., Ltd., Compal Communications (Nanjing) Co.,
Ltd.
Director：Rayonnant Technology (Taicang) Co., Ltd. Infinno Technology Corp.
Director：Zhi-pal Technology Inc., HengHao Technology Co. Ltd., Palcom International Corporation
Supervisor：Compal System Trading (Kunshan) Co., Ltd., Compal Information Research & Development (Nanjing) Co., Ltd., Compower Global Service Co.,
Ltd., HengHong Optoelectronics Technology (Kunshan) Co., Ltd., Compal Smart Device (Chongqing) Co., Ltd.
24
3.2.3
Remuneration of Directors, Supervisors, President and Vice Presidents
Remuneration of Directors
Directors' remuneration
Remuneration as an employee
Unit: NTD thousand; thousand shares; %
Remuneration
(A)
Pension (B)
Title
Name
The
Company
All
companies
included
in the
financial
statement
s
The
Compan
y
All
companies
included in
the
financial
statements
Remuneration
from earnings
appropriation
(C)
Business
department
implementation
Fees for services
rendered (D)
The sum of A, B,
C and D as a
percentage of
after-tax profit
Salaries, bonuses,
special allowances
etc (E)
Retirement
Pension (F)
The
Company
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
The
Company
All
companies
included in
the financial
statements
The
Company
All
companies
included in
the financial
statements
Share of profit as an employee (G)
The sum of A, B, C, D, E,
F, and G as a percentage
of after-tax profit
The Company
All companies included in
the financial statements
Cash
Amount
Stock
Amount
Cash
Stock
The
Company
All companies
included in the
financial
statements
Remuneration
from invested
businesses
other than the
subsidiaries
(H)
7,200
7,200
0
0
49,223 49,223 2,759
3,429 0.66% 0.67%
19,729 48,732
806
806
57,500
0
57,500
0
1.54%
1.87%
111,746
Chairman Sheng-Hsiung Hsu
Vice
Chairman
Director
Director
Jui-Tsung Chen
Representative: of
Binpal Investment
Co., Ltd.
Wen-Being Hsu
Representative of
Kinpo Electronics
Inc.:
Shyh-Yong Shen
Charng-Chyi Ko
Sheng-Chieh Hsu
Yen-Chia Chou
Director
Director
Director
Director Chung-Pin Wong
Director
Director Ming-Chih Chang
Director
Anthony Peter
Bonadero
Chiung-Chi Hsu
Sheng-Hua Peng
Min-Chih Hsuan
Director
Independent
Director
Independent
Director
Independent
Director
Duei Tsai
Duh-Kung Tsai
Director Wen-Chung Shen
Director Yung-Ching Chang
Director Chao-Cheng Chen
* 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. Directors Ming-Chih Chang, Anthony Peter Bonadero and Sheng-Hua Peng took office on June 22, 2018. Directors Wen-Chung Shen, Yung-Ching Chang and Chao-Cheng Chen left
office on June 22, 107.
2. In 2017, the Company made pension contributions totaling NT$ 744 thousand (including NT$ 405 thousand under the new system and NT$ 339 thousand 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 NT$ 744
thousand (including NT$ 405 thousand under the new system and NT$ 339 thousand under the old system).
3. Directors’ compensation refers to the estimated directors’ compensation approved by the Board of Directors meeting on March 22, 2019.
25
Range of Remuneration
Total of (A+B+C+D)
Total of (A+B+C+D+E+F+G+H)
Number of Directors
The Company
The Company
Companies in the consolidated
financial statements
Companies in the
consolidated financial
statements
7 (Note 4)
10 (Note 5)
3 (Note 6)
7 (Note 1)
10 (Note 2)
3 (Note 3)
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:
1.
2. Wen-Being Hsu, Sheng-Chieh Hsu, Yung-Chia Chou, Chung-Pin Wong, Chiung-Chi Hsu, Min-Chih Hsuan, Duei Tsai, Duh-Kung Tsai, Binpal Investment Co., Ltd. and
Shyh-Yong Shen, Ming-Chih Chang, Anthony Peter Bonadero, Sheng-Hua Peng, Wen-Chung Shen, Yung-Ching Chang and Chao-Cheng Chen – 7 position
3 (Note 12)
8 (Note 13)
2 (Note 14)
4 (Note 15)
1 (Note 16)
2 (Note 17)
5 (Note 7)
9 (Note 8)
2 (Note 9)
3 (Note 10)
1 (Note 11)
20
20
20
20
Kinpo Electronics Inc. – 10 positions
Sheng-Hsiung Hsu, Jui-Tsung Chen, Charng-Chi Ko – 3 position
Shyh-Yong Shen, Ming-Chih Chang, Anthony Peter Bonadero, Sheng-Hua Peng, Wen-Chung Shen, Yung-Ching Chang and, Chao-Cheng Chen – 7 position
3.
4.
5. Wen-Being Hsu, Sheng-Chieh Hsu, Yung-Chia Chou, Chung-Pin Wong, Chiung-Chi Hsu, Min-Chih Hsuan, Duei Tsai, Duh-Kung Tsai, Binpal Investment Co., Ltd. and
Kinpo Electronics Inc. – 10 positions
Sheng-Hsiung Hsu, Jui-Tsung Chen, Charng-Chi Ko – 3 position
Shy-Yong Shen, Anthony Peter Bonadero, Wen-Chung Shen, Yung-Ching Chang and Chao-Cheng Chen – 5 positions
6.
7.
8. Wen-Being Hsu, Sheng-Chieh Hsu, Yung-Chia Chou, Chiung-Chi Hsu, Min-Chih Hsuan, Duei Tsai, Duh-Kung Tsai, Binpal Investment Co., Ltd. and Kinpo Electronics
Inc. – 9 positions
Sheng-Hsiung Hsu, Charng-Chi Ko – 2 positions
9.
10. Chung-Pin Wong, Ming-Chih Chang, Sheng-Hua Peng – 3 positions
11. Jui-Tsung Chen – 1 position
12. Wen-Chung Shen, Chao-Cheng Chen, Binpal Investment Co., Ltd. – 3 position
13. Wen-Being Hsu, Yung-Chia Chou, Chiung-Chi Hsu, Min-Chih Hsuan, Duei Tsai, Duh-Kung Tsai, Yung-Ching Chang and Kinpo Electronics Inc. – 8 positions
14. Charng-Chi Ko, Sheng-Chieh Hsu – 2 position
15. Chung-Pin Wong, Ming-Chih Chang, Anthony Peter Bonadero, Sheng-Hua Peng, -4 position
16. Jui-Tsung Chen – 1 positions
17. Sheng-Hsiung Hsu, Shyh-Yong Shen – 2 positions
26
Remuneration of Supervisors: Not Applicable (The Company adopts an Audit Committee system)
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
Company
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; %
Remuneration
from invested
businesses other
than the
subsidiaries (E)
Sum of A, B, C and D as a
percentage of after-tax
profit (%)
The
Company
All companies
included in the
financial
statements
117,301
123,971
5,913
5,913
91,565
92,086
127,150
0
127,150
0
3.84%
3.92%
1,337
Title
Name
50 employees
including CSO
Jui-Tsung Chen
(Note1)
Note: 1.Managers’ titles and names
‧Chief Strategy Officer: Jui-Tsung Chen – 1 position
‧President: Chung-Pin Wong – 1 position
‧Executive Vice Presidents: Ming-Chih Chang, Shen-Hua Peng, Chen-Chang Hsu, and Chao-Cheng Chen, – 4 positions
‧Senior Vice Presidents: Chun-Te Shen, Kuo-Chuan Chen, Pei-Yuan Chen, Chyou-Jui Wei, Ying Chang, Wen-Da Hsu, Wei-Chang Chen, Shi-Kuan Chen, Chi-Wai Wan, Min-Tung
‧Vice Presidents: Chih-Chuan Cheng, Ching-Hsiung Lu, Po-Hsiung Chang, Po-Tang Wang, Tzong-Ming Wang, Fu-Chuan Chang, Yung-Nan Chang, Sheng-Hung Li, Yong-Ho Su,
Weng, Lo-Chun Lee – 11 positions
Jyh-Shyan Liang, Chiao-Lie Huang, Chung-Hsing Tan, Yi-Yun Chang, Hsin-Kung Mao, Hsin-Hsiung Huang, Shih-Hong Huang, Yi-Chiang Chiu, Tsing-Fa Lee,
Bor-Heng Chen, Jui-Chun Shyur, Shyh -An Lee, Ta-Chun Wang, Fei-Long Chen, Liang-Jen Lin, Peng-Hong Chan, Wei-Chia Wang, Cheng- Chiang Wang, Cheng-Hui
Su, Tu-Chuan Tu, Chang-Chieh Tien, Ling-Sheng Wu, Chi-Hsiang Ma, Shih-Tung Wang,– 33 positions
2. The Company made pension contributions totaling NT$ 5,913 thousand (including NT$ 4,349 thousand under the new system and NT$ 1,564 thousand under the
old system). While all companies reported in the financial statements made pension contributions totaling NT$ 5,913 thousand (including NTD NT$ 4,349 thousand
under the new system and NT$ 1,564 thousand under the old system).
3. Employees’ compensation appropriation was approved by the Board of Directors at the meeting on March 22, 2019. The compensations of the aforementioned
managers were not yet final and will be reviewed based on the list of the date of distribution.
27
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
Number of President and Vice Presidents
Total of (A+B+C+D)
The Company
3 (Note 1)
20 (Note 2)
19 (Note 3)
2 (Note 4)
5 (Note 5)
1 (Note 6)
Total of (A+B+C+D+E)
Companies in the consolidated
financial statements
3 (Note 7)
19 (Note 8)
20 (Note 9)
2 (Note 10)
5 (Note 11)
1 (Note 12)
50
50
Total
Note:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Chao-Cheng Chen, Ling-Sheng Wu, Shih-Tung Wang – 3 positions
Ching-Hsiung Lu, Po-Hsiung Chang, Po-Tang Wang, Tzong-Ming Wang, Fu-Chuan Chang, Yung-Nan Chang, Yong-Ho Su, Chiao-Lie Huang, Yi-Yun Chang, Hsin-Kung Mao,
Jui-Chun Shyur, Shyh -An Lee, Liang-Jen Lin, Peng-Hong Chan, Wei-Chia Wang, Cheng- Chiang Wang, Cheng-Hui Su, Tu-Chuan Tu, Chang-Chieh Tien, Chi-Hsiang Ma –
20 position
Kuo-Chuan Chen, Pei-Yuan Chen, Chyou-Jui Wei, Ying Chang, Wen-Da Hsu, Wei-Chang Chen, Min-Tung Weng, Lo-Chun Lee, Chih-Chuan Cheng, Sheng-Hung Li,
Jyh-Shyan Liang, Chung-Hsing Tan, Hsin-Hsiung Huang, Shih-Hong Huang, Yi-Chiang Chiu, Tsing-Fa Lee, Bor-Heng Chen,, Ta-Chun Wang, Fei-Lung Chen – 19 positions
Chun-Te Shen, Shi-Kuan Chen – 2 positions
Chung-Pin Wong, Ming-Chih Chang, Shen-Hua Peng, Chen-Chang Hsu, Chi-Wai Wan – 5 positions
Jui-Tsung Chen– 1 position
Chao-Cheng Chen, Ling-Sheng Wu, Shih-Tung Wang – 3 positions
Ching-Hsiung Lu, Po-Hsiung Chang, Po-Tang Wang, Tzong-Ming Wang, Fu-Chuan Chang, Yung-Nan Chang, Yong-Ho Su, Chiao-Lie Huang, Yi-Yun Chang, Hsin-Kung Mao,
Jui-Chun Shyur, Shyh -An Lee, Peng-Hong Chan, Wei-Chia Wang, Cheng- Chiang Wang, Cheng-Hui Su, Tu-Chuan Tu, Chang-Chieh Tien, Chi-Hsiang Ma – 19 positions
Kuo-Chuan Chen, Pei-Yuan Chen, Chyou-Jui Wei, Ying Chang, Wen-Da Hsu, Wei-Chang Chen, Min-Tung Weng, Lo-Chun Lee, Chih-Chuan Cheng, Sheng-Hung Li,
Jyh-Shyan Liang, Chung-Hsing Tan, Hsin-Hsiung Huang, Shih-Hong Huang, Yi-Chiang Chiu, Tsing-Fa Lee, Bor-Heng Chen,, Ta-Chun Wang, Fei-Lung Chen, Liang-Jen Lin –
20 positions
10. Chun-Te Shen, Shi-Kuan Chen – 2 positions
11. Chung-Pin Wong, Ming-Chih Chang, Shen-Hua Peng, Chen-Chang Hsu, Chi-Wai Wan – 5 positions
12. Jui-Tsung Chen – 1 position
28
Employee profit sharing granted to the management team
Unit: NTD thousand
Title
Name
Stock dividends
Cash dividends
Total
Total as a percentage to after-tax profit (%)
47 employees including
CSO Jui-Tsung Chen (Note 1)
0
127,350
127,350
1.43%
Note: 1.Managers’ titles and names
‧Chief Strategy Officer: Jui-Tsung Chen – 1 position
‧President: Chung-Pin Wong – 1 position
‧Executive Vice Presidents: Ming-Chih Chang, Shen-Hua Peng, Chen-Chang Hsu, – 3 positions
‧Senior Vice Presidents: Chun-Te Shen, Kuo-Chuan Chen, Pei-Yuan Chen, Chyou-Jui Wei, Ying Chang, Wen-Da Hsu, Wei-Chang Chen, Shi-Kuan Chen, Chi-Wai Wan,
‧Vice Presidents :Chih-Chuan Cheng, Ching-Hsiung Lu, Po-Hsiung Chang, Po-Tang Wang, Tzong-Ming Wang, Fu-Chuan Chang, Yung-Nan Chang, Sheng-Hung Li,
Min-Tung Weng, Lo-Chun Lee – 11 positions
Yong-Ho Su, Jyh-Shyan Liang, Chiao-Lie Huang, Chung-Hsing Tan, Yi-Yun Chang, Hsin-Kung Mao, Hsin-Hsiung Huang, Shih-Hong Huang, Yi-Chiang
Chiu, Tsing-Fa Lee, Bor-Heng Chen, Jui-Chun Shyur, Shyh -An Lee, Ta-Chun Wang, Fei-Long Chen, Liang-Jen Lin, Peng-Hong Chan, Wei-Chia Wang,
Cheng- Chiang Wang, Cheng-Hui Su, Tu-Chuan Tu, Chang-Chieh Tien, Ling-Sheng Wu, Chi-Hsiang Ma, Shih-Tung Wang – 30 positions
‧Other: Po-Wen Hsieh - 1 position
2. Executive Vice Presidents Chao-Cheng Chen, Vice Presidents Ling-Sheng Wu, Chi-Hsiang Ma, Shih-Tung Wang, resigned in 2018.
3. Employees’ compensation appropriation was approved by the Board of Directors at the March 22, 2019 meeting. The compensations of the aforementioned
managers have not been finalized and will be reviewed based on the list upon the date of distribution.
29
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.
2018
2017 (Note)
Amount
%
Amount
%
Increase (Decrease)
%
Amount
Unit: NT$ thousands
437,080
4.90%
461,102
8.02%
(24,022)
(5.21)%
Analysis
Directors
CSO, Presidents
and
Vice Presidents
Net Income
8,913,365
5,749,525
3,163,840
Note: 2017 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.
‧Remuneration paid by the Company to Directors has 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 for 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.
30
3.3
Implementation of Corporate Governance
3.3.1 Board of Directors
‧The term of the 12th committee is from June 26, 2015 to June 22, 2018.
‧The term of the 13th committee is from June 22, 2018 to June 21, 2021.
‧There were seven Board meetings during 2018 (A). Director’s attendance records are as shown below:
Title
Chairman
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Independent
Director
Independent
Director
Independent
Director
Name
Sheng-Hsiung Hsu
Jui-Tsung Chen
Wen-Being Hsu
Kinpo Electronics, Inc.
Representative:
Shyh-Yong Shen
Charng-Chyi Ko
Sheng-Chieh Hsu
Yen-Chia Chou
Chung-Pin Wong
Chiung-Chi Hsu
Wen-Chung Shen
Yung-Ching Chang
Chao-Cheng Chen
Ming-Chih Chang
Anthony Peter Bonadero
Sheng-Hua Peng
Min-Chih Hsuan
Duei Tsai
Duh-Kung Tsai
Attendance in
Person (B)
7
7
5
2
7
7
6
7
7
3
1
3
2
1
4
7
7
5
By Proxy
Attendance Rate
(%)[B/A]
Remarks
0
0
1
5
0
0
1
0
0
0
1
0
2
2
0
0
0
2
100%
100%
71%
29%
100%
100%
86%
100%
100%
100%
33%
100%
50%
25%
100%
100%
100%
71%
Note1
Note1
Note1
Note 2
Note 2
Note 2
Note: 1. Directors Wen-Chung Shen, Yung-Ching Chang and Chao-Cheng Chen left office on June 22, 2018.
2. Director Ming-Chih Chang, Anthony Peter Bonadero, and Sheng-Hua Peng took office on June 22, 2018.
․In 2018, Independent Director’s attendance records are as shown below:
Title
Name
Independent
Director
Independent
Director
Independent
Director
Min-Chih Hsuan
Duei Tsai
Duh-Kung Tsai
1st
Meeting
2nd
Meeting
3rd
Meeting
4th
Meeting
5th
Meeting
6th
Meeting
7th
Meeting
●
●
★
●
●
●
●
●
●
●
●
●
●
●
●
●
●
★
●
●
●
Note: ●: AZendance in Person﹔★: By Proxy﹔ 〇: Absent
31
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 at the 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 at the 2015
shareholders’ meeting. In 2019, the amendment to the Rules and Procedures for Board of Directors
Meetings was handled in accordance with the “Key points for the establishment and compliance of
exercising duties of powers of the board of directors by TWSE Listed Companies” and “Company Act”.
B. Other notes:
1. For board of directors meetings that meet any of the following descriptions, state the date, session, the
discussed topics, independent directors' opinions and how the company has responded to such opinions:
(1) Conditions described in Article 14-3 of the Securities and Exchange Act: Not applicable (the Company has
assembled the Audit Committee in place of supervisors)
(2) Any other documented objections or qualified opinions raised by independent directors against board
resolutions in relation to matters other than those described above: None.
2. Disclosure regarding avoidance of interest-conflicting agendas, including the names of directors concerned, the
agendas, the nature of conflicting interests, and the voting outcome:
◆ March 6, 2018, the 16th meeting of the 12th term of the board of directors
‧ Approved the change of the chairman of Corporate Social Responsibility Committee
An interested party relationship exited in Director Chung-Pin Wong. In order to avoid conflict of interest, the
Director excused himself from discussion and voting on this proposal. Upon solicitation of comments by the
Chairman of the meeting, there was no objection addressed and the resolution was adopted unanimously by
the remaining Directors present.
◆ May 9, 2018, the 18th meeting of the 12th term of the board of directors
‧ Approved the release of non-competition restrictions for managers
An interested parties relationship existed among Directors Jui-Tsung Chen, Chung-Pin Wong, and Chao-Cheng
Chen, who are also acting as managerial officers of Compal. In order to avoid conflict of interest, these Directors
excused themselves from discussion and voting on this proposal. Upon solicitation of comments by the
Chairman of the meeting, there was no objection addressed and the resolution was adopted unanimously by
the remaining Directors present.
‧ Approved the first mid-year employees’ bonus of 2018
In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, if an
interested party relationship existed among any Directors and any agenda proposals, such Directors should
excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of
interest, Directors Jui-Tsung Chen, Chung-Pin Wong, and Chao-Cheng Chen, who are also acting as managerial
officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments by the
chairman, there was no objection addressed and the resolution was adopted unanimously by the remaining
Directors present.
‧ Approved employees’ salary adjustment of 2018
32
In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, if an
interested party relationship existed among any Directors and any agenda proposals, such Directors should
excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of
interest, Directors Jui-Tsung Chen, Chung-Pin Wong, and Chao-Cheng Chen, who are also acting as managerial
officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments by the
chairman, there was no objection addressed and the resolution was adopted unanimously by the remaining
Directors present.
◆ July 4, 2018, the 1st meeting of the 13th term of board of directors
・Passed the senior level management change
An interested parties relationship exits among Directors Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang
(attended by proxy of Sheng-Hua Peng), and Sheng-Hua Peng. In order to avoid conflict of interest, these
Directors excused themselves from discussion and voting on this proposal. Upon solicitation of comments by
the Chairman of the meeting, there was no objection addressed and the resolution was adopted unanimously
by the remaining Directors present.
・Passed the appointment of the term 4th remuneration committee members
An interested parties relationship exits among Independent Directors Min-Chih Hsuan, Duei Tsai, and Duh-Kung
Tsai. In order to avoid conflict of interest, these Independent Directors excused themselves from discussion and
voting on this proposal. Upon solicitation of comments by the Chairman of the meeting, there was no
objection addressed and the resolution was adopted unanimously by the remaining Directors present.
◆ August 9, the 2nd meeting of the 13th term of board of directors
・Passed the compensation of Directors’ Remuneration of 2017
Chairman Sheng-Hsiung Hsu asked the Independent Director Min-Chih Hsuan to act as a deputy chairman to
preside at this meeting for discussion and voting on this proposal. Since an interested party relationship exists,
the Directors (i.e., Sheng-Hsiung Hsu, Jui-Tsung Chen, Wen Being Hsu, Shyh-Yong Shen［attended by proxy of
Sheng-Hsiung Hsu］, Charng-Chyi Ko, Sheng-Chieh Hsu, Yen-Chia Chou, Chung-Pin Wong and Chiung-Chi Hsu)
excused themselves from discussion and voting on this proposal to avoid conflict of interest. Upon solicitation
of comments by the deputy chairman, there was no objection addressed and the resolution was adopted
unanimously by the remaining Directors present.
・Approve the second mid-year employees’ bonus of 2018
In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, if an
interested party relationship exists between any Directors and any agenda proposals, such Directors should
excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of
interest, Directors Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang, and Sheng-Hua Peng, who are also acting
as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments
by the chairman, there was no objection addressed and the resolution was adopted unanimously by the
remaining Directors present.
◆ November 8, the 4th meeting of the 13th term of board of directors
・Approved the compensation of Employee bonuses in cash of year 2017
In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, if an
interested party relationship exists between any Directors and any agenda proposals, such Directors should
excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of
33
interest, Directors Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang, and Sheng-Hua Peng, who are also acting
as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments
by the chairman, there was no objection addressed and the resolution was adopted unanimously by the
remaining Directors present.
・Approved the proposal for 2018 year-end employees’ bonus
In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, if an
interested party relationship exists between any Directors and any agenda proposals, such Directors should
excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of
interest, Directors Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang, and Sheng-Hua Peng, who are also acting
as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments
by the chairman, there was no objection addressed and the resolution was adopted unanimously by the
remaining Directors present.
◆ May 13, 2019, the 7th meeting of the 13th term of board of directors
・Approved the release of non-competition restrictions for the managers
An interested parties relationship existed among Directors Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang,
and Sheng-Hua Peng. In order to avoid conflict of interest, these Directors excused themselves from discussion
and voting on this proposal. Upon solicitation of comments by the Chairman of the meeting, there was no
objection addressed and the resolution was adopted unanimously by the remaining Directors present.
・Approved the establishment of Compal Electronics Kaohsiung Branch Office
An interested party relationship exited in Director Chung-Pin Wong. In order to avoid conflict of interest, the
Director excused himself from discussion and voting on this proposal. Upon solicitation of comments by the
Chairman of the meeting, there was no objection addressed and the resolution was adopted unanimously by
the remaining Directors present.
・Approve the first mid-year employees’ bonus of 2019
In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, if an
interested party relationship existed among any Directors and any agenda proposals, such Directors should
excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of
interest, Directors Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang, and Sheng-Hua Peng, who are also acting
as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments
by the chairman, there was no objection addressed and the resolution was adopted unanimously by the
remaining Directors present.
・Approve employees’ salary adjustment of 2019
In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, if an
interested party relationship existed among any Directors and any agenda proposals, such Directors should
excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of
interest, Directors Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang, and Sheng-Hua Peng, who are also acting
as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments
by the chairman, there was no objection addressed and the resolution was adopted unanimously by the
remaining Directors present.
34
3.3.2 Audit Committee
‧The Company’s Audit Committee has three members.
‧The term of the 1st committee is from June 26, 2015 to June 22, 2018.
‧The term of the 2nd committee is from June 22, 2018 to June 21, 2021.
‧There were six Audit Committee meetings during 2018 (A). The attendance records of the Independent
Directors are as follows:
Title
Name
Independent Director Min-Chih Hsuan
Independent Director
Duei Tsai
Independent Director
Duh Kung Tsai
•Duties of the Audit Committee
Attendance in
Person (B)
6
6
5
By Proxy
0
0
1
Attendance Rate
(%) [B/A]
100%
100%
83%
Remarks
-
-
-
The Audit Committee exists as an enhancement to the Company's supervisory and management
function. It assists the Board of Directors in various decisions such as review of financial statements,
internal control policies, internal audits, accounting policies and procedures, major asset transactions,
appointment/dismissal/independence/suitability of certified public accountants, appointment/dismissal
of the chief accountant and chief auditor, etc., thereby ensuring that the Company operates in
compliance with the competent authority's instructions and relevant laws.
•The major audit items of the Audit Committee in 2018 are as follows:
1. 2017 and 1H 2018 Financial Statement
2. To evaluate the CPAs’ independence and competence for performing the financial report audit.
3. Appointment of the attesting CPA
4. A matter bearing on the personal interest of the director and Manager
5. Appointment of the Accounting Officer and Internal Audit Officer
6. A material monetary loan
7. A material asset transaction.
8. Assessment of the design and operation effectiveness of the internal control system.
9. The defects, irregularities, and the status of corrections in the internal control system.
10. Annual audit plan for year 2019
11. Compliance with the relevant laws and regulations by this Corporation.
・Review Financial Statements for the year 2018
The Company’s 2018 financial statements have been approved by the Audit Committee and by the
Board of Directors. Szu-Chuan Chien 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 the Company’s 2018 business report and proposal
for distribution of earnings to us. 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.
・The Internal Audit Officer prepared the internal audit report and tracking report for each independent
director’s review routinely. In addition, he/she reported the relevant internal audit affairs to the Audit
Committee face-to-face quarterly.
35
Independent directors engage external auditors to discuss the outcome of the financial statement audit
and other relevant legal issues at least once a year.
Independent directors are also involved in decisions such as appointment, independence review, and
suitability review of certificated public accountants.
•The implementations of the Audit Committee in 2018 are as follows:
Board of
Directors
Meeting
Content of discussion and actions taken in response
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.
17th Meeting
(12th Term)
2018.3.19
3. To review and approve the independence and fitness of
the CPA engaged by the Company for the Financial
Statements.
▲Resolution adopted by the Audit Committee (2018.3.19):
Matters listed in
Not approved by the Audit
Committee but had the
Item 5, Article 14 of
the Security Act
consent of more than
two-thirds of all directors.
V
V
V
N.A
N.A
N/A
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Committee Members present.
▲Ac\on taken by the Company in response to opinion of the Audit CommiZee:
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Directors present.
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.
▲Resolution adopted by the Audit Committee (2018.5.9):
V
V
V
N/A
N/A
N/A
18th Meeting
(12th Term)
2018.5.9
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Committee Members present.
▲Ac\on taken by the Company in response to the opinion of the Audit CommiZee:
・Motion 1 and 2:
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Directors present.
‧Motion 3:
An interested parties relationship existed among Directors Jui-Tsung Chen, Chung-Pin Wong,
and Chao-Cheng Chen, who are also acting as managerial officers of Compal. In order to avoid
conflict of interest, these Directors excused themselves from discussion and voting on this
proposal. Upon solicitation of comments by the Chairman of the meeting, there was no
objection addressed and the resolution was adopted unanimously by the remaining Directors
present.
1.Election of the Convener and Meeting chair of the 2nd
V
N/A
Audit Committee
36
1st Meeting
(13th Term)
Board of
Directors
Meeting
2018.7.4
Content of discussion and actions taken in response
2.To approve for senior level management change
3.To approve the appointment of Accounting Officer
4. To approve the appointment of Internal Audit Officer
▲Resolution adopted by the Audit Committee (2018.7.4):
・Motion 1:
Not approved by the Audit
Matters listed in
Item 5, Article 14 of
Committee but had the
the Security Act
consent of more than
two-thirds of all directors.
V
V
V
N/A
N/A
N/A
Min-Chih Hsuan is elected by all members the Audit Committee as the convener and
meeting Chairman.
・Motion 2, 3 and 4:
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Committee Members present.
▲Ac\on taken by the Company in response to opinion of the Audit CommiZee:
・Motion 1:
Not applicable (without the consent of the Board of Directors)
・Motion 2:
An interested parties relationship exits among Directors Jui-Tsung Chen, Chung-Pin Wong,
Ming-Chih Chang (attended by proxy of Sheng-Hua Peng), and Sheng-Hua Peng. In order to
avoid conflict of interest, these Directors excused themselves from discussion and voting on
this proposal. Upon solicitation of comments by the Chairman of the meeting, there was
no objection addressed and the resolution was adopted unanimously by the remaining
Directors present.
‧Motion 3 and 4:
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Directors present.
1. To approve the 1H 2018 Consolidated Financial
Statements
2.To approve a loan to Henghao Technology Co., Ltd.
3.To approve for a loan to Unicom Global, Inc.
▲Resolution adopted by the Audit Committee (2018.8.9):
V
V
V
N/A
N/A
N/A
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Committee Members present.
▲Ac\on taken by the Company in response to opinion of the Audit CommiZee:
・Motion 1: not applicable (the motion was a report intended for the Board of Directors)
‧Motion 2 and 3:
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Directors present.
1.Compal’s 100% owned subsidiary – Billion Sea Holdings –
plans to dispose of the 49% owned JV – LC Future Center
Limited
▲Resolution adopted by the Audit Committee (2018.8.7):
V
N/A
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Committee Members present.
▲Ac\on taken by the Company in response to opinion of the Audit CommiZee:
37
2nd Meeting
(13th Term)
2018.8.9
3rd Meeting
(13th Term)
2018.8.7
Board of
Directors
Meeting
Content of discussion and actions taken in response
Not approved by the Audit
Matters listed in
Item 5, Article 14 of
Committee but had the
the Security Act
consent of more than
two-thirds of all directors.
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Directors present.
1.To propose for approval of annual audit plan for year 2019
▲Resolu\on adopted by the Audit CommiZee (2018.11.8):
V
N/A
4th Meeting
(13thT Term)
2018.11.8
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Committee Members present.
▲Ac\on taken by the Company in response to opinion of the Audit CommiZee:
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Directors present.
•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: None
(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 Officer and CPA:
(1). Method of communication between Independent Directors, the Internal Audit Officer, and CPA:
‧After the Internal Audit Officer 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 the audit results to the Audit
Committee on a quarterly basis and discuss the 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 the 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.
38
(2). Summary of the communications between Independent Directors and Internal Audit Officer:
Date
2018.3.19
2018.5.9
2018.8.9
2018.11.8
2019.3.22
Key point of communication
Report on audits carried out between 2017.11.1~2018.1.31, internal control systems
self-assessment review results and to produce Internal Control System Statement
Report on audits carried out between 2018.2.1~2018.4.30
Report on audits carried out between 2018.5.1~2018.7.31
Report on audits carried out between 2018.8.1~2018.10.31 and formulation of the Audit
Plan for 2019
Report on audits carried out between 2018.11.1~2019.1.31, internal control system
self-evaluation review results and to produce Internal Control System Statement
(3). Summary of the communications between the Independent Directors and CPA:
Date
Key point of communication
2018.3.19
Report on the key audit items for the 2017 consolidated and individual financial statements
and audit outcomes
2019.3.22
Report on the key audit items for the 2018 consolidated and individual financial statements
and audit outcomes
39
3.3.3 Corporate Governance Implementation and Deviations from the “Corporate Governance
Best-Practice Principles for TWSE/TPEX Listed Companies”
Assessment criteria
Actual governance
Deviation and
causes of
deviation from
the Corporate
Governance
Best-Practice
Principles for
TWSE/TPEX
Listed
Companies
Yes No
Summary description
Yes
The Company’s corporate governance principles were approved
by the Board of Directors on May 13, 2019, and have been
disclosed on its official website and MOPS.
No deviations
were found
I. Has the company
established and
disclosed its
corporate
governance
principles based on
the “Corporate
Governance
Best-Practice
Principles for
TWSE/TPEX Listed
Companies?”
II. Shareholding structure
and shareholders’
interests
1. Has the company
Yes
implemented a set of
internal procedures to
handle shareholders’
suggestions, queries,
disputes, and
litigations?
2. Is the company
Yes
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
Yes
Yes
established internal
policies that prevent
insiders from trading
securities against
non-public
information?
III. Assembly and
The Company has a spokesperson and acting spokesperson that
represent the interest of the shareholders and a unit that
in addressing shareholders’ suggestions, queries,
specializes
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 held
by the share administration agency.
The Company has established “Internal Control Policy - Non-trade
Activities - Supervision and Management of Subsidiaries”,
“Internal Control Policy
Investment
Management”, and “Guidelines on Financial and Business
Dealings Between Affiliated Enterprises” to set up and execute
firewalls and risk controls over related parties.
- Trade Activities –
No deviations
were found
No deviations
were found
No deviations
were found
To prevent insider trading, the “CO10 Insider Trading Prevention
Management” and “Insider Trading Prevention Procedures” have
been included as part of the 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 compulsory e-Learning courses for
departmental heads, and eCSA questionnaires are issued on a
yearly basis to facilitate self-assessment.
Insiders 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.
40
Assessment criteria
Actual governance
Yes No
Summary description
Deviation and
causes of
deviation from
the Corporate
Governance
Best-Practice
Principles for
TWSE/TPEX
Listed
Companies
obligations of the
board of directors
1. Has the board devised
Yes
and implemented
policies to ensure the
diversity of its
members?
The Company has established rules and regulations such as the
“Corporate Governance Guidelines” and “Rules for Director
Election” to ensure a 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. 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 deviations
were found
No Apart from the Remuneration and Audit Committees, the
Company has also established a CSR Committee headed by
President & CEO 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.
No deviations
were found
No At present, the Company has yet to establish any policy or
assessment tool to evaluate Board performance.
Such policies
and tools will
be created
after careful
consideration.
2. Apart from the
Remuneration
Committee and Audit
Committee, has the
company assembled
other functional
committees at its own
discretion?
3. Has the Company
established a set of
policies and
assessment tools to
evaluate the board’s
performance? Is
performance evaluated
regularly at least on an
annual basis?
4. Is the independence of
Yes
external auditors
assessed on a regular
basis?
Yes
IV. Has the company
established a
dedicated unit or full
time (or part time)
personnel
responsible for
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 Norms 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 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 Cheng-Chiang Wang has been appointed to take charge of and
supervise affairs pertaining
in
the Company’s “Corporate Governance
accordance with
Guidelines”, while the BOD secretariat was assigned as the
Company’s responsible unit for corporate governance to handle
relevant affairs.
to corporate governance
41
No deviations
were found
No deviations
were found
Assessment criteria
Actual governance
Deviation and
causes of
deviation from
the Corporate
Governance
Best-Practice
Principles for
TWSE/TPEX
Listed
Companies
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, and
preparing the
agendas for board of
directors’
meetings/sharehold
ers’ meetings)?
V. Has the company
provided proper
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 to
shareholders,
employees,
customers, and
suppliers)?
VI. Does the company
engage a share
administration
agency to handle
shareholder meeting
affairs?
VII. Information
Yes No
Summary description
VP Cheng-Chiang Wang and the 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, such as handling matters relating to board meetings and
shareholders meetings according to the laws, producing minutes
in
of board meetings and shareholders meetings, assisting
onboarding and continuous development of directors, furnishing
information required for duty execution by directors and
members of the audit committee, ensuring legal compliance and
taking other matters set out in the articles or corporation or
contracts, periodically examining and revising the Company’s
corporate governance guidelines and relevant procedures,
improving disclosure transparency, safeguarding shareholder
rights and promoting better corporate governance. For more
information on the status of Compal’s corporate governance
operations for 2018, refer to page 45.
Yes
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.
No deviations
were found
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
42
Assessment criteria
Actual governance
Yes No
Summary description
Deviation and
causes of
deviation from
the Corporate
Governance
Best-Practice
Principles for
TWSE/TPEX
Listed
Companies
disclosure
1. Has the company
Yes
The Company website at (www.compal.com) is regularly updated
with
information such as financial performance, corporate
governance and shareholder meetings
No deviations
were found
established a website
that discloses financial,
business and corporate
governance-related
information?
2. Has the company
adopted other means
to disclose information
(e.g. an 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)?
VIII. Does the company
offer other vital
information
(including but not
limited to employee
rights, employee
care, investor
relationships,
supplier
relationships,
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
Yes
‧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
No deviations
were found
spokesperson in place.
‧Investor conferences are held regularly and whenever deemed
necessary. The proceedings are posted on the Company’s
website and also broadcast on the TWSE platform (at
https://www.compal.com/investor-relations/financial-release/
).
Yes
• Employee welfare and care to employees (page 45)
• Directors and Managers code of conduct, Employee code of
No deviations
were found
conduct (page 46)
• Investor relations (page 46)
• Supplier relations and execution of customer policy (page 46)
• Stakeholders’ interests (page 47)
• Risk management execution and framework (page 47~49), risk
analysis and evaluation (page 149~153)
• Insuring against liabilities of company directors and supervisors
(page 49)
• Directors’, supervisors’, and managers’ ongoing education
(page 49)
• Succession plan for Board members and key Management
team (page 50)
• Certificate and qualification acquisition status for personnel
(page 50)
43
Assessment criteria
Actual governance
Deviation and
causes of
deviation from
the Corporate
Governance
Best-Practice
Principles for
TWSE/TPEX
Listed
Companies
Yes No
Summary description
corporate
governance
practices?
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.
•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.
•With regards to the further education of Directors (including Independent Directors), Compal has advocated and
encouraged Directors to take part in courses on the pertinent regulations offered by subsidiary Kinpo Group
Management Consultant Company or training provided by external professional organizations. In 2018, members
of the Board of Directors completed a total of 33 hours of training.
•In 2018, the "Corporate Social Responsibility Committee Organizational Rules" were adopted as the basis for the
operation of the Corporate Social Responsibility Committee
•In 2019, the amendment to the “Articles of Incorporation”, “Procedures for Acquisition or Disposal of Assets”,
“Procedures for Financial Derivatives Transactions”, “Procedures for Endorsements and Guarantees”, “Procedures
for Lending Funds to Other Parties”, “Corporate Governance Best-Practice Principles”, “Rules and Procedures for
Board of Directors Meetings” are proposed to accommodate the business needs and the requirements of
applicable laws and regulations.
•In the “5th Round of Corporate Governance Evaluations” by TWSE, Compal was placed in the top 6%~20% listed
companies.
•The Company provided quarterly financial report in English since the fourth quarter of 2018.
A. Status of board member diversification :
Core items for
diversification
Name of director
(Note)
Sheng-Hsiung Hsu
Jui-Tsung Chen
Representative of Binpal
Investment Co., Ltd.:Wen-Being
Hsu
Operation
management
Leadership
and
decision-making
Knowledge
of the
industry
International
market
perspective
Finance
and
accounting
Legal
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
V
Representative of Kinpo
Electronics Inc.: Shyh-Yong Shen
Charng-Chyi Ko
Sheng-Chieh Hsu
Yen-Chia Chou
Chung-Pin Wong
Chiung-Chi Hsu
Ming-Chih Chang
Anthony Peter Bonadero
Sheng-Hua Peng
Min-Chih Hsuan
Duei Tsai
Duh-Kung Tsai
Note: Except for Anthony Peter Bonadero, who is a US citizen, others are Chinese nationality and male
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
44
B. The status of Compal’s corporate governance operations for 2018 is as follows:
․Compiled and prepared relevant documents needed for the Audit Committee and the Board of Directors’
Meetings in accordance with the pertinent regulations and operational/financial needs, also responsible for
coordination of relevant units and coordination of proposals from different relevant units.
․Pursuant to business operation needs, partial revisions have been made to the “Corporate Social Responsibility
Committee Organizational Rules” and submitted to the Board of Directors for approval.
․Canceled and changed the registration for new restricted employee shares because the criteria was 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, access
Compal’s website.
․Pursuant to the “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 by
external professional organizations.
․Disclosed and announced
in conjunction with Board of Directors Meetings,
Shareholders Meetings, financial and sales information. In addition, the Company has also held investor
conferences at least two times annually, and has been invited to attend domestic/overseas investor
conferences to help investors better understand the Company’s status of operation.
information
important
․Registered the date for Shareholders Meetings as required by law, prepared meeting notifications within the
scheduled deadline, meeting handbook and meeting minutes, election and filing of the 13th term directors,
coordinated relevant units, agents for stock affairs, CPA, 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.
․ Corporate governance evaluation – responsible for the collection of data, compilation of stock affairs data,
coordination of different units and website maintenance.
․The Company has offered liability coverage for directors, supervisors, and managers. The amount for their
liability insurance in 2018 came to USD 50,000 thousand which was roughly equivalent to NTD 1,541,500
thousand.
C. Other vital information on the operating status of corporate governance:
■ Employees' rights and care for employees
Compal respects employees' rights and tends to their needs. All internal policies are updated constantly to
reflect the latest labor regulations, and published to ensure understanding and compliance from employees.
Compal's subsidiaries in the USA, China, Brazil, Poland, Vietnam, and India have all established employment
guidelines in accordance with local labor regulations, and all terms of employment are compliant with the laws
of the local countries and regions.
The Company's support for equal work opportunities and respect for employees' freedom of association have
led to the assembly of a union at Kunshan Factory. Employees are offered equal compensation for equal work,
whereas salary details are approved based on the nature of work involved and individual performance. The
Company has nursery rooms available throughout the organization. It actively prevents and resolves sexual
harassment incidents, grants workers the break and overtime pay they deserve, purchases social insurance
coverage, and contributes to employees' pension funds.
Compal is committed to creating communication platforms where employees may exchange opinions and
information. A “Sunshine Group” and hotlines have been set up at all plant sites and are run by compassionate
people who promptly respond to employees' thoughts. By providing employees with the means to express
feelings and complaints, the Company is able to help employees resolve difficulties in a timely manner. In an
attempt to create a joyful work environment where talents are assigned to suitable positions, Compal publishes
recruitment information internally and offers employees the freedom to choose or transfer to positions they
consider suitable, and thereby assures satisfaction across the work force and protects employees' interest.
Compal provides employees with the following health-related facilities and services outside of work:
‧ Common dining: Employee dining facilities have been made available to serve nutritional and healthy
foods.
‧ Recreation center: Places where employees may hold club activities, exercise, and make friends.
‧ Spiritual, health, and arts seminars: The Company organizes health seminars, spiritual seminars, musical
performances, and art exhibitions from time to time, and uses them as a means of stress relief to cater to
employees' physical and mental health.
Infirmary and stationed physicians: Employees may consult physicians and access timely medical assistance
for them and their family members.
・ Employee assistance services are available. Employees can consult with consultants on work, family,
relationships, physical and mental health, mental illness, finance, legal, and management issues through a
‧
45
dedicated line or E-mail.
■ Codes of conduct for directors, managers, and employees
Compal has established an ethics policy as described below to enforce business integrity and to guide employees
toward complying with laws and ethics for the protection of Compal's and stakeholders' assets, interests, and
reputation:
‧ Comply with government regulations.
‧ Protect the interests of employees, customers, shareholders, suppliers, communities, and relevant
organizations.
‧ Uphold business integrity and the principles of fair trade, fair advertising, and fair competition. Refrain
from making illicit gains. Make information transparent to stakeholders while at the same time respecting
intellectual property rights, privacy, and identity protection. Prohibit retaliation and make responsible
purchase of minerals.
‧ Continually improve, execute, and convey the Company's ethics policy to relevant organizations.
In addition to implementing an ethics policy, Compal has also established a Human Resource Management Policy,
Director and Manager Code of Conduct, and Employee Code of Conduct not only in the employees' best interest,
but also to communicate with stakeholders about the moral standards and behavioral guidelines that employees
are bound to obey when carrying out their duties. All employees are required to sign a "Confidentiality
Commitment Letter" when coming on board, which is a declaration to abide by the Company's rules, the Human
Resources Management Policy and to maintain confidentiality of the Company's business secrets.
■ Investor rela\ons
The Company has an Investor Relations Department available to handle shareholders' recommendations. The
department bridges communication between the Company and its investors. In addition to hosting investor
seminars on a regular and ad-hoc basis, the department has also created an Investor Relations section on the
Company's website to facilitate complete and fair disclosure of Compal's latest progress, and thereby provide
investors with full understanding of the Company's business performance and long-term goals. In 2018,
Compal organized two investor conferences on its own and was invited to participate in four investor forums
hosted by foreign brokers, which it used as a means to promote investors' understanding towards the
Company's operations.
■ Supplier rela\ons and execu\on of customer policy
The Company signs contract with all suppliers and customers not only to protect the interests of both parties,
but also to maintain a strong working relationship.
With respect to green products and parts, the Company coordinates closely and systematically with partnered
suppliers, and follows a robust review and certification process to ensure effective communication, tracking,
management, and elimination of parts that contain prohibited chemical substances. Every supplier and business
partner thereof is able to inquire about the latest "Compal Environmental Management Standard for Parts and
Materials" through the SDCP (Supplier Design Cooperation Portal: sdcp.compal.com)/GPMS (Green Product
Management System). They are also required to provide assurance that all raw materials supplied are free of
substances that may potentially harm the environment.
The Company's R&D, production and quality assurance departments and all major customers are able to learn
information concerning chemical composition and content of green products through the use of this system, and
take measures such as sample testing and on-site inspection as deemed necessary.
The Company operates throughout Europe, America, and Asia, and has service centers established at main
business locations to provide customers with safe and high-quality products, as well as complete and correct
product information. The Company addresses customer complaints actively and immediately. It accepts
customers' audit requests, participates in customers' activities, and handles critical correspondences in a
confidential manner. The Company has always been protective of customers' secrets. It has firewalls in place to
block exchange of confidential information between customers, teams, office areas, and factories. A specialized
team has been assembled to monitor the security of network information from time to time for the protection
of customers' interests. Meanwhile, all employees are required to sign a confidentiality agreement that prohibits
them from openly discussing customers' details. It is the organization's goal to provide customers with the most
comprehensive service network and the best protection anywhere in the world. There has been no violation of
law concerning the offering and use of products or services.
■ Stakeholders' interests
Stakeholders are able to communicate with and make suggestions to the Company for the protection of their
interests. The Company provides safe and high-quality products along with complete and accurate product
information to customers. Customers' complaints are addressed immediately.
46
■ Risk management
1. Risk management practice
(1)
One of the purposes of the risk management policy is to discover any risk factors in advance that might
adversely affect operations, so that the Company may then apply appropriate assessments and treatments to
transfer risks and mitigate or prevent losses. Another purpose is to enable timely detection and warning of
changes in the internal and external environment, and thereby allow employees worldwide to execute risk
management practices within their areas of responsibility in a timely manner. The Company has established its
own financial, sales, and accounting system, and a system for monitoring financial and business information of
its subsidiaries in accordance with "Regulations Governing the Establishment of Internal Control Systems by
Public Companies". The Company has also set up relevant guidelines for supplier management, customer
relations, R&D, human resources, financial affairs, credit/endorsement/guarantee arrangements with affiliated
businesses, and acquisition/disposal of key assets. These policies, risk assessment standards, and procedures
serve as a guideline by which employees may abide for risk assessment and management. Dedicated personnel
have been appointed in every department to manage, control, minimize, and prevent Company risks.
(2)
The Internal Control System developed by the Company is distinguished between the Overall Level and
Operation Level. Five elements (Control Environment, Risk Assessment, Control Operation, Information and
Communication, Supervision) have been incorporated into each transaction cycle at the operation level. In
recent years, the Company has made enhancements to corporate risk management based on the latest
Regulations Governing Establishment of Internal Control Systems by Public Companies, corporate governance
practice, internal audit theory, technology, and various codes of conduct by adopting robust risk detection,
assessment, reporting, handling, and prevention measures.
The Company's risk control mechanism operates on three levels:
‧ The first level involves the organizer or handling officer, who is responsible for risk discovery, assessment
and control at first contact, as well as designing preventive measures against risks.
‧ The second level involves heads of various divisions (offices), headquarters, business departments/centers
and regional business groups/centers, Executive Vice Presidents and the President. This level comprises
members of the senior management, who are responsible for assessing the feasibility of various operations
as well as identifying, handling, and preventing operational risks.
‧ The third level involves review by Legal Affairs, the Auditing Office, the Board of Directors, and the Audit
Committee. The Company involves all employees as part of the risk management system and implements
layered controls over day-to-day operations.
(3)
From the implementation perspective, the Company prepares its annual budget and work plan based on
risk assessment results, which also serve as a valuable reference for decision-making and project planning in the
coming year. At the same time, the audit department also drafts audit plans for the coming year based on the
results of risk assessment and includes the progress of implementation into the Board of Directors meeting
agenda. Given the Company's role as an ODM for 5C electronics, we review and assess business risks on an
annual basis, and reflect our findings in the financial statements under accounts such as allowance for doubtful
debts, warranty reserves, and royalties. All provisioning policies are submitted to the CPA for review whenever
adjustments are made. This is to ensure that financial reports present a fair view of the Company's operations.
Furthermore, the Company has dedicated personnel appointed to monitor and control exchange rate risks, and
take hedging measures as necessary (please refer to page 149).
Important risk assessment issues that concern business execution but without having to undergo 2nd tier
(4)
or 3rd tier review are circulated to the Auditing Office, and sometimes involve the Legal Affairs Office for support.
The purpose of this practice is to engage different expertise for advice on risk identification, assessment, and
prevention. If a potential urgent risk is identified, it can be reported to the supervisor immediately for proper
prevention. For extremely important matters, such as investments and project tendering, each project will be
jointly reviewed or supervised. Inspection will be performed on a regular and intermittent basis. In conclusion,
we believe our practices to be appropriate for the given purpose, and minimized risks and kept operations under
control.
47
2. Risk management framework
Key risk areas
‧ Interest rate, exchange rate,
inflation and financial risks
‧ High-risk or highly leveraged
investment, loan to third party,
endorsement, guarantee,
trading of derivatives and
treasury investment
‧ R&D planning
‧ Changes in policy and law
‧ Changes in technology and
industry
‧ Changes in corporate image
‧ Investment, subsidiary and M&A
benefits
‧ Expansion of factory, production
site and equipment
‧ Centralized purchase or sale
‧ Equity transfer involving
directors, supervisors, and major
shareholders
‧ Change of management
‧ Litigation and non-contentious
cases
‧ Handling of product safety
incidents
‧ Other operational affairs
‧ Personnel behaviors, ethics, and
conduct
‧ Rules (including SOP), internal
control system and compliance
with regulations
Front line unit
(Business organizer)
(Level 1)
Risk review and control
(Executive management
meeting)
(Level 2)
‧ Finance Department ‧ Operation Team
Board of directors, Audit
Committee, Legal Affairs
Office, Auditing Office
(Level 3)
‧ Legal Affairs Office:
Oversees legal affairs
and makes suggestions
on risk identification,
assessment and
prevention
‧ Business
departments/centers
(Note 1)
‧ Common departments
(Note 3)
‧ Corporate investment
review
‧ Executive management
meeting
‧ Subsidiaries monitoring
and management report
‧ Auditing Office:
Risk inspection,
evaluation,
supervision,
improvement and
reporting
‧ Board of Directors,
Audit Committee:
Decision-making and
ultimate control over
risk evaluation
‧ Business
‧ Monthly operating
departments/centers
(Note 1)
‧ Common departments
(Note 3)
‧ Share administration
affairs
‧ Board of Directors
meeting
‧ Production and marketing
meeting
‧ Share administration
affairs
‧ Head of
‧ Product risk
management
‧ Managers of all levels
Finance/Accounting
‧ Legal affairs
‧ Business groups/centers
(Note 2)
‧ Managers of all levels
‧ HR & Administration
‧ Managers of all levels ‧ Legal Affairs Office
‧ Personnel Evaluation
Committee
‧ Investment Planning and
Management Office
‧ Auditing Office
‧ Finance
‧ Accounting
‧ HR & Administration
‧ IT
‧ Board of Directors Meetings ‧ Share administration
affairs
‧ Secretary of the Board
‧ Legal Affairs Office
‧ Auditing Office
‧ Prevention of insider trading ‧ Managers of all levels ‧ Insider Trading
of Directors
‧ Information security
management
‧ Managers of all levels ‧ Product risk management
Prevention Office
‧ IT Department
Notes: 1. Business departments/centers:America/Europe, Asia Pacific, Operations, Enterprise Products, Auto
Electronics, IPC Project, Creativity, Quality Assurance, Procurement, R&D, Manufacturing, and Sales, etc.
2. Business groups/centers: PC Business Group, Smart Devices Business Group, Global Operations, PC
R&D, etc.
3. Common departments: Finance, Accounting, HR & Administration, Investment Planning and
Management Office, Legal Affairs Office, etc.
48
(cid:2)
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 2018 came to USD 50,000,000, which was roughly
equivalent to NTD 1,541,500,000. Vital information relating to their liability insurance was reported to the Board
of Directors on February 22, 2019.
(cid: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 intermittent basis to directors and managers, the Company
would also organize seminars and workshops when deemed necessary. Training completed by directors and
managers in 2018 include:
Organized by
Course title
Hours
of training
Title
Name
Director
Jui-Tsung Chen
Date of
training
2018.7.17
Director
Chang Chi Ko
2018.9.21
Director
Chung-Pin Wong 2018.7.17
Independent
Director
Min-Chih Hsuan
2018.9.5
2018.9.25.
Independent
Director
Duei Tsai
2018.3.5
Taiwan Corporate
Governance
Association
Taiwan Corporate
Governance
Association
Taiwan Corporate
Governance
Association
Securities & Futures
Institute
Youth Career
Development
Association
Taiwan Depository &
Clearing Corporation
2018.5.28
2018.7.27
Taiwan Corporate
Governance
Association
Securities & Futures
Institute
2018.8.24
Securities & Futures
Institute
Independent
Director
Duh-Kung Tsai
2018.10.30
Accounting
Supervisor
Cheng-Chiang
Wang
2018.10.1~
2018.10.9
Taiwan Corporate
Governance
Association
Accounting Research
and Development
Foundation
49
3
3
3
3
3
2
3
3
3
3
30
Corporate Governance and
Securities Regulations
Discussion on the
amendment of 2018
company law (1)
Corporate Governance and
Securities Regulations
Strengthening corporate
governance with the
self-assessment system of the
board of directors
Company law amendment -
description and observation
Seminar on “Electronic Voting
and Corporate value
enhancement”
The trend of “Artificial
Intelligence” and “Anti-
tradition business era”
Conference for relevant
Insider trading laws and
compliance for TWSEC listed
and public–hold companies.
The impact on and new
outlook for corporate
governance affairs and
Director’s/Supervisor’s
responsibility due to
modification of “The
Company Act”
5. Laws risk with respect to
the Directors and the
Managers
“Training program for the
new Accounting Officer”
The class for the new
Accounting Officer, requested
due to the company share
exchange/transaction on
public place.
Title
Name
Date of
training
Head of
Auditing
Po-Wen Hsieh
2018.2.6
2018.6.11
Organized by
Course title
Accounting Research
and Development
Foundation
Accounting Research
and Development
Foundation
The Practice and Case Study
of The Internal Audit for
Material Systems in the
Manufacturing Industry.
Internal Audit: The Common
Internal Weaknesses and
Deficiencies, Legal Liabilities,
and Case Studies
Hours
of training
6
6
(cid:2)
Succession plan for Board members and key Management team
Compal launched the succession plan for Board members and the key management team in 2018. The
former President Jui-Tsung Chen (Ray Chen) was promoted to the position of Vice Chairman and Chief Strategy
Officer of the company, responsible for the company’s long-term strategy development and implementation. The
President's position was taken by Executive VP Chung-Pin Wong, who joined Compal in 1989 and has full
experience in various positions, such as marketing, procurement, sales, etc. In addition, Anthony Peter Bonadero,
Sheng-Hua Peng (Eric Peng), and Ming-Chih Chang (Mage Chang) were promoted from Senior VP to Executive VP
positions and were appointed to lead the three business group: PCBG, SDBG, and GOBG, separately. They were
also been elected as the 13th Board of Directors in 2018. By this, Compal has successfully completed the
succession of the Board members and the key management team that symbolizes transition into a new
generation.
(cid:2)
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
12 persons
8 persons
7 persons
5 persons
3 persons
4 persons
1 person
50
3.3.4 Composition, Responsibilities, and Operations of the Remuneration Committee
A. Professional Qualifications and Independence Analysis of Remuneration Committee Members
Criteria
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
0
3
1
-
-
-
Title
(Note 1)
Name
Independent
Director
Min-Chih
Hsuan
Independent
Director
Duei Tsai
Independent
Director
Duh-Kung
Tsai
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 the Company Law.
51
B. Attendance of Members at Remuneration Committee Meetings
‧The Company elected three members of the Remuneration Committee.
‧The term of the 3rd committee is from July 9, 2015 to June 22, 2018.
‧The term of the 4th committee is from July 4, 2018 to June 21, 2021.
‧There were five Remuneration Committee meetings during 2018(A) and the committee member
qualifications and attendance records are as follows:
Title
Convener
Committee
Member
Committee
Member
Name
Min-Chih
Hsuan
Duei Tsai
Duh-Kung Tsai
Attendance in
Person (B)
By Proxy
Attendance Rate (%)
[B/A]
Remarks
5
5
5
0
0
0
100%
100%
100%
-
-
-
■Functions and Tasks of the Remuneration Committee
• Prescribe and periodically review the performance review and remuneration policy, system,
standards, and structure for directors/independent directors, and managerial officers.
• Periodically evaluate and prescribe the remuneration of directors/independent directors, and
managerial officers.
"Remuneration" as used in the preceding two paragraphs includes cash compensation, stock options,
profit sharing and stock ownership, retirement benefits or severance pay, allowances or stipends of any
kind, and other substantive incentive measures.
■The discussion of the salary and Remuneration Committee and the outcome of the resolution, as well as
the actions the Company has taken in response should any of the situations arise in the operation of the
Remuneration Committee.
Board of
Directors
Meeting
17th Meeting
(12th Term)
2018.3.19
18th Meeting
(12th Term)
2018.5.9
Resolution Adopted by the Remuneration Committee
1. To approve the distribution of compensation to employees and directors for 2017
▲Resolution Adopted by the Remuneration Committee (2018.3.19):
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Committee Members present.
▲Action taken by the Company in Response to the Opinion of the Remuneration Committee:
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Directors present.
1. To approve the 1st mid-year bonus of 2018
2. Salary adjustment of 2018
3. To approve the percentage of employees’ compensation and directors' remuneration of
2018
▲Resolution Adopted by the Remuneration Committee (2018.5.9):
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Committee Members present.
▲Action taken by the Company in Response to the Opinion of the Remuneration Committee:
・Motion 1 and 2:
52
Board of
Directors
Meeting
Resolution Adopted by the Remuneration Committee
Directors Jui-Tsung Chen, Chung-Pin Wong and Chao-Cheng Chen, who held concurrent
managerial positions, had disassociated from the discussion and voting that pertained to
their personal interests. Discussions for other parties were passed as proposed without
objection from the remaining directors present at the meeting.
・Motion 3:
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Directors present
1. Election of the convener and meeting chair of the 4th Remuneration Committee.
▲Resolution Adopted by the Remuneration Committee (2018.7.4):
Min-Chih Hsuan was elected by all Committee members as the convener and meeting chair.
▲Action taken by the Company in Response to the Opinion of the Remuneration Committee:
1st Meeting
(13th Term)
2018.7.4
Not applicable (without the consent of the Board of Directors)
1. To approve the Directors' remuneration of 2017
2. To approve the 2nd mid-year bonus of 2018
▲Resolution Adopted by the Remuneration Committee (2018.8.9):
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Committee Members present.
▲Action taken by the Company in Response to the Opinion of the Remuneration Committee:
・Motion 1:
・Passed the compensation of Directors’ Remuneration of 2017
Chairman Sheng-Hsiung Hsu asked the Independent Director Min-Chih Hsuan to act as a
deputy chairman to preside at this meeting for discussion and voting on this proposal.
Since an interested party relationship exists, the Directors (i.e., Sheng-Hsiung Hsu, Jui-Tsung
Chen, Wen Being Hsu, Shyh-Yong Shen［attended by proxy of Sheng-Hsiung Hsu］,
Charng-Chyi Ko, Sheng-Chieh Hsu, Yen-Chia Chou, Chung-Pin Wong and Chiung-Chi Hsu)
excused themselves from discussion and voting on this proposal to avoid conflict of interest.
Upon solicitation of comments by the deputy chairman, there was no objection addressed
and the resolution was adopted unanimously by the remaining Directors present.
・Motion 2:
In accordance with the Company’s Regulations Governing the Proceedings of Board of
Directors Meetings, if an interested party relationship exists between any Directors and any
agenda proposals, such Directors should excuse themselves during discussion of and voting
on those proposals. Accordingly, to avoid conflict of interest, Directors Jui-Tsung Chen,
Chung-Pin Wong, Ming-Chih Chang and Sheng-Hua Peng, who are also acting as managerial
officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of
comments by the chairman, there was no objection addressed and the resolution was
adopted unanimously by the remaining Directors present.
1. To approve employees' compensation in cash of 2017
2. To approve the year-end bonus payment of 2018
▲Resolution Adopted by the Remuneration Committee (2018.11.8):
Upon solicitation of comments by the Chairman, there was no objection addressed and the
resolution was adopted unanimously by the Committee Members present.
▲Action taken by the Company in Response to the Opinion of the Remuneration Committee:
53
2nd Meeting
(13th Term)
2018.8.9
4th Meeting
(13th Term)
2018.11.8
Board of
Directors
Meeting
・Motion 1 and 2:
Resolution Adopted by the Remuneration Committee
In accordance with the Company’s Regulations Governing the Proceedings of Board of
Directors Meetings, if an interested party relationship exists between any Directors and any
agenda proposals, such Directors should excuse themselves during discussion of and voting
on those proposals. Accordingly, to avoid conflict of interest, Directors Jui-Tsung Chen,
Chung-Pin Wong, Ming-Chih Chang and Sheng-Hua Peng, who are also acting as managerial
officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of
comments by the chairman, there was no objection addressed and the resolution was
adopted unanimously by the remaining Directors present.
■Other notes:
1.
If the board of directors declines to adopt or modify 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 (e.g., 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 to by members or become subject to a qualified
opinion, which has 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’ opinions should be specified: None.
54
3.3.5 Corporate Social Responsibility
I.
1.
2.
3.
Assessment criteria
Yes No
Yes
Sound corporate governance
Does the company have a
corporate social responsibility
policy or system in place? Is
progress reviewed on a regular
basis?
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?
4.
Has the company implemented Yes
Actual governance
Summary description
Deviation and causes
of deviation from
Corporate Social
Responsibility Best
Practice Principles for
TWSE/TPEX Listed
Companies
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/(Corporate social responsibility
framework please refer to page 60)/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
No deviations were
found
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 2018, 3,923 employees had completed their training for a total of
18,338.58 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. For the 2018 Corporate Social responsibility
operation and implementation please refer to page 61, the targets and plans of 2019 Corporate
Social Responsibility please refer to page 62. The results of implementation are also 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 No deviations were
No deviations were
found
55
Assessment criteria
a reasonable remuneration
system that associates
employees’ performance
appraisals with CSR? Is the
remuneration system
supported by an effective
reward/discipline system?
Actual governance
Deviation and causes
of deviation from
Corporate Social
Responsibility Best
Practice Principles for
TWSE/TPEX Listed
Companies
Yes No
Summary description
based on individual work performance. Different salary levels may be granted depending on
education, experience, job grade, and the assigned duties.
Furthermore, employees are entitled to a portion of the share of the Company’s current year profits.
The Company has set clear guidelines to reward and penalize employees’ conduct 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.
found
II.
1.
2.
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
3.
Is the company aware of how Yes
No deviations were
found
Throughout the "product life cycle", we consider the environmental impacts of raw material
procurement, manufacturing, transportation and distribution, consumer use and disposal, etc., at
the beginning of product design. In addition to focusing on user needs, functionality and additional
Value, the R&D team is more focused on product development and design from the perspective of
“environmental load minimization” at each stage, covering at least the three core directions of
“green materials”, “energy efficiency”, and “ease of dis-assembly/recycling”.
Improve production line yield and energy efficiency, develop, and use recycled materials stably,
design energy-saving products to reduce energy consumption during reuse, and increase the
recoverable proportion of waste entering the waste phase
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
international standards such as ISO 45001. The Company adopts proper
regulations and
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 No deviations were
No deviations were
found
56
Assessment criteria
Actual governance
Deviation and causes
of deviation from
Corporate Social
Responsibility Best
Practice Principles for
TWSE/TPEX Listed
Companies
climate changes affect its
business activities? Are there
any actions taken to measure
and reduce greenhouse gas
emissions and energy use?
Yes No
Summary description
early as 2010. Starting from 2014, the Company has conducted greenhouse gas (scopes 3) inventory
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 emissions, reduction progress, compliance risks and exposure to physical risks in
the hopes of reducing operational risks and costs through autonomous carbon reduction or even
turning risks into opportunities to ensure the Company’s sustainability.
found
III.
1.
2.
3.
Enforcement of public welfare
Has the company developed its
policies and procedures in
accordance with laws and
International Bill of Human
Rights?
Yes
Yes
Yes
Does the company have means
through which employees may
raise complaints? Are
employee complaints being
handled properly?
Does the company provide
employees with a safe and
healthy work environment?
Are employees trained
regularly on safety and health
issues?
4.
Does the company have means
to communicate with
Yes
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 to
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.
The Company is well-aware of how significantly “workplace safety and health” affects a company, its
employees, and stakeholders. This was the reason why the Company has enhanced
its
environmental, safety, and quality policies and obtained ISO14001 and ISO45001 certification, 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 2018, 2,861 employees
had completed their training for a total of 5,785 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 headquarters
57
No deviation was
found
No deviations were
found
No deviations were
found
No deviations were
found
Assessment criteria
Actual governance
Yes No
Summary description
Deviation and causes
of deviation from
Corporate Social
Responsibility Best
Practice Principles for
TWSE/TPEX Listed
Companies
employees on a regular basis,
and inform them of operational
changes that may be of
significant impact?
5.
6.
7.
8.
9.
Yes
Yes
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
marketing and labeling of
products and services?
Does the company evaluate
suppliers’ environmental and
social conduct before
commencing business
relationships?
Is the company entitled to
terminate supply agreements
at any time with a major
Yes
Yes
Yes
and at various plant sites to receive employees’ complaints. A “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. All department
managers announce key points of the meeting to their subordinates.
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.
No deviations were
found
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, shipping, and repair and maintenance services
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 the 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 own logos or names on the products it produces.
No deviations were
found
No deviations were
found
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 the Letter of Undertaking for Compliance with the Responsible Business
Alliance (RBA) Code of Conduct by Vendor and evaluates suppliers’ performance by their
contribution to corporate social responsibilities.
The Company requires all major suppliers to comply with local regulations and fulfill their duties to
the environment and society. They are demanded to immediately rectify any violations found to
ensure the business relationship with the Company.
No deviations were
found
No deviations were
found
58
Assessment criteria
Actual governance
Deviation and causes
of deviation from
Corporate Social
Responsibility Best
Practice Principles for
TWSE/TPEX Listed
Companies
supplier, if the supplier is found
to have violated its corporate
social responsibilities and
caused significant impacts
against the environment or
society?
Enhanced information
disclosure
Has the company disclosed
relevant and reliable CSR
information on its website and
at the Market Observation Post
System?
IV.
1.
Yes No
Summary description
The Company’s standard procurement contract specifically requires suppliers to comply with the
Responsible Business Alliance (RBA) Code of Conduct 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.
Yes
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 the Market Observation Post System (MOPS).
No deviations were
found
59
████ Corporate social responsibility framework
Board of Directors
Corporate Social Responsibility Steering Committee
(CSR Steering Committee)
CSR Office
Executive Secretary
CSR Executive Seeders
• Implementation and execution of CSR
• Sound corporate governance
• Fostering a sustainable environment
• Upholding public interest
• Enhanced CSR disclosure
Employee care unit
Corporate Governance
Group
Environmental Safety
and Health Group
Supply Chain
Management Group
• Responsible
purchase
• Prohibition against
conflict minerals
• Green purchase
• Supplier CSR
commitment
• Certified supplier
audit
• Waste and raw
materials
management
• Prohibition against
child labor
• Workers' freedom
and human rights
• Employee health
and safety
• Equal employment
opportunities
• Employee salary
and welfare
• Professional skills
training and
management
• Diverse
communication
with employees
• Employee care
• Commercial
integrity
• Anti-corruption
• Regulatory
compliance
• Enforcement of
internal control and
internal audit
• Information
transparency
• Accurate financial
data
• Protection of
shareholders' equity
• Protection of
intellectual property
rights
• Information security
and privacy
management
• Safe work
environment
• Green environment
and sustainability
• Green design and
production
• Reduction of
carbon, energy and
greenhouse gas;
promotion of
product carbon
footprint and CDP
• Management of
waste and
hazardous
substances
• Use of renewable
energy source
60
████ The operation and implementation of Corporate Social Responsibility in 2018
Item
Corporate
Governance
Supply Chain
Management
Green
Environment
Green
Product
Social Welfare
Result
1. We were awarded "4th Corporate Governance Evaluation top 6-20% in the publicly traded
company group", which was held by Taiwan Stock Exchange (TWSE).
2. We have been selected into the MSCI ESG Leaders Index, the most importance sustainable
performance evaluation indexes taken by international investors, for 12 consecutive years.
3. We finished the Corporate Social Responsibility Committee Organizational Rules.
1. To achieve Conflict-Free Minerals, we completed the investigation of Conflict Minerals and
signed commitment statements.
2. To reinforce CSR audits and management on Tier 1 suppliers, we audited 15 suppliers in
2018.
1. We received a B- grade for CDP in 2018 and have been selected for CDP Climate Change for
five consecutive years.
2. We built solar power generators and introduced an ISO 50001 energy management system at
plants of CD, KSP3, and PCP.
1. In 2018, we produced 63 halogen-free notebooks, 12 halogen-free smart phones, 2
halogen-free tablets and 20 halogen-free wearable devices.
2. 92.6 % of notebook computers and tablets product were certified of Energy Star 6.1.
6 display products were certified Energy Star 7.0.
1. We donated NT$10 million to Hualien Earthquake Disaster Relief.
2. To encourage employees to participate in social welfare, we offer a paid volunteering leave.
3. We consistently donate tablets and AIO computers to promote digital mobile learning in
schools in remote areas and achieve the SDGs (Sustainable Development Goals) of the
United Nations.
4. We consistently participate in charities with the HCI foundation and sponsored the children's
theatre of the W3 Troupe in Taitung, annual fundraising, as well as blood donation events
(350 employees donated 546 units of blood in 2018.)
5. We built up a CSR page on Facebook to enhance internal and external communication and
share information.
Employee
Care
1. We offer employee care including health Counseling, health lectures, weight loss programs,
birthday events, department gathering, and all kinds club activities.
2. To improve fertility rates, we provide an NT$ 66,000 maternity subsidy to employees for each
newborn baby. 253 Compal babies were born in 2018.
Awards
and Honors
1. The Compal CSR report in 2017 was assured by SGS Taiwan Ltd., which has been engaged to
provide assurance for AA1000 AS and GRI Standards disclosure in accordance with Core
Options. Meanwhile, the report won the Platinum Medal in the Taiwan Corporate
Sustainability Report of TCSA.
2. We were ranked 404th of Fortune Top 500, 1500th of Forbes Top 2000, 6th of Common Wealth
Magazine’s Top 2000 Manufacturers, and 59th of Common Wealth Magazine’s Top 1000 in
China, Taiwan, and Hong Kong
61
████ The targets and plans of Corporate Social Responsibility in 2018
Target
In response to all of the
"United Nations
Sustainable
Development Goals
(SDGS)", the 14th "Life
below water" event was
launched.
Focus on the mitigation
and adaptation of
climate change,
continuously producing
green designs, as well
as managing the energy
conservation and
extreme climate
resilience in plants.
Keep collaborating with
customers and
suppliers and promote
the establishment of a
CSR management
platform and system
before the year 2020.
Introduce the Employee
Assistance Program
(EAP) to strengthen the
employee's physical
and mental health care.
Plan
(1)Held beach cleaning activities and lectures on environment protection, which
invited professional environmental lecturers to educate our colleagues on
the correct action to take care of the sea.
(2)Promote reading education – focusing on the marine ecology and plastic
reduction.
(3)Hold the sketch/painting activities for employees and their children and
marine ecology.
(1)Promise to reduce greenhouse gas emissions. With the emission volume of
2014 as the standard, we will decrease our emission volume (Revenue in NT$
per million) by 6% by 2020
(2)Continue to promote our suppliers with energy-saving and carbon-reducing
plans in order to help them carry out decreases and adjustments to cope
with climate change.
(3)Continue to refer to the TCFD framework to effectively identify risks
associated with climate change and master green business opportunities.
(4)Promote lean production, adopt systematic management methods, reduce
unhelpful waste in production process, control energy resource use, create
economic effects, and improve environmental efficiency and enterprise
competitiveness.
(5)Continue to transport solar power plants to maximize the use of renewable
energy.
(1)Complete the platform and system of supply chain management before the
end of October 2020.
(2)Complete the CSR data collection, analysis and tracking improvement by
suppliers on the system.
(1)Cooperate with external professional consultants to provide our employees
more of the assistance support in physical and mental health.
(2)Hold parent-child education/legal/financial management and other related
lectures to help our staff understand more and take care of their family.
(3)Actively execute in the health promotion management for the moderate and
high-risk groups in cardiovascular in health examinations.
NO.
1
2
3
4
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 the “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.
In order to implement the development of sustainable environment, maintain environmental management
system, the company regularly organizes environmental education courses for management and employees. At
the same time, green management has been introduced from the product design stage and the supply chain.
Reduce the energy consumption of products and services, effectively manage harmful substances, reduce the
generation of waste water and waste, and properly handle and adopt the best feasible pollution prevention and
control technology measures. Improve product life and reliability, and maximize the sustainable use of
renewable resources with the concept of easy disassembly and recycling. Formulate the company's energy
■
62
conservation and carbon reduction targets, carry out greenhouse gas reduction operations, and do its utmost to
reduce the adverse impact of the company's operations on human health and the natural environment.
VI. Other important information to facilitate better understanding of the company’s corporate social responsibility
practices:
■ External ini\a\ves and par\cipa\on
As a significant member of the Earth, the Company actively participates in global and local environmental initiatives
and actions. Since 2009, Compal has been participating in CDP's questionnaires on climate change, water, and supply
chain carbon management. In addition, the Company takes part in the GHG Protocol developed by World Business
Council for Sustainable Development (WBCSD) and World Resources Institute (WRI), and the “Business
Transformation Carbon Footprint Program” introduced by the Industrial Technology Research Institute (ITRI) and
Taiwan Electrical and Electronic Manufacturers' Association (TEEMA). The Company has been named a “Low-carbon
pioneer”, and is a current participant of DSJI and the Supply Chain GHG Task Force under the International
Sustainability Index Promotion Alliance for Taiwanese Businesses, and took part in the Taipei Earth Day Corporate
Environment Education Commitment campaign. In 2014, Compal was invited to the annual meeting of Taiwan's
“Cradle to Cradle” platform. In 2015, Compal was selected as part of CDP's Climate Disclosure Leadership Index (CDLI)
for the first time. In 2018, Compal received an overall CDP Management score of B-.
■ Energy management system
Increasing productivity per unit of energy is the most fundamental solution to reducing energy consumption and
greenhouse gas emission. In 2018 , it obtained the ISO 50001 certification of the Pingzhen Plant and Plant 3 in
Kunshan. It plans to complete the Chengdu plant energy management system certification this year and extend the
relevant experience to other factories.
■ Supply chain carbon management
Being one of the world's key IT producers, Compal uses “information platform” and “workshops” to keep suppliers
informed of the latest energy/carbon reduction technologies and green living, and inspires them to commit to active
care for the local environment.
The Company requires all its suppliers to be certified for ISO9001 (quality management system) and ISO14001
(environmental management system), and follow EICC guidelines by signing a letter of commitment to the
behavioral standards of the RBA Code of Conduct. Under this commitment, upstream suppliers are bound to comply
with international, national, and local regulations with respect to all activities. In the second half of 2017, Compal
launched its “Supply Chain GHG Management Program” and held seminars at various factories as a means to
communicate with suppliers on how they are expected to contribute and assist in Compal's global environmental
protection and quality management initiatives. Compal also took the opportunity to exchange and share experiences
on CSR issues with suppliers.
■ Corporate environmental educa\on
The Company continued to incorporate environmental education and green experience into employees' training
throughout 2018. Invite the popular professors of National Taiwan Ocean University to share the information on
sustainable seafood, small ecological travel of the stream, the ecological and cultural history of Dadaotun Wharf,
ecological and cultural lectures on Huajiang Wild Geese, and the natural ecological journey. The Company had
provided full support from the top-down, while employees and their family members enthusiastically participated in
a series of “experiential” environmental education. We rallied our employees to exercise our influence as consumers
to select safe foods and sponsor quality rice fields and tea farms. The crops are later presented to clients as Chinese
New Year gifts. By modifying demand, we hope to change supply and promote more sustainable agriculture, forestry,
animal husbandry, and fishery. All new recruits are required to undergo 0.5 hours of online environmental training in
their initial year. The course covers a variety of topics from green living, preservation of ecosystems, climate change,
to green design. In the future, the Company will also make “green products” a mandatory course and introduce
more advanced courses on green design issues. A core team will be assembled specifically for the purpose of
improving green energy efficiency, and building up Compal's distinguished values in the ICT (Information and
Communication Technologies) industry.
63
■ Suppor\ng social enterprises
In recent years, many social enterprises have emerged with goals to protect the environment and improve public
interest. In support of their efforts, the Company encourages employees to purchase products and services offered
by social enterprises, hoping that by redirecting purchasing power, we may be able to muster positive energy to
solve society's problems. In 2018, Compal collaborated with Mennonite Hualien County Sheltered Workshop, Taiwan
Association for Marine Environmental Education, I Can Sheltered Workshop, Hanner Family, Taiwan Mountain and
Maritime Protection Society, and managed to raise several hundred thousand dollars of donations from employees.
■ Community engagement
The Company has long been sponsoring the maintenance and management of Zhouzi Park No. 2 in Neihu in order to
provide community residents and industrial park workers an ideal place for leisure and recreation activities.
■ Social services
‧Compal's employees have been running the “Compal Volunteer Club” since 2004. Members of this club visit
disadvantaged children during weekends and guide them to reading good books. The goal of this program is to help
them develop the habit of reading and the ability to think independently, and hence prepare them for the future.
The volunteers have also been working with Hsu Chauing Social Welfare and Charity Foundation to provide
extra-curriculum education for immigrant children. Since 2009, they have been visiting Jong Jen Elementary School,
Wuhan Elementary School, Nan-Shi Primary School, Chung Ping Elementary School, Shuang Long Elementary School,
Neihai Elementary School, Nan Sing Elementary School, Hsiang An Elementary School, Tien Hsin Elementary School,
Hua Hsun Elementary School, Wu Cyuan Elementary School, San He Elementary School, Chung-Shing Elementary
School, Sin-Jie Elementary School, Xin Lu Elementary School, Fu An Elementary School, Dacheng Elementary School,
Long-Sing Primary School, San Keng Primary School, Shanghu Primary School, Yisheng Elementary School, Shi-Hai
Primary School, Te-Long Elementary School, Sha Keng Elementary School, Da Po Elementary School and Haibin
Elementary School in Taoyuan during public holidays to accompany children in their reading activities. By the end of
2018, the volunteers had assisted 1,810 immigrant children and children from disadvantaged families.
‧Compal has been encouraging college volunteer clubs to join the Company's “reading volunteers” initiative and
provide study aids to children from low-income families in the neighborhood. By sharing good reading materials and
environmental awareness, the Company hopes to contribute to the learning progress of disadvantaged children.
■ Social welfare
(1) Budget sponsorship
‧Sponsoring of budgets for college volunteer clubs- In an attempt to encourage college students to participate in
volunteer service, the Company has been contributing NT$600,000 every year since 2004 to sponsor college clubs in
promoting children's reading, after-school classes, and environmental education in locations that lack resources and
for low-income households. A total of 19 college clubs applied for sponsorship and 401 volunteers participated in
sponsored volunteer activities in 2018, for which the Company contributed a sum of NT$600,000 that benefited
1,016 students.
‧Sponsoring of W3 Troupe's charity performance - Compal donated NT$800,000 and invited more than 1250
disadvantaged children and their teachers to W3 Troupe's show - “Fantasy Valley I - Finding Lost Courage”. Through
art therapy, we hope to give children the right influence they need to develop a positive mind, and encourage them
to listen, see, and experience for themselves the wonders of life.
‧In addition to charity involvement, the Company also provides strong support to academic and industrial
organizations including: NTU System Culture Foundation, Taipei City Friends of the Police Association Neihu Office,
International Council for Small Business –ROC, Taiwan Pawprint K9 Rescue, Taoyuan Enterprise Chamber, Garden
Homeless Animal Association, Cheng Dian Culture & Education Foundation, Fire Department, Taipei City Government,
Taiwan District of Kiwanis International, Shenkeng District Office of New Taipei City, National Pingtung University of
64
Science and Technology, Kenting National Park Headquarters, Spinal Cord Injury Foundation, Taoyuan County
Volunteer Fire Brigade Pingzhen Division. A sum of NT$6,251,720 donated to the abovementioned entities in 2018
(2) Donation of supplies
‧320 tablets, 25 AIOs, 30 NBs, 15 E-sports Nbs, and 15 sets of desktop computers (including a host computer and
LCD) were donated to support the digital learning Program in remote areas.
The Company donated 150 tablets to eight digital centers located in Sanzhi Dist of New Taipei City, Gongguan
Township of Miaoli County, Yuanli Township of Miaoli County, Mailiao Township of Yunlin County, Zhuqi Township of
Chiayi County, Dalin Township of Chiayi County, Fengbin Township of Hualien County, and Jincheng Township of
Kinmen County. In addition, the company donated 50 tablets, 30 NBs, 15 sets of desktop computers (including a
host computer and LCD) to Fu Jen University Taiwan Bi-Education Care Center and the Love Reading Service of
Department of Library & Information Science. 25 AIOs were donated to 5 elementary schools located in Pingtung
and Taoyuan County, 15 sets of 21-inch curved E-sports notebooks to Wen Huan elementary schools in Taoyuan
County, 120 tablets to 5 elementary schools located in New Taipei City, Taoyuan City and Miaoli County, and assisted
Township schools and communities to help promote digital mobile learning.
(3) Charity Arts Exhibition and Concert
“Meeting pets” was the theme of the Charity art exhibition in 2018 and the Thanksgiving concert to show supports
and warmness to pets. 15 photographs from employees and 19 hand-drawing bags from employees and their kids
were displayed at the exhibition. Meanwhile, all exhibits were on sale for charity. We collected NT$67,793 from the
exhibition subscription and donated NT$44,055 to the Taiwan animal protection association and NT$23,738 to the
Taiwan Guide Dog Association respectively.
■ Human rights
The Company respects the human rights of all employees. In addition to prohibiting the use of child labor and
overtime working, the Company treats all employees of different ethnicities, religious beliefs, skin color, gender,
nationality, age and physical features with equal respect and fairness. It has been explicitly stated in the Human
Resource Management Policy that “The Company shall recruit employees based on knowledge, morality, skills,
experience and suitability for the position/job in question. Under no circumstances may the Company reject
recruitment for reasons such as gender, ethnicity, religion, political association, nationality, sexual preference, or
age”. The Company also refrains from using involuntary workers and child labor.
■ Safety and health
At a time when financial performance is as important as environmental protection, the Company considers
“occupational safety and health” to be an important issue that no business shall neglect. Only by creating a safe
work environment are employees able to unleash their full potential, which is a driving force behind the Company's
progress. For this reason, the Company not only ensures that every operation is compliant with environmental,
safety, and health rules, but also commits to eliminate or reduce safety and health risks to employees, suppliers,
contractors and stakeholders that are caused by production procedures, facilities, and activities. At Compal, we see
financial performance, environmental protection, and occupational safety and health as three co-existing and
complementing factors of business administration. The Company created its official environmental safety and quality
policies to guide employees toward protection in the workplace and social responsibilities. Furthermore, these
policies also provide employees and external stakeholders (such as suppliers, contractors, customers, environmental
organizations, government agencies and community residents) with a better understanding of the Company's
environmental safety efforts and its resolve to protect and minimize risks to the environment. Ultimately, we hope
to direct the attention of our partnered vendors to environmental protection, safety and health, and work together
towards accomplishing our goals.
65
(1) Environment safety policy:
‧Comply with environmental, safety and health laws, and related requirements.
‧Conduct environment safety and health training to raise employees' awareness towards individual responsibilities
as well as safety and health concerns of the surrounding environment, while at the same time encouraging their
participation in relevant issues.
‧Continually improve environmental, safety and health performance through programs such as pollution
prevention, accident prevention, energy/resource conservation, waste reduction, and responsible care.
‧Pay attention to the control of pollution sources and reducing waste from production. Enhance safety and health
facilities to prevent pollution and minimize risks.
‧Establish proper communication channels to convey the Company's environmental safety policy, requirements,
and goals to employees, suppliers, contractors, nearby residents and concerned organizations.
(2) Environmental safety and health systems/measures:
In an attempt to minimize losses on occupational hazards and rectify hidden dangers and recurring safety
incidents for more harmonic labor-management relations, the Company subsequently assembled an Environment
Safety Promotion Committee that specializes in the development of environment safety plans. Any environment
safety-related policies and goals proposed are subject to review during the Environmental Safety Management
Review Meeting. Once reviewed, the Committee becomes responsible for supervising work safety units in the
implementation of safety and health-related measures, auto inspections, maintenance, and training to eliminate
hazardous factors in the environment. In addition, the Committee also supervises relevant departments in
completing hazard prevention and loss control systems.
(3) Execution
‧Fire safety equipment (facility) plans and execution: Appropriateness and adequacy of fire safety equipment
(facilities) are reviewed whenever there is a change to the layout of the business premises. Locations of fire safety
equipment (facility) and evacuation routes are clearly labeled on each floor. The Company also engages
professional and qualified fire safety inspectors to conduct annual fire safety inspections and reports according to
law.
‧Water/power plans and execution: The Company promotes proper awareness and implements appropriate control
on all uses of water and power equipment for more effective conservation of energy and resources. The
administrative department is responsible for the day-to-day inspection of power usage, power systems, and water
equipment. All inspection findings are detailed in the “Safety and Health Equipment Inspection Log” and any
issues discovered are rectified immediately.
‧Cleaning, monitoring, and control of industrial waste: Handled by the Factory Affairs Division of various factories
and General Affairs Department of the headquarters. Waste generated from factories can be classified into the
following categories:
a. Hazardous waste: Sorted according to “Standards for Defining Hazardous Industrial Waste” stipulated by the
Environmental Protection Administration (EPA), Executive Yuan, and collected by certified contractors for
subsequent treatment.
b. Industrial waste: Industrial waste other than hazardous industrial waste is collected and treated by certified
contractors.
66
‧Emergency response procedures: These procedures have been established to guide the Company
through disruption of production, information, and raw material supply in the occurrence of natural or
man-made disasters. Incident resolution procedures:
Hazard alert occurs
危害警訊發生
Incident reporting
事故通報
Confirmation of
危害確認
Harzard
YES
YES
Activate emergency
緊急應變組織運作
response
NO
NO
Update
列入紀錄
records
i
事
故
調
查
報
告
m
及
e
a
s
改
u
r
e
善
s
n
預
r
i
s
防
k
m
措
a
n
a
施
g
e
納
m
e
n
入
t
s
風
y
s
t
e
險
m
管
理
系
統
修
正
I
n
c
l
u
s
i
o
n
o
f
i
n
c
i
d
e
n
t
i
n
v
e
s
t
i
g
a
t
i
o
n
r
e
p
o
r
t
a
n
d
i
m
p
r
o
v
e
m
e
n
t
/
p
r
e
v
e
n
t
i
v
e
Confirmation of
危害控制確認
damage control
NO
否
Request external
請求外部支援
support
YES
是
Post-disaster recovery
災後復原工作運作
Incident investigation and proposal
事故調查、擬定預防對策
of preventive measures
Level 1 hazard:
危害等級1：
(cid:3) Any death or 3 major injuries or higher
◆ 人員死亡或3人以上重傷
(cid:3) Loss of work hour exceeding 1 day
◆ 損失工時1日以上
(cid:3) Loss of property above US$1 million
◆ 財產損失100萬美元以上
SP：屬危害等級：1 須通
報高階風險管理委員會
SP: Occurrence of Level 1
hazard must be escalated to
the Senior Risk Management
Committee
(4) Quality Policy (pursuing continuous improvement to meet customer needs): We commit to
. Implement customer-oriented performance management.
. Create competitive advantages in products and services.
67
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 the 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. The Company adopted Global Reporting
Initiative’s most updated guidelines (GRI Standards, published in 2016) to prepare its 2018 CSR report. The report
was compiled based on issues concerning stakeholders 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 Silver or Bronze Awards by Taiwan Institute for Sustainable Energy for its “Taiwan Corporate Sustainability
Report Award” in 2014-2017 and a Top 50 Platinum Award in 2018.
68
3.3.6
Ethical Corporate Management
Assessment criteria
Actual governance
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
Yes No
Summary description
I.
Establishment of integrity
policies and solutions
1.
Has the company stated in
Yes
The Company has clearly outlined the procedures for ethical management and guidelines for
No deviations were
its Memorandum or
conduct in its HR policies, social responsibility policies, the integrity principles and code of conduct
found
external correspondence
for directors, supervisors, managers, and the general code of conduct. The Board of Directors and
the policies and practices it
the management have committed themselves to business integrity. The Company’s “Board of
has to maintain business
Directors Meeting Guidelines” contain a conflicting interest clause that requires directors to
integrity? Are the board of
disassociate from all discussion and voting on any agenda that poses a conflict of interest between
directors and the
the Company and themselves or the entities they represent.
management committed to
fulfilling this commitment?
2.
Does the company have any
Yes
The Company has established the “Ethical Corporate Management Best Practice Principles” and
No deviations were
measures against dishonest
“Procedures for Ethical Management and Guidelines for Conduct” (hereinafter, “Procedures and
found
conduct? Are these
measures supported by
proper procedures,
behavioral guidelines,
disciplinary actions and
complaint systems?
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 has 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 or the official Company website. Any
person involved in unethical conduct will be referred to an authorized department and processed
69
Assessment criteria
Actual governance
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
Yes No
Summary description
according to the “Procedures for Ethical Management and Guidelines for Conduct”.
3.
Has the company taken
Yes
The Company’s “Procedures for Ethical Management and Guidelines for Conduct” govern the
No deviations were
steps to prevent
occurrences listed in Article
7, Paragraph 2 of “Ethical
Corporate Management
Best Practice Principles for
TWSE/TPEX-Listed
Companies” or business
conducts that are prone to
integrity risks?
Integrity actions
found
following
‧ Prohibition against offering and acceptance of improper gains
‧ Prohibition against lobbying
‧ 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.
Does the company evaluate
Yes
The Company requires all suppliers to sign the Letter of Undertaking for Compliance with the
No deviations were
the integrity of all
counterparties it has
Responsible Business Alliance (RBA) Code of Conduct by Vendors, which binds them to local
found
regulations on workers, environment, safety, health, management, and moral conduct, and prevents
business relationships with?
them against corruptive and unethical behaviors.
II.
1.
Are there any integrity
clauses in the agreements it
signs with business
70
Assessment criteria
partners?
Actual governance
Yes No
Summary description
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
2.
Does the company have a
Yes
The Company has appointed its Human Resources, Administrative Management and Legal Affairs
No deviations were
unit that specializes (or is
Office as the competent units in charge of the Company’s ethical matters. These units jointly set the
found
involved) in business
integrity? Does this unit
report its progress to the
board of directors on a
regular basis?
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 “Procedures for Ethical Management and
Guidelines for Conduct” 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 familiarize all employees with the aforementioned guidelines and thereby facilitate
the promotion of honest management.
Status of Operation and Implementation in 2018:
A total of 682 suppliers (91%) engaged in business transactions with the Company signed the RBA
Code of Conduct commitment or completed the RBA Code of Conduct questionnaire. In addition, a
total of 4,655 employees completed a total of 20,963 hours of integrity management related
training, 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
71
Assessment criteria
Actual governance
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
Yes No
Summary description
‧Management for the prevention of insider trading (for senior managers)
‧Responsible Business Alliance
‧Introduction to intellectual property rights, understanding information security, and Personal
Information Protection Act, and case studies
3.
Does the company have any
Yes
The Company has established the “Ethical Corporate Management Best Practice Principles” and
No deviations were
policy that prevents conflict
“Procedures for Ethical Management and Guidelines for Conduct” (hereinafter, “Procedures and
found
of interest, and channels
Behaviors”). A Company director, officer or other stakeholder attending, or present at a board
that facilitate the report of
meeting, or a juristic representative whose presence infers a likelihood that company interests might
conflicting interests?
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 a 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 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,
72
Assessment criteria
Actual governance
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
Yes No
Summary description
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.
Has the company
Yes
The Company has set “Ethical Corporate Management Best Practice Principles” and focuses on
No deviations were
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?
creating an effective accounting system and internal control system to avoid high-risk or unethical
found
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.
5.
Does the company organize
Yes
The Company organizes training courses
in accordance with “Regulations Governing the
No deviations were
internal or external training
Establishment of Internal Control Systems by Public Companies” and the board-approved “Insider
found
on a regular basis to
Trading Prevention Principles”. Insider training prevention courses are organized for vice
maintain business integrity?
president-grade employees and above, while general employees are subjected to training on ethical
73
Assessment criteria
Actual governance
Yes No
Summary description
behaviors on a yearly basis.
III.
Implementation of
whistleblowing system
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
1.
Does the company provide
Yes
The Company has mailboxes in place to receive malpractice reports from within or outside the
No deviations were
incentives and means for
Company. Once a report has been sent to the mailbox, it will be referred to the appropriate
found
employees to report
malpractice? Does the
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
company assign dedicated
situation requires it.
personnel to investigate the
reported malpractice?
2.
Has the company
Yes
The Company has specifically instructed case handlers to strictly follow procedures when building,
No deviations were
implemented any standard
assigning and investigating cases, and to exercise discretion during the investigation process.
found
procedures or
confidentiality measures for
handling reported
malpractices?
3.
Does the company assure
Yes
The Company has confidentiality procedures built into its management policies and employee code
No deviations were
malpractice reporters that
of conduct to protect informers and investigators from improper treatments or retaliation.
found
they will not be mistreated
for making such reports?
IV
Enhanced information
74
Assessment criteria
disclosure
Actual governance
Yes No
Summary description
Deviation and causes
of deviation from
Integrity Best-Practice
Principles for
TWSE/TPEX Listed
Companies
1.
Has the company disclosed
Yes
The Company has disclosed corporate governance and business integrity matters and updated the
No deviations were
its integrity principles and
progress onto its website
and MOPS?
progress of such efforts in its annual reports, CSR reports and “Investor Relations-corporate
found
governance” and “CSR” sections of its website.
V
If the company has established business integrity policies in accordance with “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-Listed
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”.
75
3.3.7 Corporate Governance Guidelines and Regulations
Please refer to the Company’s website→ Investor Rela\ons → Corporate Governance → Major Internal
Policies
https://www.compal.com/investor-relations/corporate-governance/
‧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 Endorsements and Guarantees
‧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 https://www.compal.com/CSR/ZH/
‧Sustainable Management
‧Stakeholders
‧Supply Chain Management
‧Environment
‧Employee Relationship
‧Charity
‧Download Report
Please refer to the Company’s website→ Stakeholder Communica\on
https://www.compal.com/stakeholder-communication-area/
‧Employee Relations
‧Customer Relations
‧Supplier Relations
‧Investor Relations
76
3.3.9
Internal Control Systems
Compal Electronics, Inc.
Statement of the Internal Control System
The Company states the following with regard to its internal control system during fiscal year 2018, based on the
findings of a self-assessment:
Date: March 22 2019
1. The Company is fully aware that establishing, operating, and maintaining an internal control system are the
responsibility of its Board of Directors and management. The Company has established such a system aimed
at providing reasonable assurance of the achievement of objectives in the effectiveness and efficiency of
operations (including profits, performance, and safeguard of asset security), reliability, timeliness,
transparency, and regulatory compliance of reporting, and compliance with applicable laws, regulations, and
bylaws.
2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal
control system can provide only reasonable assurance of accomplishing the three goals mentioned above.
Furthermore, the effectiveness of an internal control system may change along with changes in environment
or circumstances. The internal control system of the Company contains self-monitoring mechanisms,
however, and the Company takes corrective actions as soon as a deficiency is identified.
3. The Company judges the design and operating effectiveness of its internal control system based on the
criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public
Companies (herein below, the “Regulations”). The internal control system judgment criteria adopted by the
Regulations divide internal control into five elements based on the process of management control: 1.
control environment 2. risk assessment 3. control activities 4. information and communications 5.
monitoring activities. Each element further contains several items. Please refer to the Regulations for details.
4. The Company has assessed the design and operating effectiveness of its internal control system according to
the aforesaid criteria.
5. Based on the findings of the assessment mentioned in the preceding paragraph, the Company believes that
as of Dec 31, 2018 its internal control system (including its supervision and management of subsidiaries),
encompassing internal controls for knowledge of the degree of achievement of operational effectiveness
and efficiency objectives, reliability, timeliness, transparency, and regulatory compliance of reporting, and
compliance with applicable laws, regulations, and bylaws, is effectively designed and operating, and
reasonably assures the achievement of the above-stated objectives.
6. This Statement will become a major part of the content of the Company's Annual Report and Prospectus,
and will be made public. Any falsehood, concealment, or other illegality in the content made public will
entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.
7. This Statement has been passed by the Board of Directors Meeting of the Company held on March 22, 2019,
where 0 of the 14 attending directors expressed dissenting opinions, and the remainder all affirmed the
content of this Statement.
Compal Electronics, Inc.
Chairman: Sheng-Hsiung Hsu (Rock Hsu)
President: Chung-Pin Wong (Martin Wong)
77
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 to the date of the annual report: None.
3.3.11 Major Resolutions Made in Shareholders’ Meeting and Board Meetings
1. Shareholders’ meeting
▓Time：9:00 am, June 22, 2018
▓Place：B1, No. 581, Ruiguang Rd., Neihu District, Taipei City 11492, Taiwan (R.O.C.)
▓Major Resolutions:
(1)Election of the 13th Term of Directors, the result of the elections:
・New Directors are:
Sheng-Hsiung Hsu, Jui-Tsung Chen, Binpal Investment Co., Ltd., Kinpo Electronics, Inc., Charng-Chyi Ko,
Sheng-Chieh Hsu , Yen-Chia Chou, Chung-Pin Wong , Chiung-Chi Hsu, Ming-Chih Chang, Anthony Peter
Bonadero, Sheng-Hua Peng
・New Independent Director are:
Min-Chih Hsuan, Duei Tsai, Duh-Kung Tsai
(2) Ratified the Business Report and Financial Statements for 2017.
(3) Ratified the Distribution of Earnings for 2017.
(4) Approval cash distribution from capital surplus.
(5)Approval of the release of non-competition restrictions for Directors.
▓Post-meeting Execution:
(1) The 13th Term of Directors approved by the Ministry of Economic Affairs on July 23, 2018
(2) The 2018 distribution of cash dividends and capital reserves are summarized as follows:
‧Cash Dividends: NTD 1 per share
‧Cash Distributed from Capital Reserve: NTD 0.2 per share
‧Ex-dividend Date: July 29, 2018.
‧Declaration Date: August 17, 2018.
78
2. Board meetings
Board of Directors
Meeting
Major Resolutions
1. Approved the promotion of Managers.
2. Approved the cancellation of restricted employee warrant shares where conditions had not
16th Meeting
(12th Term)
2018.3.6
been met by the intended employee.
3. Approved the CSR Committee Procedure.
4. Approve the chairman of Corporate Social Responsibility Committee change.
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
17th Meeting
(12th Term)
2018.3.19
18th Meeting
(12th Term)
2018.5.9
1st Meeting
(13th Term)
2018.7.4
Letter of 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 of 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 of Directors and Independent Director
nominees.
9. Approve the release of non-competition restrictions for managers
10. Approve the release of non-competition for the 13th Term of Directors and Independent
Director-eligible nominees.
11. Approve the first mid-year employees’ bonus of 2018.
12. Approve employee salary adjustment of 2018
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.
1. Election of the 13th Term of Chairman of the Board
2. Election of the 13th Term of Vice Chairman of the Board
3. Approved the senior level management change
4. Approved the appointment of the Accounting Officer
5. Approved the appointment of the Internal Audit Officer
6. Approved the appointment of the 4th term remuneration committee members
7. Approved the relevant matters regarding the distribution of 2017 cash dividends and cash
distribution from capital surplus to shareholders
8. Approved the issuance of the Letter of Support by the Company to facilitate its subsidiary in
obtaining credit facilities from financial institutions
2nd Meeting
9. Approved of the Company obtaining credit facilities from financial institutions
1. Approved the compensation of Directors’ Remuneration of 2017
79
Board of Directors
Meeting
(13th Term)
2018.8.9
3rd Meeting
(13th Term)
2018.8.7
4th Meeting
(13th Term)
2018.11.8
5th Meeting
(13th Term)
2019.2.22
6th Meeting
(13th Term)
2019.3.22
Major Resolutions
2. Approve the second mid-year employees’ bonus of 2018
3. Approved a loan to Henghao Technology Co., Ltd.
4. Approved a loan to Unicom Global, Inc.
5. Approved the issuance of the Letter of Support by the Company to facilitate its subsidiary in
obtaining credit facilities from financial institutions
6. Approved of the Company obtaining credit facilities from financial institutions
1. Approved Compal’s 100% owned subsidiary – Billion Sea Holdings – plans to dispose of the
49% owned JV – LC Future Center Limited
1. Approved the compensation of Employee bonuses in cash in 2017
2. Approved the proposal for 2018 year-end employee bonuses
3. Approved the annual audit plan for 2019
4. Approved the issuance of the Letter of Support by the Company to facilitate its subsidiaries
in obtaining credit facilities from financial institution(s)
5. Approved of the Company obtaining credit facilities from financial institutions
6. Approved senior level management change
1. Approved of the Company obtaining credit facilities from financial institutions
1. Approved the Internal Control System Statement for the year 2018
2. Approved the proposal of the distribution of compensation to employees and directors for
2018
3. Approved the 2018 audited Financial Statements and Consolidated Financial Statements
4. Approved the Business Report for 2018
5. Approved the Business Plan for 2019
6. Approved the proposal for Distribution of Earnings for 2018
7. Approved the proposal of cash distribution from Capital Surplus
8. Approved the CPAs’ independence and competence of performing the financial report audit.
9. Approved the convention of the 2019 Annual General Shareholders’ Meeting
10. Approved the targets and plans of the 2019 Corporate Social Responsibility
11. Approved the issuance of the Letter of Support by the Company to facilitate its subsidiaries
in obtaining credit facilities from financial institutions
12. Approved of the Company obtaining credit facilities from financial institutions
80
Board of Directors
Meeting
Major Resolutions
7th Meeting
(13th Term)
2019.5.13
1. Approved the amendment to the “Articles of Incorporation”
2. Approved the amendment to the “Procedures for Acquisition or Disposal of Assets”
3. Approved the amendment to the “Procedures for Financial Derivatives Transactions”
4. Approved the amendment to the “Procedures for Endorsement and Guarantee”
5. Approved the amendment to the “Procedures for Lending Funds to Other Parties”
6. Approved the amendment to the “Corporate Governance Best-Practice Principles”
7. Approved the amendment to the “Rules and Procedures for Board of Directors Meetings”
8. Approved the release of non-competition restrictions for the managers
9. Approved the release of non-competition restrictions for Directors
10. Approved the establishment of Compal Electronics Kaohsiung Branch Office
11. Approved the appointment of the Corporate Governance Officer
12. Approved the first mid-year employees’ bonus of 2019
13. Approved employees’ salary adjustment of 2019
14. Approved the proposal for the appropriated percentage for the remuneration of employees
and Directors of 2019
15. Approved the loan to the 100% owned subsidiary Compal (Vietnam) Co., Ltd.
16. Approved the loan to the 100% owned subsidiary Compalead Eletrônica do Brasil Indústria e
Comércio Ltda.
17. Approved the issuance of the Letter of Support by the Company to facilitate its subsidiary in
obtaining credit facilities from financial institutions
18. Approved of the Company obtaining credit facilities from financial institutions
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:
Name
Date of appointment Date of dismissal
Reasons for dismissal
Title
President
Jui-Tsung Chen
1989.6.1
Accounting Officer
Ching-Hsiung Lu
1989.10.1
2018.7.4
2018.7.4
Internal position adjustment
Internal position adjustment
81
3.4
Information Regarding the Company’s Audit Fees and Independence
3.4.1 Audit Fees
Accounting Firm
Name of CPA
Period Covered by CPA’s Audit
Remarks
KPMG
Chien, Szu Chuan
Au, Yiu Kwan
2018.01.01~2018.12.31
-
Fee Range
1
2
3
4
5
6
Under NT$ 2,000,000
NT$2,000,000 ~ NT$4,000,000
NT$4,000,000 ~ NT$6,000,000
NT$6,000,000 ~ NT$8,000,000
NT$8,000,000 ~ NT$10,000,000
Over NT$100,000,000
Fee Items
Audit Fee
Non-audit Fee
-
-
-
-
-
10,420
-
2,023
-
-
-
-
Unit: NT$ thousands
Total
-
2,023
-
-
-
10,420
(1) Non-audit fees paid to CPAs, accounting firms, and affiliated companies thereof that amount to
more than 1/4 of the audit fees:
Unit: NT$ thousands
Firm Name of CPA
Audit
Fee
Non-audit Fee
System
Design
Company
Registration
Human
Resource
Others
Subtotal
Period Covered by CPA’s
Audit
Remarks
KPMG
Chien, Szu
Chuan
Au, Yiu-Kwan
10,420
-
107
-
1,916
2,023
2018.01.01~2018.12.31
-
Note: Other non-audit fees: Transfer pricing report of $600,000, tax consultation of $1,086,000, and others of
$230,000.
(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
82
3.5
Replacement of CPA
(1) About the former CPA
Date of replacement
Reason and explanation for
replacement
State whether the
commissioner or the CPA
terminated the service or
declined the commission
Approved by the Board of Directors on May 9, 2018
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
Other audit report opinions and
causes issued within the last
two years other than
unqualified opinions
Did he/she have opinions that
differed from that of the
publisher?
Yes
N/A
Description
N/A
Accounting principles or practices
Disclosure of financial report
Scope or step of auditing
Other
V
N/A
Other items of disclosure
(Contents that should be
disclosed as covered in Clauses
1.4~1.7, Section 6, Article 10 of
this guideline)
(2) About the succeeding CPA
Name of accounting firm
Name of CPA
Date commissioned
Items of consultation and
results on the accounting
methods for specific
transactions, accounting
principles and potential
opinions for financial reports
prior to commissioning
Written opinion from
succeeding CPA on items of
disagreement with the former
CPA
KPMG
Chien, Szu Chuan, Au, Yiu-Kwan
Approved by the Board of Directors on May 9, 2018
N/A
N/A
(3) Response from the former CPA on Clauses 1 and Clause 2.3, Section 6, Article 10 of this guideline: None.
83
3.6
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.
3.7
Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders
Title
Name
Chairman
Sheng-Hsiung Hsu
Vice Chairman
And CSO
Jui-Tsung Chen
Anthony Peter Bonadero
Director
Director
Binpal Investment Co.,
Ltd..
Representative:
Wen-Being Hsu
Kinpo Electronics, Inc.
Representative:
Shyh-Yong Shen
Chang Chi Ko
Sheng Chieh Hsu
Yen-Chia Chou
Sheng-Hua Peng
Ming-Chih Chang
Chiung-Chi Hsu
Min-Chih Hsuan
Chung-Pin Wong
Director
Director
Director
Director and
President
Director
Director
And EVP
Director
Director
And EVP
Independent
Director
Independent
Director
Independent
Director
Director Wen-Chung Shen
Yung-Ching Chang
Director
Director
And EVP
Executive Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Chao-Cheng Chen
Kuo-Chuan Chen
Chen Chang Hsu
Pei-Yuan Chen
Duh-Kung Tsai
Chun-Te Shen
Duei Tsai
2018
Up till April 23, 2019
Shares held
Increase
(Decrease)
Shares pledged
Increase
(Decrease)
Shares held
Increase
(Decrease)
Shares pledged
Increase (Decrease)
Unit: shares
0
0
0
0
0
0
0
0
0
765,000
117,000
0
0
315,000
0
0
0
0
(270,000)
765,000
0
315,000
129,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2,570,000
84
0
0
0
1,000,000
0
0
0
(225,000)
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
Title
Name
2018
Up till April 23, 2019
Shares held
Increase
(Decrease)
Shares pledged
Increase
(Decrease)
Shares held
Increase
(Decrease)
Shares pledged
Increase (Decrease)
Chyou-Jui Wei
Ying Chang
Wen-Da Hsu
Wei-Chang Chen
Shi-Kuan Chen
Chi-Wai Wan
(80,000)
315,000
240,000
180,000
0
0
Min-Tung Weng
240,000
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Senior Vice
President
Lo-Chun Lee
Vice President Chih-Chuan Cheng
Vice President Ching-Hsiung Lu
Vice President Po-Hsiung Chang
Vice President Po-Tang Wang
Vice President Tzong -Ming Wang
Vice President Fu-Chuan Chang
Vice President Yung-Nan Chang
Vice President Sheng-Hung Li
Vice President Yong-Ho Su
Vice President Jyh-Shyan Liang
Vice President Chiao-Lie Huang
Vice President Chung-Hsing Tan
Vice President Yi-Yun Chang
Vice President Hsin-Kung Mao
Vice President Hsin-Hsiung Huang
Vice President Shih-Hong Huang
Vice President Yi-Chiang Chiu
Vice President Tsing-Fa Lee
Vice President Bor-Heng Chen
Vice President Jui-Chun Shyur
Vice President Shyh-An Lee
Vice President Ta-Chun Wang
Vice President Fei-Long Chen
Vice President Jen-Liang Lin
General Counsel Peng-Hong Chan
Vice President Wei-Chia Wang
180,000
180,000
(935,000)
0
180,000
75,000
(4,000)
54,000
180,000
180,000
120,000
10,000
70,000
180,000
180,000
120,000
120,000
120,000
(15,000)
120,000
0
0
0
0
0
0
0
Accounting &
Corporate
Governance
Officer
Cheng-Chiang Wang
0
85
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
(120,000)
0
0
0
0
0
0
0
0
0
0
0
(10,000)
30,000
(54,000)
0
0
0
0
(10,000)
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
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-
-
-
Title
Name
Vice President Cheng-Hui Su
Tu-Chuan Tu
Vice President
Vice President Chang-Chieh Tien
Internal Audit
Officer
Po-Wen Hsieh
2018
Up till April 23, 2019
Shares held
Increase
(Decrease)
Shares pledged
Increase
(Decrease)
Shares held
Increase
(Decrease)
Shares pledged
Increase (Decrease)
0
0
0
0
0
0
0
0
0
0
0
0
Vice President Ling-Sheng Wu
Vice President Chi-Hsiang Ma
Vice President Shih-Tung Wang
Note: 1.Directors Wen-Chung Shen, Yung-Ching Chang and Chao-Cheng Chen left office on June 22, 2018.
(5,000)
0
0
0
0
0
-
-
-
2. Vice Presidents Liang-Jen Lin, Peng-Hong Chan, Wei-Chia Wang, Cheng- Chiang Wang, Cheng-Hui Su, Tu-Chuan
Tu, Chang-Chieh Tien were promoted and took office respectively in 2018, while Executive Vice President
Chao-Cheng Chen, Vice Presidents Ling-Sheng Wu, Chi-Hsiang Ma and Shih-Tung Wang resigned in 2018.
3.7.1 Shares Trading with Related Parties:
Reason
Name
for
transfer
Transaction
date
Counterparty
Counterparty's relationship
with the Company,
Directors, Supervisors, and
shareholders with more
than 10% ownership
interest
Shares
Transaction
price
Chiung-Chi Hsu
Inherit
2018/10/17 Ching-Hua Hsu Hsu
Mother and Son
42,000
18.45
Chiung-Chi Hsu
Inherit
2018/10/23 Ching-Hua Hsu Hsu
Mother and Son
75,000
18.45
Kuo-Chuan Chen
Ching-Hsiung Lu
Ching-Hsiung Lu
Yung-Nan Chang
Gift
Gift
Gift
Gift
2018/5/31
Chao-Chuan Chen
Father and Son
111,000
19.80
2018/3/30
Shao-Hsuan Lu
Father and Daughter
115,000
19.95
2018/7/10
Chen-Huei Yen
Husband and Wife
1,000,000
19.00
2018/10/19 Hao-Ching Chang
Father and Daughter
126,000
17.40
3.7.2
Shares Pledged with Related Parties: None
86
Relationship among the Top Ten Shareholders
3.8
April 23, 2019 Unit: Shares
Name
Self
Shares held
Shareholdings of spouse and
underage children
Shares
195,311,000
Silchester
International
Investors
International Value
Equity Trust
Kinpo Electronics Inc. 151,628,692
8,975,401
Representative:
Sheng-Hsiung Hsu
Shareholding
Percentage
4.43%
Shares
Shareholding
Percentage
-
-
3.44%
0.20%
-
17,107,025
-
0.39%
Silchester
International
Investors
International Value
Equity Group Trust
Fidelity Puritan Trust:
Fidelity Low-Priced
Stock Fund
Vanguard Emerging
Markets Stock Index
Fund, A Series of
Vanguard
International Equity
Index Funds
Silchester
International
Investors
International Value
Equity Taxable Trust
JPMorgan Chase Bank
N.A., Taipei Branch in
custody for Vanguard
Total International
Stock Index Fund, a
series of Vanguard
Star Funds
Fubon Life Insurance
Co., Ltd
Representative:
Ming-Hsing Tsai
Cathay Life Insurance
Co., Ltd.
Representative:
Tiao-Kuei Huang
Dimensional Emerging
Markets Value Fund
101,499,000
2.30%
67,000,000
1.52%
66,273,410
1.50%
66,086,000
1.50%
65,563,212
1.49%
64,200,991
1.46%
0
0%
58,181,000
1.32%
0
0%
54,866,333
1.24%
-
-
-
-
-
-
0
-
0
-
87
Total shares held in the
names of others
Shares held
Shares
Shareholding
Percentage
Spouse, relative of
second degree or closer,
and relationships among
top 10 shareholders
Name
Relationship
0
0
0
0
0
0
0% N/A
N/A
0% N/A
0%
N/A
0% N/A
N/A
0% N/A
N/A
0% N/A
N/A
-
-
-
-
0
0% N/A
N/A
-
0
0% N/A
N/A
-
0%
-
0%
-
0
0
0
0
0
0% N/A
N/A
0%
0% N/A
N/A
0%
0% N/A
N/A
3.9
Ownership of Shares in Affiliated Enterprises
December 31, 2018 Unit: Shares; %
Investees (Note)
Invested by the Company
Held by directors,
supervisors, managers, and
directly/indirectly
controlled entities
Aggregate investment
Shares
Shareholding
percentage
Shares
Shareholding
percentage
Panpal Technology Corp.
Gempal Technology Corp.
Hong Ji Capital Co., Ltd.
Hong Jin Investment Co., Ltd.
Zhaopal Investment Co., Ltd.
Yongpal Investment Co., Ltd.
Kaipal Investment Co., Ltd.
Rayonnant Technology Co.,
Ltd.
RiPAL Optotronics Co., Ltd.
Unicom Global Inc.
Palcom International
Corporation
Henghao Technology Co., Ltd.
Compal Broadband Networks
Inc.,
Crownpo Technology Co., Ltd.
Kinpo Group Management
Consultant Company
Mactech Co., Ltd.
General life Biotechnology Co.,
Ltd.
Lead-honor Optoelectronic
Co., Ltd.
Infinno Technology
Corporation
Accesstek Inc.
Allied Circuit Co., Ltd.
Arcadyan Technology Corp.,
Maxima Ventures I, Inc.
Avalue Technology Inc.
Core Profit Holdings Ltd.
Flight Global Holding Inc.
Just International Ltd.
High Shine Industrial Corp.
Compal International Holding
Co., Ltd.
Big Chance International Co.,
Ltd.
Compal Rayonnant Holdings
Limited
Auscom Engineering Inc.
Shares
500,000,000
90,000,000
100,000,000
29,500,000
135,800,000
118,850,000
51,050,000
Shareholding
percentage
100.00
100.00
100.00
100.00
100.00
100.00
100.00
29,500,000
100.00
6,000,000
10,000,000
100.00
100.00
10,000,000
100.00
63,815,952
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
10,000,000
63,815,952
29,060,176
43.48 14,172,854
21.20
43,233,030
3,738,668
33.23 6,185,465
54.94
9,924,133
300,000
37.50
300,000
37.50
600,000
21,756,192
52.88
274,954
0.67
22,031,146
15,000,000
50.00
2,772,000
42.00
5,649,625
27.20
-
-
-
899,160
10,157,730
41,304,504
126,000
15,240,070
147,000,000
89,755,495
48,010,000
42,700,000
27.78
319,707
20.42 7,236,701
21.34 27,497,677
3,000
22.55
672,000
21.99
-
100.00
-
100.00
-
100.00
-
100.00
-
15,000,000
- 2,772,000
-
5,649,625
9.88
14.55
14.55
0.54
0.97
1,218,867
17,475,025
68,802,181
129,000
15,912,070
- 147,000,000
89,755,495
-
48,010,000
-
42,700,000
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
64.68
88.17
75.00
53.55
50.00
42.00
27.20
37.66
34.97
35.55
23.09
22.96
100.00
100.00
100.00
100.00
100.00
53,001,000
100.00
90,820,000
100.00
12,500,000
100.00
3,000,000
100.00
88
-
-
-
-
-
-
-
-
53,001,000
90,820,000
100.00
12,500,000
3,000,000
100.00
100.00
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
Compal Europe (Poland) Sp. z
o.o.
Bizcom Electronics, Inc.
Compal Electronics (Holding)
Ltd.
136,080
100.00
100,000
100.00
1,000
100.00
Compalead Electronics B.V.
6,426,516
100.00
-
-
-
-
-
-
-
-
136,080
100,000
1,000
6,424,516
Etrade Management Co., Ltd.
46,900,000
65.23 25,000,000
34.77
71,900,000
Webtek Technology Co., Ltd.
100,000
100.00
Forever Young Technology Inc.
50,000
100.00
-
-
-
-
100,000
50,000
Lipo Holding Co., Ltd.
98,000
49.00
102,000
51.00
200,000
Ascendant Private Equity
Investment Ltd.
31,253,125
34.72 37,253,825
42.50
68,506,950
UniCore BioMedical Co., Ltd.
20,000,000
100.00
Shennona Corporation
2,500,000
100.00
Note: Investments made by the Company using the Equity Method.
20,000,000
2,500,000
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
77.22
100.00
100.00
89
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
Remarks
Paid in
properties other
than cash
Others
2017
2
10
6,000,000,000 60,000,000,000
4,422,464,625 44,224,646,250 Cancellation of Restricted Employee Shares of
N/A
Change of capital approved by the Ministry of Economic Affairs on
2017
2017
5
8
10
6,000,000,000 60,000,000,000 4,422,152,625 44,221,526,250 Cancellation of Restricted Employee Shares of
N/A
Change of capital approved by the Ministry of Economic Affairs on
$20,460,000
February 24, 2017
10
6,000,000,000 60,000,000,000 4,421,870,625 44,218,706,250 Cancellation of Restricted Employee Shares of
N/A
Change of capital approved by the Ministry of Economic Affairs on
$3,120,000
June 3, 2017
2017
11
10
6,000,000,000 60,000,000,000 4,420,280,625 44,202,806,250 Cancellation of Restricted Employee Shares of
N/A
Change of capital approved by the Ministry of Economic Affairs on
$2,820,000
August 29, 2017
May 13, 2019
2018
2018
3
5
Share
Type
Ordinary
shares
10
6,000,000,000 60,000,000,000 4,419,191,625 44,191,916,250 Cancellation of Restricted Employee Shares of
N/A
Change of capital approved by the Ministry of Economic Affairs on
$15,900,000
November 29, 2017
10
6,000,000,000 60,000,000,000 4,407,146,625 44,071,466,250 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
$120,450,000
May 29, 2018
Outstanding shares (public listed)
Unissued shares
Total
Authorized capital
Remarks
4,407,146,625
1,592,853,375
6,000,000,000
Approved to include 100,000,000 shares of employees shares and corporate
bonds with warrant in capital.
■ Shelf registration system information: None
90
4.1.2 Status of Shareholders
Analysis
Government
Agencies
Financial
Institutions
Other
Institutions
Foreign
Institutions &
Natural Persons
Domestic
Natural
Persons
Treasury
stocks
Total
April 23, 2019
Number of
Shareholders
Shareholding
(shares)
Percentage
3
42
285
993
175,750
0
177,073
8
174,421,971
388,781,921
2,260,082,693 1,583,860,032
0
4,407,146,625
0.00%
3.96%
8.82%
51.28%
35.94%
0.00%
100.00%
4.1.3 Share Ownership Distribution
Range of Shareholding
(Unit: Shares)
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
Number of
Shareholders
Shareholding (Shares)
Percentage
April 23, 2019
45,590
86,852
21,532
7,683
4,354
3,817
1,755
1,174
2,131
1,019
466
178
91
44
387
177,073
8,863,196
198,236,742
160,694,287
93,997,886
79,298,458
95,240,018
62,122,883
54,349,232
152,573,319
141,994,391
132,628,990
87,514,821
61,993,916
39,045,147
3,038,593,339
4,407,146,625
0.20%
4.50%
3.65%
2.13%
1.80%
2.16%
1.41%
1.23%
3.46%
3.22%
3.01%
1.99%
1.41%
0.89%
68.94%
100.00%
4.1.4 List of Major Shareholders
Shareholder’s name
Shares
Shares held
Percentage (%)
April 23, 2019
Silchester International Investors International Value Equity Trust
195,311,000
4.43%
Kinpo Electronics Inc.
151,628,692
Silchester International Investors International Value Equity Group Trust
101,499,000
Fidelity Puritan Trust: Fidelity Low-Priced Stock Fund
Vanguard Emerging Markets Stock Index Fund, A Series of Vanguard
International Equity Index Funds
67,000,000
66,273,410
3.44%
2.30%
1.52%
1.50%
Silchester International Investors International Value Equity Taxable Trust
66,086,000
1.50%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total
International Stock Index Fund, a series of Vanguard Star Funds
Fubon Life Insurance Co., Ltd.
65,563,212
1.49%
64,200,991
1.46%
91
Cathay Life Insurance Company, Ltd.
Dimensional Emerging Markets Value Fund
58,181,000
54,866,333
1.32%
1.24%
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
Per-share
dividend
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
Stock
dividends
From earnings
From capital
reserves
Cumulative unpaid
dividends
P/E ratio
Price to dividends ratio
Cash dividend yield
Analysis of
investment
returns
2017
22.90
18.45
20.50
23.32
22.12
2018
22.15
16.65
19.16
24.26
23.05
Year-to-date
March 31, 2019
19.15
17.05
18.30
24.75
-
4,344,645,129
4,356,447,549
4,357,129,194
1.32
2.05
0.31
4,344,645,129
4,356,447,549
1.32
1.20
-
-
-
15.53
17.08
5.85%
2.05
1.20
-
-
-
9.35
15.97
6.26%
-
-
-
-
-
-
-
-
-
Note: The 2018 distribution of earnings was resolved at the March 22, 2019 Board of Directors’ Meeting and will be
submitted to the 2019 shareholders’ meeting for final approval.
4.1.6 Dividend Policy and Implementation Status
(1) Dividend Policy
When the Company makes a profit during the year, 10% of the 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 the pertinent laws and regulations. The balance of earnings available for
distribution is composed of the remainder of the said profit and the retained earnings 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 dividends, after closing and
distribution of earnings, 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,
92
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 Dividends
(cid:3)
The proposed 2018 distribution of earnings of shareholders’ dividends in the amount of NTD 4,407,146,625 will
be discussed at the 2019 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.
(cid:3)
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) When there is a significant change in the expected dividend policy, it should be stated: None.
4.1.7 Impact to 2019 Business Performance and EPS resulting from Stock Dividend Distribution:
Not Applicable (The Company did not disclose 2019 annual financial forecast)
4.1.8 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 directors 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.
(cid:3)
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
(cid:3)
(cid:3)
the subsequent year as a change in accounting estimate.
93
(3) 2018 employees compensation proposal passed by the board of directors
(cid:3) Accrued employees compensation is NTD $930,857,503 and directors compensation is NTD $49,222,782.
(cid:3)
If the estimated distribution amount differs from the amounts estimated in accrued expenses, the
variance, reason, and resolution should be disclosed: No variance.
(cid:3)
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 2017 employee and directors compensation:
(cid:3)
(cid:3)
The employee compensation is NTD $624,296,016 and the directors compensation is NTD $33,012,128.
The 2017 actual distribution of employee and directors compensation was approved at the 2017
shareholders’ meeting and remained as proposed by the board of directors.
4.1.9
Company Buyback of Own Shares: None
94
4.2
Bonds: None
4.3
Preferred shares: None.
4.4
Global Depository Receipts
(1) Issuance
Details
Date of issue:
November 9, 1999
May 21, 2001
Issuance and trading location
Luxembourg
Total sum issued
Issuance price per unit
USD 122,160,000
USD 15.27
Number of units issued
8,000,000 units
Source of represented
securities
Participating shareholder(s):
Kinpo Electronics, Inc.
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
Quantity of represented
securities
40,000,000 ordinary shares of Compal
Electronics
144,000,000 ordinary shares of Compal
Electronics
GDR holders’
rights and obligations
1. Voting rights:
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
Trustee
Depository bank
Custodian
N/A
N/A
The Bank of New York
Mega International Commercial Bank Mega International Commercial Bank
The Bank of New York
Unredeemed balance
Allocation of expenses
incurred at issuance and over
the duration
Key terms of the depository
and custodian agreements
Per
Unit
Market
Price
2018
Year-to-date
May 13, 2019
High
Low
Average
High
Low
Average
106,272,719 units (May 13, 2019)
Borne by participating shareholder(s)
Allocated proportionally between the
Company and participating
shareholders
See descriptions below
USD $3.752
USD $2.7017
USD $3.18418
USD $3.2367
USD $2.7686
USD $3.0305802
95
(2) Key terms of the depository and custodian agreement
1. Key terms of the depository agreement
■ Depository receipts
Each depository certificate represents 5 Compal ordinary shares.
■ Transfer/seZlement
Ownership and transfer of depository receipts shall be certified through the book-entry settlement
system of The Depositary Trust Company ("DTC"). Depository receipts shall be settled over DTC's book-entry
system. Unless otherwise specified by law, ownership and transfer of depository receipts may only be
completed over DTC's records. In Europe, depository receipts are still held under DTC, but transactions are
settled through the book-entry system of Euroclear or Clearstream.
■ Deposit and redemp\on of Compal shares
Three months after issuance of depository receipts, holders may request to redeem and receive shares
represented by the depository receipt after paying the relevant charges according to the terms of the
depository contract, or request the depository institution to sell shares represented by the depository receipt
(provided that Compal has placed an adequate quantity of ordinary shares for sale with the depository
institution). Once the shares represented by the depository receipt have been sold, the depository institution
shall deduct the relevant charges, taxes, and government levies from the sales proceeds, and convert the
remainder into USD before paying the depository receipt holder who has requested redemption. Subsequent
issues of depository receipts are subject to the procedures outlined by the Securities and Futures Institute of
the Republic of China, the terms of the depository contract, and the consent of both Compal and the
depository institution.
The depository receipts have been listed on the Luxembourg Stock Exchange and are traded through the
PORTAL of National Association of Securities Dealers Inc.
■ Distribution of dividends, gains, and rights
For cash dividends on Compal shares, the depository institution is required to convert the amount of
cash received into USD according to the laws of the Republic of China, deduct taxes and relevant charges, and
distribute the remainder to depository receipt holders based on the percentage of shares represented in each
depository receipt.
For stock dividends on Compal shares (including shares issued against capitalized earnings and reserves),
the depository institution is required to adjust the number of shares represented in each depository receipt
according to the laws of the Republic of China and terms of the depository contract. DTC will then produce
additional depository receipts based on the size currently held and distribute them to the respective holders.
Sale of stock dividends is subject to compliance with the terms of the depository contract and laws of the
Republic of China.
■ Tax
(1) Any dividends (cash or stock) paid to the depository institution are subject to withholding tax at the
prevailing tax rate when payment is made.
(2) Holders who request the redemption of depository receipts by having the depository institution sell the
underlying shares through the Taiwan Stock Exchange Corporation (TWSE) will be charged securities
transaction tax at the prevailing rate when the sale takes place.
96
(3) Capital gains tax on securities transactions is currently suspended according to the laws of the Republic of
China. Practices may be adjusted to reflect changes in the laws of the Republic of China.
2. Key terms of the custodian agreement
■ Placing securi\es for the issuance of global depository receipts
Compal is required to place securities with the custodian and hand over all documents mentioned in the
custodian contract, which provide the basis for the issuance of global depository receipts.
■ No\fying the depository ins\tu\on for the issuance of depository receipts
Once the custodian has received Compal's ordinary shares, the custodian shall immediately notify the
depository institution for the issuance of global depository receipts. As soon as the depository institution
receives the above notice, it shall produce and issue global depository receipts representing the number of
entitled securities to the parties mentioned in the custodian's notice above.
■ Delivery of securi\es upon redemp\on of depository receipt
If a holder requests the redemption of depository receipts, the depository institution shall immediately
notify the custodian to transfer the number of securities represented to the party specified by the depository
institution. The custodian may collect a sum sufficient to cover the taxes or expenses incurred from the party
specified by the depository institution as a result.
■ Confirma\on of share quantity on baseline date
The custodian is required to report to the depository institution the number of securities held in custody
by the end of each baseline date.
4.5
Employee Warrants: None
4.6
Subscription of New Shares by Employees and Restricted Shares: None
4.7
Status of New Shares Issuance in Connection with Mergers and Acquisitions: None
4.8
Financing Plans and Implementation:
(1) Execution of the previous issue or private placement of securities that have not been completed:
None
(2) The latest three-year issuance or private placement of securities has been completed and the
project benefits have not yet been revealed: none
97
V. Operational Highlights
5.1
Business Activities
5.1.1 Business Scope
(1) Main areas of business operations
The development, design, manufacture and sales of Notebook PCs, Ultrabook PCs, 2-in-1 PCs, AIO PCs, Tablet
PCs, Servers, AE, the Smart Home, LCD TVs, LCD Monitors, Public Displays, Smart Phones and Modules and
other Smart Accessory and Wearable Devices.
The development and design of IoT Vertical Solutions, Electronic Medical Recording devices (EMR), and
hospital management systems, Point of Care solutions, smart Sports, medical AI, and innovative medical
devices。
(2)
Revenue distribution
Major Divisions
5C electronics
Other products
Total
(3) New products development
Unit: NTD thousands
(%) of Total Sales in 2018
99.7%
0.3%
100.0%
The development and design of IoT Vertical Solutions, Electronic Medical Recording Devices (EMR), hospital
management systems, Point of Care solutions, and smart Sports.
■ Notebooks
In 2018, Compal adopted the most efficient R&D methods for the launch of their latest notebook PC
hardware. This includes products using Intel Core i3, i5 and i7 8th generation processors and AMD central
processors. Graphics were incorporated in a single silicon chip in the development of the APU for the launch of
these new laptops which are compatible with the Windows 10 operating system. Compal has special expertise
in system integration, R&D and manufacturing to assist clients in the development and mass-production of new
products with the latest specifications in a relatively short time. The Compal price-competitive, slim and stylish
notebooks were launched at a time when the market favored more affordable and portable devices. They
received most positive responses from consumers. The purchase signal in the high-end gaming laptop market
has been relatively stable, making the gaming laptop market new ground for brand name companies to vie for
growth. The injection of more money into this aspect of the notebook market has intensified competition in the
global gaming notebook market. After years of operation as an ODM of gaming notebooks for our brand
partners, Compal has accumulated profound experience in their design and development. In 2019, the
Company will continue to keep up with the market trends by introducing high-end technical specifications,
multi-dimensional graphics chips and Intel’s 8th generation high-end H series central processors 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 in different
countries and markets. Significant resources have been devoted to the development of commercial notebooks,
given how resilient the demand has been to economic downturn. Overall, Compal aims to attain
industry-leading R&D capabilities in both the consumer and commercial markets.
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■ Ultrabooks
Innovative technology and extensive R&D capabilities have allowed Compal to maintain a leading position
in the industry. Compal produces an ultra-thin notebook, the 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 most excellent
performance and allows users to really be productive. More Windows 10 Ultrabooks equipped with standard
voltage processors are scheduled for launch in 2019. In addition to compatibility with the Intel design
specifications for their latest generation products, we will also be introducing slimmer products at a lower price
to meet market demand. They will feature the stylish and elegant body that is typical of Compal products, yet
offer computing power that can rival a high-performance PC. Compal will also continue to develop newer and
more competitive technologies that consumers around the world will get to enjoy, but will also give our clients
faster access to these markets.
■ 2-in-1 Notebooks
The 2-in-1 Notebook 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. The touch-sensing display module coupled with the latest Microsoft Windows 10 OS attracts both
the consumer base for standard laptops as well as that for tablet PCs. We have utilized our rich R&D experience
to present a number of innovative concepts that incorporate exclusive technology as well as materials. The
fan-less design of the in 2-in-1 Notebook with its different designs and form factors, has allowed the company
to create new market demand and earn unanimous praise from clients and consumers alike.
■ All-in-one (AIO)
The AIO has been on the market for years. It is an elegant deign combination of screen and computer with
a thin, special shape. The product has replaced the desktop in many households and corporations. Compal has
also enhanced the design to allow the AIO to lie flat while also being portable (Portable AIO). Because Compal
has the fundamental technical capabilities required for notebook PCs as featured in the AIOs, it can also
commence production in a very short time. Our AIO product lines have been very well received by clients.
■ Tablets
Compal has long cultivated tablet PC technology for industrial, commercial and consumer use, as well as for
eReader products. We will continue to develop a series of tablet PCs and LTE compatible products at affordable
price points to satisfy the needs of our customers while also winning consumer recognition and respect.
■ Smart Wearable Devices
Compal began shipping wearable devices in 2016. The development of these devices was greatly enhanced by
our very capable design and development departments and efficient mass production. We have made
significant progress in terms of the shipping quantities of Google Wear OS smart watches. In addition to the
development of even more compact and energy efficient smart watches we intend to expand our production
lines to include other wearable products in the near future.
■ Smartphones and Modules
Compal continues to strengthen our R&D operational efficiency and communications core technologies as well
as the development of innovative technologies to maintain an industry-leading position. In the near future, we
will continue to develop mid- and high-end smart mobile devices with powerful multi-core chipsets, narrow
borders, multi-camera imaging and special features cameras. We will also upgrade our TDD-LTE/ FDD-LTE
carrier technology aggregation. In addition to continued strengthening of R&D competitiveness, we will also
invest in the 5G communications technology and develop cost-effective, popular and stylish products to cope
with the rapid growth of customer needs in the emerging markets.
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■ Smart Home
Smart Home has been in development for many years, the rise of the Internet of Things (IoT) and AI
technologies, has allowed the hub with smart voice assistant to become the focal point of competition in
several relevant industries. We have already received client recognition for our development of the Smart
Speaker and Smart Display using our own computing and mobile design and development capability. In the
future, Compal will also use its core capabilities to gradually expand product coverage in many different
applications and industries.
■ LCD TVs
As consumers change their TV watching habits, the interaction experience between users of Smart TVs, or smart
phones for that matter, has also become redefined by seamless extension of content on these devices. This
includes an embedded voice assistant to help consumers find content more easily. Furthermore we have also
enhanced high resolution TV and high dynamics technologies to improve both user convenience and viewing
quality to meet growing user expectation from such smart devices.
■ LCD Monitors
Develop an HDMI wireless casting dongle and integrate with a smart platform for 65-inch and above, as well as
the development of interactive whiteboards for the B2B market.
■ AE
Car PCs consist of an in-car communication system (Telematics) and an in-car AV entertainment system
(in-Vehicle-Infotainment). As telematics systems are governed by special regulations on safety and
communications control, we have long been working with car manufacturers to ensure the relevant processes
were in sync. Due to the similarity in system framework between in-car AV entertainment and PCs, the field
became a natural starting point for a Compal 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 Ver\cal Solu\ons
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 client needs.
Demands from B2B customers not only account for a higher portion of the existing IoT market but also bring
Compal more immediate profit. As Artificial Intelligence (AI) applications have become more popular, Compal is
now offering 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 Solution 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 popular and convenient 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 active engagement in the healthcare
market. The company has reached out to major hospitals and point of care (POC) centers such as those engaged
in long term or post partum care, using our strengths in integration and extensive experience in product
development. The designs, which include science, technology, and humanity, help caregivers to provide higher
quality services and also give the hope of a better quality of life and personal dignity to those who need
healthcare.
■ Servers
The Cloud application market is growing and a significant portion of data storage and computing analytics
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have shifted to cloud servers in the back-end. 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, and
has the capacity to design and manufacture servers with high C/P value.
5.1.2
Industry Overview
1. Current and future industry prospects
■ Notebooks
The growth of the notebook market over recent years has been driven by corporate equipment renewals
and educational purchases. According to IDC, notebook shipments amounted to 164 million units
worldwide in 2018, up 2% from 2017. Commercial replacement demand is expected to continue into 2019,
and shipments should remain about the same as those in 2018. As the PC industry matures, brand
manufacturers are shifting focus towards higher priced and more featured products, such as Ultrabooks,
2-in-1s and gaming notebooks, in search of more market opportunities, revenue and profit. This
transformation requires more precise market segmentation, product positioning and innovative design.
Compal, with its extensive industrial experience, fine craftsmanship and proprietary patents, is able to
coordinate with suppliers and customers in creating market demand by developing innovative products
that progress with time.
■ Ultrabooks
Slimness and lightweight continue to be two dominant design trends in the PC market today. As solid-state
drives (SSD) become popular, ultrabooks no longer present a luxury that only high-end consumers can
afford, but are gradually becoming accessible to mainstream consumers as more affordable models
become available. According to IDC, the shipment of ultrabooks (<21mm thick) in 2018 was close to 68
million units worldwide, representing an annual growth rate of 28%. Ultrabooks are expected to account
for 52% of the total notebook shipment worldwide by 2020 and will officially become the mainstream
variant. However, Compal will continue exploring new lightweight materials, power-saving solutions and
cooling technologies to help our clients provide the most competitive products, and earn market
recognition.
■ 2-in-1 Notebooks
Owing to effort across the entire supply chain, the cost and selling price of 2-in-1s have dropped
considerably, which has made them more available and acceptable by a wider group of consumers. There
are two types of 2-in-1: flip-screen and detachable. Flip-screen notebooks can be physically converted for
use under different scenarios, such as video sharing, multi-user sharing and tablet mode. In recent years,
manufacturers have introduced notebooks with flip screens that are both lightweight and thin, making
them even more appealing. Detachable notebooks are characterized by smaller screen size. This is a feature
that appeals to both tablet and notebook users. The smaller form factor combined with detachable
keyboard can better satisfy users who have higher need for portability. According to IDC, the shipment of
2-in-1devices totaled about 34.5 million units worldwide in 2018, and manufacturers are expected to
introduce more diverse products in 2019. This has the potential to increase shipment by nearly 11% to
more than 38 million units. These 2-in-1 Notebooks will inject new vitality into the notebook PC market.
■ All-in-one (AIO)
The AIO market is currently dominated by Lenovo, Apple, HP and DELL. Those top brands account for more
than 80% of market share today. The AIO market is currently divided between two extremes. One end of
the spectrum is characterized by the use of entry-level CPUs such as Intel Celeron and Pentium. Their main
purpose being to replace desktop PCs as learning machines for children. On the other end of the spectrum
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there lies the mid-range and high-priced products. Their main advertised features include multimedia
playback, a high-end desktop or notebook CPU, an advanced video processor, and a large touchscreen
panel. These high-end specifications combined with aesthetic design have revolutionized the PC market and
these products are starting to replace desktops. According to IDC, the 3-year decline of AIOs has ended and
shipments should remain stable with 12.36 million units in 2019. In terms of design trend, the market
should expect touch-based applications, graphical user interfaces or e-sport grade AIOs in the future. The
potential for AIOs to replace desktop PCs in broader scenarios should further stimulate product growth.
■ Tablets
The continuous growth of smartphones with large displays has weakened the demand for tablets and the
size of the tablet market fell by about 11.7% in 2018. Performance-to-price ratio and functionality remains
the main consumer concern. Demand for tablets with voice has been relatively stable. Compal has been
adjusting its tablet product line to quickly respond to the changing market, and continues to provide
consumers with a competitive and diverse range of products.
■ Smart Wearable Devices
According to IDC, sales volume grew more than 3 fold in 2018. This dynamic growth is being led by strong
sales of the Apple watch. In addition to light weight, slimness and energy efficiency, the critical factor that
persuades a consumer to purchase a wearable device is the perceived value of the device. To satisfy
consumer perceived value, Compal not only consults their upstream partners about customer needs, but
also provides diverse designs and solutions based on the needs of the ultimate consumer.
■ Smartphones and Modules
According to IDC, smartphone shipments totaled 1.4 billion units worldwide in 2018, this represented a
4.1% annual decline. Restricted by a saturated market and few new innovative device features, the
smartphone market has continued to decline in 2019. Compal will aggressively invest in communications
modules in 5G development, and will offer solutions with embedded AI, smart assistant, and a more
intuitive user interface. We will concentrate on enhanced AI development for smartphone applications to
provide better and more attractive user experience.
■ Smart Home
Mobile devices have become an inseparable part of daily life. As wireless technology matures, an “Always
Connected” environment is starting to take shape to cater for our work, living and leisure needs. Smart
home applications have become a main stream development item for technology giants such as Amazon
and Google. Smart voice assistance has been a breakthrough for progress in smart home applications. More
and more players are joining this market. In the future, there will be more applications based on voice
interaction, image recognition and interaction, as well as security. The implementation of AI technology will
provide users with more convenient and intuitive experience.
■ Displays
According to a report by IHS, shipment of LCD TVs totaled 221 million units in 2018, representing a YoY
growth of around 3%. Faced with this market reality we continue to strengthen our relationships with
strategic partners and integrate products across different categories to expand industry exposure. By such
means Compal has managed to maintain the strength and flexibility needed to respond to market changes.
■ Auto electronics (AE)
According to statistics published in the foreign media, sales in the Global light vehicle market totaled 95.6
million units in 2018. Most of this was contributed by the Asian markets. The Chinese market alone
accounted for more than 25% of units sold, making it the largest in the world. This was followed by the USA
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and Europe. The tighter emission and safety standards around the world has resulted in progress being
made towards the development of electric vehicles and advanced driver-assistance systems (ADAS).
To satisfy the tightened safety requirements and prepare for ADAS, Compal has obtained certification for
ISO 26262 - Road Vehicles - Functional Safety in 2017. This makes us the first ISO 26262-certified AE
integrated system provider in Taiwan. This certification will provide Compal with the foundation needed to
improve functional safety and provide auto electronics that will satisfy all the international automobile
makers.
■ IoT Ver\cal Solu\ons
Industrial computers are playing a vital role in the development of IoT. In addition, Edge Computing
demand is on the rise to satisfy the needs of AI applications. According to an IHS institute forecast the
global demand for industrial computers will grow 4.9% and reach close to US$4 billion (excluding services)
in 2019. There are many types of industrial computer, including boards, sub-systems and integrated
solutions. These are commonly used in industrial, commercial and medical applications. Box PCs and
Rugged Tablets are the most popular for IoT applications and have exhibited consistent growth. Many
industries have expressed high interest in IoT, and Compal is currently working with other industry leaders
in the development of AGV (Automated Guided Vehicle), which can help manufacturers improve
production efficiency. Compal has also developed a smart AI camera aimed at retailers and home security.
This presents Compal with a favorable entry into the IoT industry.
■ Smart Medical and Healthcare
Increasing shortages of medical staff over recent years has imposed a heavy burden on medical personnel.
The result is that medical institutions are desperately searching for more efficient ways to manage
personnel and resources. In the United States, hospitals have responded to this crisis with the full
implementation of digital charts and modern hospital management systems. Compal is actively introducing
promising solutions from abroad to help Taiwanese medical institutions provide better service for patients.
Furthermore, the aging population and shifting focus of medical technology towards convenience have
resulted in a change in healthcare practice from always being hospital-based to some home-based and
personalized solutions. In light of this, Compal has invested significant resources in the development of
integrated products that make it possible for many healthcare services to be carried out at home or at
other fixed locations.
Compal also develops smart sports solutions and smart assistive tools, and is collaborating with
professional athlete training centers, both local and abroad, in the development of exclusive high-end
products for professional athletes.
■ Servers
Server shipments have grown progressively at about 2.6% per year mainly due to increased demand for
cloud services. According to IDC, shipment of x86 servers totaled 12 million units in 2018. This is expected
to rise to nearly 12.3 million units in 2019. x86 servers accounted for 99% of total server shipments. Rack
mounted servers represent a higher market share because they are both energy efficient and expandable.
2. Association between upstream, midstream, and downstream industry participants
■ Notebooks
The notebook industry is now mature and Taiwanese manufacturers have developed comprehensive
partnerships with upstream, mid-stream and downstream suppliers. This fully-fledged supply system gives
manufacturers the advantage of being able to quickly and flexibly adjust to market changes. It also enables
Compal to keep up to date with the latest technology and pricing of key components such as CPUs, chipsets,
LCD panels, hard disk drives (HDD), and solid-state drives (SSD). Compal and other Taiwanese ODMs/OEMs
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possess distinctive know-how on system integration, from design to manufacture, as well as operational
management. Taiwan now accounts for more than 80% of the world's notebook ODM/OEM production.
The downstream customers including brand manufacturers such as Dell, Lenovo, HP, Acer, Asus and Apple
all have strong marketing strategies and comprehensive sales support systems to ensure success.
■ Ultrabooks
As an ultrabook supplier, access to metal for casings and lightweight carbon fiber materials is especially
important. Compal has already developed a robust upstream, mid-stream and downstream supply system,
and acquired the equipment and technology to produce the needed metal products to customer
satisfaction. Compal will now shift focus gradually towards products in the mainstream price range, such as
ultrabooks made with plastic materials. This will ensure quick launch of new customer products and growth
in this particular market.
■ 2-in-1 Notebooks
The supply chain and manufacturers of 2-in-1s are generally identical to those of convention notebooks,
with the addition of some tablet parts suppliers and manufacturers. Support of the existing supply system
and its advantage of integration across suppliers, allows Compal to maintain full control of the development
of key components. This speeds up research and innovation of new features because brand manufacturers
and users of 2-in-1s continue to add new requirements. Despite the increasing complexity and challenges
ahead, Compal remains confident and continues to make improvements as well as bringing new products
and concepts to the market.
■ All-in-one (AIO)
The supply chain and manufacturers of AIOs are generally identical to those of conventional notebooks. The
upstream supply structure is similar to that for general PCs, with the addition of suppliers of large
touchscreen panels. The downstream is comprised entirely of brand manufacturers, with Lenovo, Apple,
DELL and HP being the dominant players. DELL focuses mainly on commercial users while HP targets home
multimedia, Lenovo places more emphasis on mid and low-end products.
■ Tablets
In addition to relying on the existing supplier chain and industry advantages, Compal also actively explores
competitive suppliers to ensure that the price and quality of its products conform to both customer and
market expectations.
■ Smart Wearable Devices
Compal works closely with suppliers of chips, sensors, wearable displays and touchscreen modules to
secure parts for wearable devices. In addition to coordinating with upstream suppliers and developing new
technologies for new customers, Compal also reaches out to suppliers that have new technologies to offer.
This frequent exchange of information allows the Company to quickly adjust its supply chain and product
development strategies to suit the prevailing market.
■ Smartphones and Modules
Compal actively explores competitive suppliers to ensure the quality of sourced material meets both
customer and market needs. Furthermore, Compal is building up a 5G related component supplier chain, as
well as new technology, to assist customers to remain competitive.
■ Smart Home
Compal provides diversified terminal devices such as smart speakers and smart displays for this application
segment. Compal also coordinates across upstream, mid-stream and downstream partners, to provide all
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kinds of customized hardware devices, software support, and platform solutions on demand. This allows
different system integration providers and our many industrial customers, to fulfill all kinds of smart home
application.
■ Displays
Compal engages in a sustained and integrated strategic alliance with upstream, mid-stream and
downstream partners that reduces overall material cost. The Company frequently adjusts overseas
production sites to support localized customer sales with local production. This allows us to retain control
over operating costs and shipment flexibility to accommodate changes in market demand.
■ Auto electronics (AE)
The mid-stream players in the supply of auto electronics are represented by tier 1 AE integrated system
providers. This integrated system handles in-car information, communications and entertainment, and is
also linked to other auto parts. These products are sold to downstream automobile makers, which places
the Company between the mid-stream and upstream of the AE supply chain.
■ IoT Vertical Solutions
Taiwan already has a complete supply chain for Box PCs from a hardware perspective, including Rugged
Tablets and Edge Computing. However, what makes these two products different from conventional PCs is
that they are designed with particular specifications to operate under harsh environments. For this reason,
product positioning and requirements differ depending on the location, country, customer or application
involved. Compal has also begun development of integrated system services such as computer vision and AI
applications that aim to satisfy both customer and market demand.
■ Smart Medical and Healthcare
(1) Management system:
• Digital charts and smart ward solutions
Compal has been introducing digital charts through an alliance with some foreign partners. Unlike the
conventional management system adopted by existing medical institutions, this product offers the
potential to provide both diagnostic aid to physicians and also to reduce the workload on nurses. It can also
be integrated with many different data management systems currently used in hospitals. Digital
transformation is already happening within the healthcare system. Compal is currently working with several
hospitals to develop digital charts and smart ward solutions. Medical institutions will no longer have to
operate in isolation, but will be able to coordinate their activities with each other towards the
establishment of a uniform standard to reduce the wastage of medical resources.
• Point of care solutions
Compal aims to address the recent increase in demand, as well as the shortage of manpower, at nursing
and postpartum centers. This is being done by the introduction of human-operated healthcare solutions,
such as proprietary bedside systems that are compatible with the instruments and specifications of other
manufacturers. However, flexibility and the ability to customize products to customer needs will still be
maintained. The most important feature of this product is that it works with different types of Smart Home
devices and medical instruments, and also supports multiple services. It is intended to provide home
comfort at nursing and postpartum centers, while also allowing professional care facilities to be set up at
home.
(2) Instruments, equipment and accessories:
• Smart sports
Compal has invested substantial resources into the development and integration of smart sports vital sign
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monitors. These can gather measurable data and are also useful for professional course design. Compal
solutions can be further combined with the services of professional fitness training centers to provide users
and trainers with physiological information in real-time. This information can be exchanged over the cloud
to facilitate remote training and communication between athletes and trainers. This helps athletes
undertake the most effective physical and technical training methods and also helps to avoid sports
injuries.
• Smart assistance devices and healthcare-related products
Compal is actively investing in the digital transformation of medical equipment. By the incorporation of
Internet connectivity, data from medical equipment can be exchanged and calculations can be made in
real-time over the cloud. This can make various user services available, including such as auto
record-keeping, reminders, behavior prediction and so on. These devices can even be connected to
advanced and back-end medical service providers for professional medical consultation, to accomplish the
Compal vision of a mobile and real-time medical service.
•
Compal has been working with partners in both industry and the medical segment for several years and
has invested in the development of some rather innovative medical devices. These include: CGM
(Continuous Glucose Monitoring), 24 hour BPM (24 hour blood pressure monitoring), handheld smart
ultrasound, i-AED and others. We expect to provide users and physicians with many more options to help
develop a smart medical industry and improve the quality of healthcare.
Innovative medical devices
(3) Medical AI
• Cardiovascular disease prediction
In an effort to reduce the problem of a lack of medical manpower, Compal has been working with the
Chi-Mei Hospital and medical center on the development of AI in medicine. Using the existing abundant
medical resources of the hospital, Comal is helping to build up a Cardiovascular disease prediction AI
system which can be used in hospitals and medical centers. The product will include long term tracking and
users may be able to predict the timing and probability of cardiovascular complication. This will allow
preventative action to be taken and reduce the risk of such events as stroke, Myocardial infarction, etc.
Compal also expects to help with the medical technology upgrade after the integration of the product in
the professional medical establishments in Taiwan.
■ Servers
Server technology is a highly mature industry and one in which Taiwanese manufacturers have developed a
comprehensive supply system of upstream, mid-stream and downstream partners. Main parts such as CPUs,
memory and storage drives are easy to secure and downstream customers such as HPE, DELL and Lenovo all
have long-term notebook manufacturing relationships with Compal. Compal has now developed
extensive experience and a reputation in the design and manufacture of server products.
3. Product trends and competition
■ Notebooks
• The Notebook has matured to a point where brand manufacturers are shifting focus towards higher
priced and more fully featured products, such as ultrabooks, 2-in-1s and gaming notebooks in a search
for greater market opportunities, revenue and profit.
• The Intel 8th generation CPUs, the Core i3, i5 and i7, were the mainstream processors used in 2018. The
new 9th generation Intel 10nm CPUs will become available on the market in 2H-2019 and will provide
additional performance enhancements.
• The increasing popularity of mobile devices and online applications have called for more robust and
diverse security functions, from fingerprint, to facial, to voice recognition. All of which are intended to
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enhance information flow and convenience without compromising security.
■ Ultrabooks
• Light weight, slimness, and high-quality design will become the main decision factors for consumers.
• The use of standard performance CPUs will provide consumers with adequate power for multi-tasking
and the handling of day-to-day computing tasks.
• Long-lasting batteries will free users from the need for frequent recharging when traveling.
• Metallic casing material allows thinner, lighter and higher value products.
■ 2-in-1 Notebooks
• Consumers nowadays expect more from 2-in-1s than light weight and portability. Multi-tasking
processors, long-lasting batteries and the capacitive stylus have become the new mainstream features.
■ All-in-one (AIO)
• High-end home entertainment AIOs and new flat, portable AIOs present new opportunities.
• There is room for improvement in touch-based applications and graphical user interfaces.
• The product exterior can be designed to match interior decoration and furniture.
• Portable products can be designed with screens that can move in several directions.
The AIO target market is no longer confined to first-time PC users, or as replacement for conventional
office desktops. More advanced components are becoming available and these devices will benefit from
broadened applications to achieve higher market acceptance.
■ Tablets
• Extend R&D technology to 4G data communications.
• Focus on higher cost/performance ratio and better quality design.
• Explore collaborative opportunities with content providers or telecommunications service providers.
• Explore opportunities in education, for kids, industrial, and medical applications.
• Develop tablets for the Smart Home and IoT and use them as control centers or as multi-functional
platforms.
The Tablet is a mature product, what manufacturers should focus on for the next step is the exploration of
new use cases and more convenient user operation and support for more diversified applications.
Education, kids, e-commerce, smart home hub and IoT applications are all possibilities that Compal is
actively exploring.
■ Smart Wearable Devices
• More and more smart, fashionable and compact watches for sports and health are following Apple to
the market.
• Customers who use smart wearable devices for sports also want high accuracy GPS, steps counts, heart
rate and various other measurements. However, power efficiency remains a key requirement common
to all users.
• Customers who use smart wearable devices for health reasons need accurate algorithms and
convenient user operation. This remains a mainstream market.
To satisfy customer need, Compal not only continues to make more power-efficient and compact designs,
but is also enhancing the flexibility of its production processes.
■ Smartphones and Modules
4G is an established and popular subscriber service today, and carrier aggregation (CA), based on 4G
technology to provide wide bandwidth and high transmission speed, has been developed to satisfy the
increasing consumer demand for audio, video and application services.
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• Develop multi-core infrastructure and new-generation LTE CA products to satisfy both the work and
entertainment needs of the consumer.
Implement more sensors and advanced camera technology to provide more convenient use.
• Develop large screens, high resolution and borderless smartphones.
•
• Explore high 5G transmission speed and support new AI applications to drive video streaming services.
The differences between smartphone brands, in terms of hardware structure, have become negligible. This
is why Compal has moved focus towards the design of new imaging technologies and software services to
create better differential value. At the same time Compal
is exploring new opportunities for
communications products in industrial and IoT applications.
■ The Smart Home
• The voice input and interaction provided by the smart speaker and smart display is a trend of the future
and will connect the more intuitive and convenient smart home products.
• Software services working on cloud computing, data analysis and user behavior learning will define the
key competitiveness of smart home products.
■ Displays
The emergence of Chinese brands and OEMs presents intense competition. In response, the Company is
working with its US and Japanese partners to develop mid-range and high-end models and introduce new
applications such as AI and voice assistance. Compal sparks creativity through constant accumulation of the
latest technologies and experience. This enables us to integrate R&D resources across different fields such
as smartphones, wearable devices, the Smart Home and IoT to bring new prospects to the industry. We
constantly improve user experience, secure long-term competitiveness and maintain a technological
advantage over our peers.
■ Auto electronics (AE)
Telematics and in-vehicle-infotainment.
■ IoT ver\cal solu\ons
• Driven by a rapid increase in the demand for the smart city, application of the Box PCs has expanded to
cover infrastructure, Industry 4.0 and smart architecture, while flexible designs and customization have
enabled many possibilities for integrated systems.
• Rugged tablets will be more widely used in industry, logistics and medical applications.
• The growing popularity of online shopping will make it necessary for physical merchants to explore new
solutions to connect with consumers. Smart retail presents such a solution, as it aims to learn consumer
behavior to determine the optimal sales strategy to be offered.
• Home security is becoming a very important part of daily life. Unlike ordinary IP cameras, with computer
visual AI, smart cameras can provide better security in a home application than conventional cameras.
• AGV has been part of automated industry for decades. Compal has added many cutting edge
technologies to AGV, such as LiDAR (Light Detection and Ranging), as well as precise computer vision
analysis to help manufacturers enhance the flexibility of production.
•
■ Smart Medical and Healthcare
(1) Management system:
• Digital charts and smart ward solutions
The United States currently has the most popular (Level 7) digital chart and hospital management
system, and other countries around the world are following closely behind. The purpose of this
product is to deliver functions that will be of assistance to physicians and nurses while still being easy
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to operate. Alliances with world industry leaders has made it possible for Compal to introduce the
solution to medicine in Taiwan, where its success will be replicated in our medical systems and it will
also be moved to other countries in Asia.
• Point of care solutions
An aging society, combined with a need for differentiated medical services, make nursing centers and
postpartum care centers especially popular in Taiwan. This management system provides them with a
comprehensive solution, and makes it possible for communications to be established between several
different medical devices while patient privacy remains protected. Compal has invested in the
development of related hardware and software, and is working with existing medical instrument
suppliers on the growth of this market.
(2) Instruments, equipment and accessories:
• Smart sports
There is already a strong and growing demand from professional athletes for assistive technologies
and devices. Compal has invested significant R&D effort in collaboration with top world sports experts
for the development of products that are more suitable for professional athletes. Compal is also
working with fitness centers on the creation of customized, exclusive packages that deliver the most
effective sports solutions and communications to users and businesses.
• Medical equipment and healthcare-related products
Medical equipment with Internet connectivity is a trend of the future. Devices that have functionality
that allows access to information from a health management platform will be easier to operate and
also more competitive in the market. Compal will continue investing in the development of medical
instruments and equipment with such connectivity and will bring better quality services to customers
with the help of a management platform and cloud service.
•
As the new biosensors and related hardware such as MCU/firmware/bio materials and software have
matured over recent years, development of the innovative medical devices industry has also moved to
another stage. Continuous investment and development by Compal has led to more and more
customers gaining trust in our design and development capacity, and the market trend is now moving
towards alternative device generation.
Innovative medical devices
(3) Medical AI:
• Cardiovascular disease prediction
Medical AI has become one of hot topics in medical technology development. Many heavy players like
IBM, Apple, GOOGLE and Amazon have become aggressively involved in this segment. Compal has also
been investing in some major medical topics and is working in cooperation with several national and
overseas medical centers on medical AI research and development.
■ Servers
The rack-mounted server is still the mainstream product today because it can be easily maintained and also
expanded as business grows. Tower servers are still favored among SMEs for their low cost, but the market
share has been steadily declining. Blade servers are relatively expensive to set up, and may gradually be
replaced by more simplified High Density servers.
• The number of servers required for Data Centers has increased continuously year after year. Although
the demand for conventional enterprise-grade servers has gone down a little, demand for both types of
server will ultimately reach equilibrium.
In addition to cost-performance, design flexibility and quick response to customer need are the two
most decisive factors for product success.
•
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5.1.3 Research and Development
1. Research and Development Expenses over the past year:
Year
R&D expenses
Operating revenue
Unit: NTD thousands; %
R&D expenses as a percentage of
operating revenue
2018
2019 first quarter
12,780,935
3,241,734
967,706,411
210,600,553
1.4
1.5
2. New products developed
■ Notebooks
• High-end products: These are high-performance models combined with an ultra-high definition display and a
powerful GPU that target users who seek ultimate multimedia and gaming experience.
• Mainstream products: 15.6-inch and 14-inch products with slim bezel design that are powered by Intel 8th
generation Core i3, i5 or i7, or AMD CPUs, are distinguished by integrated or discrete GPU models.
• Business products: Business notebooks designed specifically for corporate users. These products feature
enhanced structural design and security, and are offered to large corporations, SME, and the education
sector. Security mechanisms such as fingerprint, facial or voice recognition are incorporated to satisfy user
need for security and data confidentiality.
• Special products: Compal has directed resources into developing notebooks of extreme slimness, and will
lead the industry in technological innovation in this area.
■ Ultrabooks
• Compal has successfully mass-produced and launched many ultrabooks, and its designs have been recognized
by several international awards.
• New ultrabooks will feature thin-frame displays for a more fashionable and cleaner appearance; the display
quality will also be improved.
■ 2-in-1 Notebooks
• Compal has successfully designed, mass-produced devices and launched a new 2-in-1.
• An innovative hinge design is being developed to provide a more secure and precise connection while
allowing easier detachment, this allows better user convenience when 2-in-1s are used in different scenarios.
■ All-in-one (AIO)
• Compal has successfully designed, mass-produced and launched AIOs for mainstream users.
• Compal has successfully designed, mass-produced and launched a new flat-type of AIO.
• Compal has developed, mass-produced and launched AIOs that are targeted at e-sports.
• Compal plans to acquire touch control technologies with pen support and introduce AIOs in sizes ranging
from 19" to 27".
• Compal has successfully designed AIOs with a wireless charging dock.
■ Tablets
• Compal has successfully developed and mass-produced WiFi tablets of high performance-to-cost ratio for
video streaming and entertainment.
• Compal has successfully developed and mass-produced a new-generation of e-book.
■ Smart Wearable Devices
• More than 20 smart watches were launched in 2018.
• A new generation of lighter, smaller, more power efficient, multi-purpose smart watches with diverse designs
will be introduced in the future.
• Other wearable devices have also been scheduled for mass production.
■ Smartphones and Modules
• Compal has successfully developed and mass-produced smartphones with 3CA (carrier aggregation)
technology that work on 4G LTE (TDD-LTE/FDD-LTE).
• Compal has successfully developed smartphones that feature dual main cameras and a dual selfie camera.
• Compal has successfully developed a smartphone that features a thermal imaging camera, a high-resolution
screen with enhanced sunlight readable mode, laser distance detection, air quality detection, and is water
resistant to 5 meters.
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• Compal has successfully developed the smallest LTE smartphone (credit card size) in the world that features
an e-ink display and a power-saving 5-days standby.
■ The Smart Home
• Compal has successfully launched a smart display that has received consumer recognition in the North
American market.
• Compal has successfully developed several smart speakers that will be launched in the near future.
■ LCD TVs
• Compal has successfully developed mainstream UHD Dolby Vision HDR smart TVs with AI Voice Assistant in
sizes of 43-inch and above for North America.
■ LCD TV BM
• Compal has successfully developed a 96 zone local backlight dimming module, this will enhance the perceived
quality and profit margin of products on the market.
■ Auto Electronics (AE)
• Compal has mass-produced various systems and modularized several products that it has designed and
developed.
■ The IoT Vertical Solution
• Compal has successfully developed and mass-produced Box PCs, and is shipping them to local telecom
carriers and industrial control solution providers.
• Compal has successfully developed and mass-produced Rugged Tablets, and plans to ship products to System
Integrators in 2019.
• Compal has completed the development of voice and vision AI products, and has started shipping them to
customers.
• Compal has completed the development of AGVs, both lifting and towing types, and is using them in the
Compal factory. Compal has also started promoting them to System Integrators of automated industries
worldwide.
■ Smart Medical and Healthcare
• Digital charts and a smart ward solution
Compal is promoting business opportunities in this respect. Several hospitals have begun adopting and
exploring our smart ward solution this year.
• Point of care solutions
More than 10 point-of-care centers in Taiwan have begun trials and official use of this solution. In addition to
this, several prominent nursing centers in China have also shown interest and commenced collaborating in
the use of this solution.
• Smart sports
•
Smart sports solutions have been introduced at several places in Taiwan and promotion in the Taiwan and
China market is ongoing. A case has also been built up in Kaohsiung.
Innovative medical devices
Many innovative medical device cases have been executed, and plans for the achievement of FDA/ NMPA/CE
certification have been established. Launch is expected by the end of 2019 and 2020.
• Cardiovascular disease prediction
This AI project will be introduced at the Chi-Mei medical center by mid 2019, and will also be introduced at
other medical centers and clinics after this.
■ Servers
• General Purpose Rack-mounted Servers
The launch of 1U and 2U general purpose rack-mounted servers is undemanding and the factory can quickly
fulfill customer requirements by a simple BOM Option change.
• Edge Computing Servers
The system has been designed for 5G telecommunication facilities in collaboration with China telecom
service providers,. This system provides tremendous and responsive acceleration for all aspects of edge
computing.
• High Capacity Storage Servers
The 4U server includes 36 3.5inch hard drives and dual Intel Xeon processors, to provide cloud service
providers with massive computing performance and huge capacity to fulfill any user scenario.
5.1.4 Long-term and Short-term Development
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(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 to become
the focal point of the product market. User functionality should be taken into consideration as well as
competitive pricing for lower priced products.
• Production bases will be diversified to spread the risk of 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 of
feasible design.
• 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 to achieve a growth rate that is better than 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 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 customer need, 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 to give customers better and more 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, aimed at more accurate prediction of market trends, before
the clients do, 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
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5.2 Market and Sales Overview
5.2.1 Market Analysis
1. 2018 Sales (Service) by Regions
Area
Americas
Europe
Asia (Including Taiwan)
Other Area
Total
Percentage
42.2%
30.1%
24.8%
2.9%
100.0%
2. Market Share
■ Notebook
According to IDC statistics, the total number of notebook PCs sold around the world in 2018 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 World leading manufacturer of this product. 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 to maintain our lead over the competition.
■ Smart Wearable Devices
Compal is the biggest ODM supplier of the more than 40 models of the Google Wear OS Smartwatch. We expect the
smart watch market to maintain its high growth for the next three years. Compal will continue to fight for more
world class brand orders. We will study market demand and adjust the direction of product development to satisfy
the latest market dynamics.
■ Smartphones & Modules
The Smartphone market has become quite saturated. However, Compal will continue promotion to international
customers and regional carriers, to provide diversified and customized product as well as ODM/EMS services. We
understand the market and continue to explore many different innovative applications to satisfy dynamic market
demand.
■ Displays
According to IHS, the prospects for shipments of LCD TVs in 2018 will be flat. The development of new LCD TV
products will shift towards high end specifications such as ultra-high-resolution, local dimming, a built-in voice
assistant and so on, with dimensions reaching 65” and more. These features, coupled with high dynamic contrast
and a wide color gamut, will enable the next generation of TV products to render even more realistic images and
deliver superior audio-visual enjoyment for consumers.
3. Future Supply and Demand Situation and Growth of the Market
■ Notebooks
According to IDC statistics, the global shipping quantity for notebook PCs in 2018 grew by 2%. Looking
towards 2019, and the demand for replacement in the Windows 10 market, we expect the global shipping
quantity for notebook PCs in 2019 to be the same as that in 2018.
■ Ultrabooks
The ultrabook PC has been well-received and is not limited to the high-end market. More and more mid-line
models have also shifted towards more compact design. IDC statistics show the global shipping quantity for
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ultrabook PCs (no thicker than 21mm) in 2018 was approximately 68 million units. An annual growth rate of
12% is expected for 2019 with a total shipping quantity exceeding 76 million units.
■ 2-in-1 Notebooks
Much effort and hard work from the industrial chain, has resulted in the costs and prices for 2-in-1
Notebooks to become substantially lower as consumers have gradually become more receptive and familiar
with the product. IDC statistics show the global shipping quantity for 2-in-1 Notebooks in 2018 was
approximately 34.5 million units. It is expected by that 2019, different manufacturers will offer more
diversified products to contribute to an annual growth rate of close to 11%, with a global shipping quantity
exceeding 38 million units. 2-in-1 Notebooks will inject new vitality into the notebook PC market.
■ All-in-one (AIO)
IDC statistics show the global shipping quantity for AIO PCs in 2018 was 12.38 million units and the number is
expected to remain about the same at 12.36 million units in 2019. Compal will continue to cultivate the
market.
■ Tablets
Forecasts predict a continued decline in terms of shipping quantity for tablets in 2019. However, Compal still
anticipates some gradual growth in demand. This will be the result of increased network coverage and
telecommunication facilities, as well as active promotion of 4G connectivity by the service providers in
emerging regions. Compal will direct its experience in smartphone design towards the development of
tablets with carrier access and also design entry-level tablets, also with carrier access, to accommodate the
growing demand.
■ Smart Wearable Devices
Estimates from IDC predict that the total shipping quantity for smart watches will continue high growth until
2022. CAGR is expected to reach 23% with a total shipping volume at 115 million units. In view of the
substantial growth in the use of smart wearable devices, Compal will develop more suitable sensor chipsets
to satisfy user needs and also incorporate 4G LTE and other telecommunication technologies for more
diverse application. Voice control and the integration of AI will also be investigated and serve as a potential
source of momentum that could keep the market growing. Compal will continue to accumulate the relevant
technologies to extend its reach into more diversified wearable device product lines.
■ Smartphones and Modules
According to IDC, the smartphone market is expected to decline 0.8% in 2018. The global shipping quantity
for the year will continue to benefit from high growth in emerging markets. Compal will continue to focus on
communication products with high cost-performance ratio and models with special features while seeking
collaboration with new customers to ensure steady momentum in terms of sales.
■ Smart Home
According to a forecast by Strategy Analytics, Smart Home sales will continue to grow and will reach 1.6
billion units shipped in 2023. Compal will inject the necessary resources and actively establish its presence in
the market.
■ LCD TVs
According to an IHS forecast, the shipment of LCD TVs will remain flat in 2019. The development of new LCD
TV products will shift towards high end specifications such as ultra high-resolution in 8K, local dimming, a
built-in voice assistant and so on, with dimensions reaching 65” and above. These features, coupled with
high dynamic contrast and a wide color gamut, will enable the next generation of TV products to render even
more realistic images and deliver superior audio-visual enjoyment to the consumer.
■ 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.
■ AE
According to statistical data from Focus2move (an internationally renowned survey organization) sales in
the global light vehicles market in 2018 were 95.6 million units. The two big markets being China (28.08
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million cars at 30%) and America (17.20 million cars at 19%). It is estimated that the 2019 market will be
similar to that of 2018. The rapid growth in electric vehicles, ADAS and the autonomous driving market, has
already drawn many high tech industries into the automobile industry.
■ IoT Ver\cal Solu\ons
A Gartner prediction, shows that the IoT Vertical Industry market has grown close to USD 82.7 billion in value.
Government, manufacturing, transportation and logistics, and retail account for approximately 40% of the
Smart Applications market. Compal will inject resources into the development of smart application products
for specific domains.
■ Smart Medical and Healthcare
(1) Management Systems:
Electronic Medical Records (EMR) and Smart Ward Solutions: According to estimates by FMI, the global
market for Electronic Medical Records (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: A report published by Markets and Markets, shows that factors such as the aging
populations and digital medical services, will cause the global market for patient and point of care solution
related management systems to reach USD 16 billion by 2020 with an annual growth rate of 19.7%.
(2) Instruments, Equipment and Accessories:
Smart Sports: According to a forecast in 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 demographic.
(3) Medical Equipment and Healthcare Related Products:
According to an estimate by Research and Markets, the global market for medical devices was worth
approximately USD 370 billion in 2018 and the figure is expected to exceed USD 400 billion in 2019 at an
annual growth rate of 4.5%.
(4) Innovative Medical Devices:
Innovative medical devices such as CGMs achieved USD 1.8 billion and USD 2.5 Billion is predicted for 2026,
with a CAGR of 33%.
(5) Cardiovascular Disease Prediction AI:
As forecast by Global Markets Insights, the Global medical AI market will reach USD 13 Billion, with a CAGR
of 40%.
■ Servers
According to IDC statistics, the demand for x86 servers reached 12 million units in 2018 and will approach
12.3 million units in 2019. The market for servers is expected to grow in the next few years, with the main
driving force coming from a demand for cloud applications. The bulk of servers shipped were x86 units,
which account for approximately 99% of all servers shipped. Rack servers have the greatest market share
and Compal will seize the opportunity to move more firmly into the server market.
4. Competitive advantage:
Compal is a long-time player in the IT industry and has committed to its role as an ODM. The following is a
description of our competitive advantages in terms of R&D and mass production capacity:
■ Notebooks
The Company has been manufacturing notebooks since 1989 and is one of the most experienced notebook
manufacturers in Taiwan. Products designed by the Company have won many Editor's Choice awards from
renowned magazines worldwide as well as awards from the Taiwan External Trade Development Council.
Furthermore, our design team has great sensitivity and responds to market changes with new
commercialized products. To enhance product competitiveness, Compal has assembled an R&D team that
specializes in the research of new materials and technologies as well as to adding more value to products.
The Company also has an intellectual property rights system in place to protect new technologies
developed by the R&D team.
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The demand for notebooks by general consumers has dwindled consistently due to the rise of handheld
devices. This has forced manufacturers to switch competitive strategy towards faster response and more
ergonomic design. The Company has always been sensitive to changes in the market and product trends.
The next generation of products is planned well in advance to capture market opportunities and generate
revenue.
■ Ultrabooks
Compal continues to stay ahead of its competitors in terms of technology advancement and R&D, and
strives to bring innovation to its designs. The Company expects to maintain this advantage in 2019 and will
actively assist customers in the development of more competitive ultrabooks.
■ 2-in-1 Notebooks
Compal has extensive experience in the development and manufacture of both notebooks and tablets. By
adding a bit of innovation, Compal is confident of their ability to create new demand for this product.
■ All-in-one (AIO)
Compal possesses the advantage and ability to commercialize products quickly in this respect. To further
emphasize product differentiation, a dedicated software development team has been assembled to carry
out software development and man-machine interface integration, to make the products more suitable for
consumer need.
■ Tablets
Compal remains somewhat optimistic about the future of the tablet market. We will continue to introduce
differentiated and competitively priced products to consumers. The Company will also explore the possibility
of introducing products that support 4G/LTE CA, using the experience and knowledge accumulated in
smartphone manufacture, to meet rising demand..
■ Smart Wearable Devices
The Company has developed many different types of wearable device ahead of international peers, and
engages companies such as Google and Qualcomm in strategic long-term partnerships for development of
innovative technology. Compal currently offers an extensive range of products, and leads the industry in
many advanced technologies that include video, audio, wireless and wearable materials.
■ Smartphones and Modules
Compal has accumulated many years of experience in smartphones. The ability to develop proprietary
software and hardware and incorporate research outcome and technologies into products has earned us the
recognition of customers all over the world. Furthermore, the advantage of producing at scaled economy
provides exceptional bargaining power with respect to the pricing and timing of material supply. This allows
much more flexibility and control over raw material purchases.
• Development of 5G communication technology and keeping pace with emerging technologies.
• The introduction of AI, the virtual personal assistant and a more intuitive user interface.
• The enhanced application of biometric technologies.
• The acquisition of know-how on LTE and CA and the use an adjustable, coupled-fed antenna to minimize
phone size.
■ The Smart Home
Compal will leverage its existing R&D and firmware design abilities in PCs and communications for the
development of a cloud computing software/platform. This will complement the hardware to bring
customers more complete solutions and customizable applications, as well as fine tuned products that meet
market expectation.
■ Displays
Compal will continue strengthening its strategic partnership with customers and suppliers to develop
applications such as AI and the voice assistant. By integrating resources across different fields of expertise,
Compal aims to expand its influence on participants from other industries and engage them in mutually
beneficial business arrangements in ways that improve competitiveness and increase market share.
■ Auto electronics (AE)
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Based on observations of the available technologies and design trends, the latest innovations in auto
electronics have been focused toward in-car video entertainment and communication. The helps to establish
a closer connection between the consumers living and working activities and their vehicles. Compal has the
advantage of being able to integrate key IT industry technologies and know-how to provide solutions for
in-car entertainment and communication, as well as the ability to work alongside customers to realize
business opportunities.
■ IoT Ver\cal Solu\on
Compal aims to expand its notebook design capabilities to that of industrial computers with different
capability and specifications to provide customers with the most comprehensive solutions. Furthermore,
Compal will be re-designing its factory production lines to conform with special specifications and test
requirements for new product applications for medial and vertical industries. AI will be incorporated in
vertical solutions as needed to complement the overall service package and to ensure greater reliability of
the products offered.
■ Smart medical and healthcare
Compal will leverage its existing ITC capabilities and cloud platform to explore cross-industry alliances and
opportunities to satisfy customer need with diverse products and services.
■ Servers
Compal has many years of experience in the design and manufacture of computers, this had helped with our
entry into the server industry. Compal's existing business relationships with world leading server
manufacturers also works in our favor.
5. Future opportunities, threats, and responsive strategies
■ Opportuni\es
• New product concepts such as the 2-in-1, ultrabook and e-sports will continue stimulating market
demand.
• Renewal demands for corporate notebooks remain consistent following new products introduced by
•
Intel and Microsoft.
Innovation from world leading brands puts the Company in a position to dictate new products and
markets.
• Expansion of software development, aesthetic design and man-machine interface talent has greatly
improved the ergonomics of products manufactured by Compal, which adds both value and appeal to
customers.
• Compal's strong R&D, manufacturing and operational management experience has earned the trust of
world-renowned brands.
• Compal has rigorous processes in place to monitor cost from initial R&D to manufacture, and is
therefore able to maintain a product competitive edge.
• A rational pricing strategy supported by an alliance with parts suppliers helps secure market growth.
• Connectivity not only brings convenience, but also adds value and competitiveness to the products
offered.
• Compal actively forms alliances with participants in different industries. This helps the Company to
increase product and customer diversity.
• Compal remains active in developing innovative technologies and exploring new product concepts. The
Company works alongside customers in developing new product lines, and in so doing secures access to
new products and technologies.
• The growing scale of 4G LTE infrastructures in emerging markets provides users with the incentive to
renew mobile devices, and supports the growth of smartphone demand.
• Demand for entry-level tablets and tablets with voice features continue to rise. The Company offers
some of the most competitive products in the industry to meet this demand.
• Compal has the technical capabilities to make smartphones and tablets in ways that support new IoT
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applications such as smart speakers, smart voice assistance etc… as well as the ability to explore new
opportunities across the industries.
• Driven by growing demand for wearable devices, Compal continues to mass-produce products and
develop new proposals and innovations with major customers, continuing to maintain the Company’s
position as the leading producer of wearable devices.
• Compal is aggressively investing in 5G development and puts much innovative energy into 5G and
product development to provide the 5G applications requested by their customers.
■ Threats
• CPU shortage and weak consumer demand continued to affect the shipment of notebooks in the first
half of 2019.
• New Chinese manufacturers have joined the race with competitively priced mid-range and high-end
notebooks. This has intensified price competition in this product category.
• The industry now competes in terms of vertical integration as opposed to specialization, which involves
more costly investment, higher market complexity and more challenging business management. Faced
with the rise of the Chinese supply chain, Taiwanese notebook manufacturers need to coordinate
operations to be able to match the integrated design, development and assembly capacity from China.
• The Notebook is a highly matured product and requires more diverse, value-adding and innovative
features for differentiation from other market participants.
• Products with Internet connectivity tend to involve many different communication protocols at the
same time, this poses a challenge in product development and can make products unacceptable to
some consumers.
• Too many competitors in the IoT market can give rise to inconsistent quality, and make competition in
the industry more difficult.
• Ongoing price competition among smartphones has significant impact on large-brand customers.
• Overall demand for tablets has declined, which adds to the competitive pressure.
• Wearable devices are still in the early stages of development, and require sustained periods of
expansion to reach an economy of scale.
• Big carriers are still hesitating to invest in 5G infrastructure. This may have an impact on the 5G market
take-off schedule.
■ Strategies
• The Company will adopt strategies that focus primarily on innovation, product added value and service.
• Quality and production efficiency will be improved to reduce manufacturing costs.
• The use of land and human resources in emerging countries throughout the world will be optimized to
reduce the cost of production and basic R&D.
• We will enhance product design review and develop a comprehensive database of documents to
improve design efficiency and quality while reducing costs.
• New customers and new product lines will be explored in emerging markets.
• The change of the Microsoft operating system will prompt corporate users to renew existing equipment.
Compal and its customers will address this by introducing lightweight notebooks with balanced
performance and portability. Entry-level products can also be introduced to emerging markets and the
education sector that are more price-sensitive.
• The gaming market has grown in diversity with new technologies constantly being introduced to entice
consumers into replacing old products. Compal is in the position to offer gaming notebooks at various
price levels to meet consumer demand.
• Offer complete solutions and form alliances across industries to quickly tap into market demand while
retaining the flexibility to satisfy customer needs.
• Progressively nurture innovative talent within the organization, enhance the development capacity for
high-end medical equipment and engage world-renowned medical equipment suppliers in strategic,
long-term and mutually beneficial cooperation.
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• Continue to strengthen working relationships with platform operators by providing hardware and
software solutions.
• Continue strengthen innovative development and enhance the collaboration with carrier partners. Build
up the threshold on 5G technology and provide the most advanced total solution.
5.2.2 Major Products and Their Main Uses
1. Main product applications
■ Notebooks
An analog-digital application hardware platform combined with dedicated software to enable a variety of
applications such as data editing/processing, word processing, layout, graphics applications, web browsing,
communications, digital multimedia entertainment, gaming and others.
■ Ultrabooks
A laptop that emphasizes thinness and light-weight and takes into account computing as well as battery
performance to meet the consumer need for both portability and productivity.
■ 2-in-1 Notebooks
These devices use the Windows 10 operating system, have an optional stylus, and satisfy the growing
consumer demand for mobile computing. In addition to multiple operating modes, the device has a touch
screen that enables it to be used as a tablet.
■ All-in-one (AIO)
Beautiful aesthetics suited for home, commercial, and design use, with emphasis on a touch screen input
interface, a range of software applications and high computing power.
■ Smart Home
Smart appliances, controls and sensors that provide users with diversified services for a smart lifestyle.
■ Servers
Designed for high power computing, capable of storing massive amounts of data and compatible with
different processing programs for data analysis. Built to accommodate different applications required by
enterprises, data centers and cloud platforms.
■ Tablets
Portable touch screen multimedia, mobile viewing and online information applications.
■ Displays
Graphics displays with audio output.
■ Smartphones and Modules
Personal communication and internet access.
■ AE
• Touch screen Car multimedia players
• Vehicle communication (3G/4G) system.
• Voice controlled natural sound navigation.
• Android Auto/Carplay connection. Smartphone Connection.
• Accident alarm.
•
Integrated peripheral safety warning systems such as wireless tire pressure and collision avoidance radar.
■ IoT Ver\cal Solu\ons
Flexible hardware designs allow a range of customized software applications along with the cloud and big
data analysis for horizontal alliance. We offer clients complete solutions and services by the creation of novel
applications. Unlikely conventional IT products, such as AGV and AI products, most of them need
customization for various needs, but they elicit greater brand loyalty.
■ Smart Medicine and Healthcare
Penetration into households and point-of-care areas using technology, including that of the IoT, and gradual
integration with our own peripheral software products allows the provision of comprehensive solutions.
119
These can give convenient and instant smart health care that will enhance dependence on the products as
well as engender user brand loyalty.
■ Servers
These are designed for high computing power, capable of storing massive amounts of data and compatible
with different processing programs for data analysis. They are built to accommodate the many different
applications required by enterprises, data centers and cloud platforms.
120
2. Production processes of main products
■ Notebook PCs
Casing of logic
board
Preparation of LCD
display
Assembly
Preparation of main
board
Preparation of
keyboard
Fasten LED
board
Fasten power
switch board
Produce LED
frame
Inspect LCD panel
Fasten interface
board to lower
casing
Fix LCD panel to
lower casing
Apply hook to
casing
Combine upper &
lower casing
Assemble LCD
casing & logic board
upper casing
(cid:2) Production process
inspection
(cid:2)
Input inspection
(cid:2) Input inspection
Fasten motherboard
to frame
Parts processing
SMT (surface mount
Prepare battery
spring
Prepare battery
wire
Prepare disk drives (cid:2) Visual inspection
technology)
Insert add-ons
Fasten disk
drives+motherboard
to bottom casing
Fasten power board
to motherboard
Soldering furnace
Remove board
(cid:2) Production process
Trip conductor
inspection
(cid:2)
Prepare plunger
+ frame
Install frame
onto metal board
Apply
double-sided tape
Insert keys
Press keys and
check
Install PCB to
lower casing
Install wires to
lower casing &
fasten
Fasten LCD casing &
bottom casing
Battery assembly
Apply heat sink
Machine wash
Assemble upper
casing
Prepare name
plate
Process quality
inspection
Keyboard installation Secondary soldering (cid:2)
(cid:2)
Function test
(cid:2) Accelerated aging
test
(cid:2)
Function test
Prepare name plate
& paste onto unit
Brush clean
(cid:2) Visual observation
Repair
(cid:2) Process quality
inspection
Wipe down unit
(cid:2) Automated machine
(cid:2)
Exterior inspection
(cid:2) Accelerated aging
testing
Unit packaging
(cid:2) Automated machine
test
testing
(cid:2) QA testing
Shipping of finished
goods
121
Prepare parts
Functional test
Fasten metal parts
Structural inspection
Install connecting wires
Assembly of LCD TV & monitor
↓
↓
Assemble LCD panel
↓
↓
Assemble display panel
↓
Assemble power panel
↓
↓
Assemble back casing
↓
(cid:2)
↓
(cid:2)
↓
(cid:2) Accelerated aging test
↓
↓
(cid:2)
↓
(cid:2)
↓
Wipe down exterior
↓
(cid:2)
↓
Paste front and back name
↓
plates
(cid:2) QA testing
↓
↓
Box and package
↓
(cid:2)
Final product inspection
Exterior inspection
Screen adjustment
Electrical test
Pressure test
Packaging
■ LCD TV & monitor
Display panel
Power panel
SMT
Parts processing
Visual inspection
SMT visual inspection
↓
↓
↓
↓
Manually insert add-ons
↓
(cid:2)
↓
↓
Manual soldering
↓
↓
↓
(cid:2)
↓
(cid:2)
QA random inspection
Apply heat sink
Auto soldering
Substrate test
Apply glue
SMT
Parts processing
↓
↓
↓
SMT visual
↓
inspection
Manually insert
↓
add-ons
(cid:2) Visual inspection
↓
Auto soldering
↓
Manual soldering
↓
Apply glue
122
IMEI
OK
Packaging
OK
Shipment
■ Smartphones and tablet PCs
Design/analyze
OK
Input material
OK
SQE test
OK
Install PCB SMD
OK
Welding of parts
OK
Base band TEST
OK
Assembly
OK
Vibration &
appearance
OK
Function test
OK
FINAL TEST
OK
CALL TEST
OK
Current IDEL
OK
Exterior
NO
NO
NO
NO
NO
NO
NO
NO
Repair
OK
Repair
OK
Repair
Repair
Repair
Repair
OK
OK
OK
OK
Repair
OK
Repair
OK
123
5.2.3 Supply Status of Main Materials
■ CPU/Chipset
(cid:3) Notebook
The Intel 10nm process production yield was lower than expected in 2018, this delayed the mass
production schedule of Ice Lake until the third quarter of 2019. Transferred 14nm production capacity
and server demand growth was higher than the estimate and this resulted in a 25% shortage gap in
CPU availability in the third quarter of 2018. This was more serious in the lower-end CPU Gemini Lake.
To solve the shortage problem Intel put 1 billion US dollars into the 14nm production bases in Oregon,
Arizona, Ireland and Israel to increase production. Mass production will begin in the third quarter of
2019, which will increase capacity by 25%.
The shortage of Intel CPUs caused HP, Lenovo and Dell to increase AMD shipments and they started
using AMD Stony Ridge CPU in the Chromebook. It is expected that AMD penetration will increase to
18%. Intel estimates that the CPU shortage will ease in Q3 2019.
The Intel new product roadmap shows a high-end level launch of the first 8 core 14nm Coffee
Lake-Refresh in Q2 2019. It has a performance 10% higher than the previous generation of Coffee Lake.
The mid-level product, Comet Lake, will launch in Q3 2019 to replace the 14nm Whiskey Lake, with a
10% improvement in performance. The 10nm Ice Lake-U is expected to be launched in Q3 2019. The
next generation of 10nm Tiger Lake will be launched in Q2 2020. It will still be dominated by Gemini
Lake for low-end products in power-saving Chromebooks and small notebooks. The Gemini Lake
Refresh, which is expected to be revised in the first quarter of 2020, will remain at 14nm. Overall, Intel
shipping strategy will remain focused on 14nm from 2019 to 2020.
(cid:3) Smartphones and Modules
The growth of the smart phone chip market is gradually slowing down, the performance and user
experience claimed for 5G has resulted in a postponement.
The process of conversion is obvious, 28nm is still the mainstream, but the proportion will be
significantly revised downwards in 2019. There is some chance for improvement in the cost structure
for entry-level products and expanded shipments in emerging markets. The AP would be moving to
higher-end processors and the key factor will be the 7nm and 12nm production capacity which will
affect the shipment of medium and high-end models.
In the first half of 2018, 5G solutions are still in the form of AP and 5G Modem chips. Many AP
companies have announced the launch of stand-alone 5G data chips. The SOC solution will ship in early
2020.
■ HDD
The popularity of the cloud and the efficiency of SSD storage technology has resulted in the traditional
hard drive no longer being an essential PC device. HDD shipments in 2019 are expected to have
negative growth of 15%.
In terms of capacity, 500 GB, 1 TB, 2 TB, and 1 TB (SMR) hard drives are mainstream products. It is
anticipated that much high capacity storage will go to the cloud and the tendency to increase storage
beyond 2 TB is less urgent.
In terms of rotation speed, 5400rpm is still the mainstream. Although access speed is faster at 7200rpm,
consumers are not particularly impressed by the difference. In terms of thickness, 7mm remains the
124
mainstream, and no reductions are expected, the development of higher capacity will be the main
target. The estimate for HDD shipments in 2019 shows a decline
However, some manufacturers will make use of HAMR and MAMR technology to increase the storage
capacity of HDDs and 3.5 inch hard drives used in data centers may have a capacity of 16 TB by 2020.
The 3D NAND Flash yield rate has improved and SSD prices have gone down regularly in 2019. The HDD
share in NB will be lower than 40%, and it is expected that the unit cost per GB will continue to go
down in 2019 and HDD market share will be lower than 30% in NB.
■ Memory
(cid:3) DRAM
The main use of DRAM is in Mobiles (41%), Servers (26%), Consumers (15%), PCs (14%), and Graphics
(5%). From an economic perspective, the US-China trade war and continuous threat of more tariffs has
caused import and export trade uncertainty. There has been no significant increase or decrease in
shipments in the 2019 due to the lack of breakthroughs in 3C products, and the slowdown in market
demand for Smartphones, Servers and PCs continues. However, the increase in average carrying
capacity is still driving demand growth. Shipments of Servers have been growing by 3% annually, and
the size of GB/sys has increased from 268GB to 322GB and above. Shipment of Smartphones has been
declining at 1% annually, with the size of GB/sys increased from 3.3GB to 3.8GB. Shipments for PC have
also been declining at 1.7% annually, but the size of GB/sys has increased from 6.7GB to 7.1GB.
In terms of DRAM supply, the DRAM market has finished capacity expansion and Samsung, SK Hynix
and Micron started mass production in the second half of 2018. These companies had all fully
embraced 1xnm by 2019, and Samsung has already started with the higher level 1ynm generation. The
market tensions caused by the shortage of DRAM products are over and there might even be an
oversupply. The result is no new development in technology, or new platform such as DDR5, is being
developed by the manufacturers.
In 2018, the Bitcoin mining demand collapse caused by the banning of Bitcoin trading in China, has left
a large stock of GDDR5 to be digested in the market. The existing e-sports demand cannot cope with
these mountainous stocks, the result has been a continuous decline in VRAM price. However, this
VRAM inventory may be consumed in the second and third quarters of 2019, because Nvidia is to
launch the new Turing-based GTX series and will be using GDDR5 again. There is a chance for the VRAM
price to recover in the third quarter of 2019.
The lowest point reached during the two periods of price decline in PC DRAM over the past 10 years
was in 2012. There will probably be another low point at the end of 2019.
The DRAM market is affected by the global economy, the decline in smartphone sales volume, as well
as the unsteadiness of American and Chinese trade. The demand has been weak, transactions have
remained slack and there has been no upturn. The main demand for DRAM is from mobiles, especially
those with multiple cameras and lens systems and the new 5G models. The amount of DRAM used
increases with each new model. The half year decline might not restrain demand and the stock could
be consumed by the end of Q2. The supply during the first half of the year has been in excess, above
that predicted. However, there may be convergence in Q3 ~ Q4.
125
(cid:3) NAND flash
The overall demand for NAND Flash fell by nearly 20% in the Q1 2019. This was caused by the
traditional off-season, coupled with weak server demand, the extended replacement cycle of mobile
phones, and unexpected sales of the Apple iPhone.
The NAND Flash capacity of mainstream mobile models has been expanded from 128GB to 256GB and
high-end models even had 1TB in 2018. Furthermore, the size of the SSDs installed in NBs has also
doubled to 512GB and more than 60% of them are expected to be equipped with SSD. This means the
growth momentum will come from the raised average capacity and SSD carrying rate in a situation
where server and mobile demand is weak.
Although the price of NAND Flash has fallen by more than 50% in 2019 compared with the same period
last year, manufacturers continue to put improved production and process technology into operation.
The mainstream SSD will be 64-layer 3D TLC in the first half of this year. However, Samsung, Toshiba
and Micron will be launching 96-layer 3D TLC, and Hynix will offer 72-layer 3D TLC in the second half of
the year. In addition, the QLC SSD is being supplied by the manufacturers, which will increase the
overall supply. There is still room for price reduction in the medium and high-capacity SSD segment.
What will be of concern is the prospect of other manufacturers following up with QLC SSD in the
second half of the year.
According to current preliminary plans, the overall NAND Flash capacity of the manufacturers in the
fourth quarter of 2019 will be more than that of last year. Mass production of 3D NAND has been the
main operation and the Samsung production capacity is about 85%, Toshiba and WD about 75%,
Micron about 90%, and SK Hynix about 60%. It is estimated that the portion of 3D NAND capacity in the
fourth quarter of 2019 will increase by 20% over that of the same period in 2018 and the NAND Flash
technology process has been upgraded. Even if the manufacturers slow down production of 96-layer
Flash, as well as the expansion of capacity, supply and demand will remain the determining factor in
the second half of 2019.
■ ODD
Although NBs have become commonplace, we do not anticipate the inclusion of CD drives in models
shipped in 2020. There were ODD devices in 29% of NBs shipped in 2018 and we expect this to go down
to 23% by the end of 2019. The main specification was a DVD-RW (super-multi) with a tray height of
9.0mm. CD drives will not have new specifications in the future. The main ODD main suppliers are HLDS
and PLDS. The number of NBs with ODD has fallen and these two suppliers have already start
developing other applications. These include disks that are less easily damaged. The use of these disks
will be mainly for archiving and data storage and this will result in a lower overall utilization rate.
■ BaZeries
The rapid development of dedicated electrical vehicles by automobile manufacturers and the
continued growth of this market, has increased the demand for cylindrical automotive batteries (EV,
E-Bike). This has strengthened and is expected to be grow fast in 2019 and in the future. The saturated
NB market has caused many battery manufacturers to transferred cylindrical productivity to
automobile batteries. They are gradually withdrawing from the NB market, this is especially so for the
Japanese manufacturer (Panasonic). The Korean manufacturers (LGC, SDI) have chosen to keep
capacity open and accept orders selectively. However, they are also expected to follow the Japanese
126
manufacturers and withdraw from the NB market in the future. The supply of Polymer will become
very important. It is light, thin, and has large capacity. Polymers can be customized to meet the
requirements of Industrial design (ID). Chinese manufacturers such as Coslight, ATL, and BYD are now
taking over the NB battery market share and have a significant price advantage.
The market has become much more aware of battery safety in recent years. In the future,
manufacturers will switch their targets from developing high ED (Energy Density) to achieving safer
design not only because of obstacles in ED development related to cost and application range, but
specifically with respect to safe design. Moreover, the application range of ceramic lithium batteries is
increasing as a result of the rapid development, high energy density and the excellent safety of a solid
electrolyte.
As the raw material prices of batteries (lithium, cobalt, and nickel) continue to fluctuate, it is unlikely
that the price of batteries will go down significantly in the short term.
■ LCD panels
In 2018 TV panels benefitted from an upgrade when production of 10.5 and 8.6 generation panels
started in the China factory. Special offers were made and monitor panel shipments increased under
the influence of the full display productivity upgrade and demand from the gaming sector. However, a
shortage of driver ICs and other components for NBs meant that supplies needed to be accumulated in
advance. Demand for all applications grew, except that for PAD panels, which underwent a market
recession.
The shipments of both full display and narrow bezel NBs were outstanding in 2018. The penetration
rate of the full display panel exceeded 30% for the first time, to reach 31%. The panel factory has
continued to increase production capacity and the continuous promotion of full display products
means that penetration is expected to reach rate of 45% in 2019.
In the face of new productivity by panel makers in China, the Taiwan/Korea panel factory market
strategy has become the development of high-technology panels to increase product value. Panel
makers in Taiwan were the first to develop the Mini LED and look forward to the high-end market for
high-definition panels. The Korean OLED panel technology is leading the world and the factory has
stopped 8.5-generation LCD production, has switched to OLED, and is promoting this and other related
products.
Major production of non OLED devices in the future could well be Mini LED panels. The Mini LED has
high brightness, high contrast and gives excellent quality that actually competes with that of OLED
displays. Current development has reached a stage that includes movie theaters and home cinema,
where high quality visual effects as needed. There are now also more opportunities for breaking into
the consumer display market. New applications will cover mobile phones, pads, desktop displays, car
displays and TV backlights and the Mini LED will enter the development stage between 2019 and 2020.
The OLED camp is becoming mature with respect to POLED (flexible plastic panel) technology. It is
expected that after 2019, some brands will launch products that feature folding screens. However, the
yield rate and durability of the product will be the main obstacle to subsequent market development of
these products.
127
■ Touch control modules
In 2018, overall consideration of cost and application in the NB main touch solution was based on one
glass (OGS). However, the demand for touch control in NBs has not improved very much, and the
direction of product design is still towards the integration of panel and touch technology. At present,
the design of touch control in the NB entails only about 5% of the production effort. After touch
technology was combined with the panel for mobile phones it became a mainstream interface. Smart
phones account for 82% of the proportion of touch panel shipments. At present, the market tends to
be mature and saturated, which also leads to some stagnation in the touch market.
The demand for NBs with stylus pens was about 18% in 2018. The major applications were in 2 in 1
production. In addition to Microsoft, Google has also become active in the promotion of the Chrome
Book 2 in 1 application. Google hopes that collocation of the stylus with the NB will allow students to
have a smooth transition from writing with a pen to the use of a stylus.
At present, there are several different protocols for stylus use: USI – Universal Stylus Initiative used by
Dell, Lenovo, HP, Intel and Google; MPP – Microsoft Pen Protocol used by Microsoft; and AES – Active
static electricity led by Wacom. It is clearly necessary to devise a means to make communications for
touch products that use a stylus compatible across different devices. The first means for this was
proposed by the USI camp, where two-way communications is established between the stylus and the
device. The device is controlled by the stylus, and this is expected to become the mainstream design of
the future.
128
5.2.4 Major Suppliers and Clients
(1) Major Suppliers in the Last Two Calendar Years
2017
2018
Party
Name
Amount
As a
percentage
to 2017 net
purchases
(%)
Relationship
with the
issuer
Name
Amount
As a
percentage
to 2018 net
purchases
(%)
Relationship
with the issuer
Name
1
2
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
328,103,409
113,241,981
475,877,885
917,223,275
35.77
12.35
51.88
100.00
N/A
N/A
Company E
Company B
Others
Net Purchase
Unit: NTD thousand
Amount
2019 first quarter
As a
percentage to
2019 first
quarter net
purchases (%)
36.03
10.05
53.92
100.00
75,418,270
21,037,016
112,891,744
209,347,030
Relationship
with the issuer
N/A
N/A
(2) Major Clients in the Last Two Calendar Years
2017
2018
2019 first quarter
Unit: NTD thousand
Party
Name
Amount
As a
percentage
to 2017 net
sales (%)
Relationship
with the
issuer
Name
Amount
As a
percentage to
2018 net sales
(%)
Relationship
with the
issuer
Name
Amount
As a
percentage to
2019 first
quarter net
sales (%)
Relationship
with the
issuer
1 Company a
2 Company d
3 Company e
4 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
128,790,649
414,474,616
66,783,151
187,925,666
169,732,329
967,706,411
N/A
N/A
N/A
N/A
13.31
42.83
6.90
19.42
17.54
100.00
Company a
Company d
Company e
Company f
Others
Net sales
23,024,220
95,899,762
18,785,644
32,167,065
40,723,862
210,600,553
N/A
N/A
N/A
N/A
10.93
45.54
8.92
15.27
19.34
100.00
129
5.2.5 Production in the Last Two Years
Year
Production
volume/
value
Main products
2017
Unit: thousand devices; NTD thousands
2018
Production capacity
Production volume
Production value
Production capacity
Production volume
Production value
5C electronics
118,701
99,257
881,078,686
122,631
106,027
934,122,749
5.2.6 Shipments and Sales in the Last Two Years
2017
Unit: devices; NTD thousands
2018
Domestic sales
Volume
450
Value
2,211,434
Export sales
Domestic sales
Export sales
Volume
97,512
Value
Volume
Value
885,445,525
398
1,818,019
Volume
102,797
Value
965,888,392
Year
Sales volume
Main products
5C electronics
5.3
Human Resources
Year
December 31, 2017
December 31, 2018
March 31, 2019
Number of employees
Average age
Average years of service
Doctoral Degree
Master Degree
Academic
qualifications
University
High school / Below/
others
75,392
27.53
1.97
0.06%
3.78%
18.83%
77.33%
82,374
27.69
2.06
0.05%
3,64%
18.83%
77.48%
130
81,339
28.51
1.95
0.05%
3.67%
18.45%
77.83%
5.4
(1)
Environmental Protection Expenditure
Compal 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 emission
and the impact on global warming, the Taiwan and Mainland China plants together incurred
expenses of NT$10,731 thousand (excluding regular maintenance and green R&D) in 2018. We are
keeping the promises we made as an earth citizen and hope to make substantial contribution to the
protection of the global environment. We will continue our commitment to efforts in this respect.
Compliance with EU RoHS directives:
(2)
All Compal products are 100% compliant with EU RoHS Directives. There have been no cases of
returns for non-compliance. Compal requires suppliers to adjust the revised exclusion clause, and
the relevant specifications for the use of plasticizers DEHP, BBP, DBP and DIBP, which came into
effect in 2019, and have been effective since 2018/07/02.
To manufacture environmentally friendly green products and meet the requirements of both
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 Compal comply with the validation IECQ QC 080000
Electrical and requirements of the Electronic Components and Products Hazardous Substance
Process Management System.
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.
(3)
5.5
Labor Relations
(1)
■
Availability and execution of employee welfare, education, training and retirement policies.
Elaboration of the agreements between employers and employees, and protection of employee
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. Employee 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
131
■
■
■
(2)
policy in Taiwan. Since 2011, we have provided generous maternity grants for employees and their
spouses and children. By the end of 2018, the Company had provided NT$150.67 million in
maternity allowances and bonuses. There were 28 counts of employees who took parenting leave,
with the right to return, in 2018.
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 an online learning platform to further
assist the competent staff in keeping abreast of learning progress.
In 2018, a total of 2,640 training sessions (both internal and external) were organized; these
courses delivered 127,126.77 hours of training and 38,718 persons enrolled. The total training
expenses were NT$16,329 thousand. The training courses included:
Orientation: New hire seminars and corporate culture experience camps were organized to help
new hires better understand Company culture, the current status of the industry, and Company
strategy and vision.
Language training: Basic to advanced English and Japanese courses that train employees to respond
to customers and gives them a global vision through workspace situational training.
Managerial skills Training: To establish a comprehensive blueprint of development level, strengthen
core competency at all levels in such aspects as teamwork, problem analysis, innovative thinking...
and soon, to conduct planning for Company talent training at various stages.
Professional training: Categorized new professional knowledge lectures, courses, and experience
heritage job training to enhance employee expertise and technology and also to enhance Company
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, the effect is maximized 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 and the
Labor Pension Acts. For employees who are transferred to affiliated companies, benefits are paid
from the pension fund account according to the years of service by the employee in the respective
departments, in proportion to the amount each department had contributed over the course of
their service.
Employer-employee communications and the enforcement of worker rights.
The Company has always valued employer-employee relations, and has communication channels
available to facilitate two-way communication that allows the Company to respond to the thoughts
and opinions of employees in a prompt manner. The Company not only has policies in place to
protect employee rights, but also makes decisions in the best interests of its employees.
Personnel management
The Company has clear policies in place to manage human resources and to guide employee
behavior. There are specific levels of approval authority and detailed rules to guide decisions
concerning employee recruitment, promotion, appraisal, assignment, leave of absence, resignation,
confidentiality agreements, reward and discipline. These policies and rules exist to eliminate
subjective judgment 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.
132
(4)
(5)
• The Company hires regular cleaning services to ensure the cleanliness of its work environment.
Employee safety
• Personnel entry and exit is controlled by a security system.
• Security personnel are stationed 24 hours a day to patrol plant premises and monitor the
surveillance system.
• Lectures and rehearsals are organized annually to demonstrate proper responses to cases of
emergency.
Actual or estimated losses arising as a result of employment disputes in the recent year up to 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, nor does it
expect any occurrence in the coming year.
•
Responsive strategies and possible expenses: none.
5.6
Important Contracts
Agreement
Counterparty
Period
From
Patent licensing
Phoenix Technologies
2010.1.1
agreement
Co
Auto-renewed
upon expiry
1. Tool Licenses
2. Source Code licenses
3. Maintenance
Major Contents
Restrictions
Trading and
manufacturing
Dell Products L.P.
agreement
Under this agreement, the buyer will
From
procure computer products developed and
1997.06.26
manufactured by the seller, while the seller
Auto-renewed
will grant the buyer proper licenses to use
upon expiry
the products and provide after-sales
technical services.
Trading and
manufacturing
Acer Inc.
agreement
From 2001.10.01
Yearly
Auto-renewed
upon expiry
Under this agreement, the buyer will
procure computer products developed and
manufactured by the seller, along with
N/A
after-sales technical services provided by
the seller.
133
N/A
N/A
VI. Financial Information
6.1
Five-Year Financial Summary
1. Condensed Balance Sheet and Statement of Comprehensive Income
▓▓▓▓ Consolidated Condensed Balance Sheet – Based on IFRS
Year
Financial Summary for The Last Five Years (Note 1)
Unit: NT$ thousands
As of March 31,
2019
Analysis
2014
2015
2016
2017
2018
Current assets
324,845,249
277,783,476
300,469,007
321,782,654
362,745,250
350,597,181
Property, plant, and
24,472,732
24,308,631
20,952,677
18,179,367
20,418,228
equipment
20,405,435
Intangible assets
1,035,162
1,194,193
1,291,281
1,284,660
1,516,253
1,695,903
Other assets
Total assets
Prior to
Current
distribution
liabilities
After
distribution
28,397,575
24,639,275
24,303,146
22,109,740
15,115,092
17,571,259
378,750,718
327,925,575
347,016,111
363,356,421
399,794,823
390,269,778
250,264,267
202,757,075
209,232,199
231,955,732
274,207,898
259,764,905
256,832,412
208,009,032
214,478,756
237,184,287
(Note 2)
-
Non-current assets
22,266,514
15,570,384
25,500,097
22,752,717
12,425,077
14,911,307
Total liabilities
Prior to
distribution
After
distribution
Equity attributable to
parent company
shareholders
Ordinary shares
Capital reserves
Prior to
Retained
distribution
earnings
After
distribution
272,530,781
218,327,459
234,732,296
254,708,449
286,632,975
274,676,212
279,098,926
223,579,416
239,978,853
259,937,004
(Note 2)
-
101,386,923
103,775,795
105,804,389
101,895,584
105,723,646
107,819,999
44,232,366
44,711,266
44,241,606
44,191,916
44,071,466
44,071,466
14,296,445
12,838,638
11,779,274
10,938,773
9,932,434
9,933,014
47,721,872
51,877,511
55,289,409
56,557,146
60,060,381
61,396,881
43,293,091
47,450,840
50,867,256
52,149,999
(Note 2)
-
Other equity interests
(3,139,021)
(3,926,881)
(4,624,653)
(8,911,004)
(7,459,388)
(6,700,115)
Treasury stock
(1,724,739)
(1,724,739)
(881,247)
Non-controlling interests
4,833,014
5,822,321
6,479,426
(881,247)
6,752,388
(881,247)
7,438,202
(881,247)
7,773,567
Total equity Prior to
distribution
After
distribution
106,219,937
109,598,116
112,283,815
108,647,972
113,161,848
115,593,566
99,651,792
104,346,159
107,037,258
103,419,417
(Note 2)
-
Note: 1. The financial information is audited and certified by the CPA every year. The financial information as of March 31,
2019, has not yet been audited by the CPA.
2. The 2018 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.
134
▓▓▓▓ Parent-Company-Only Condensed Balance Sheet – Based on IFRS
Year
Financial Summary for The Last Five Years (Note 1)
Unit: NT$ thousands
As of March 31,
2019
Analysis
2014
2015
2016
2017
2018
Current assets
255,609,554
207,496,808
237,412,415
240,677,588
265,372,906
Property, plant, and
equipment
2,230,023
2,181,737
2,132,114
2,092,272
2,128,181
Intangible assets
412,185
378,454
268,316
146,813
378,745
Other assets
Total assets
Prior to
Current
distribution
liabilities
After
distribution
85,179,353
86,182,040
88,808,075
85,179,393
87,932,981
343,431,115
296,239,039
328,620,920
328,096,066
355,812,813
220,791,532
177,664,877
197,566,162
203,492,102
237,882,742
227,434,703
182,976,882
202,872,746
208,780,678
(Note 2)
Non-current assets
21,252,660
14,798,367
25,250,369
22,708,380
12,206,425
Prior to
Total
distribution
liabilities
After
distribution
Equity attributable to
parent company
shareholders
Ordinary shares
242,044,192
192,463,244
222,816,531
226,200,482
250,089,167
248,687,363
197,775,249
228,123,115
231,489,058
(Note 2)
-
-
-
-
-
N/A
44,232,366
44,711,266
44,241,606
44,191,916
44,071,466
Capital reserves
14,296,445
12,838,638
11,779,274
10,938,773
9,932,434
Prior to
Retained
distribution
earnings
After
distribution
47,721,872
51,877,511
55,289,409
56,557,146
60,060,381
43,293,091
47,450,840
50,867,256
52,149,999
(Note 2)
Other equity interests
(3,139,021)
(3,926,881)
(4,624,653)
(8,911,004)
(7,459,388)
Treasury stock
(1,724,739)
(1,724,739)
(881,247)
(881,247)
(881,247)
Non-controlling interests
-
-
-
-
-
Total equity
Prior to
distribution
After
distribution
101,386,923
103,775,795
105,804,389
101,895,584
105,723,646
94,818,778
98,523,838
100,557,832
96,667,029
(Note 2)
Note: 1.The financial information is audited and reviewed by the CPA every year.
2. The 2018 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.
135
▓▓▓▓ Consolidated Condensed Statement of Comprehensive Income – Based on IFRS
Year
Analysis
Net sales revenue
Gross profit
Financial Summary for The Last Five Years (Note 1)
Unit: NT$ thousands
As of March 31,
2019
2014
2015
2016
2017
2018
845,700,752
847,305,698
766,810,035
887,656,959
967,706,411
210,600,553
32,364,662
33,378,357
32,836,970
31,964,569
30,567,091
7,662,179
Net operating income
11,664,922
11,312,452
11,063,645
9,208,429
9,261,746
2,421,498
Non-operating income and
expense
(1,937,570)
479,641
749,700
(1,094,152)
2,527,839
(311,698)
Net income before tax
9,727,352
11,792,093
11,813,345
8,114,277
11,789,585
2,109,800
Net income from continuing
operations
Net loss from discounting
operations
7,545,381
9,007,147
8,968,006
6,158,037
9,589,301
1,659,701
-
-
-
-
-
-
Net income (loss)
7,545,381
9,007,147
8,968,006
6,158,037
9,589,301
1,659,701
Income (Loss) from Other
comprehensive income (loss)
4,555,499
(101,970)
(1,265,546)
(4,604,412)
387,887
746,547
(net after tax)
Comprehensive income
12,100,880
8,905,177
7,702,460
1,553,625
9,977,188
2,406,248
Net income attributes to
shareholders of the Parent
Net income attributes to
non-controlling interests
Comprehensive income
attributed to owners of parent
Comprehensive income
7,024,461
8,684,610
8,130,890
5,749,525
8,913,365
1,350,258
520,920
322,537
837,116
408,512
675,936
309,443
11,548,480
8,552,926
6,916,562
1,189,818
9,278,187
2,095,773
attributed to non-controlling
552,400
352,251
785,898
363,807
699,001
310,475
interests
Earnings per share (unit: dollar)
1.63
2.01
1.88
1.32
2.05
0.31
Note: 1. The financial information is audited and certified by the CPA every year. The financial information as of March 31, 2019
has not yet been audited by the CPA.
2. The 2018 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.
136
▓▓▓▓ Parent-Company-Only Condensed Statement of Comprehensive Income – Based on IFRS
Year
Financial Summary for The Last Five Years (Note 1)
Unit: NT$ thousands
As of March 31,
2019
2014
2015
2016
2017
2018
803,504,061
802,994,930
725,653,095
841,309,602
911,050,122
21,288,913
22,737,590
21,281,171
21,544,440
21,880,841
Analysis
Net sales revenue
Gross profit
Net operating income
7,291,756
7,305,278
5,972,854
5,170,549
6,936,706
Non-operating income and
expense
286,853
2,857,612
3,398,892
1,508,171
3,021,610
Net income before tax
7,578,609
10,162,890
9,371,746
6,678,720
9,958,316
Net income from continuing
operations
Net loss from discounting
operations
7,024,461
8,684,610
8,130,890
5,749,525
8,913,365
-
-
-
-
-
Net income (loss)
7,024,461
8,684,610
8,130,890
5,749,525
8,913,365
Income (loss) from other
comprehensive income (net
4,524,019
(131,684)
(1,214,328)
(4,559,707)
364,822
N/A
after tax)
Comprehensive income
11,548,480
8,552,926
6,916,562
1,189,818
9,278,187
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Earnings per share(unit: dollar)
1.63
2.01
1.88
1.32
2.05
Note: 1.The financial information is audited and reviewed by the CPA every year.
2. The 2018 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.
2. Auditors’ Opinions
Year
2014
2015
2016
2017
2018
Accounting Firm
KPMG
KPMG
KPMG
KPMG
KPMG
CPA
Audit Opinion
Kuo, Kuan Ying; Lo, Jui Lan
Kuo, Kuan Ying; Lo, Jui Lan
Kuo, Kuan Ying; Au, Yiu Kwan
Kuo, Kuan Ying; Au, Yiu Kwan
Chien, Szu Chuan; Au, Yiu Kwan
Modified unqualified opinion (Note 1)
Modified unqualified opinion (Note 2)
Unqualified opinion
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.
137
6.2 Five-Year Financial Analysis
▓▓▓▓
Consolidated Financial Analysis – Based on IFRS
Analysis
Year
Financial Analysis for the Last Five Years
As of
March 31,
2019
Debt ratio
71.96
66.58
67.64
70.09
71.70
70.38
2014
2015
2016
2017
2018
Capital Structure (%)
Long term fund to property, plants, and
equipment ratio
Current ratio (%)
Liquidity analysis
Quick ratio (%)
Operating
Performance
Analysis
Interest coverage
Accounts receivable turnover (times)
Average collection turnover
Inventory turnover (times)
Accounts payable turnover (times)
Average inventory turnover days
Property, plant and equipment turnover
(times)
Total assets turnover(times)
Return on total assets (%)
Return on equity (%)
525.02
514.91
657.59
722.80
615.07 639.55
129.80
102.70
10.54
4.66
78.25
13.73
5.13
26.59
137.00
143.60
113.71
120.22
14.11
13.47
4.93
74.03
14.31
5.42
4.50
81.11
15.51
5.68
25.50
23.53
138.72
108.19
132.29 134.96
103.06
99.13
7.25
5.03
72.56
14.55
6.30
25.08
5.47
5.08
3.85
4.35
71.85
83.90
12.61
6.33
9.48
5.27
28.95
38.50
37.03
34.74
33.88
45.36
50.14
41.27
2.37
2.33
7.31
2.40
2.74
8.35
2.27
2.87
8.08
2.49
2.01
5.57
2.54
3.08
8.65
Profitability Analysis
Operating income to paid-in capital ratio (%)
21.99
26.37
26.70
18.36
26.75
Net margin (%)
Earnings 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.
0.89
1.63
13.51
(Note2)
19.59
1.57
1.10
1.06
2.01
4.70
1.16
1.88
0.61
0.69
1.32
0.99
2.05
(Note1)
(Note1)
(Note2)
1.95
42.42
(Note1)
1.58
1.09
1.57
1.09
48.05
(Note1)
1.63
1.16
44.84
(Not1)
1.60
1.40
2.13
0.56
1.45
4.78
0.78
0.31
-
-
-
-
-
2. Not applicable as 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 increase in profit compared to the earlier period.
‧Return on equity: Mainly due to the increase in profit compared to the earlier period.
‧Operating income to paid-in capital ratio: Mainly due to the increase in profit before tax compared to the
earlier period.
‧Net margin: Mainly due to the increase in profit compared to the earlier period.
‧Earnings per share: Mainly due to the increase in profit compared to the earlier period.
‧Cash flow ratio: Mainly due to net cash outflow in operating activities.
‧Cash reinvestment ratio: Mainly due to net cash outflow in operating activities.
‧Financial leverage: Mainly due to the increase in interest expenses compared to the earlier period.
4. The financial information is audited and certified by the CPA every year. The financial information as of
March 31, 2019, has not yet audited by the CPA.
5. The Company made retroactive adjustment to previous amounts in the financial statements effective
138
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 2018 financial statement has not yet been approved at a shareholders’ meeting
▓▓▓▓ Formula
Financial Structure
1.
(1) Debt Ratio = Total liabilities/Total assets
(2) Ratio of long-term capital to property, plants, and equipment = (Net shareholders’ equity + Long-term
liability)/Net property, plants, and equipment
Solvency
2.
(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) Accounts receivable (including accounts receivable and notes receivable from business activities) turnover
= Net sales/Average accounts receivable balance (including accounts receivable and notes receivable from
business activities)
Inventory turnover = Cost of Goods Sold/Average inventory balance
(2) A/R turnover days = 365/accounts receivable turnover
(3)
(4) Accounts payable (including accounts payable and notes payable from business activities) turnover = Cost of
goods sold/Average accounts payable balance (including accounts payable and notes payable from business
activities)
Inventory turnover days = 365/Inventory turnover
(5)
(6) Property, plants, and equipment turnover = Net sales/Average Net Property, plants, 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)
Leverage
6.
(1) Operating leverage = (Nest revenue - variable cost of goods sold and operating expense)/operating income
(2) Financial leverage = Operating income/(Operating income - interest expenses)
139
▓▓▓▓
Parent-Company-Only Financial Analysis – Based on IFRS
Analysis
Year
Financial Analysis for the Last Five Years
Debt ratio
70.48
64.97
67.80
68.94
70.29
2013
2014
2015
2016
2017
As of
March 31,
2018
Capital Structure (%)
Long term fund to property, plants, and
equipment ratio
Current ratio (%)
Liquidity analysis
Quick ratio (%)
Operating
Performance
Analysis
Interest coverage
Accounts receivable turnover (times)
Average collection turnover
Inventory turnover (times)
Accounts payable turnover (times)
Average inventory turnover days
property, plants, and equipment turnover
(times)
Total assets turnover(times)
Return on total assets (%)
Return on equity (%)
5,499.48
5,434.85 6,146.71
5,955.44
5,541.36
115.77
116.79
120.17
118.27
111.56
96.83
15.70
4.72
77.25
23.04
4.88
15.84
102.28
105.89
96.92
89.79
17.81
14.03
5.03
72.57
23.34
5.16
4.61
79.14
26.42
5.16
15.64
13.81
7.85
5.06
72.13
23.11
5.65
15.79
6.14
5.08
71.80
18.82
5.95
19.39
361.26
364.02
336.43
398.31
431.73
N/A
2.51
2.33
7.15
2.51
2.87
8.47
2.32
2.79
7.76
2.56
2.00
5.54
2.66
3.06
8.59
Profitability Analysis
Operating income to paid-in capital ratio (%)
17.13
22.73
21.18
15.11
22.60
Net margin (%)
Earnings per share (dollar)
Cash flow ratio (%)
0.87
1.63
1.08
2.01
15.13
(Note1)
1.12
1.88
3.15
0.68
1.32
0.98
2.05
(Note1)
(Note1)
Cash flow
Cash flow adequacy ratio (%)
(Note2)
(Note2)
38.20
11.48
5.45
Cash reinvestment ratio (%)
Leverage
Operating leverage
Financial leverage
Note: 1.The ratio is negative.
23.48
(Note1)
2.42
1.08
2.41
1.09
0.68
2.74
1.14
(Note1)
(Note1)
2.86
1.23
2.59
1.39
2. Not applicable as the financial information, for more than five years, in accordance with IFRS 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.
‧Average Inventory Turnover Days: Mainly due to the decrease in Inventory Turnover (times) compared to
the earlier period.
‧Return on Total Assets: Mainly due to the increase in net income compared to the earlier period.
‧Return on Equity: Mainly due to the increase in net income compared to the earlier period.
‧Operating Income to Paid-in Capital Ratio: Mainly due to the increase in income before tax compared to
the earlier period.
‧Net Margin: Mainly due to the increase in net income compared to the earlier period.
‧Earnings Per Share: Mainly due to the increase in net income compared to the earlier period.
‧Cash flow ratio: Mainly due to net cash outflow in operating activities.
‧Cash Flow Adequacy Ratio: Mainly due to Most recent 5-year cash inflow from operating activities being
lower than the earlier period.
‧Cash reinvestment ratio: Mainly due to net cash outflow in operating activities.
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
140
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 2018 financial statement has not yet been approved at a shareholders’ meeting.
▓▓▓▓ Formula
Financial Structure
1.
(1) Debt Ratio = Total liabilities/Total assets
(2) Ratio of long-term capital to property, plants, and equipment = (Net shareholders’ equity + Long-term
liability)/Net property, plants, and equipment
Solvency
2.
(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) Accounts receivable (including accounts receivable and notes receivable from business activities) turnover
= Net sales/Average accounts receivable balance (including accounts receivable and notes receivable from
business activities)
Inventory turnover = Cost of Goods Sold/Average inventory balance
(2) A/R turnover days = 365/accounts receivable turnover
(3)
(4) Accounts payable (including accounts payable and notes payable from business activities) turnover = Cost of
goods sold/Average accounts payable balance (including accounts payable and notes payable from business
activities)
Inventory turnover days = 365/Inventory turnover
(5)
(6) Property, plants, and equipment turnover = Net sales/Average Net Property, plants, 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)
Leverage
6.
(1) Operating leverage = (Nest revenue - variable cost of goods sold and operating expense)/operating income
(2) Financial leverage = Operating income/(Operating income - interest expenses)
141
6.3
Audit Committee’s Report for the Most Recent Year
Audit Committee’s Review Report
The Company’s 2018 financial statements have been approved by the Audit Committee and
by the Board of Directors. Szu-Chuan Chien 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 2018 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:
March 22, 2019
142
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.
Status of Financial Difficulties for the Company and its Subsidiaries
6.6
Incidence of financial difficulties for the Company and its subsidiaries between the period of 2018 to the
publication date of this annual report: None.
143
VII. Review of Financial Conditions, Financial Performance, and Risk
Management
7.1
Analysis of Financial Status
Analysis
Year
2018
2017
Unit: NT$ thousands
Difference
Amount
%
362,745,250
321,782,654
40,962,596
7,364,485
11,807,622
(4,443,137)
12.73
-37.63
accounted
Current Assets
Investments
using equity method
Property, plant and equipment
Other Assets
for
Total Assets
Current Liabilities
Other Liabilities
Total Liabilities
Ordinary Share
Capital surplus
Retained Earnings
Other Equity Interests
Treasury stock
Non-controlling Equity
20,418,228
9,266,860
399,794,823
274,207,898
12,425,077
286,632,975
44,071,466
9,932,434
60,060,381
(7,459,388)
(881,247)
7,438,202
113,161,848
18,179,367
11,586,778
363,356,421
231,955,732
22,752,717
254,708,449
44,191,916
10,938,773
56,557,146
(8,911,004)
(881,247)
6,752,388
108,647,972
2,238,861
(2,319,918)
36,438,402
42,252,166
(10,327,640)
31,924,526
(120,450)
(1,006,339)
3,503,235
1,451,616
-
685,814
4,513,876
12.32
-20.02
10.03
18.22
-45.39
12.53
-0.27
-9.20
6.19
-16.29
-
10.16
4.15
Total Equity
Note: Analysis of variations exceeding 20% and amounting to more than NTD10 million:
(cid:3) Decrease in investments accounted for using equity method: Mainly due to the disposal of equity investment –
Shares of LC Future Center Limited
(cid:3) Decrease in Other Assets: Mainly due to the disposal of non-current financial assets at fair value through other
comprehensive income (& non-current available-for-sale financial assets)
(cid:3) Decrease in other liabilities: Mainly due to the decrease in long-term borrowings
(cid:3) 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.
(cid:3) Future response actions: Not applicable
144
7.2 Analysis of Financial Performance
Analysis
Year
2018
2017
Unit: NT$ thousands
Difference
Amount
%
Net Sales
Cost of Sales
Gross Profit
Operating Expenses
Operating Income
Non-operating Income and Expenses
Profit Before Tax
Less: Income Tax Expense
Net Profit (loss)
Other Comprehensive Income (after
tax)
967,706,411
937,139,320
30,567,091
21,305,345
9,261,746
2,527,839
11,789,585
2,200,284
9,589,301
887,656,959
80,049,452
855,692,390
81,446,930
31,964,569
(1,397,478)
22,756,140
(1,450,795)
9,208,429
53,317
9.02
9.52
-4.37
-6.38
0.58
(1,094,152)
3,621,991
-331.03
8,114,277
1,956,240
6,158,037
3,675,308
244,044
3,431,264
45.29
12.48
55.72
387,887
(4,604,412)
4,992,299
-108.42
Total Comprehensive Income
9,977,188
1,553,625
8,423,563
542.19
Note: Analysis of variations exceeding 20%:
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
Increase in Non-operating income and expenses: Mainly due to the increase in gains on disposal of
investments, increase in gains on financial assets and liabilities at fair value through profit or loss,
decrease in foreign currency exchange losses, increase in dividend revenue and increase in finance costs.
Increase in profit before Tax: Mainly due to the increase of gains on non-operating income and expenses
items.
Increase in net Profit: Mainly due to the increase in profit before tax.
Increase in other comprehensive income (after tax): Mainly due to the increase of gains of exchange
differences on translation of foreign financial statements and increase in unrealized losses from
investments in equity instruments measured at fair value through other comprehensive income.
Increase in total comprehensive Income: Mainly due to the increase in net profit and other
comprehensive income (after tax).
■ 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:
(cid:3)
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 +0%, -5%, and
+2% respectively in 2019 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 -1%, -6%, and +27% in
2019 compared to the previous year. Looking forward to 2019, although the macro environment is still full
of challenges, we still expect Compal 5C electronics shipments to grow year-over-year from last year’s
83 million units, after taking into account the market condition and Compal's business plans for 2019,
and exhibit another year of growth. In addition, we also anticipate the revenue contribution of
non-PC segment to grow toward 40% in the mid-to-long run. The related market analysis please refer
to page 101～103 for “Industry Overview – current and future industry prospects”.
(cid:3)
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 2019.
145
7.3 Analysis of Cash Flow
7.3.1 Cash Flow Analysis for the Current Year
Unit: NT$ thousands
Cash and Cash
Equivalents,
Beginning of Year
(1)
70,062,713
Net Cash Flow
from Operating
Activities
(2)
(15,262,849)
Cash Inflow
(Outflow)
(3)
Cash Surplus
(Deficit)
(1)+(2)+(3)
15,496,681
70,296,545
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.
2. Analysis of the change of 2018 cash flow changes:
•
•
Net cash outflow in operating activities of $15,262,849 thousand: mainly due to reduce of net changes
of assets and liabilities from operating activities.
Net cash inflow in investing activities of $2,438,759 thousand: mainly due to the purchase of real-estate
property, plants, and equipment, and the disposal of equity investments and available-for-sale financial
assets.
Net inflow of financing activities of $11,632,654 thousand: mainly due to the increase in loan and
distribution of cash dividend.
3. Financing of cash deficits: not applicable.
4. Liquidity analysis: current asset to current liability ratio is 132.3%, representing the healthy liquidity status.
•
7.3.2 Cash Flow Analysis for the Coming Year
Unit: NT$ 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)
70,296,545
16,343,100
(21,026,790)
65,612,854
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 2019 cash flow changes:
•
Net cash inflow in operating activities of $16,343 thousand: expect sales growth and profits from the
operation.
Net cash outflow in investing activities of $6,021,927 thousand: expect to increase investment
expenditures.
Net cash outflow in financing activities of $15,068,097 thousand: expect to distribute cash dividend and
increase/decrease in long-term and short-term debt.
•
•
3. Financing of cash deficits: not applicable.
4. Liquidity analysis: The Company should be able to mainly sound liquidity, as cash balance in the beginning of
year plus net cash inflows from operating activities are adequate in meeting the Company's investing and
financing needs.
146
7.4 Major Capital Expenditures
7.4.1 Major Capital Expenditures and Sources of Capital
Project
Actual or Planned
Actual or Planned
Source of Capital
Date of Completion
Total Capital
Unit: NT$ thousands
Actual or Expected Capital
Expenditure 2018
Smart health and
cloud-based
integrated medical
examination system
7.4.2 Expected Benefits
Private Capital
2018
102,877
102,877
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 specialized 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. We also want to 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
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
147
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 returns on investments.
(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
797 million, coming mainly from the performance of Compal Precision Module Co., Ltd., and Lipo Holding
Co., Ltd.
(3) 2019 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 mobile device solutions 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 will 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 that are not involved in hardware
production, we also will expand the size of our developers and the proportion of software and 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.
148
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; %
2018
(1,172,785)
(430,612)
967,706,411
11,789,585
(0.121%)
(9.948%)
(0.045%)
(3.652%)
According to the most recent U.S. Fed meeting statement, FOMC decided to maintain the target range for the
federal funds rate at 2.25% to 2.5%. In light of global economic and financial developments and muted inflation
pressures, the Committee will be patient as it determines what future adjustments to rates might be appropriate. In
addition, the market is expecting the Fed will not raise the rate any more in 2019. With regards to the interest rate
for NTD, in light of the persistent uncertainties over the international economic, trade, and financial prospects and
subdued inflationary pressures, the Board of the Central Bank of Taiwan has resolved that the bank will maintain the
current rate at 1.375%. As of the end of 2018, the Company’s cash balance came to approximately NTD 70.297
billion. The long and short-term bank loans came to about NTD 100.884 billion, with net interest expenses for the
year at NTD 1,172,785 thousand. The amount accounted for 0.121% and 9.948% of the Company’s net sales and
income before tax respectively. As of December 31, 2018, should all other factors remain unchanged, the increase of
0.25% in interest will cause a decrease in income before tax of NTD 10,551 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 minimize 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
$(430,612) thousand, accounting for (0.045%) and (3.652%) of net revenue and net profit before tax respectively. As
of December 31, 2018, with all other factors remaining unchanged, a 5% appreciation of USD/TWD will increase
income before tax by $67,828 thousand. We will take all necessary actions based on the fluctuation of the exchange
rate in the future.
3. Inflation:
According to relevant data published by the Central Bank, imported inflationary pressure would be held down
149
by lower international oil prices projected for this year. The CPI for the year was expected to grow by 0.97% and
while CPI outlook should remain stable, we will continue to watch for potential impact on prices.
7.6.2 Policies, Main Causes of Gain or Loss, and Future Response Measures with Respect to High-risk,
High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions
1. The Company does not make high-risk, high-leveraged investments.
2. The Company only offers financing to its related parties, mainly providing short-term financing for their
operating needs.
3. The Company is engaged in endorsement and guarantee activities which are only negotiated between
subsidiaries and the parent company. The arrangements are covered by proper Endorsement and Guarantee
Procedures.
4. The Company uses a hedging strategy for assets and liabilities valued in foreign currencies. Such hedging, done
through forward foreign exchange contracts and swap trading, covers the amount of net assets and liabilities to
achieve the objective of risk aversion. At the end of 2018, the Company’s position in open forward foreign
exchange contracts amounted to USD$ 136,900 thousand, EUR 52,200 thousand, and swap contracts of USD$
27,300 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 a 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 integration of add-on function. They also team with clients to
meet their market planning and detail product developments.
In general, the Company usually has less than a one year product development cycle and aims 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 business target and whether the existing customers
continue their cooperation with the Company. The 2019 R&D expenses are expected to be NT$ 12.8 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 2018, the Company made all the necessary responses to significant changes in international
and domestic policies and regulations, without a significant impact on Company operation.
150
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. The rising technology trend of IOT, Artificial Intelligence
(AI), and 5G communication will also bring significant developments of industry as well as market opportunities. 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 Innovation Center is also involved in the
development of innovative products, technologies, and designs to 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, manufacturing, 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, the 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 2018, the Company placed
within the top 6%-20% in the TWSE-listed Companies in the 4th round of “Corporate Governance Evaluation” and
the distinction of the 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 was no
company crisis in 2018 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 businesses 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
151
competitiveness. We expect to benefit from synergy, have a 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 above case was
settled on April 16, 2019, and the two parties agreed to revoke the lawsuit filed against the other party.
7.6.13 Other Major Risks
Information Security
In order to maintain the competitive advantage and precious intellectual property of the company, the business
division of Compal Electronics, Inc. followed the “Compal Information Security Management System” to establish
information management processes and protection specifications in accordance with the government information
security related laws and regulations to ensure the interests of the company, customers and employees, and
maintain the competitiveness of the company. With the implementation of the Plan-Do-Check-Act (PDCA)
management cycle, we continued to improve our information security system and comply with customer contracts
properly to ensure the information security of the customers. Compal Electronics, Inc. had no proven complaints
regarding intrusions to customer privacy or the loss of customer data in 2018. In response to external changes and
the evolving of attack techniques, we continuously focus and invest in new information security knowledge and
technologies for the effective advanced protection and detection of new information security threats to reduce
operational risks.
Compal Electronics, Inc. passed the ISO 27001:2005 information security certification in 2005, received the
“Information Security Management System ISO 27001:2005” certification issued by the certification agency British
Standards Institution (BSI) and gradually expanded the certification range while conducting regular tracking twice a
year as well as reviewing audits every three years. In 2015 and 2017, we also passed the ISO 27001:2013 certification
and received the “Information Security Management System ISO 27001:2013” certification, meeting the
requirements of the new specifications.
The scope of certification includes the information headquarters, research and development for portable
computer products, research and development for all-in-one computer products, research and development for
152
vehicle electronics, and research and development for server products. In April and September of 2018, we also
passed external audit reviews and obtained certifications as valid proof based on the review results, ensuring the
effective operations of the information security management systems. After the integration of the smart device
business group information security system, the control of existing VPN and personal network hotspots were
strengthened, and the scope of regular vulnerability scans was expanded.
In order to achieve the promise of “ensuring sustainable operations and increasing customer satisfaction”
comprehensively, the “Information Security Committee” was established as the highest commanding unit for
information security. Management review meetings were held during the first and second halves of the year to
coordinate and discuss the information security plans, policies, goals, resource scheduling, etc., implementing the
company’s information security governance policies, clearly declaring and implementing the maintenance of
information security, and requiring the participation of all employees.
(cid:1)
(cid:1)
(cid:1)
(cid:1)
(cid:1)
In order to increase the employee’s awareness on information security, all colleagues of Compal Electronics, Inc.
has received social engineering exercises, propaganda on information security as well as educational training.
The six major information security goals are measured monthly to monitor the control measures of information
security management.
BCP recovery exercises are executed regularly to ensure the validity of the BCP plan and that it meets the
system recovery goals.
Internal and external audits are executed regularly every six months to ensure that the management system is
followed and improved continuously.
Risk assessment is executed regularly every six months. Risk evaluation is performed through asset values and
business processes, and risk processing measures are performed for the high-level risks evaluated.
Due to the information security event of the industry in 2018, comprehensive reviews of the risk and protection
measures for ransomware were also immediately conducted.
Others
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 intermittent 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 did not face any significant risk in 2018.
7.7 Other material issues: None.
153
VIII. Special Disclosure
8.1
Summary of Affiliated Companies (As of Dec 31, 2018)
8.1.1 Affiliated enterprises report
1. chart
154
155
2. Backgrounds of affiliated enterprises (December 31, 2018)
Company name
Compal Electronics,
Inc.
Date of
establishment
1984.06.01
Compal
International
Holding Co., Ltd.
Compal
International
Holding (HK)
Limited
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.
2000.01.12
2008.08.11
2000.05.19
2003.01.07
2003.06.20
2007.11.28
2010.03.05
Kunshan Botai
Electronics Co., Ltd.
2001.08.20
Compower Global
Service Co., Ltd.
2012.04.23
Prospect Fortune
Group Ltd.
2000.01.18
Jenpal International
Ltd.
2010.12.27
Fortune Way
Technology Corp.
2015.12.18
Just International
Ltd.
1992.08.25
Compal Display
Holding (HK)
Limited
Compal Electronics
(China) Co., Ltd.
2008.08.11
1995.12.25
Address
Paid-up capital Main business activities or products
Unit: thousand dollars
NT$44,071.466 Manufacturing, processing and trading
of notebooks, computer monitors, LCD
TVs, cellphones, and electronic parts
General investment, and production
and sale of notebooks
US$53,001
US$74,803
General investments
US$12,000
Production of notebooks, cellphones
and electronics
US$12,000
Production of notebooks, tablets and
electronics
US$24,000
Production of notebooks and
electronics
US$2,000
Hardware/software development and
production of computers, cellphones
and electronic components, and sale of
self-produced products
US$20,000
Production and sale of notebooks,
cellphones and digital products
US$1,000
Production and after-sale service of
notebooks and cellphones
RMB $ 2,000
Maintenance and after-sale service of
notebooks and cellphones
US$1
Trading of notebooks and related parts
US$7,350
General investments
US$14,900
General investments
US$48,010
US$62,298
General investment, and production,
sale and maintenance of computer
monitors and LCD TVs
General investments
US$37,000
Manufacturing and sale of displays
No. 581 and 581-1, Ruiguang
Road, Neihu District, Taipei City
Palm Grove House, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
Room 511, 5F, Silvercord Tower
1, No. 30 Canton Road, Tsim
Sha Tsui, Kowloon, Hong Kong
No. 25, Third Avenue, A Zone,
Kunshan Comprehensive Free
Trade Zone, Kunshan, Jiangsu,
China
No. 15, Third Avenue, A Zone,
Kunshan Comprehensive Free
Trade Zone, Kunshan, Jiangsu,
China
No. 58, First Avenue, A Zone,
Kunshan Comprehensive Free
Trade Zone, Kunshan, Jiangsu,
China
8F, Changjiang Science Park,
No. 40 Nanchang Road, Gulou
District, Nanjing, Jiangsu, China
No. 9, Second Avenue, A Zone,
Kunshan Comprehensive Free
Trade Zone, Kunshan, Jiangsu,
China
No. 1881, Liji Road, Shipai,
Bacheng Town, Kunshan City,
Jiangsu, China
No. 58, First Avenue, A Zone,
Kunshan Comprehensive Free
Trade Zone, Kunshan, Jiangsu,
China
Tropic Isle Building, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
Palm Grove House, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
Tropic Isle Building, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
Tropic Isle Building, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
Room 511, 5F, Silvercord Tower
1, No. 30 Canton Road, Tsim
Sha Tsui, Kowloon, Hong Kong
No. 988 Tongfengdong Road,
Kunshan City Development
Area, Jiangsu, China
156
Date of
establishment
2018.04.13
Company name
Compal Smart
Device (Chongqing)
Co.,LTD.
Compal
Optoelectronics
(Kunshan) Co., Ltd.
Compal System
Trading (Kunshan)
Co., Ltd.
Compal Investment
(Jiangsu) Co., Ltd.
2003.02.28
2007.10.24
2011.02.17
Compal Display
Electronics
(Kunshan) Co., Ltd.
Compal
International Ltd.
2011.03.30
1997.04.15
Compal Electronics
International Ltd.
1997.04.22
Smart International
Trading Ltd.
1998.09.03
Amexcom
Electronics, Inc.
Mexcom
Technologies, LLC
Mexcom
Electronics, LLC
CENA Electromex,
S.A. de C.V.
2011.07.22
2011.07.22
2011.07.22
1986.11.26
Big Chance
International Co.,
Ltd.
Center Mind
International Co.,
Ltd.
Compal Investment
(Sichuan) Co., Ltd.
Compal Electronics
(Chengdu) Co., Ltd.
2011.04.01
2011.04.01
2011.04.01
2011.04.02
Compal
Management
(Chengdu) Co., Ltd.
2011.05.25
Address
Paid-up capital Main business activities or products
NO.18-5,BAOHONG
AVENUE,LIANGJIANG NEW
DISTRICT,CHONGQING,CHINA(N
O.D05,ZONE D,AIR PORT
SECTION OF LIANGLU CUNTAN
FREE TRADE PORT
No. 988 Tongfengdong Road,
Kunshan City Development
Area, Jiangsu, China
No. 435 Weiye Road, Kunshan
City Development Area, Jiangsu,
China
China Business Section,
Kunshan Economic &
Technological Development
Zone, Jiangsu, China (south of
Zhonghuayuan Road and west
of Renmin South Road)
No. 1881, Liji Road, Shipai,
Bacheng Town, Kunshan City,
Jiangsu, China
Tropic Isle Building, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
Tropic Isle Building, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
Tropic Isle Building, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
318 N. Carson Street, #208,
Carson City, NV 89701
318 N. Carson Street, #208,
Carson City, NV 89701
318 N. Carson Street, #208,
Carson City, NV 89701
Ave Rio Bravo 1230 Parque
Industrial Rio Bravo, Ciudad
Juarez, Chihuahua, Mexico
32557
Tropic Isle Building, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
Tropic Isle Building, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
No. 6, Shenglong Street, Wuhou
District, Chengdu, Sichuan
No. 88, Sec.1, ZongBao Avenue
Chengdu Hi-tech
Comprehensive Bonded
Zone,Shuangliu County,
Chengdu, Sichuan, China
No. 6, Shenglong Street, Wuhou
District, Chengdu, Sichuan
157
RMB$60,000
Development, production and sale of
communication equipment,
cellphones, computers and smart
watches, and provision of relevant
technical services
US$12,100
Production and sale of LCD TVs
US$1,400
International trade and distribution of
computers and electronic components
US$15,600
General investments
US$15,000
Production and sale of LCD TVs
US$500
Sale of monitors, LCD TVs and related
parts
US$9,245
General investments
US$1
Trading of electronic products and
related parts
US$1,000
Sale and maintenance of LCD TVs
US$1
General investments
US$8,234
General investments
US$8,050
Production, sale and maintenance of
LCD TVs
US$90,820
General investments
US$80,820
General investments
US$80,820
US$80,000
US$800
External investment and consultation
service
Development and production of
notebooks, tablets, digital products,
network switches, wireless APs, and
auto electronics
Management consultation, training,
business information, tax advisory,
investment consultation, and
investment management
Date of
establishment
2011.06.02
2011.06.02
Company name
Prisco International
Co., Ltd.
Compal Electronics
(Chongqing) Co.,
Ltd.
Core Profit
Holdings Ltd.
2012.04.02
Billion Sea Holdings
Ltd.
2012.04.02
High Shine
Industrial Corp.
2007.07.04
Intelligent
Universal
Enterprise Ltd.
Compal (Vietnam)
Co., Ltd.
2007.08.02
2007.10.04
Goal Reach
Enterprises Ltd.
2007.07.03
2007.07.03
Compal
Development &
Management
(Vietnam) Co., Ltd.
Panpal Technology,
Inc.
Gempal
Technology, Inc.
Hong Ji Capital, Inc. 2004.06.28
1997.10.29
1997.08.20
2008.07.15
2004.07.02
Hong Jin
Investment, Inc.
Compalead
Eletrônica do Brasil
Indústria e
Comércio Ltda.
Compal Electronics
India Private
Limited
Accesstek Inc., Inc. 2000.08.18
1996.05.21
Arcadyan
Technology
Corporation
Arcadyan
Technology N.A.
Corp.
Arcadyan Germany
Technology GmbH
2003.05.09
2003.07.30
2007.04.11
Address
Paid-up capital Main business activities or products
Tropic Isle Building, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
No.10-3,BaoHong Avenue,
YuBei District, ChongQing,
China (NO.A03,ZoneA,AirPort
Section of LiangLu CunTan Free
Trade Port Area)
Vistra Corporate Services,
Wickhams Cay II, Road Town,
Tortola, VG1110, British Virgin
Islands
Vistra Corporate Services,
Wickhams Cay II, Road Town,
Tortola, VG1110, British Virgin
Islands
P. O. Box 3321, Drake
Chambers, Road Town, Tortola,
British Virgin Islands
P. O. Box 3321,Drake
Chambers, Road Town, Tortola,
British Virgin Islands
Ba Thien Industrial Zone, Binh
Xuyen County, Vinh Phuc
Province, Vietnam
Palm Grove House, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
Ba Thien Industrial Zone, Binh
Xuyen County, Vinh Phuc
Province, Vietnam
No. 581, Ruiguang Road, Neihu
District, Taipei City
No. 581, Ruiguang Road, Neihu
District, Taipei City
No. 581, Ruiguang Road, Neihu
District, Taipei City
No. 581, Ruiguang Road, Neihu
District, Taipei City
Rua Kanebo 175, Galpões C1 a
C6, e C12 Distrito Industrial,
Jundiaí, São Paulo,
CEP:13213-090, Brazil
B-4, Ecotech 1 Ext., Surajpur
Kasna Rd., Greater
Noida-201308, UP, India
5F-1, No. 65, Lane 525, Section
1, Guangfu Road, Hsinchu City
8F, No. 8, Section 2, Guangfu
Road, East District, Hsinchu City
US$10,000
General investments
US$10,000
Development, production and sale of
notebooks and related components,
and provision of maintenance and
after-sale services
US$147,000
General investments
US$147,000
General investments
US$42,700
General investments
US$30,000
General investments
VND543,243,500 Production, development, sale and
repair of notebooks, computer
monitors, LCD TVs and electronic
components
General investments
US$12,700
VND216,428,500 Construction and investment of
infrastructures at Ba-Thien Industrial
Zone, Vietnam
NT$5,000,000
General investments
NT$900,000
General investments
NT$1,000,000
General investments
NT$295,000
General investments
BRL20,109
Production and after-sale service of
notebooks, cellphones and electronics
INR386,000
Production and after-sale service of
cellphones
NT$32,369
NT$1,936,190
Design, manufacturing and trading of
optical disc writers and kits
Research, development, production
and sale of WLAN, integrated digital
home and mobile office products
Sale of wireless network products
Sale and technical support of wireless
networking products
5450 Thornwood Dr, Unit J
Floor 2 San Jose CA
95123-1222, USA
Koelner Strasse 10b D-65760
Eschborn, Germany
US$669
EUR25
158
Company name
Arcadyan
Technology
Corporation Korea
Arcadyan do Brasil
Ltda.
Date of
establishment
2014.10.16
2015.04.24
Arcadyan
Technology Limited
Arcadyan
Technology
Australia Pty Ltd
Arcadyan Holding
(BVI) Corp.
2016.08.16
2018.03.28
2007.03.07
Sinoprime Global
Inc.
2004.12.29
Arcadyan
Technology
(Shanghai) Corp.
Arch Holding (BVI)
Corp.
Compal
Information
Technology
(Kunshan) Co., Ltd.
Zhi-pal Technology
Inc
Tatung Technology
Inc.
2002.04.17
2007.05.24
2006.06.26
2009.08.10
2008.01.21
2018.11.22
2012.12.11
Tatung Technology
of Japan Co., Ltd.
Quest International
Group Co., Ltd.
Exquisite Electronic
Co., Ltd.
Tatung Home
Appliances (Wu
Jiang) Co., Ltd.
Acbel Telecom Inc. 2004.11.29
2001.02.13
2012.02.03
Leading Images
Limited
2008.01.02
Great Arch Group
Ltd.(Note)
2008.10.02
Astoria Networks
GmbH
Compal Broadband
Networks Inc.
2008.09.22
2009.08.19
Speedlink Tradings
Limited
2011.12.30
Address
Paid-up capital Main business activities or products
Rm.#1109, 166, Gunpo-si,
Gyeonggi-do, Korea
Avenida Dr. Delfim Moreira,
356-SL 202, Centro, Minas
Gerais, Santa Rita, Brazil, CEP
37540-000
183 Fraser Road, Sheffield,
S80JP, United Kingdom
Suite 476 Level 4, 311-315
Castlereagh Street, Sydney
NSW 2000
Portcullis TrustNet Chambers,
P.O. Box 3444, Road Town,
Tortola, British Virgin Islands
Palm Grove House, P.O. Box
438, Road Town,
Tortola, British Virgin Islands
4F, Block 2, No. 80 Huashen
Road, Free Economic Pilot Zone,
Shanghai, China
Palm Grove House, P.O. Box
438, Road Town,
Tortola, British Virgin Islands
No. 520 Nanbang Road,
Economic & Technological
Development Zone, Kunshan,
Jiangsu, China, China
5F, No. 58, Lane 188, Ruiguang
Road, Neihu District, Taipei City
10F, No. 288, Section 6, Civic
Boulevard, Xinyi District, Taipei
City
1 Chome-2-18, Mita, Minato-ku,
Tokyo-to, Japan
Level 2, Lotemau Centre, Vaea
Street, Apia, Samoa.
Level 2, Lotemau Centre, Vaea
Street, Apia, Samoa.
No. 508 Youming Road,
Songling Town, Wujiang
District, Suzhou, Jiangsu, China
5F, No. 58, Lane 188, Ruiguang
Road, Neihu District, Taipei City
Palm Grove House, P.O. Box
438, Road Town,
Tortola, British Virgin Islands
Palm Grove House, P.O. Box
438, Road Town,
Tortola, British Virgin Islands
Koelner Strasse 10b D-65760
Eschborn, Germany
13F-1, No. 1, Taiyuan 1st Street,
Zhubei City, Hsinchu County
KRW100,000
Sale of wireless networking products
BRL9,682
Sale of wireless network products
GBP50
AUD 50
Technical support for wireless
networking products
Sale of wireless networking products
US$32,780
General investments
US$9,050
General investments
US$13,100
Development and sale of WLAN
products
US$10,550
General investments
US$12,450
Production and sale of WLAN products
NT$349,800
General investments
NT$410,000
Development and sale of digital home
electronics
JPY 5,000
Sale of digital home electronics
US$1,200
General investments
US$1,170
General investments
US$3,350
Production and sale of digital home
electronics
NT$85,720
General investments
US$50
General investments
US$50
Sale of wireless networking products
EUR25
Sale of wireless networking products
NT$668,184
Development and sale of cable
modems, set-top boxes and
communication products
Import and export trading
Palm Grove House, P.O.
Box438, Road Town,Tortola,
British Virgin Islands
US$50
159
Date of
establishment
2018.01.01
Company name
Compal Broadband
Networks Belgium
BVBA
Zhaopal Investment 2009.10.15
Yongpal Investment 2009.10.15
Kaipal Investment 2009.10.15
Henghao
Technology Co.,
Ltd.
2010.12.10
HengHao Holdings
A Co., Ltd.
2010.12.10
HengHao Holdings
B Co., Ltd.
2010.12.14
HengHao
Optoelectronics
Technology
(Kunshan) Co., Ltd.
HengHao Trading
Co., Ltd.
2010.05.07
2010.12.15
Lucom Display
Technology
(Kunshan) Ltd.
Mactech Inc.
2010.11.01
2000.05.23
Ripal Optotronics
Co, Ltd.
2013.8.26
Rayonnant
Technology Co., Ltd
Compal Rayonnant
Holdings Ltd.
2010.03.23
2011.12.02
Allied Power
Holding Corp.
2005.04.07
Primetek
Enterprises Ltd.
2005.01.28
2010.03.31
2010.06.04
Rayonnant
Technology
Holdings (HK) Co.,
Ltd.
Rayonnant
Precision
Technology
(Taicang) Co., Ltd.
Bizcom Electronics,
Inc.
Address
Paid-up capital Main business activities or products
Bekersveld 19, 2630 Aartselaar,
BELGIUM
EUR$200
No. 581, Ruiguang Road, Neihu
District, Taipei City
No. 581, Ruiguang Road, Neihu
District, Taipei City
No. 581, Ruiguang Road, Neihu
District, Taipei City
No. 2-1, Wenhua Rd., Hsin-chu
Industrial Park, Hukou Shiang,
Hsin-chu County 30352, Taiwan
R.O.C.
Palm Grove House , P.O. Box
438, Road Town Tortola, British
Virgin Islands
Palm Grove House , P.O. Box
438, Road Town Tortola, British
Virgin Islands
NO.520, Nanbang Rd., Kunshan
City, Jiangsu Province, China
Palm Grove House , P.O. Box
438, Road Town Tortola, British
Virgin Islands
NO.520, Nanbang Rd., Kunshan
City, Jiangsu Province, China
No. 89, Land 36, Section 2,
Tanxing Road, Tanyang Village,
Tanzi District, Taichung City
2F, No. 256, Section 3,
Zhongzheng Road, Rende
District, Tainan City
No. 581, Ruiguang Road, Neihu
District, Taipei City
Palm Grove House, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
P.O. Box 3321,
Sealight House,
Road Town, Tortola,
British Virgin Islands
Palm Grove House, P.O. Box
438, Road Town, Tortola, British
Virgin Islands.
Room 1904, 19 F, phuket
commercial centre, 5 Hanoi
road, Tsim Sha Tsui, Kowloon,
Hong Kong
No.9 Tainan Road,Industry Park,
Taicang, Jiangsu, China
Import and export of broadband
network products and related
components, and provision of technical
support and consultation services
General investments
NT$1,358,000
NT$1,188,500
General investments
NT$510,500
General investments
NT$638,150
Manufacturing of electronic
components, computers and
peripherals
US$46,882
General investments
US$46,882
General investments
US$40,000
Production touch panels and related
components
US$10
Trading
US$15,000
Production touch panels and LCD
displays
NT$411,458
NT$60,000
Manufacturing of machinery and
lighting equipment, retail sale of
machinery, and international trade
Manufacturing of home appliances and
audiovisual electronics
NT$295,000
US$12,500
Manufacturing and sale of computers
and peripherals
General investments
US$21,151
General investments
US$3,151
General investments
US$18,000
General investments
US$18,000
Development and production of
aluminum and magnesium alloy-based
products
1992.04.13
1171 Montague Express Way,
Milpitas, CA 95035, USA
US$100
Marketing and after-sale of computer
monitors and notebooks
160
Address
Paid-up capital Main business activities or products
Date of
establishment
2008.03.05
2008.10.27
2007.08.09
2014.02.19
1999.01.16
2011.09.29
2000.07.05
2003.09.23
2004.03.26
Company name
Compal Europe
(Poland) Sp. z o.o.
Auscom
Engineering Inc.
Flight Global
Holding Inc.
Compalead
Electronics B.V.
General Life
Biotechnology Co.,
Ltd.
Rapha Bio Ltd.
Etrade
Management Co.,
Ltd.
Compal
Communications
(Nanjing) Co., Ltd.
Compal Digital
Communications
(Nanjing) Co., Ltd.
Compal Wireless
Communications
(Nanjing) Co., Ltd.
Webtek Technology
Co., Ltd.
2006.02.13
2000.07.07
Forever Young
Technology Inc.
2004.11.25
Giant Rank Trading
Limited
2004.11.25
HANHELT
Communications
(Nanjing) Co., Ltd.
2009.03.11
Unicom Global. Inc 2006.03.21
Palcom
International
Corporation
Compal Electronics
(Holding) Ltd.
2006.03.22
1997.04.22
UniCore Biomedical
Co., Ltd.
2018.01.25
Techniczna 792-518 Lodz,
Poland
One Dell Way, MSC PS2-88,
Round Rock, Texas 78682, USA
P. O. Box 3321, Drake
Chambers, Road Town, Tortola,
British Virgin Islands
Prins Bernhardplein 200, 1097
JB Amsterdam, the Netherlands
No.581-1, Ruiguang Rd., Neihu
Dist., Taipei City
5F, No.240, Shinshu Rd., Shin
Juang Dist., New Taipei City
Palm Grove House, P.O. Box
438,Road Town, Tortola, British
Virgin Islands
No.68-2, Suyuan Road, Export
Processing Zone (South Area).
Jiangning Nanjing China
No.77 Gaohu Street, Jiangning
Economic & Technological
Development Zone, Nanjing,
China
No.68-2, Suyuan Road, Export
Processing Zone (South Area).
Jiangning Nanjing China
Palm Grove House, P.O. Box
438,Road Town, Tortola, British
Virgin Islands
P.O. Box 3321, (Sealight House),
Road Town, Tortola,
British Virgin Islands
Palm Grove House
P.O. Box 438
Road Town, Tortola,
British Virgin Islands
Room 301 3rd floor 43#,
Headquarters Park,N0.70#
Phoenix Road Jiangning District,
Nanjing, China
No. 581, Ruiguang Road, Neihu
District, Taipei City
8F, No. 385, Yangguang St.,
Neihu District, Taipei City
Tropic Isle Building, P.O. Box
438, Road Town, Tortola, British
Virgin Islands
1F, No. 50, Section 1, Jiuzong
Road, Neihu District, Taipei city
2017.10.18
Raycore Biotech
Co., Ltd.
Shennona
Corporation
Note: The liquidation procedure was completed in April 2018.
No. 581, Ruiguang Road, Neihu
District, Taipei City
1171 Montague Express Way,
Milpitas, CA 95035, USA
2018.01.10
161
PLN6,804
US$3,000
US$89,755
Maintenance and after-sale service of
notebooks and cellphones
Development of notebooks and related
components, hardware and software
General investments
US$6,427
General investments
NT$300,000
Production and wholesaling of medical
equipment
NT$12,750
In vitro test supplies and equipment
US$71,900
General investments
US$22,000
Production of cellphones and tablets
US$5,800
Production of cellphones and tablets
US$39,000
Production of cellphones and tablets
US$100
Sale of cellphones
US$50
Sale of cellphones
US$ -
Sale of cellphones
US$2,000
Development of electronic
communication equipment
NT$100,000
NT$100,000
Manufacturing and retail of computers
and electronic components
Sale of cellphones
US$1
General investments
NT$200,000
NT$25,000
US$1,000
Management consultation, leasing,
and wholesale/retail of medical
equipment
Wholesaling and retailing of veterinary
drugs
Medical care IOT business
3. Business activities and relationships of affiliated enterprises (December 31, 2018)
Industry
category
Investment
holding
company
Name of affiliated enterprise
Business relationship with other affiliated enterprises
Compal International Holding Co., Ltd.
Compal International Holding (HK)
Limited
Jenpal International Ltd.
Fortune Way Technology Corp.
Just International Ltd.
Compal Display Holding (HK) Limited
Compal Investment (Jiangsu) Co., Ltd.
Compal Electronics International Ltd.
Mexcom Technologies, LLC
Mexcom Electronics, LLC
Big Chance International Co., Ltd.
Center Mind International Co., Ltd.
Compal Investment (Sichuan) Co., Ltd.
Prisco International Co., Ltd.
Core Profit Holdings Ltd.
Billion Sea Holdings Ltd.
High Shine Industrial Corp.
Intelligent Universal Enterprise Ltd.
Goal Reach Enterprises Ltd.
Panpal Technology Corporation
Gempal Technology Co., Ltd.
Hong Ji Investment Co., Ltd.
Hong Jin Investment Co., Ltd.
Zhaopal Investment Co., Ltd.
YongPal Investment Co., Ltd.
KaiPal Investment Co., Ltd.
Compal Rayonnant Holdings Ltd.
Allied Power Holding Corp.
Flight Global Holding Inc.
Compalead Electronics B.V.
Etrade Management Co., Ltd.
Compal Electronics (Holding) Ltd.
Arcadyan Holding (BVI) Corp.
Arch Holding (BVI) Corp.
Holds investment interest in Compal International Holding (HK)
Limited, Prospect Fortune Group Ltd., Jenpal International Ltd., and
Fortune Way Technology Corp.
Holds investment interest in 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., Kunshan Botai Electronics Co., Ltd.,
and Compal Investment (Jiangsu, China) Co., Ltd.
General investments
General investments
Holds investment interest in Compal Display Holding (HK) Limited,
Compal International Ltd., and Compal Electronics International Ltd.
Holds investment interest in Compal Electronics (China) Co., Ltd.,
Compal Optoelectronics (Kunshan) Co., Ltd., Compal System Trading
(Kunshan) Co., Ltd., and Compal Investment (Jiangsu, China) Co., Ltd.
Holds investment interest in Compal Display Electronics (Kunshan)
Co., Ltd.
Holds investment interest in Smart International Trading Ltd.,
Amexcom Electronics, Inc., Mexcom Technologies, LLC, and Mexcom
Electronics, LLC
Holds investment interest in CENA Electromex, S.A. de C.V.
Holds investment interest in CENA Electromex, S.A. de C.V.
Holds investment interest in Center Mind International Co., Ltd. and
Prisco International Co., Ltd.
Holds investment interest in Compal Investment (Sichuan) Co., Ltd.
Holds investment interest in Compal Electronics (Chengdu) Co., Ltd.
and Compal Management (Chengdu) Co., Ltd.
Holds investment interest in Compal Electronics (Chongqing) Co.,
Ltd.
Holds investment interest in Billion Sea Holdings Ltd.
General investments
Holds investment interest in Intelligent Universal Enterprise Ltd. and
Goal Reach Enterprises Ltd.
Holds investment interest in Compal (Vietnam) Co., Ltd.
Holds investment interest in Compal Development & Management
(Vietnam) Co., Ltd.
General investments
General investments
General investments
General investments
General investments
General investments
General investments
General investments
General investments
General investments
General investments
General investments
General investments
Holds investment interest in Sinoprime Global Inc., Arch Holding
(BVI) Corp., and Shanghai Guangzhi Technology Development Co.,
Ltd.
Holds investment interest in Compal Information Technology
(Kunshan) Co., Ltd.
162
Industry
category
Name of affiliated enterprise
Business relationship with other affiliated enterprises
Electronic
products
wholesaling
Electronic
products
manufacturing
Zhi-pal Technology Inc
Quest International Group Co., Ltd.
Exquisite Electronic Co., Ltd.
Acbel Telecom Inc.
Holds investment interest in Compal Broadband Networks Inc. and
Arcadyan do Brasil Ltda.
Holds investment interest in Exquisite Electronic Co., Ltd.
Holds investment interest in Tatung Home Appliances (Wu Jiang)
Co., Ltd.
Holds investment interest in Leading Images Limited and Great Arch
Group Ltd.
Holds investment interest in Astoria Networks GmbH
General investments
General investments
Leading Images Limited
Sinoprime Global Inc.
Rayonnant Technology Holdings (HK) Co.,
Ltd.
General investments
HengHao Holdings A Co., Ltd.
General investments
HengHao Holdings B Co., Ltd.
General investments
Primetek Enterprises Ltd.
Trading of notebooks and related parts
Prospect Fortune Group Ltd.
International trade and distribution of computers and electronic
Compal System Trading (Kunshan) Co.,
components
Ltd.
Sale of monitors, LCD TVs and related parts
Compal International Ltd.
Trading of electronic products and related parts
Smart International Trading Ltd.
Sale of cellphones
Webtek Technology Co., Ltd.
Sale of cellphones
Forever Young Technology Inc.
Sale of cellphones
Giant Rank Trading Limited
Sale of cellphones
Palcom International Corporation
Arcadyan Technology N.A. Corp.
Sale of wireless networking products
Arcadyan Technology Corporation Korea Sale of wireless networking products
Sale of wireless networking products
Arcadyan do Brasil Ltda.
Sale of wireless networking products
Arcadyan Technology Australia Pty Ltd.
Development and sale of digital home electronics
Tatung Technology Inc.
Sale of digital home electronics
Tatung Technology of Japan Co., Ltd.
Sale of wireless networking products
Great Arch Group Ltd.
Sale of wireless networking products
Astoria Networks GmbH
Sale and technical support of wireless networking products
Arcadyan Germany Technology GmbH
Trading
HengHao Trading Co., Ltd.
Import and export trading
Speedlink Tradings Limited
Import and export of broadband network products and related
Compal Broadband Networks Belgium
components, and provision of technical support and consultation
BVBA
services
Manufacturing, processing and trading of notebooks, computer
monitors, LCD TVs, cellphones, and electronic parts
Production of notebooks, cellphones and electronics
Compal Electronics Inc.
Compal Electronics Technology
(Kunshan) Co., Ltd.
Compal Information (Kunshan) Co., Ltd. Production of notebooks, tablets and electronics
Compal Information Technology
(Kunshan) Co., Ltd.
Compal Digital Technology (Kunshan)
Co., Ltd.
Kunshan Botai Electronics Co., Ltd.
Compal Electronics (China) Co., Ltd.
Compal Smart Device (Chongqing) Co.,
Ltd.
Production of notebooks and electronics
Production and after-sale service of notebooks and cellphones
Manufacturing and sale of displays
Development, production and sale of communication equipment,
cellphones, computers and smart watches, and provision of relevant
technical services
Production and sale of LCD TVs
Production and sale of notebooks, cellphones and digital products
Compal Optoelectronics (Kunshan) Co.,
Ltd.
Compal Display Electronics (Kunshan)
Co., Ltd.
Amexcom Electronics, Inc.
CENA Electromex, S.A. de C.V.
Production and sale of LCD TVs
Sale and maintenance of LCD TVs
Production, sale and maintenance of LCD TVs
163
Industry
category
Name of affiliated enterprise
Business relationship with other affiliated enterprises
Compal Electronics (Chengdu) Co., Ltd.
Development and production of notebooks, tablets, digital products,
network switches, wireless APs, and auto electronics
Compal Electronics (Chongqing) Co., Ltd. Development, production and sale of notebooks and related
Compal (Vietnam) Co., Ltd.
Compalead Eletrônica do Brasil Indústria
e Comércio Ltda.
Unicom Global. Inc
Accesstek Inc.
Arcadyan Technology Corp.
Compal Broadband Networks Inc.
Henghao Technology Co., Ltd.
Mactech Co., Ltd.
components, and provision of maintenance and after-sale services
Production, development, sale and repair of notebooks, computer
monitors, LCD TVs and electronic components
Production and after-sale service of notebooks, cellphones and
electronics
Manufacturing and retail of computers and electronic components
Design, manufacturing and trading of optical disc writers and kits
Research, development, production and sale of WLAN, integrated
digital home and mobile office products
Development and sale of cable modems, set-top boxes and
communication products
Manufacturing of electronic components, computers and
peripherals
Manufacturing of machinery and lighting equipment, retail sale of
machinery, and international trade
Manufacturing and sale of computers and peripherals
Production of cellphones and tablets
Manufacturing of home appliances and audiovisual electronics
Production of cellphones and tablets
Production of cellphones and tablets
Rayonnant Technology Co., Ltd.
Compal Communications (Nanjing) Co.,
Ltd.
Compal Digital Communications
(Nanjing) Co., Ltd.
Compal Wireless Communications
(Nanjing) Co., Ltd.
RiPAL Optotronics Co., Ltd.
Compal Electronics India Private Limited Production and after-sale service of cellphones
Compal Information Technology
(Kunshan) Co., Ltd.
Tatung Home Appliances (Wu Jiang) Co.,
Ltd.
HengHao Optoelectronics Technology
(Kunshan) CO., LTD
Rayonnant Precision Technology
(Taicang) Co., Ltd.
Lucom Display Technology (Kunshan) Ltd. Production touch panels and LCD displays
Compal Information Research &
Development (Nanjing) Co., Ltd.
Compower Global Service Co., Ltd.
Production and sale of digital home electronics
Production and sale of WLAN products
Production touch panels and related components
Development and production of aluminum and magnesium
alloy-based products
Hardware/software development for computers, cellphones and
electronic components
Maintenance and after-sale service of notebooks and cellphones
Compal Management (Chengdu) Co., Ltd. Management consultation, training, business information, tax
HANHELT Communications (Nanjing) Co.,
Ltd.
Bizcom Electronics, Inc.
Compal Europe (Poland) Sp. z o.o.
Auscom Engineering Inc.
Arcadyan Technology (Shanghai) Corp.
Arcadyan Technology Limited
Compal Development & Management
(Vietnam) Co., Ltd.
advisory, investment consultation, and investment management
Development of electronic communication equipment
Marketing and after-sale of computer monitors and notebooks
Maintenance and after-sale service of notebooks and cellphones
Development of notebooks and related components, hardware and
software
Development and sale of WLAN products
Technical support for wireless networking products
Construction and investment of infrastructures at Ba-Thien Industrial
Zone, Vietnam
UniCore Biomedical Co., Ltd.
Management consultation, leasing, and wholesale/retail of medical
equipment
Raycore Biotech Co., Ltd.
Wholesaling and retailing of veterinary drugs
164
Technology
service
Construction
and
development
Leading and
management
consulting
Wholesale and
retail of
Industry
category
veterinary
drugs
Manufacturing
and sale of
medical
equipment
Medical care
Name of affiliated enterprise
Business relationship with other affiliated enterprises
General Life Biotechnology Co., Ltd.
Rapha Bio Ltd.
Manufacturing and sale of medical equipment
Sale of test instruments and supplies
Shennona Corporation
Medical care IOT business
165
4. Directors, supervisors, and President of affiliated enterprises
December 31, 2018 Unit: NTD thousands; shares; %
Company name
Title
Name or name of representative
Compal Electronics
Inc.
Chairman
Vice Chairman
Director
Director
Sheng-Hsiung Hsu
Jui-Tsung Chen
Binpal Investment Co., Ltd.
(Representative: Wen-Being Hsu )
Kinpo Electronics, Inc.
(Representative: Shyh-Yong Shen)
Chang Chi Ko
Sheng Chieh Hsu
Yung-Chia Chou
Chung-Pin Wong
Director
Director
Director
Director and
President
Chiung-Chi Hsu
Director
Ming-Chih Chang
Director
Anthony Peter Bonadero
Director
Director
Sheng-Hua Peng
Independent Director Min-Chih Hsuan
Independent Director Duei Tsai
Independent Director Duh Kung Tsai
Representative
Representative
Director
Compal
International
Holding Co., Ltd.
Compal
International
Holding (HK)
Limited
Compal Electronics
Technology
(Kunshan) Co., Ltd.
Compal Information
(Kunshan) Co., Ltd.
Compal Information
Technology
(Kunshan) Co., Ltd.
Director
Director
Director
Chairman
Director
Director
Supervisor
President
Chairman
Director
Director
Supervisor
President
Chairman
Director
Director
Supervisor
Wen-Being Hsu
Shyh-Yong Shen
Compal Electronics Inc.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal International Holding Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
Compal International Holding Co., Ltd.
(Representative: Jui-Tsung Chen )
Compal International Holding (HK) Limited
(Representative: Sheng-Hsiung Hsu )
Compal International Holding (HK) Limited
(Representative: Jui-Tsung Chen )
Compal International Holding (HK) Limited
(Representative: Chung-Pin Wong)
Compal International Holding (HK) Limited
(Representative: Ching-Hsiung Lu)
Ming-Chih Chang
Compal International Holding (HK) Limited
(Representative: Sheng-Hsiung Hsu )
Compal International Holding (HK) Limited
(Representative: Jui-Tsung Chen )
Compal International Holding (HK) Limited
(Representative: Chung-Pin Wong)
Compal International Holding (HK) Limited
(Representative: Ching-Hsiung Lu)
Ming-Chih Chang
Compal International Holding (HK) Limited
(Representative: Sheng-Hsiung Hsu )
Compal International Holding (HK) Limited
(Representative: Jui-Tsung Chen )
Compal International Holding (HK) Limited
(Representative: Chung-Pin Wong)
Compal International Holding (HK) Limited
166
Shares held
Shares (Note)
8,975,401
35,352,587
5,000,000
151,628,692
7,896,867
9,119,297
8,022,874
6.618,618
2,117,731
1,919,489
0
835,000
0
0
0
4,000,000
0
Shareholding
percentage
0.20%
0.80%
0.11%
3.43%
0.18%
0.21%
0.18%
0.15%
0.05%
0.04%
0%
0.02%
0.00%
0.00%
0.00%
0.09%
0.00%
53,001,000
100.00%
53,001,000
100.00%
74,802,500
100.00%
74,802,500
100.00%
NT$368,580
100.00%
NT$368,580
100.00%
NT$368,580
100.00%
NT$368,580
100.00%
0
0.00%
NT$368,580
100.00%
NT$368,580
100.00%
NT$368,580
100.00%
NT$368,580
100.00%
0
0.00%
NT$737,160
100.00%
NT$737,160
100.00%
NT$737,160
NT$737,160
100.00%
100.00%
Company name
Title
Name or name of representative
Compal Information
Research &
Development
(Nanjing) Co., Ltd.
Compal Digital
Technology
(Kunshan) Co., Ltd.
Kunshan Botai
Electronics Co., Ltd.
President
Chairman
Director
Director
Supervisor
President
Chairman
Director
Director
Supervisor
President
Chairman
Director
Director
Supervisor
Compower Global
Service Co., Ltd.
President
Managing Director
Supervisor
Director
Jenpal International
Ltd.
Director
Fortune Way
Technology Corp.
Just International
Ltd.
Compal Display
Holding (HK)
Limited
Director
Director
Director
Director
Director
Director
Director
Compal Electronics
(China) Co., Ltd.
Chairman
(Representative: Ching-Hsiung Lu)
Ming-Chih Chang
Compal International Holding (HK) Limited
(Representative: Sheng-Hsiung Hsu )
Compal International Holding (HK) Limited
(Representative: Jui-Tsung Chen )
Compal International Holding (HK) Limited
(Representative: Chun-Te Shen)
Compal International Holding (HK) Limited
(Representative: Cheng-Chiang Wang)
Chun-Te Shen
Compal International Holding (HK) Limited
(Representative: Sheng-Hsiung Hsu )
Compal International Holding (HK) Limited
(Representative: Jui-Tsung Chen )
Compal International Holding (HK) Limited
(Representative: Chung-Pin Wong)
Compal International Holding (HK) Limited
(Representative: Ching-Hsiung Lu)
Ming-Chih Chang
Compal International Holding (HK) Limited
(Representative: Sheng-Hsiung Hsu )
Compal International Holding (HK) Limited
(Representative: Jui-Tsung Chen )
Compal International Holding (HK) Limited
(Representative: Ming-Chih Chang)
Compal International Holding (HK) Limited
(Representative: Ching-Hsiung Lu)
Ming-Chih Chang
Kunshan Botai Electronics Co., Ltd.
(Representative: Chung-Pin Wong)
Kunshan Botai Electronics Co., Ltd.
(Representative: Cheng-Chiang Wang)
Ming-Chih Chang
Compal International Holding Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
Compal International Holding Co., Ltd.
(Representative: Jui-Tsung Chen )
Compal International Holding Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
Compal International Holding Co., Ltd.
(Representative: Jui-Tsung Chen )
Compal International Holding Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
Compal International Holding Co., Ltd.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Just International Ltd.
(Representative: Sheng-Hsiung Hsu )
Just International Ltd.
(Representative: Jui-Tsung Chen )
Compal Display Holding (HK) Limited
(Representative: Sheng-Hsiung Hsu )
167
Prospect Fortune
Group Ltd.
President
Director
Shares held
Shares (Note)
Shareholding
percentage
0
NT$61,430
0.00%
100.00%
NT$61,430
100.00%
NT$61,430
100.00%
NT$61,430
0
100.00%
0.00%
NT$61.4300
100.00%
NT$61.4300
100.00%
NT$61.4300
100.00%
NT$61.4300
100.00%
0
NT$30,715
0.00%
100.00%
NT$30,715
100.00%
NT$30,715
100.00%
NT$30,715
0
NT$8,945
NT$8,945
0
1,000
1,000
100.00%
0.00%
100.00%
100.00%
0.00%
100.00%
100.00%
7,350,000
100.00%
7,350,000
100.00%
14,900,000
100.00%
14,900,000
100.00%
48,010,000
100.00%
48,010,000
100.00%
62,297,500
100.00%
62,297,500
100.00%
NT$1,136,455
100.00%
Company name
Title
Name or name of representative
Compal Smart
Device (ChongQing)
Co., Ltd.
Compal
Optoelectronics
(Kunshan) Co., Ltd.
Compal System
Trading (Kunshan)
Co., Ltd.
Compal Investment
(Jiangsu) Co., Ltd.
Compal Display
Electronics
(Kunshan) Co., Ltd.
Director
Director
Supervisor
President
Chairman
Director
Director
Supervisor
President
Chairman
Director
Director
Supervisor
President
Chairman
Director
Director
Supervisor
President
Chairman
Director
Director
Supervisor
President
Chairman
Director
Director
Supervisor
Compal Display Holding (HK) Limited
(Representative: Jui-Tsung Chen )
Compal Display Holding (HK) Limited
(Representative: Sheng-Hua Peng)
Compal Display Holding (HK) Limited
(Representative: Ching-Hsiung Lu)
Fu-Chuan Chang
Compal Electronics (China) Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics (China) Co., Ltd.
(Representative: Jui-Tsung Chen )
Compal Electronics (China) Co., Ltd.
(Representative: Sheng-Hua Peng)
Compal Electronics (China) Co., Ltd.
(Representative: Cheng-Chiang Wang)
Sheng-Hua Peng
Compal Display Holding (HK) Limited
(Representative: Sheng-Hsiung Hsu )
Compal Display Holding (HK) Limited
(Representative: Jui-Tsung Chen )
Compal Display Holding (HK) Limited
(Representative: Sheng-Hua Peng)
Compal Display Holding (HK) Limited
(Representative: Ching-Hsiung Lu)
Fu-Chuan Chang
Compal Display Holding (HK) Limited
(Representative: Jui-Tsung Chen )
Compal Display Holding (HK) Limited
(Representative: Sheng-Hsiung Hsu )
Compal Display Holding (HK) Limited
(Representative: Chung-Pin Wong)
Compal Display Holding (HK) Limited
(Representative: Cheng-Chiang Wang)
Ming-Chih Chang
Compal International Holding (HK) Limited
& Compal Display Holding (HK) Limited
(Representative: Sheng-Hsiung Hsu )
Compal International Holding (HK) Limited
& Compal Display Holding (HK) Limited
(Representative: Jui-Tsung Chen )
Compal International Holding (HK) Limited
& Compal Display Holding (HK) Limited
(Representative: Sheng-Hua Peng)
Compal International Holding (HK) Limited
& Compal Display Holding (HK) Limited
(Representative: Ching-Hsiung Lu)
Sheng-Hua Peng
Compal Investment (Jiangsu, China) Co.,
Ltd.
(Representative: Sheng-Hsiung Hsu )
Compal Investment (Jiangsu, China) Co.,
Ltd.
(Representative: Jui-Tsung Chen )
Compal Investment (Jiangsu, China) Co.,
Ltd.
(Representative: Sheng-Hua Peng)
Compal Investment (Jiangsu, China) Co.,
168
Shares held
Shares (Note)
Shareholding
percentage
NT$1,136,455
100.00%
NT$1,136,455
100.00%
NT$1,136,455
100.00%
0
0.00%
NT$268,362
100.00%
NT$268,362
100.00%
NT$268,362
100.00%
NT$268,362
100.00%
0
0.00%
NT$371,652
100.00%
NT$371,652
100.00%
NT$371,652
100.00%
NT$371,652
100.00%
0
NT$43,001
0.00%
100.00%
NT$43,001
100.00%
NT$43,001
100.00%
NT$43,001
0
100.00%
0.00%
NT$479,154
100.00%
NT$479,154
100.00%
NT$479,1546
NT$479,154
0
100.00%
100.00%
0.00%
NT$460,725
100.00%
NT$460,725
100.00%
NT$460,725
100.00%
NT$460,725
100.00%
Company name
Title
Name or name of representative
Shares held
Shares (Note)
Shareholding
percentage
Compal
International
Ltd.
Compal Electronics
International Ltd.
President
Director
Director
Director
Director
Smart International
Trading Ltd.
Director
Amexcom
Electronics, Inc.
Mexcom
Technologies, LLC
Mexcom
Electronics, LLC
CENA Electromex
S.A. de C.V.
Big Chance
International Co.,
Ltd.
Director
Director
Director
Director
President
Director
Director
Director
Director
Director
President
Director
Director
Center Mind
International Co.,
Ltd.
Director
Director
Compal Investment
(Sichuan) Co., Ltd.
Chairman
Director
Director
Supervisor
President
Chairman
Director
Director
Compal Electronics
(Chengdu) Co., Ltd.
Ltd.
(Representative: Ching-Hsiung Lu)
Sheng-Hua Peng
Just International Ltd.
(Representative: Sheng-Hsiung Hsu )
Just International Ltd.
(Representative: Jui-Tsung Chen )
Just International Ltd.
(Representative: Sheng-Hsiung Hsu )
Just International Ltd.
(Representative: Jui-Tsung Chen )
Compal Electronics International Ltd.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics International Ltd.
(Representative: Jui-Tsung Chen )
Compal Electronics International Ltd.
(Representative: Sheng-Hua Peng)
Compal Electronics International Ltd.
(Representative: Hsin-Kung Mao)
Compal Electronics International Ltd.
(Representative: Chung-Pin Wong)
Hsin-Kung Mao
Compal Electronics International Ltd.
(Representative: Hsin-Kung Mao )
Compal Electronics International Ltd.
(Representative: Hsin-Kung Mao )
Mexcom Electronics, LLC
(Representative: Sheng-Hua Peng)
Mexcom Electronics, LLC
(Representative: Yuan-Fu Chou)
Mexcom Electronics, LLC
(Representative: Hsin-Kung Mao)
Pedro Chacon
Compal Electronics Inc.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Big chance International Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
Big chance International Co., Ltd.
(Representative: Jui-Tsung Chen )
Center Mind International Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
Center Mind International Co., Ltd.
(Representative: Jui-Tsung Chen )
Center Mind International Co., Ltd.
(Representative: Chung-Pin Wong)
Center Mind International Co., Ltd.
(Representative: Ching-Hsiung Lu)
Ming-Chih Chang
Compal Investment (Sichuan) Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
Compal Investment (Sichuan) Co., Ltd.
(Representative: Jui-Tsung Chen )
Compal Investment (Sichuan) Co., Ltd.
169
0
500,000
0.00%
100.00%
500,000
100.00%
9,245,000
100.00%
9,245,000
100.00%
1,000
1,000
100.00%
100.00%
1,000,000
100.00%
1,000,000
100.00%
1,000,000
0
NT$31
100.00%
0.00%
100.00%
NT$252,907
100.00%
32,903,054
100.00%
32,903,054
100.00%
32,903,054
100.00%
0
0.00%
90,820,000
100.00%
90,820,000
100.00%
80,820,000
100.00%
80,820,000
100.00%
NT$2,482,387
100.00%
NT$2,482,387
100.00%
NT$2,482,387
100.00%
NT$2,482,387
100.00%
0
0.00%
NT$2,457,200
100.00%
NT$2,457,200
NT$2,457,200
100.00%
100.00%
Company name
Title
Name or name of representative
Compal
Management
(Chengdu) Co., Ltd.
Prisco International
Co., Ltd.
Compal Electronics
(Chongqing) Co.,
Ltd.
Core Profit Holdings
Ltd.
Supervisor
President
Chairman
Director
Director
Supervisor
President
Director
Director
Chairman
Director
Director
Supervisor
President
Director
Director
Billion Sea Holdings
Ltd.
Director
High Shine
Industrial Corp.
Director
Director
Director
Intelligent Universal
Enterprise Ltd.
Director
Compal (Vietnam)
Co., Ltd.
Goal Reach
Enterprises Ltd.
Director
Director
Director
Director
Director
Compal
Development &
Management
(Vietnam) Co., Ltd.
Panpal Technology Chairman
Director and
President
(Representative: Chung-Pin Wong)
Compal Investment (Sichuan) Co., Ltd.
(Representative: Ching-Hsiung Lu)
Ming-Chih Chang
Compal Investment (Sichuan) Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
Compal Investment (Sichuan) Co., Ltd.
(Representative: Jui-Tsung Chen )
Compal Investment (Sichuan) Co., Ltd.
(Representative: Chung-Pin Wong)
Compal Investment (Sichuan) Co., Ltd.
(Representative: Ching-Hsiung Lu)
Ming-Chih Chang
Big chance International Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
Big chance International Co., Ltd.
(Representative: Jui-Tsung Chen )
Prisco International Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
Prisco International Co., Ltd.
(Representative: Jui-Tsung Chen )
Prisco International Co., Ltd.
(Representative: Chung-Pin Wong)
Prisco International Co., Ltd.
(Representative: Ching-Hsiung Lu)
Ming-Chih Chang
Compal Electronics Inc.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Core Profit Holdings Ltd.
(Representative: Sheng-Hsiung Hsu )
Core Profit Holdings Ltd.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
High Shine Industrial Corp.
(Representative: Sheng-Hsiung Hsu )
High Shine Industrial Corp.
(Representative: Jui-Tsung Chen )
Intelligent Universal Enterprise Ltd.
(Representative: Jui-Tsung Chen )
High Shine Industrial Corp.
(Representative: Sheng-Hsiung Hsu )
High Shine Industrial Corp.
(Representative: Jui-Tsung Chen )
Goal Reach Enterprises Ltd.
(Representative: Jui-Tsung Chen )
Shares held
Shares (Note)
Shareholding
percentage
NT$2,457,200
100.00%
0
0.00%
NT$24,572
100.00%
NT$24,572
100.00%
NT$24,572
100.00%
NT$24,572
100.00%
0
0.00%
10,000,000
100.00%
10,000,000
100.00%
NT$307,150
100.00%
NT$307,150
100.00%
NT$307,150
100.00%
NT$307,150
100.00%
0
0.00%
147,000,000
100.00%
147,000,000
100.00%
147,000,000
100.00%
147,000,000
100.00%
42,700,000
100.00%
42,700,000
100.00%
30,000,000
100.00%
30,000,000
100.00%
NT$921,450
100.00%
12,700,000
100.00%
12,700,000
100.00%
NT$390,081
100.00%
Compal Electronics Inc.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
500,000,000
100.00%
500,000,000
100.00%
170
Company name
Title
Name or name of representative
Director
Supervisor
Gempal Technology
Co., Ltd.
Chairman
Director and
President
Director
Supervisor
Hong Ji
Investment Co., Ltd.
Chairman
Director and
President
Director
Supervisor
Hong Jin
Investment Co., Ltd.
Chairman
Director and
President
Director
Supervisor
President
Supervisor
Supervisor
Chairman
Director
Director
Compalead
Eletrônica do Brasil
Indústria e
Comércio Ltda.
Compal Electronics
India Private
Limited
Accesstek Inc.
Arcadyan
Technology Corp.
Arcadyan
Technology N.A.
Corp.
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Sheng Chieh Hsu)
Compal Electronics Inc.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Sheng-Hua Peng)
Compal Electronics Inc.
(Representative: Sheng Chieh Hsu)
Compal Electronics Inc.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Sheng-Hua Peng)
Compal Electronics Inc.
(Representative: Sheng Chieh Hsu)
Compal Electronics Inc.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Sheng Chieh Hsu)
Hsiao-Li Chao
President
Guo-Dung Yu
Panpal Technology Corporation
(Representative: Ching-Hsiung Lu)
Maywufa Co., Ltd.
(Representative: Cheng-Chia Li)
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Sheng-Hua Peng)
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Che-He Wei
Compal Electronics Inc.
(Representative: Chao-Peng Tseng)
Arcadyan Technology Corp.
(Representative: Jui-Tsung Chen )
Arcadyan Technology Corp.
(Representative: Chao-Peng Tseng)
Chao-Peng Tseng
171
Director
Director and
President
Independent Director Ying-Jen Li
Independent Director Ching-Jang Wen
Independent Director Wen-An Yang
Director
Director
President
Shares held
Shares (Note)
Shareholding
percentage
500,000,000
100.00%
500,000,000
100.00%
90,000,000
100.00%
90,000,000
100.00%
90,000,000
100.00%
90,000,000
100.00%
100,000,000
100.00%
100,000,000
100.00%
100,000,000
100.00%
100,000,000
100.00%
29,500,000
100.00%
29,500,000
100.00%
29,500,000
100.00%
29,500,000
100.00%
0
0
159,742
32,019
0.00%
0.00%
4.94%
0.99%
41,304,504
21.34%
41,304,504
21.34%
41,304,504
0
41,304,504
0
0
0
1,000
1,000
0
21.34%
0.00%
21.34%
0.00%
0.00%
0.00%
100.00%
100.00%
0.00%
Company name
Title
Name or name of representative
Arcadyan Germany
Technology GmbH
Arcadyan
Technology
Corporation Korea
Arcadyan do Brasil
Ltda.
Arcadyan
Technology Limited
Arcadyan
Technology
Australia Pty Ltd.
Arcadyan Holding
(BVI) Corp.
Sinoprime Global
Inc.
Arch
Holding
(BVI) Corp.
Arcadyan
Technology
(Shanghai) Corp.
Compal Information
Technology
(Kunshan) Co., Ltd.
Zhi-pal Technology
Inc
Managers
Director
Arcadyan Technology Corp.
(Representative: Chao-Peng Tseng)
Arcadyan Technology Corp.
(Representative: Chao-Peng Tseng)
Managers
Nien-Che, Hsiung
Director
Director
Director
Director
Director
Chairman
Director
Chairman
Director
Chairman
Director
Chairman
Director
Director
Director
Director
Supervisor
President
Chairman
Director
Director
Supervisor
President
Chairman
Director
Director
Arcadyan Technology Corp.
(Representative: Chao-Peng Tseng)
Arcadyan Technology Corp.
(Representative: Keng-Tien Lin)
Arcadyan Technology Corp.
(Representative: Chao-Peng Tseng)
Arcadyan Technology Corp.
(Representative: Fong-Yu, Lu) )
Arcadyan Technology Corp.
(Representative: Linda, Chu )
Arcadyan Technology Corp.
(Representative: Jui-Tsung Chen )
Arcadyan Technology Corp.
(Representative: Chao-Peng Tseng)
Arcadyan Holding (BVI) Corp.
(Representative: Jui-Tsung Chen )
Arcadyan Holding (BVI) Corp.
(Representative: Chao-Peng Tseng)
Arcadyan Holding (BVI) Corp.
(Representative: Jui-Tsung Chen )
Arcadyan Holding (BVI) Corp.
(Representative: Chao-Peng Tseng)
Arcadyan Holding (BVI) Corp.
(Representative: Chao-Peng Tseng)
Arcadyan Holding (BVI) Corp.
(Representative: Ching-Hsiung Lu)
Arcadyan Holding (BVI) Corp.
(Representative: Fong-Yu, Lu) )
Arcadyan Holding (BVI) Corp.
(Representative: Chung-Pao, Liu)
Arcadyan Holding (BVI) Corp.
(Representative: Chien-Lin Chen )
Arcadyan Holding (BVI) Corp.
(Representative: Shih-Wei Huang)
Chung-Pao, Liu
Arch Holding (BVI) Corp.
(Representative: Fong-Yu, Lu) )
Arch Holding (BVI) Corp.
(Representative: Jui-Tsung Chen )
Arch Holding (BVI) Corp.
(Representative: Chao-Peng Tseng)
Arch Holding (BVI) Corp.
(Representative: Ching-Hsiung Lu)
Chung-Pao, Liu
Arcadyan Technology Corp.
(Representative: Chao-Peng Tseng)
Arcadyan Technology Corp.
(Representative: Sheng-Hua Peng)
Arcadyan Technology Corp.
172
Shares held
Shares (Note)
Shareholding
percentage
500
100.00%
20,000
100.00%
0
50,000
50,000
50,000
50,000
50,000
0.00%
100.00%
100.00%
100.00%
100.00%
100.00%
32,780,148
100.00%
32,780,148
100.00%
9,050,000
100.00%
9,050,000
100.00%
34,900
34,900
100.00%
100.00%
NT$389,856
100.00%
NT$389,856
100.00%
NT$389,856
100.00%
NT$389,856
100.00%
NT$389,856
100.00%
NT$389,856
100.00%
0
0.00%
NT$370,512
100.00%
NT$370,512
100.00%
NT$370,512
100.00%
NT$370,512
100.00%
0
0.00%
34,980,000
100.00%
34,980,000
34,980,000
100.00%
100.00%
Company name
Title
Name or name of representative
Shares held
Shares (Note)
Shareholding
percentage
Director
Supervisor
President
Chairman
Director
Director
Director
Director
Director
Director
Supervisor
Supervisor
Supervisor
President
Director
Director
Tatung Technology
Inc.
Tatung Technology
of Japan Co., Ltd.
Quest International
Group Co., Ltd.
Director
Director
Exquisite Electronic
Co., Ltd.
Director
Tatung Home
Appliances (Wu
Jiang) Co., Ltd.
Director
Chairman
Director
Director
Supervisor
President
Acbel Telecom Inc. Chairman
Director
Director
Supervisor
President
Director
Leading
Images Limited
(Representative: Ching-Hsiung Lu)
Arcadyan Technology Corp.
(Representative: Fong-Yu, Lu) )
Arcadyan Technology Corp.
(Representative: Shih-Wei Huang)
Chao-Peng Tseng
Arcadyan Technology Corp.
(Representative: Chao-Peng Tseng)
Arcadyan Technology Corp.
(Representative: Fong-Yu, Lu) )
Arcadyan Technology Corp.
(Representative: Chien-Lin Chen)
Arcadyan Technology Corp.
(Representative: Nien-Che, Hsiung)
Arcadyan Technology Corp.
(Representative: Li-Wei Dang)
Shang Chi Investment Co., Ltd.
(Representative: Chia-Tien Lin )
Chunghwa Investment Holding Company
(Representative: Tian-Tsair Su )
Shih-Wei Huang
Chi Sheng Investment Co., Ltd.
(Representative: Chang-Chuan Lin)
Shih-Wei Huang
Li-Wei Dang
Tatung Technology Inc.
(Representative: Li-Wei Dang)
Tatung Technology Inc.
(Representative: Chao-Peng Tseng)
Tatung Technology Inc.
(Representative: Chao-Peng Tseng)
Tatung Technology Inc.
(Representative: Li-Wei Dang)
Quest International Group Co., Ltd.
(Representative: Chao-Peng Tseng)
Quest International Group Co., Ltd.
(Representative: Li-Wei Dang)
Exquisite Electronic Co., Ltd.
(Representative: Fong-Yu, Lu) )
Exquisite Electronic Co., Ltd.
(Representative: Chao-Peng Tseng)
Exquisite Electronic Co., Ltd.
(Representative: Li-Wei Dang)
Exquisite Electronic Co., Ltd.
(Representative: Shih-Wei Huang)
Li-Wei Dang
Arcadyan Technology Corp.
(Representative: Chao-Peng Tseng)
Arcadyan Technology Corp.
(Representative: Fong-Yu, Lu) )
AcBel Polytech Inc.
(Representative: Ching-Shang Kao)
Shih-Wei Huang
Fong-Yu, Lu
Acbel Telecom Inc.
(Representative: Chao-Peng Tseng)
173
34,980,000
100.00%
34,980,000
100.00%
0
25,027,910
0.00%
60.86%
25,027,910
60.86%
25,027,910
60.86%
25,027,910
60.86%
25,027,910
60.86%
1,027,056
2.51%
4,570,830
11.15%
0
2,727,272
0
1,062,935
0
0
0.00%
6.65%
0.00%
2.59%
100.00%
100.00%
1,200,000
100.00%
1,200,000
100.00%
1,170,000
100.00%
1,170,000
100.00%
NT$99,696
100.00%
NT$99,696
100.00%
NT$99,696
100.00%
NT$99,696
100.00%
0
4,494,111
0.00%
51.08%
4,494,111
51.08%
4,292,216
0
0
48.78%
0.00%
0.00%
50,000
100.00%
Company name
Title
Name or name of representative
Shares held
Shares (Note)
Shareholding
percentage
Director
Director
Director
Director
Director
Managers
Managers
Great Arch
Group Ltd.
Astoria
Networks
GmbH
Compal Broadband
Networks Inc.
Chairman
Director
Director
Director
Acbel Telecom Inc.
(Representative: Ching-Hsiung Lu)
Acbel Telecom Inc.
(Representative: Chung-Pao, Liu)
Acbel Telecom Inc.
(Representative: Chao-Peng Tseng)
Acbel Telecom Inc.
(Representative: Ching-Hsiung Lu)
Acbel Telecom Inc.
(Representative: Chung-Pao, Liu)
Leading Images Limited
(Representative: Tsai-Yen Chuang)
Leading Images Limited
(Representative: Yu-Yu Wang)
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Realsun Investment Co., Ltd
(Representative: Tsai , Jon-Jinn )
Compal Electronics Inc.
(Representative: Yu- Ho Wang)
Independent Director Wong, Jen-Zen
Independent Director Mao, Yin-Wen
Independent Director Chen, Miao- Ling
President
Director
Speedlink Tradings
Limited
Compal Broadband
Networks Belgium
BVBA
Zhaopal
Investment Co., Ltd.
YongPal
Investment Co., Ltd.
KaiPal
Investment Co., Ltd.
Henghao
Technology
Co.,Ltd..
HengHao Holdings
A Co., Ltd.
HengHao Holdings
B Co., Ltd.
Director
Director
Supervisor
Supervisor
Supervisor
Chairman
Vice Chairman
and President
Director
Director
Supervisor
Director
Director
Director
Director
Yu- Ho Wang
Compal Broadband Networks Inc.
(Representative: Chung-Pin Wong )
Compal Broadband Networks Inc.
(Representative: Yu- Ho Wang)
Compal Broadband Networks Inc.
(Representative: Yu- Ho Wang)
Compal Electronics Inc.
(Representative: Chang Chi Ko)
Compal Electronics Inc.
(Representative: Chang Chi Ko)
Compal Electronics Inc.
(Representative: Chang Chi Ko)
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Chen-Chang Hsu)
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Sheng-Hua Peng)
Chyou-Jui Wei
Henghao Technology Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
Henghao Technology Co., Ltd.
(Representative: Chung-Pin Wong)
HengHao Holdings A Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
HengHao Holdings A Co., Ltd.
(Representative: Chung-Pin Wong)
174
50,000
50,000
50,000
50,000
50,000
25,000
25,000
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
29,060,176
43.48%
29,060,176
43.48%
3,575,000
5.35%
29,060,176
43.48%
0
0
0
1,086,810
50,000
50,000
0.00%
0.00%
0.00%
0.02%
100.00%
100.00%
20,300
100.00%
135,800,000
100.00%
118,850,000
100.00%
51,050,000
100.00%
63,814,952
100.00%
63,814,952
100.00%
63,814,952
100.00%
63,814,952
0
46,882,022
46,882,022
46,882,022
46,882,022
100.00%
0.00%
100.00%
100.00%
100.00%
100.00%
Company name
Title
Name or name of representative
HengHao
Optoelectronics
Technology
(Kunshan) CO., LTD
HengHao Trading
Co., Ltd.
Lucom Display
Technology
(Kunshan) Ltd.
Mactech Inc.
Rayonnant
Technology Co., Ltd.
Compal Rayonnant
Holdings Ltd.
Allied Power
Holding Corp.
Primetek
Enterprises Ltd.
Chairman
Director
Director
Supervisor
President
Director
Director
Chairman
Director
Director
Supervisor
President
Chairman
Director
Director
Director
Director
Director
Director
Supervisor
Chairman
Director and
President
Director
Supervisor
Director
Director
Director
Director
Director
Director
Rayonnant
Director
HengHao Holdings B Co., Ltd.
(Representative: Chen-Chang Hsu)
HengHao Holdings B Co., Ltd.
(Representative: Chia-Tien Liu
HengHao Holdings B Co., Ltd.
(Representative: Jui-Hsiang Yang )
HengHao Holdings B Co., Ltd.
(Representative: Cheng-Chiang Wang)
Chen-Chang Hsu
HengHao Holdings B Co., Ltd.
(Representative: Sheng-Hsiung Hsu )
HengHao Holdings B Co., Ltd.
(Representative: Chung-Pin Wong)
HengHao Holdings B Co., Ltd.
(Representative: Chen-Chang Hsu)
HengHao Holdings B Co., Ltd.
(Representative: Chia-Tien Liu )
HengHao Holdings B Co., Ltd.
(Representative: Jui-Hsiang Yang )
HengHao Holdings B Co., Ltd.
(Representative: Hsiu-Chuan Hsu )
Chen-Chang Hsu
Compal Electronics Inc.
(Representative: Yung-Ching Chang)
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Chen-Chang Hsu)
Compal Electronics Inc.
(Representative: Ming-Chih Chang)
Wen-Pin Kuo
Chuan-Kuei Lin
Chyou-Jui Wei
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Pao-Jui Cheng)
Compal Electronics Inc.
(Representative: Hsi-Kuan Chen)
Compal Electronics Inc.
(Representative: Chyou-Jui Wei)
Compal Electronics Inc.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Rayonnant Holdings Ltd.
(Representative: Chung-Pin Wong)
Rayonnant Technology Co., Ltd.
(Representative: Pao-Jui Cheng)
Allied Power Holding Corp.
(Representative: Chung-Pin Wong)
Allied Power Holding Corp.
(Representative: Pao-Jui Cheng)
Allied Power Holding Corp.
175
Shares held
Shares (Note)
Shareholding
percentage
NT$1,228,600
100.00%
NT$1,228,600
100.00%
NT$1,228,600
NT$1,228,600
0
10,000
10,000
NT$460,725
NT$460,725
NT$460,725
NT$460,725
0
21,756,192
100.00%
100.00%
0.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
0.00%
52.88%
21,756,192
52.88%
21,756,192
52.88%
21,756,192
52.88%
21,756,192
52.88%
1,301,505
1,609,172
0
3.16%
3.91%
0.00%
29,500,000
100.00%
29,500,000
100.00%
29,500,000
100.00%
29,500,000
100.00%
12,500,000
100.00%
12,500,000
100.00%
12,500,000
59.10%
8,651,000
40.90%
3,151,000
100.00%
3,151,000
18,000,000
100.00%
100.00%
Company name
Title
Name or name of representative
Shares held
Shares (Note)
Shareholding
percentage
Technology
Holdings (HK) Co.,
Ltd.
Rayonnant
Precision
Technology
(Taicang) Co., Ltd.
Bizcom Electronics,
Inc.
Compal Europe
(Poland) Sp. z o.o.
Director
Chairman
Director
Director
Supervisor
President
Director
Director
Director
Director
Director
Director
Auscom
Engineering Inc.
Chairman
Director and
President
Director
Director
Director
Flight Global
Holding Inc.
RiPAL Optotronics
Co., Ltd.
Chairman
Director
Director
Supervisor
Director
Director
Director
Chairman
Director
Compal Electronics
(Holding) Ltd.
Etrade
Management Co.,
Ltd.
Compal
Communications
(Nanjing) Co., Ltd.
(Representative: Chyou-Jui Wei)
Allied Power Holding Corp.
(Representative: Pao-Jui Cheng)
Rayonnant Technology Holdings (HK) Co.,
Ltd.
(Representative: Pao-Jui Cheng)
Rayonnant Technology Holdings (HK) Co.,
Ltd
(Representative: Shyh-An Lee).
Rayonnant Technology Holdings (HK) Co.,
Ltd.
(Representative: Hsi-Kuan Chen)
Rayonnant Technology Holdings (HK) Co.,
Ltd.
(Representative: Chyou-Jui Wei)
Pao-Jui Cheng
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Sheng-Hua Peng)
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Duan Wang)
Compal Electronics Inc.
(Representative: Duan Wang)
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Min-Tung Wong)
Compal Electronics Inc.
(Representative: Chun-Te Shen)
Compal Electronics Inc.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Sheng-Hua Peng)
Compal Electronics Inc.
(Representative: Chyou-Jui Wei)
Compal Electronics Inc.
(Representative: Sheng-Hsiung Hsu )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Etrade Management Co., Ltd.
(Representative: Sheng-Hua Peng)
Etrade Management Co., Ltd.
(Representative: Ching-Hsiung Lu)
176
18,000,000
100.00%
NT$552,870
100.00%
NT$552,870
100.00%
NT$552,870
100.00%
NT$552,870
100.00%
0
100,000
0.00%
100.00%
100,000
100.00%
100,000
100.00%
100,000
100.00%
136,080
100.00%
136,080
100.00%
3,000,000
100.00%
3,000,000
100.00%
3,000,000
100.00%
89,755,495
100.00%
89,755,495
100.00%
6,000,000
100.00%
6,000,000
100.00%
6,000,000
100.00%
6,000,000
100.00%
1,000
1,000
100.00%
100.00%
46,900,000
65.23%
NT$675,730
100.00%
NT$675,730
100.00%
Company name
Title
Name or name of representative
Compal Digital
Communications
(Nanjing) Co., Ltd.
Compal Wireless
Communications
(Nanjing) Co., Ltd.
Webtek Technology
Co., Ltd
Forever Young
Technology Inc.
HANHELT
Communications
(Nanjing) Co., Ltd.
Director
Supervisor
President
Chairman
Director
Director
Supervisor
President
Chairman
Director
Director
Supervisor
President
Director
Director
Chairman
Director
Director
Supervisor
Unicom Global. Inc. Chairman
Director
Director
Supervisor
Chairman
Director
Director
Supervisor
Director
Director
Palcom
International
Corporation
Compalead
Electronics B.V.
General Life
Chairman
Etrade Management Co., Ltd.
(Representative: Hsin-Hsiung Huang)
Etrade Management Co., Ltd.
(Representative: Guo-Dung Yu)
Sheng-Hua Peng
Etrade Management Co., Ltd.
(Representative: Sheng-Hua Peng)
Etrade Management Co., Ltd.
(Representative: Ching-Hsiung Lu)
Etrade Management Co., Ltd.
(Representative: Hsin-Hsiung Huang)
Etrade Management Co., Ltd.
(Representative: Guo-Dung Yu)
Sheng-Hua Peng
Etrade Management Co., Ltd.
(Representative: Sheng-Hua Peng)
Etrade Management Co., Ltd.
(Representative: Ching-Hsiung Lu)
Etrade Management Co., Ltd.
(Representative: Hsin-Hsiung Huang)
Etrade Management Co., Ltd.
(Representative: Guo-Dung Yu)
Sheng-Hua Peng
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative:Jui-Tsung Chen )
Forever Young Technology Inc.
(Representative: Sheng-Hua Peng)
Forever Young Technology Inc.
(Representative: Chung-Shing Tan)
Forever Young Technology Inc.
(Representative: Wen-Ta Hsu)
Forever Young Technology Inc.
(Representative: Chiao-Lie Huang)
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Po-Hsiung Chang)
Compal Electronics Inc.
(Representative: Chyou-Jui Wei)
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Sheng-Hua Peng)
Compal Electronics Inc.
(Representative: Cheng-Chiang Wang)
Compal Electronics Inc.
(Representative: Guo-Dung Yu)
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Hsin-Kung Mao)
Compal Electronics Inc.
177
Shares held
Shares (Note)
Shareholding
percentage
NT$675,730
100.00%
NT$675,730
100.00%
0
0.00%
NT$178,147
100.00%
NT$178,147
100.00%
NT$178,147
100.00%
NT$178,147
100.00%
0
0.00%
NT$1,505,035
100.00%
NT$1,505,035
100.00%
NT$1,505,035
100.00%
NT$1,505,035
100.00%
0
100,000
0.00%
100.00%
50,000
100.00%
NT$61,430
100.00%
NT$61,430
100.00%
NT$61,430
100.00%
NT$61,430
100.00%
10,000,000
100.00%
10,000,000
100.00%
10,000,000
100.00%
10,000,000
100.00%
10,000,000
100.00%
10,000,000
100.00%
10,000,000
100.00%
10,000,000
100.00%
6,426,516
100.00%
6,426,516
15,000,000
100.00%
50.00%
Company name
Title
Name or name of representative
Biotechnology Co.,
Ltd.
Rapha Bio Ltd.
Director
Director
Director
Director
Supervisor
Supervisor
Chairman
Director
Director
Supervisor
Giant Rank Trading
Limited
UniCore Biomedical
Co., Ltd.
Director
Chairman
Director
Director
Director
Director
Supervisor
Chairman
Director
Director
Supervisor
Director
Director
Director
Raycore Biotech
Co., Ltd.
Shennona
Corporation
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Sheng-Hua Peng)
Alltek Technology Corp.
(Representative: Yu-Wen Wu)
WK Technology Fund IV
China Development Industrial Bank
Chyou-Jui Wei
General Life Biotechnology Co., Ltd.
(Representative: Chyou-Jui Wei)
General Life Biotechnology Co., Ltd.
(Representative: Cheng-Ta Chen)
General Life Biotechnology Co., Ltd.
(Representative: Tung-Pang Lin)
General Life Biotechnology Co., Ltd.
(Representative: Kuo-Hsiung Chung)
Forever Young Technology Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Jui-Tsung Chen )
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Sheng-Hua Peng)
Compal Electronics Inc.
(Representative: Tzu-Chen Yen)
Compal Electronics Inc.
(Representative: Chyou-Jui Wei)
Compal Electronics Inc.
(Representative: Shu-Fen Ning)
UniCore Biomedical Co., Ltd.
(Representative:Jui-Tsung Chen )
Raypal Biomedical Co., Ltd.
(Representative: Yen-Liang Lin)
UniCore Biomedical Co., Ltd.
(Representative: Chyou-Jui Wei)
Shu-Fen Ning
Compal Electronics Inc.
(Representative: Chung-Pin Wong)
Compal Electronics Inc.
(Representative: Wei Chang Chen )
Compal Electronics Inc.
. (Representative: Duan Wang )
Shares held
Shares (Note)
Shareholding
percentage
15,000,000
50.00%
15,000,000
50.00%
6,922,940
604,800
2,520,000
0
1,275,000
1,275,000
1,275,000
1,275,000
-
23.08%
2.02%
8.40%
0.00%
100.00%
100.00%
100.00%
100.00%
100.00%
20,000,000
100.00%
20,000,000
100.00%
20,000,000
100.00%
20,000,000
100.00%
20,000,000
100.00%
20,000,000
100.00%
1,275,000
51.00%
1,225,000
49.00%
1,275,000
0
51.00%
0.00%
2,500,000
100.00%
2,500,000
100.00%
2,500,000
100.00%
Note: Limited liability companies are shown in terms of amount and percentage of capital contribution. (Exchange
rates for amount of capital contribution: USD 1:TWD 30.7150, CNY 1:TWD 4.4727, and VND 1:TWD 0.001327.)
178
1. Overview of Operating Status for Affiliated Companies in 2018
Company Name
Capital
Net asset value Total liabilities
Net worth
Operating
Operating
Net loss/profit for the
EPS (in NTD)
revenue
income
period (after tax)
(After tax)
Unit: NTD thousand
Compal Electronics, Inc.
44,071,466
355,812,813
250,089,167
105,723,646
911,050,122
6,936,706
8,913,365
Compal International Holding Co.,
Ltd. and its subsidiaries
Just International Ltd.
and its subsidiaries
Big Chance International Co., Ltd.
and its subsidiaries
1,787,680
71,918,065
36,991,088
34,926,977
66,670,945
1,290,185
1,081,596
1,480,509
45,636,624
37,654,484
7,982,140
101,961,957
(130,716)
85,523
2,636,051
26,694,558
20,656,573
6,037,985
32,200,292
282,088
261,806
Core Profit Holdings Ltd.
4,318,860
7,655,360
29,953
7,625,407
1,346,815
1,333,821
571,587
762,234
-
-
-
2,604,284
(54,394)
(35,898)
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.
Shennona Corporation
Arcadyan Technology Corp.
and its subsidiaries
Compal Broadband Networks Inc.
and its subsidiaries
Zhaopal Investment Co., Ltd.
Yongpal Investment Co., Ltd.
Kaipal Investment Co., Ltd.
5,000,000
10,325,638
4,882,374
5,443,264
11,161,150
400,323
900,000
1,000,000
295,000
1,901,645
1,068,129
328,921
32,369
38,204
200,000
29,558
193,550
5,484
140
306
69
870
7,470
47
1,901,505
1,067,823
328,852
37,334
186,080
5,437
-
-
-
-
(268)
(207)
(196)
(90)
8,157
-
(25,019)
(24,825)
48,531
88,488
46,621
20,358
141
(21,757)
(24,820)
1936,190
21,253,482
11,779,684
9,473,798
26,621,262
971,443
871,519
668,184
3,149,993
1,335,321
1,814,672
5,316,086
205,010
184,370
1,358,000
1,188,500
510,500
6,226
5,543
3,271
35
35
161
6,191
5,508
3,110
179
-
-
-
(186)
(186)
(186)
(182)
(184)
(185)
2.05
20.41
1.78
2.88
17.72
(0.84)
0.10
0.98
0.47
0.69
0.04
1.09
(9.93)
4.56
3.02
-
-
-
Company Name
Capital
Net asset value Total liabilities
Net worth
Operating
Operating
Net loss/profit for the
EPS (in NTD)
revenue
income
period (after tax)
(After tax)
638,150
5,415,869
5,534,350
(118,481)
6,304,664
(630,251)
(737,747)
(11.56)
Henghao Technology Co., Ltd.
and its subsidiaries
Mactech Co., Ltd.
Ripal Optotronics CO, LTD. 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.
General life Biotechnology Co., Ltd.
300,000
416,793
115,703
301,090
463,560
39,719
411,458
688,857
156,470
532,387
457,680
35,199
60,000
63,954
12,157
51,797
53,910
20,653
76,500
20,946
46,429
295,000
80,342
38,569
41,773
-
(26,579)
(51,684)
377,328
1,135,412
1,028,111
107,301
1,186,367
(185,700)
(72,346)
Flight Global Holding Inc.
2,754,741
4,628,097
Compalead Electronics B.V.
197,463
830,400
3,031
90,156
101,747
588,323
174,642
181,573
147,571
159,054
55,662
82,743
3,073
440,752
15,588
125,911
4,545,354
827,327
347,493
516,817
154,091
-
-
9,031
(10,067)
10,080
(119)
(1,036)
8,082
(16,749)
4,757
275,557
284,489
2,295,154
7,958,432
8,308,861
(350,429)
40,051,475
(112,211)
(432,820)
4,333,892
3,518,267
815,625
107,753,114
(16,083)
21,331,927
19,873,863
1,458,063
77,563,590
(5,905)
(0)
31
Etrade Management Co., Ltd and
its subsidiaries
Webtek Technology Co., Ltd
Forever Young Technology Inc. and
its subsidiaries
Unicom Global Inc.,
Palcom International Corporation
3,340
1,575
100,000
100,000
499,761
166,977
876,024
50,498
Compal Electronics (Holding) Ltd.
34
3,617,816
-
2. Common shareholders in controlling and controlled companies: None
(376,263)
116,479
3,617,816
547,767
192,369
-
(138,004)
(139,243)
9,981
-
9,242
-
180
1.86
3.5
1.55
(1.75)
(1.92)
80.82
(-123.08)
1.56
3.07
14.41
(3.96)
-
0.62
(13.92)
0.92
-
8.1.2
Consolidated financial statements of affiliated enterprises
Representation Letter
The entities that are required to be included in the combined financial statements of COMPAL ELECTRONICS, INC. as
of and for the year ended December 31, 2018 under the Criteria Governing the Preparation of Affiliation Reports,
Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as
those included in the consolidated financial statements prepared in conformity with International Financial
Reporting Standards No. 10 endorsed by the Financial Supervisory Commission, "Consolidated and Separate
Financial Statements." In addition, the information required to be disclosed in the combined financial statements is
included in the consolidated financial statements. Consequently, COMPAL ELECTRONICS, INC. and its subsidiaries do
not prepare a separate set of combined financial statements.
Company name: COMPAL ELECTRONICS, INC.
Chairman: Sheng-Hsiung Hsu (Rock Hsu)
Date: March 22, 2019
8.1.3
Affiliation reports: None
181
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:
Unit: NT$ thousands; Shares; %
Name of
Share Capital
Funding
of Shares
Subsidiary
Acquired
Source
Held by the
Percentage
Company
Date of
Shares and
Shares and
Acquisition or
Amount
Amount
Disposition
Acquired
Disposed
Investment
Gain (Loss)
Shareholdings and
Amount as of March
Collateralized
31, 2019
Amount of
Amount
Endorsements
Loaned to
Made for the
the
Subsidiary
Subsidiary
Panpal
Technology
NTD 5,000,000,000
Corporation
Gempal
Technology
NTD 900,000,000
Co., Ltd.
Proprietary
capital
100%
Proprietary
capital
100%
-
-
-
-
-
-
-
-
31,648,082 shares
NTD 559,812,000
N/A
18,369,349 shares
NTD 321,435,000
N/A
-
-
-
-
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
publication date of this annual report, hence there were no impacts.
8.4
Other supplementary notes, where applicable: None
8.5
Any Events in 2018 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
182
Compal Electronics, Inc.
Chairman: Sheng-Hsiung Hsu (Rock Hsu)
Chief Executive Officer (CEO): Chung-Pin Wong (Martin Wong)
Attachment I
Stock Code:2324
COMPAL ELECTRONICS, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
With Independent Auditors’’’’ Report
For the Years Ended December 31, 2018 and 2017
Address:
Telephone: (02)8797-8588
No.581 & 581-1, Ruiguang Rd., Neihu District, Taipei, Taiwan
Table of contents
Contents
1. Cover Page
2. Table of Contents
3. Representation Letter
4. Independent Auditors’ Report
5. Consolidated Balance Sheets
6. Consolidated Statements of Comprehensive Income
7. Consolidated Statements of Changes in Equity
8. Consolidated Statements of Cash Flows
9. Notes to the Consolidated Financial Statements
(1) Company history
(2) Approval date and procedures of the consolidated financial statements
(3) New standards, amendments and interpretations adopted
(4) Summary of significant accounting policies
(5) Significant accounting assumptions and judgments, and major sources of
estimation uncertainty
(6) Explanation of significant accounts
(7) Related-party transactions
(8) Pledged assets
(9) Commitments and contingencies
(10) Losses due to major disasters
(11) Subsequent events
(12) Other
(13) Other disclosures
(a) Information on significant transactions
(b) Information on investees
(c) Information on investment in Mainland China
(14) Segment information
2
Page
1
2
3
4
5
6
7
8
9
9
9～19
19～50
50～51
51～104
105～107
107
108
108
108
108
109～121
121～125
126～129
129～131
3
Representation Letter
The entities that are required to be included in the combined financial statements of COMPAL ELECTRONICS,
INC. as of and for the year ended December 31, 2018 under the Criteria Governing the Preparation of Affiliation
Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the
same as those included in the consolidated financial statements prepared in conformity with International
Financial Reporting Standards No. 10 endorsed by the Financial Supervisory Commission, "Consolidated and
Separate Financial Statements." In addition, the information required to be disclosed in the combined financial
statements is included in the consolidated financial statements. Consequently, COMPAL ELECTRONICS, INC.
and subsidiaries do not prepare a separate set of combined financial statements.
Company name: COMPAL ELECTRONICS, INC.
Chairman: Sheng-Hsiung Hsu (Rock Hsu)
Date: March 22, 2019
4
Independent Auditors’’’’ 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 balance sheets as of December 31, 2018 and 2017, and the
consolidated statement of comprehensive income, changes in equity and cash flows for the years ended
December 31, 2018 and 2017, 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, 2018 and 2017, and its consolidated financial
performance and its consolidated cash flows for the years then ended December 31, 2018 and 2017, 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”),
Accounting Standards ( “ IASs ” ), Interpretations developed by the International Financial Reporting
Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed
and issued into effect 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 we have fulfilled our other ethical responsibilities in accordance with the Code. 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)(i) 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 reviewing if the measurement of impairment loss of accounts receivable is accordance with
accounting policy, examining the historical recovery records, analyzing the aging of accounts receivable, 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)(j) 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 prior year and 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 its parent-company-only financial statements as of and for the years ended
December 31, 2018 and 2017, 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 with
the IFRSs, IASs, IFRC, SIC, endorsed and issued into effect 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 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.
4-3
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 auditors’ report are Szu-Chuan Chien and
Yiu-Kwan Au.
KPMG
Taipei, Taiwan (Republic of China)
March 22, 2019
The accompanying consolidated financial statements are intended only to present the consolidated statements 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 SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars)
Assets
Current assets:
Cash and cash equivalents (note (6)(a))
Current financial assets at fair value through profit or loss (note (6)(b))
Current available-for-sale financial assets (note (6)(e))
Current financial assets at amortized cost (note (6)(g))
Current bond investments without active market (note (6)(h))
Notes and accounts receivable, net (note (6)(i))
Notes and accounts receivable due from related parties, net (notes (6)(i) and 7)
Other receivables, net (notes (6)(i) and 7)
Inventories (note (6)(j))
Other current assets (note 8)
Non-current assets:
Investments accounted for using equity method (note (6)(k))
Non-current financial assets at fair value through profit or loss (note (6)(b))
Non-current financial assets at fair value through other comprehensive income (note (6)(c))
Non-current available-for-sale financial assets (note (6)(e))
Non-current financial assets at cost (note (6)(f))
Non-current bond investments without active market (note (6)(h))
Property, plant and equipment (notes (6)(n) and 8)
Intangible assets
Deferred tax assets (note (6)(u))
Long-term prepaid rents (note (6)(s))
Other non-current assets (note 8)
1100
1110
1125
1136
1147
1170
1180
1200
1310
1470
1550
1510
1517
1523
1543
1546
1600
1780
1840
1985
1990
December 31, 2018
December 31, 2017
Amount
%
Amount
%
$
70,296,545 17.6
70,062,713 19.3
-
-
4,611,134
1.1
-
350,000
0.1
-
40,706
46,479
-
-
-
-
350,000
0.1
203,715,965 51.0
177,272,731 48.8
58,106
-
113,994
-
1,665,249
0.4
988,008
0.3
79,148,922 19.8
69,512,712 19.1
2,899,329
0.7
3,395,311
0.9
362,745,250 90.7
321,782,654 88.5
7,364,485
1.9
11,807,622
3.2
69,390
-
5,172,295
1.3
-
-
-
-
-
-
-
20,418,228
1,516,253
1,023,948
891,147
593,827
37,049,573
-
-
-
5.1
0.4
0.3
0.2
0.1
9.3
7,646,667
2.1
53,982
-
350,000
18,179,367
1,284,660
1,351,371
571,133
328,965
0.1
5.0
0.4
0.4
0.2
0.1
41,573,767 11.5
Liabilities and Equity
Current liabilities:
Short-term borrowings (note (6)(o))
Current financial liabilities at fair value through profit or loss (note (6)(b))
Current contract liabilities (note (6)(y))
Notes and accounts payable
Notes and accounts payable to related parties (note 7)
Other payables (note 7)
Current tax liabilities
Current provisions (note (6)(q))
Other current liabilities
Unearned revenue
Current refund liabilities (note (6)(r))
Long-term borrowings, current portion (note (6)(p))
Non-Current liabilities:
Long-term borrowings (note (6)(p))
Deferred tax liabilities (note (6)(u))
Non-current net defined benefit liability (note (6)(t))
Non-current liabilities, others
Total liabilities
Equity:
Equity attributable to owners of parent:
Ordinary share (note (6)(v))
Capital surplus (note (6)(v))
Retained earnings (note (6)(v))
Other equity interest (note (6)(v))
Treasury shares (note (6)(v))
2100
2120
2130
2170
2180
2200
2230
2250
2300
2313
2365
2322
2540
2570
2640
2670
3110
3200
3300
3400
3500
36XX
Non-controlling interests
Total equity
5
December 31, 2018
December 31, 2017
Amount
%
Amount
%
$
72,350,197 18.1
56,515,525 15.6
26,913
-
24,463
1,476,304
0.4
-
-
-
152,300,093 38.1
140,381,168 38.6
1,976,620
19,558,007
3,722,191
426,981
3,255,135
-
1,579,832
17,535,625
0.5
4.9
0.9
0.1
0.8
-
0.4
4.4
1,636,656
16,318,597
4,362,395
1,827,439
3,071,238
1,617,626
-
0.5
4.5
1.2
0.5
0.8
0.4
-
6,200,625
1.7
274,207,898 68.6
231,955,732 63.8
10,998,438
478,169
710,146
238,324
12,425,077
2.7
0.1
0.2
0.1
3.1
21,252,263
614,437
705,810
5.8
0.2
0.2
180,207
-
22,752,717
6.2
286,632,975 71.7
254,708,449 70.0
44,071,466 11.0
44,191,916 12.2
9,932,434
2.5
10,938,773
3.0
60,060,381 15.0
56,557,146 15.6
(7,459,388) (1.8)
(8,911,004) (2.5)
(881,247) (0.2)
(881,247) (0.2)
105,723,646 26.5
101,895,584 28.1
7,438,202
1.8
6,752,388
1.9
113,161,848 28.3
108,647,972 30.0
Total assets
$
399,794,823
100.0
363,356,421
100.0
Total liabilities and equity
$
399,794,823
100.0
363,356,421
100.0
See accompanying notes to consolidated financial statements.
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Share)
6
Net sales revenue (notes (6)(y), (6)(z) and 7)
Cost of sales (notes (6)(t), 7 and 12)
Gross profit
Operating expenses: (notes (6)(s), (6)(t) and 12)
Selling expenses
Administrative expenses
Research and development expenses
Net operating income
Non-operating income and expenses:
Other gains and losses, net (notes (6)(d), (6)(k) and (6)(ab))
Finance costs
Other income (notes (6)(s) and (6)(ab))
Miscellaneous disbursements
Impairment loss (note (6)(f))
Share of profit of associates and joint ventures accounted for using equity method (note (6)(k))
Total non-operating income and expenses
Profit before tax
Less: Tax expense (note (6)(u))
Profit
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
%
2017
2018
Amount
$ 967,706,411 100.0 887,656,959 100.0
937,139,320 96.8 855,692,390 96.4
3.6
Amount %
31,964,569
30,567,091
3.2
4,319,991
4,204,419
12,780,935
21,305,345
9,261,746
0.4
0.4
1.4
2.2
1.0
7,167,461
4,050,028
11,538,651
22,756,140
9,208,429
2,256,958
(2,636,443)
2,132,864
(22,908)
-
797,368
2,527,839
11,789,585
2,200,284
9,589,301
0.2
(0.3)
0.2
-
-
0.1
0.2
1.2
0.2
1.0
(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
0.8
0.5
1.3
2.6
1.0
(0.2)
(0.1)
0.2
-
-
-
(0.1)
0.9
0.2
0.7
-
-
-
-
-
Other comprehensive income, before tax, remeasurement of defined benefit obligation
Other comprehensive income, before tax, equity instruments at fair value through other comprehensive income
Share of other comprehensive income (loss) of associates and joint ventures accounted for using equity method,
components of other comprehensive income that will not be reclassified to profit or loss
Income tax related to components of other comprehensive income that will not be reclassified to profit or loss (note (6)(u))
Components of other comprehensive income that will not be reclassified to profit or loss
(16,260)
-
(1,188,635) (0.1)
(84,394)
-
(124,949)
75,832
(1,254,012) (0.1)
-
-
(561)
14,348
(70,607)
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
Gains (losses) on hedging instrument
Share of other comprehensive income (loss) of associates and joint ventures accounted for using equity method,
components of other comprehensive income that will be reclassified to profit or loss
Income tax relating to components of other comprehensive income that will be reclassified to profit or loss (note (6)(u))
Components of other comprehensive income (loss) that will be reclassified to profit or loss
Other comprehensive income (loss), net
Total comprehensive income
Profit, attributable to:
Profit, attributable to owners of parent
Profit, attributable to non-controlling interests
Comprehensive income attributable to:
Comprehensive income (loss), attributable to owners of parent
Comprehensive income (loss), attributable to non-controlling interests
Earnings per share (note 6(x))
Basic earnings per share
Diluted earnings per share
1,807,381
-
-
-
(162,189)
(3,293)
1,641,899
387,887
9,977,188
8,913,365
675,936
9,589,301
9,278,187
699,001
9,977,188
0.1
-
-
-
-
-
0.1
-
1.0
0.9
0.1
1.0
1.0
0.1
1.1
2.05
2.02
(4,808,866) (0.5)
326,490
-
-
(30,076)
(21,353)
-
-
-
-
-
(4,533,805) (0.5)
(4,604,412) (0.5)
0.2
1,553,625
5,749,525
408,512
6,158,037
1,189,818
363,807
1,553,625
0.7
-
0.7
0.1
-
0.1
1.32
1.31
$
$
$
$
$
4000
5000
6100
6200
6300
7020
7050
7190
7590
7670
7770
7900
7950
8300
8310
8311
8316
8320
8349
8360
8361
8362
8363
8368
8370
8399
8300
8500
8610
8620
8710
8720
9750
9850
See accompanying notes to consolidated financial statements.
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the years ended December 31, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars)
Equity attributable to owners of parent
Retained earnings
Total other equity interest
Capital
surplus
11,779,274
Legal
reserve
17,439,772
Special
reserve
Unappropriated
retained
earnings
Unrealized
gains
(losses) on
financial
assets
measured at
fair value
through other
comprehensiv
e income
-
-
-
-
Exchange
differences on
translation of
foreign
financial
statements
1,324,282
-
(4,801,658)
(4,801,658)
Total
retained
earnings
55,289,409
5,749,525
(68,107)
5,681,418
Unrealized
gains
(losses) on
available-for-
sale financial
assets
(5,663,830)
-
310,058
310,058
Unearned
employee
benefit and
others
Total other
equity
interest
Treasury
shares
Total
equity
attributable
to owners of
parent
(285,105)
-
-
-
(4,624,653)
-
(4,491,600)
(4,491,600)
(881,247) 105,804,389
5,749,525
(4,559,707)
1,189,818
-
-
-
7
Non-control
ling
interests Total equity
6,479,426 112,283,815
6,158,037
(4,604,412)
1,553,625
408,512
(44,705)
363,807
Balance at January 1, 2017
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 of ordinary share
Cash dividends from capital surplus
Difference between consideration and carrying
amount arising from acquisition or disposal
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
Changes in non-controlling interests
Balance at December 31, 2017
Effects of retrospective application
Adjusted balance at January 1, 2018
Profit for the year ended December 31, 2018
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve appropriated
Special reserve appropriated
Cash dividends of ordinary share
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
Disposal of investments in equity instruments
Ordinary
shares
$ 44,241,606
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(884,431)
33,016
142
-
(49,690)
14,217
(63,472)
-
-
60,027
-
-
-
-
-
-
-
-
-
-
(120,450)
-
-
-
-
-
-
(881,429)
(32,706)
(459)
(151,766)
-
60,021
measured at fair value through other
comprehensive income
Changes in non-controlling interests
Balance at December 31, 2018
-
-
$ 44,071,466
-
-
See accompanying notes to consolidated financial statements.
-
-
-
813,089
-
-
-
-
-
-
-
-
-
3,199,674
-
-
-
-
1,139,875
-
-
-
-
-
-
-
-
-
-
-
574,953
-
-
-
-
-
-
-
-
-
-
-
-
-
4,491,599
-
-
-
-
-
-
-
-
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
494,051
34,458,787
8,913,365
14,094
8,927,459
(574,953)
(4,491,599)
(4,407,147)
-
(521,643)
-
-
(4,422,153)
-
(2,179)
(424)
(194)
11,269
-
-
56,557,146
494,051
57,051,197
8,913,365
14,094
8,927,459
-
-
(4,407,147)
-
(521,643)
(1,156)
36,141
(1,156)
36,141
-
-
(1,024,470)
(1,024,470)
-
-
44,191,916
10,938,773
18,252,861
4,339,549
-
-
-
-
44,191,916
10,938,773
18,252,861
4,339,549
-
-
-
-
-
-
-
-
-
-
(3,477,376)
-
(3,477,376)
-
1,624,424
1,624,424
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,847,823)
(5,847,823)
-
(1,273,696)
(1,273,696)
-
-
-
-
489,483
1,130
-
-
1,024,470
-
-
-
-
-
-
-
-
-
-
-
(5,353,772)
5,353,772
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
205,249
-
-
(79,856)
-
(79,856)
-
-
-
-
-
-
-
-
-
-
-
-
-
79,856
-
-
-
-
-
-
-
205,249
-
-
(8,911,004)
(494,051)
(9,405,055)
-
350,728
350,728
-
-
-
-
489,483
1,130
79,856
-
1,024,470
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,422,153)
(884,431)
-
-
-
-
-
-
(4,422,153)
(884,431)
30,837
(282)
357,314
-
-
-
14,023
103,356
60,027
-
388,151
(282)
14,023
103,356
-
60,027
(448,159)
(448,159)
6,752,388 108,647,972
(881,247) 101,895,584
-
-
-
-
(881,247) 101,895,584
8,913,365
364,822
9,278,187
-
-
-
6,752,388 108,647,972
9,589,301
387,887
9,977,188
675,936
23,065
699,001
-
-
-
-
-
-
-
-
-
-
-
-
(4,407,147)
(881,429)
(64,866)
(485)
(156,219)
60,021
-
-
-
-
-
-
-
-
-
-
-
-
(4,407,147)
(881,429)
(64,866)
(485)
(156,219)
60,021
-
(13,187)
-
(13,187)
7,438,202 113,161,848
9,932,434
18,827,814
8,831,148
32,401,419
60,060,381
(1,852,952)
(5,606,436)
(7,459,388)
(881,247) 105,723,646
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the years ended December 31, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars)
Cash flows from (used in) operating activities:
Profit before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation and amortization
Increase (decrease) in expected credit loss /allowance for uncollectible accounts
Net loss (gain) on financial assets or liabilities at fair value through profit or loss
Finance cost
Interest income
Dividend income
Compensation cost of share-based payments
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
Total adjustments to reconcile profit (loss)
Changes in operating assets and liabilities:
Changes in operating assets:
Decrease (increase) in financial assets at fair value through profit or loss
Decrease (increase) in financial assets mandatorily measured at fair value through profit or loss
Decrease (increase) in notes and accounts receivable
Decrease (increase) in other receivables
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:
Increase (decrease) in financial liabilities designated as at fair value through profit or loss
Increase (decrease) in notes and accounts payable
Increase (decrease) in other payables
Increase (decrease) in refund liabilities
Increase (decrease) in provisions
Increase (decrease) in unearned revenue
Increase (decrease) in contract liabilities
Increase (decrease) in other current liabilities
Others
Total changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash inflow (outflow) generated from 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 financial assets at amortized cost
Acquisition of investments accounted for using equity method and financial assets at fair value through other comprehensive income
Proceeds from disposal of investments accounted for using equity method and financial assets at fair value through other comprehensive
income
Acquisition of financial assets at fair value through profit or loss
Proceeds from disposal of financial assets at fair value through profit or loss
Net cash flow from disposal of subsidiaries
Proceeds from capital reduction of investments
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Increase in long-term prepaid rents
Others
Net cash flows from (used in) investing activities
Cash flows from (used in) financing activities:
Increase in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Cash dividends paid
Acquisition of non-controlling interests
Disposal of ownership interests in subsidiaries
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 consolidated financial statements.
8
2018
2017
$
11,789,585
8,114,277
4,940,672
(17,449)
(117,677)
2,636,443
(1,463,658)
(279,044)
(121,765)
(797,368)
23,228
(2,513,207)
-
13,302
2,303,477
-
(3,936,569)
(26,227,099)
(680,718)
(9,691,835)
551,607
(101,686)
(40,086,300)
2,450
12,258,889
1,434,494
60,526
39,834
-
(189,017)
231,592
50,649
13,889,417
(26,196,883)
(23,893,406)
(12,103,821)
1,403,559
414,120
(2,399,912)
(2,576,795)
(15,262,849)
350,000
(107,877)
7,814,859
(47,937)
574,528
-
15,082
(5,154,447)
48,354
(575,232)
(315,395)
(163,176)
2,438,759
15,834,672
34,267,200
(33,186,025)
(5,228,555)
(1,801)
-
(110,954)
58,117
11,632,654
1,425,268
233,832
70,062,713
70,296,545
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)
350,000
(97,009)
2,265,745
-
-
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
$
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the years ended December 31, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
9
(1) Company history
Compal Electronics, Inc. (the "Company") was incorporated in June 1984 as a company limited by shares
and registered under the Ministry of Economic Affairs, R.O.C. The address of the Company's registered
office is No.581 and No.581-1 Ruiguang Rd., Neihu Dist., Taipei City, Taiwan. In accordance with Article
19 of the Business Mergers and Acquisitions Act, the Company merged its subsidiary, Compal
Communications, Inc. ("CCI") (the "Merger"), pursuant to the resolutions of the Board of Directors in
November, 2013. The Company was the surviving company and CCI was the dissolved company. The
effective date of the Merger was February 27, 2014. The Company and its subsidiaries (together referred to
as the "Group" and individually as the "Group entities") primarily are involved in the manufacture and sale
of notebook personal computers ("notebook PCs"), monitors, LCD TVs, mobile phones and various
components and peripherals.
(2) Approval date and procedures of the consolidated financial statements:
These consolidated financial statements were authorized for issuance by the Board of Directors and issued
on March 22, 2019.
(3) New standards, amendments and interpretations adopted:
(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial
Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.
The following new standards, interpretations and amendments have been endorsed by the FSC and are
effective for annual periods beginning on or after January 1, 2018.
New, Revised or Amended Standards and Interpretations
Amendment to IFRS 2 “Classification and Measurement of Share-based
Payment Transactions”
Amendments to IFRS 4 “Applying IFRS 9 Financial Instruments with IFRS 4
Insurance Contracts”
IFRS 9 “Financial Instruments”
IFRS 15 “Revenue from Contracts with Customers”
Amendment to IAS 7 “Statement of Cash Flows–Disclosure Initiative”
Amendment to IAS 12 “Income Taxes–Recognition of Deferred Tax Assets for
Unrealized Losses”
Amendments to IAS 40 “Transfers of Investment Property”
Effective date
per IASB
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2017
January 1, 2018
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
10
New, Revised or Amended Standards and Interpretations
Annual Improvements to IFRS Standards 2014-2016 Cycle:
Amendments to IFRS 12
Amendments to IFRS 1 and Amendments to IAS 28
IFRIC 22 “Foreign Currency Transactions and Advance Consideration”
Effective date
per IASB
January 1, 2017
January 1, 2018
January 1, 2018
Except for the following items, the Group believes that the adoption of the above IFRSs would not
have any material impact on its consolidated financial statements. The extent and impact of significant
changes are as follows:
(i)
IFRS 15 “Revenue from Contracts with Customers”
IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers,
using a five-step model framework to determine the method, timing and amount of revenue
recognized. This standard replaces existing revenue recognition guidance, including IAS 18,
Revenue, IAS 11, Construction Contracts, and the related interpretations. The Group applies this
standard retrospectively with the cumulative effects, it needs not restate those contracts, but
instead, continues to apply IAS 11, IAS 18 and the related Interpretations for comparative
reporting period. Upon the initial application of this standard, there was no cumulative effect and
no adjustment was made to retained earnings on January 1, 2018.
The following are the nature and impacts on changing of accounting policies:
1)
Sales of goods
For the sale of the Group's products, revenue was used to be recognized when the goods are
delivered to the customers’ premises, which is taken to be the point in time at which the
customer accepts the goods and the related risks and rewards of ownership transfer, the
revenue and costs can be measured reliably, the recovery of the consideration is probable
and there is no continuing management involvement with the goods. Under IFRS 15,
revenue will be recognized when a customer obtains control of the goods. The Group
believes that the point at which the related risks and rewards of ownership transfer to the
customers is similar to the point of control transfer. Therefore, the changes in accounting
policy of the above-mentioned sales of goods do not result in a material adjustment of the
financial statements.
2)
Impacts on financial statements
The following tables summarize the impacts of adopting IFRS 15 on the Group’s
consolidated financial statements for the year ended December 31, 2018:
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
11
December 31, 2018
January 1, 2018
Carrying
amount under
IAS 18 and
related
standards and
interpretations
Adjustments
from
changes in
accounting
policies
Carrying
amount
under IFRS
15
Carrying
amount under
IAS 18 and
related
standards and
interpretations
Adjustments
from
changes in
accounting
policies
Carrying
amount
under IFRS
15
Impacted line items on the
consolidated balance sheets
Notes and accounts receivable,
net (notes 1 and 2)
$
203,623,702
92,263
203,715,965
177,272,731
79,014
177,351,745
Inventories (note 1)
Other current assets (note 1)
Impact on assets
Current contract liabilities
79,191,636
(42,714)
79,148,922
69,512,712
(55,625)
69,457,087
2,856,615
$
42,714
92,263
2,899,329
3,395,311
55,625
79,014
3,450,936
(note 3)
$
-
1,476,304
1,476,304
-
1,665,321
1,665,321
Current provisions (note 2)
Other current liabilities (note
3)
Unearned revenue (note 3)
Current refund liabilities
(notes 1 and 2)
Impact on liabilities
1,914,550
(1,487,569)
426,981
1,827,439
(1,440,292)
387,147
3,325,306
(70,171)
3,255,135
3,071,238
(47,695)
3,023,543
1,406,133
(1,406,133)
-
1,617,626
(1,617,626)
-
-
1,579,832
1,579,832
-
1,519,306
1,519,306
$
92,263
79,014
Impacted line items on the
consolidated statement of cash flows
Cash flows from (used in) operating activities:
Adjustments:
Decrease (increase) in notes and accounts
receivable
Increase in inventories
For the year ended December 31, 2018
Carrying
amount under
IAS 18 and
related
standards and
interpretations
Adjustments
from changes
in accounting
policies
Carrying
amount under
IFRS 15
$
(26,213,850)
(13,249)
(26,227,099)
(9,678,924)
(12,911)
(9,691,835)
Decrease (increase) in other current assets
538,696
12,911
551,607
Increase (decrease) in contract liabilities
-
(189,017)
(189,017)
Increase (decrease) in provisions
Increase (decrease) in other current liabilities
Increase (decrease) in unearned revenue
87,111
254,068
(211,493)
Increase (decrease) in refund liabilities
-
(47,277)
(22,476)
211,493
60,526
39,834
231,592
-
60,526
Cash inflow (outflow) generated from
operations
$
-
Note 1: For the sale with a right of return, the Group adjusted expected return, as well as
recognized the refund liability and the right to recover products(accounted for as other
current assets) when recognized revenue. Under IFRS 15, the above-mentioned assets
and liabilities were reclassified according to the regulations.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
12
Note 2: Prior to the adoption of IFRS 15, the sales returns and discounts were recognized as sales
returns and allowances provisions or a deduction of notes and accounts receivable.
Under IFRS 15, it was recognized as refund liabilities.
Note 3: Prior to the adoption of IFRS 15, unearned revenue were recognized as other current
liabilities or expressed it alone. Under IFRS 15, it was recognized as contract liabilities.
(ii)
IFRS 9 “Financial Instruments”
IFRS 9 replaces IAS 39 “Financial Instruments: Recognition and Measurement” which
contains classification and measurement of financial instruments, impairment and hedge
accounting.
As a result of the adoption of IFRS 9, the Group adopted the consequential amendments to IAS 1
“Presentation of Financial Statements” which requires impairment of financial assets to be
presented in a separate line item in the statement of profit or loss and OCI. Previously, the Group’
s approach was to include the impairment of trade receivables in selling expenses. Additionally,
the Group adopted the consequential amendments to IFRS 7 “ Financial Instruments:
Disclosures” that are applied to disclosures about 2018 but generally have not been applied to
comparative information.
The detail of new significant accounting policies and the nature and effect of the changes to
previous accounting policies are set out below:
1) Classification of financial assets and financial liabilities
IFRS 9 contains three principal classification categories for financial assets: measured at
amortized cost, fair value through other comprehensive income (“FVOCI”) and fair
value through profit or loss (“FVTPL”). The classification of financial assets under
IFRS 9 is generally based on the business model in which a financial asset is managed and
its contractual cash flow characteristics. The standard eliminates the previous IAS 39
categories of held to maturity, loans and receivables and available for sale. Under IFRS 9,
derivatives embedded in contracts where the host is a financial asset in the scope of the
standard are never bifurcated. Instead, the hybrid financial instrument as a whole is
assessed for classification. For an explanation of how the Group classifies and measures
financial assets and accounts for related gains and losses under IFRS 9, please see note
(4)(g).
The adoption of IFRS 9 did not have any significant impact on its accounting policies on
financial liabilities.
2)
Impairment of financial assets
IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with the ‘expected credit loss’
(“ECL”) model. The new impairment model applies to financial assets measured at
amortized cost, contract assets and debt investments at FVOCI, but not to investments in
equity instruments. Under IFRS 9, credit losses are recognized earlier than those under IAS
39. Please see note (4)(g).
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
13
3) Hedge accounting
The Group has elected to adopt the new general hedge accounting model in IFRS 9, which
requires the Group to ensure that hedge accounting relationships are aligned with its risk
management objectives and strategy, and apply a more qualitative and forward-looking
approach to assessing hedge effectiveness.
The Group uses forward foreign exchange contracts to hedge the variability in its cash
flows arising from the changes in foreign exchange rates relating to foreign currency
borrowings, receivables, sales and inventory purchases. The Group designates only the
change in fair value of the spot element of the forward exchange contract as the hedging
instrument in cash flow hedging relationships. The effective portion of changes in fair
value of hedging instruments is accumulated in a cash flow hedge reserve as a separate
component of equity.
Under IAS 39, the change in fair value of the forward element of the forward exchange
contracts (“forward points”) was recognized immediately in profit or loss. However,
under IFRS 9, the forward points are separately accounted for as a cost of hedging; they are
recognized in OCI and accumulated in a cost of hedging reserve as a separate component
within equity.
Under IAS 39, for all cash flow hedges, the amounts accumulated in the cash flow hedge
reserve were reclassified to profit or loss as reclassification adjustment in the same period
as the hedged expected cash flows affected the profit or loss. However, under IFRS 9, for
cash flow hedges of foreign currency risk associated with forecast inventory purchases, the
amounts accumulated in the cash flow hedge reserve are instead included directly in the
initial cost of the inventory item when it is recognized. The same approaches also apply
under IFRS 9 to the amounts accumulated in the costs of hedging reserve.
For an explanation of how the Group applies hedge accounting under IFRS 9, please see
note (4)(g).
4)
Transition
The adoption of IFRS 9 have been applied retrospectively, except as described below,
Differences in the carrying amounts of financial assets and financial liabilities resulting
from the adoption of IFRS 9 are recognized in retained earnings and reserves as on January
1, 2018. Accordingly, the information presented for 2017 does not generally reflect the
requirements of IFRS 9 and therefore is not comparable to the information presented for
2018 under IFRS 9.
‧The following assessments have been made on the basis of the facts and circumstances that
existed at the date of initial application.
－The determination of the business model within which a financial asset is held.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
14
－The designation of certain investments in equity instruments not held for trading as
at FVOCI.
‧If an investment in a debt security had low credit risk at the date of initial application of
IFRS 9, then the Group assumed that the credit risk on its asset will not increase
significantly since its initial recognition.
‧All hedging relationships designated under IAS 39 on December 31 2017 met the criteria
for hedge accounting under IFRS 9 on January 1, 2018, and are therefore, regarded as
continuing hedging relationships.
5) Classification of financial assets on the date of initial application of IFRS 9
The following table shows the original measurement categories under IAS 39 and the new
measurement categories under IFRS 9 for each class of the Group’s financial assets as of
January 1, 2018. (no change in measurement categories and carrying amounts for financial
liabilities.)
IAS 39
IFRS 9
Measurement categories
Carrying
Amount
Measurement categories
Carrying
Amount
Financial Assets
Cash and cash equivalents
Loans and receivables (note 3)
$
70,062,713 Amortized cost
Debt securities
Loans and receivables (Bond
700,000 Amortized cost
investment without active
market-current and
non-current) (note 1)
Derivative instruments
Designated as at FVTPL
40,706 Mandatorily at FVTPL
Investment in equity
At cost (note 2)
48,709 FVTPL
instruments
At cost (note 2)
5,273 FVOCI
Available for sale – current and
1,059,926 FVTPL
non-current (note 2)
Available for sale – current and
6,633,220 FVOCI
non-current (note 2)
70,062,713
700,000
40,706
48,709
5,273
1,059,926
6,633,220
Notes and accounts
Loans and receivables (note 3)
137,202,382 Amortized cost
137,202,382
receivable, net (including
related parties)
Notes and accounts
Loans and receivables (note 4)
40,184,343 FVOCI
40,184,343
receivable, net (including
related parties)
Other receivables and
Loans and receivables (note 3)
1,222,501 Amortized cost
1,222,501
guarantee deposits
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
15
Note1: The corporate debt securities that were previously classified as bond investment
without an active market are now classified at amortized cost. The Group intends
to hold the assets to maturity to collect contractual cash flows and these cash flows
consist solely of payments of principal and interest on the principal amount
outstanding.
Note2: These equity securities (including financial assets measured at cost) represent
investments that the Group intends to hold for the long term for strategic purposes.
As permitted by IFRS 9, the Group has designated these investments at the date of
initial application as measured at FVOCI and FVTPL. Accordingly, a decrease of
$494,051 thousands in the reserves, as well as the increase of $494,051 thousands
in retained earnings were recognized on January 1, 2018.
Note3: Cash and cash equivalents, notes and accounts receivable (including related parties),
other receivables and guarantee deposits that were classified as loans and
receivables under IAS 39 are now classified at amortized cost.
Note4: Accounts receivable are held within a business model whose objective is achieved
by both collecting the contractual cash flows and by selling accounts receivables
that were classified as loans and receivables under IAS 39 are now classified at
FVOCI, and recorded as accounts receivable.
The following table reconciles the carrying amounts of financial assets under IAS 39 to the
carrying amounts under IFRS 9 upon transition to IFRS 9 on January 1, 2018.
2017.12.31
IAS 39
Carrying
Amount
Reclassifications
Remeasurements
Fair value through profit or loss
Beginning balance of FVTPL (IAS 39)
$
40,706
-
Additions – equity instruments:
From financial assets measured at cost
From available for sale
Total
Fair value through other comprehensive income
Beginning balance of available for sale (including
measured at cost) (IAS 39)
Addition – debt instruments:
From loans and receivables
Subtractions – equity instruments:
From financial assets measured at cost
From available for sale
Total
Amortized cost
-
-
40,706
48,709
1,059,926
1,108,635
7,747,128
-
$
$
-
-
-
$
7,747,128
40,184,343
(48,709)
(1,059,926)
39,075,708
Beginning balance of cash and cash equivalents,
$
249,371,939
-
bond investment without an active market, trade
and other receivables, and other financial assets
Subtractions – debt instrument:
To FVOCI
Total
-
$
249,371,939
(40,184,343)
(40,184,343)
-
-
-
-
-
-
-
-
-
-
-
-
2018.1.1
IFRS 9
Carrying
Amount
2018.1.1
Adjustments
to retained
earnings
2018.1.1
Adjustments
to other
equity
-
-
-
-
1,149,341
174,679
174,679
(174,679)
(174,679)
319,372
(319,372)
-
-
-
-
-
-
46,822,836
319,372
(319,372)
-
-
-
-
-
-
209,187,596
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
16
(iii) Amendments to IAS 7 “Disclosure Initiative”
The amendments require disclosures that enable users of financial statements to evaluate changes
in liabilities arising from financing activities, including both changes arising from cash flow and
non-cash changes.
To satisfy the new disclosure requirements, the Group presents a reconciliation between the
opening and closing balances for liabilities with changes arising from financing activities as note
6(ag).
(iv) Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Loss”
The amendments clarify the accounting for deferred tax assets for unrealized losses on debt
instruments measured at fair value.
The Group believes that the above changes in accounting policies would not have any material
impact on its consolidated financial statements.
(b) The impact of IFRS endorsed by FSC but not yet effective
The following new standards, interpretations and amendments have been endorsed by the FSC and are
effective for annual periods beginning on or after January 1, 2019 in accordance with Ruling No.
1070324857 issued by the FSC on July 17, 2018:
New, Revised or Amended Standards and Interpretations
IFRS 16 “Leases”
IFRIC 23 “Uncertainty over Income Tax Treatments”
Amendments to IFRS 9 “Prepayment features with negative compensation”
Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement”
January 1, 2019
Amendments to IAS 28 “Long-term interests in associates and joint ventures” January 1, 2019
January 1, 2019
January 1, 2019
Effective date
per IASB
January 1, 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle
January 1, 2019
Except for the following items, the Group believes that the adoption of the above IFRSs would not
have any material impact on its consolidated financial statements. The extent and impact of
signification changes are as follows:
(i)
IFRS 16 “Leases”
IFRS 16 replaces the existing leases guidance, including IAS 17 “ Leases ” , IFRIC 4
“Determining whether an Arrangement contains a Lease”, SIC-15 “Operating Leases –
Incentives” and SIC-27 “Evaluating the Substance of Transactions Involving the Legal Form
of a Lease”.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
17
IFRS 16 introduces a single and an on-balance sheet lease accounting model for lessees. A lessee
recognizes a right-of-use asset representing its right to use the underlying asset and a lease
liability representing its obligation to make lease payments. In addition, the nature of expenses
related to those leases will now be changed since IFRS 16 replaces the straight-line operating
lease expense with a depreciation charge for right-of-use assets and interest expense on lease
liabilities. There are recognition exemptions for short-term leases and leases of low-value items.
The accounting for lessors remains similar to the current standard – i.e. the lessors will continue
to classify leases as finance or operating leases.
1) Determining whether an arrangement contains a lease
On transition to IFRS 16, the Group can choose to apply either of the following:
‧ the definition of a lease in IFRS 16 to all its contracts; or
‧ a practical expedient that does not require any reassessment whether a contract is, or
contains, a lease.
The Group plans to apply the practical expedient to grandfather the definition of a lease
upon transition. This means that it will apply IFRS 16 to all contracts entered into before
January 1, 2019 and identified as leases in accordance with IAS 17 and IFRIC 4.
2)
Transition
As a lessee, the Group can apply the standard using either of the following:
‧ retrospective approach; or
‧ modified retrospective approach with optional practical expedients.
The lessee applies the election consistently to all of its leases.
On January 1, 2019, the Group plans to initially apply IFRS 16 using the modified
retrospective approach. Therefore, the cumulative effect of adopting IFRS 16 will be
recognized as an adjustment to the opening balance of retained earnings at January 1,
2019, with no restatement of comparative information.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
18
When applying the modified retrospective approach to leases previously classified as
operating leases under IAS 17, the lessee can elect, on a lease-by-lease basis, whether to
apply a number of practical expedients on transition. The Group is assessing the potential
impact of using these practical expedients:
‧ apply a single discount rate to a portfolio of leases with similar characteristics.
‧ apply the exemption not to recognize the right-of-use assets and liabilities to leases
with lease term that ends within 12 months of the date of initial application.
‧ exclude the initial direct costs from measuring the right-of-use assets at the date of
initial application.
‧ use hindsight when determining the lease term if the contract contains options to
extend or terminate the lease.
3)
So far, the most significant impact identified is that the Group will have to recognize the
new assets and liabilities for the operating leases of its offices, warehouses, and factory
facilities. The Group estimated that the right-of-use assets and the lease liabilities to
increase by $2,973,419 and $2,082,272, respectively, as well as the long-term prepaid
rents to decrease by $891,147 on January 1, 2019.
No significant impact is expected for the Group’s finance leases.
(ii)
IFRIC 23 “Uncertainty over Income Tax Treatments”
In assessing whether and how an uncertain tax treatment affects the determination of taxable
profit (tax loss), tax bases, unused tax losses, unused tax credits, as well as tax rates, an entity
shall assume that a taxation authority will examine the amounts it has the right to examine and
have a full knowledge on all related information when making those examinations.
If an entity concludes that it is probable that the taxation authority will accept an uncertain tax
treatment, the entity shall determine the taxable profit (tax loss), tax bases, unused tax losses,
unused tax credits, as well as tax rates consistently with the tax treatment used or planned to be
used in its income tax filings. Otherwise, an entity shall reflect the effect of uncertainty for
each uncertain tax treatment by using either the most likely amount or the expected value,
depending on which method the entity expects to better predict the resolution of the
uncertainty.
So far, the Group believes that above change in accounting policies would not have any
material impact on its financial statements.
The actual impacts of adopting the standards may change depending on the economic
conditions and events which may occur in the future.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
19
(c) The impact of IFRS issued by IASB but not yet endorsed by the FSC
As of the date, the following IFRSs that have been issued by the International Accounting Standards
Board (“IASB”), but have yet to be endorsed by the FSC:
New, Revised or Amended Standards and Interpretations
Amendments to IFRS 3 “Definition of a Business”
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between
an Investor and Its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IAS 1 and IAS 8 “Definition of Material”
Those which may be relevant to the Group are set out below:
Effective date
per IASB
January 1, 2020
Effective date to
be determined
by IASB
January 1, 2021
January 1, 2020
Issuance / Release
Dates
October 31, 2018
Standards or
Interpretations
Amendments to IAS 1 and IAS
8 “Definition of Material”
Content of amendment
The amendments clarify the definition of
material and how it should be applied by
including in the definition guidance that until
IFRS
featured elsewhere
now has
in
Standards. In addition,
the explanations
accompanying
the definition have been
improved. Finally, the amendments ensure
that the definition of material is consistent
across all IFRS Standards.
The Group is evaluating the impact on its consolidated financial position and consolidated financial
performance upon the initial adoption of the above-mentioned standards or interpretations. The
results thereof will be disclosed when the Group completes its evaluation.
(4) Summary of significant accounting policies:
The significant accounting policies presented in the consolidated financial statements are summarized as
follows. The following accounting policies were applied consistently throughout the periods presented in
the financial statements.
(a) Statement of compliance
These consolidated financial statements have been prepared in accordance with the Regulations
Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as the
Regulations), the International Financial Reporting Standards, the International Accounting
Standards, IFRIC Interpretations and SIC Interpretations endorsed and issued into effect by the FSC
(hereinafter referred to as the IFRS endorsed by the FSC).
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
20
(b) Basis of preparation
(i) Basis of measurement
Except for the following significant accounts in the statement of financial position, the
consolidated financial statements have been prepared on the historical cost basis:
1)
2)
Financial instruments (including derivative financial instruments) measured at fair value
through profit or loss are measured at fair value;
Financial instruments measured at fair value through other comprehensive income
(Available-for-sale) are measured at fair value;
3) Hedging financial instruments are measured at fair value;
4)
The defined benefit liability (or asset) is recognized as plan assets less the present value
of the defined benefit obligation and the effect of the asset ceiling mentioned in note
(4)(r).
(ii) Functional and presentation currency
The functional currency of each Group entities is determined based on the primary economic
environment in which the entities operates. The consolidated financial statements are presented
in New Taiwan Dollar, which is the Company's functional currency. All financial information
presented in New Taiwan Dollar has been rounded to the nearest thousand.
(c) Basis of consolidation
(i)
Principles of preparation of the consolidated financial statements
The consolidated financial statements comprise the Company and its subsidiaries. The Group
controls an entity when it is exposed, or has rights, to variable returns from its involvement
with the entity and has the ability to affect those returns through its control over the entity.
The financial statements of subsidiaries are included in the consolidated financial statements
from the date that control commences until the date that control ceases. Intra-group balances
and transactions, and any unrealized income and expenses arising from intra-group transactions
are eliminated in preparing the consolidated financial statements. Losses applicable to the
non-controlling interests in a subsidiary are allocated to the non-controlling interests even if
doing so causes the non-controlling interests to have a deficit balance.
Accounting policies of subsidiaries have been adjusted to ensure consistency with the policies
adopted by the Group.
Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of
control are accounted for as equity transactions. Any differences between the Group’s share
of net assets before and after the change, and any considerations received or paid, are adjusted
to or against the Group reserves.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
21
(ii) List of subsidiaries in the consolidated financial statements
Investor
Name of Subsidiary
The Company
Panpal Technology Corp.
(“Panpal”)
Nature of
Operation
Investment
Percentage of
ownership
December 31,
2018
December 31,
2017
100%
100%
Description
Panpal held 31,648
thousand shares of the
Company as of December
31, 2018, which
represented 0.7% of the
Company’s outstanding
shares.
Gempal held 18,369
thousand shares of the
Company as of December
31, 2018, which
represented 0.4% of the
Company’s outstanding
shares.
Zhaopal was dissolved on
November 30, 2017
Yongpal was dissolved on
November 30, 2017
Kaipal was dissolved on
November 30, 2017
The Group had the ability
to control ATK. ATK
was dissolved on June 30,
2009.
The Group had the ability
to control Arcadyan.
Accesstek, Inc. (“ATK”) Design, manufacturing
and sales of optical disk
drives and components
〃
〃
〃
〃
〃
〃
R&D, manufacturing and
sales of wireless
network, integrated
household electronics,
and mobile office
products
Manufacturing and sales
of PCs, computer
periphery devices, and
electronic components
〃
Manufacturing of electric
appliance and
audiovisual electric
products
Manufacturing of
equipment and lighting,
retailing of equipment
and international trading
Manufacturing and sales
of medical equipment
〞
〃
〃
〃
〃
〃
The Company,
Panpal, et al.
Gempal Technology Corp.
(“Gempal”)
Hong Ji Capital Co., Ltd.
(“Hong Ji”)
Hong Jin Investment Co.,
Ltd. (“Hong Jin”)
Zhaopal Investment Co.,
Ltd. (“Zhaopal”)
Yongpal Investment Co.,
Ltd. (“Yongpal”)
Kaipal Investment Co., Ltd.
(“Kaipal”)
〃
Arcadyan Technology
Corp. (“Arcadyan”)
The Company Rayonnant Technology
Co., Ltd. (“Rayonnant
Technology”)
HengHao Technology Co.,
Ltd. (“HengHao”)
Ripal Optoelectronics Co.,
Ltd. (“Ripal”)
Mactech Co., Ltd
(“Mactech”)
General Life
Biotechnology Co., Ltd.
(“GLB”)
〃
〃
〃
〃
〃
〃
Unicore BioMedical Co.,
Ltd. (“Unicore”)
Shennona Corporation
(“Shennona”)
Management consulting
services, rental and
leasing business,
wholesale and retail sale
of medical equipments.
Medical care IOT
business
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
38%
38%
35%
36%
100%
100%
100%
100%
100%
100%
53%
53%
50%
50%
100%
100%
100%
-
Shennona was established
in January 2018.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
22
Investor
Name of Subsidiary
Nature of
Operation
Percentage of
ownership
December 31,
2018
December 31,
2017
Description
The Company Auscom Engineering Inc.
(“Auscom”)
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Panpal and
Gempal
〃
Just International Ltd.
(“Just”)
Compal International
Holding Co., Ltd.
(“CIH”)
Compal Electronics
(Holding) Ltd.
(“CEH”)
Bizcom Electronics, Inc.
(“Bizcom”)
Flight Global Holding Inc.
(“FGH”)
High Shine Industrial Corp.
(“HSI”)
Compal Europe (Poland)
Sp. z o.o. (“CEP”)
Big Chance International
Co., Ltd. (“BCI”)
Compal Rayonnant
Holdings Limited
(“CRH”)
Core Profit Holdings
Limited (“CORE”)
Compalead Electronics
B.V. (“CPE”)
Compalead Eletronica do
Brasil Industria e
Comercio Ltda.
(“CEB”)
Compal Electronics India
Private Limited
(“CEIN”)
Just
Compal Display Holding
〃
〃
(HK) Limited
(“CDH (HK)”)
Compal Electronics
International Ltd.
(“CII”)
Compal International Ltd.
(“CPI”)
CDH (HK) Compal Electronics
(China) Co., Ltd.
(“CPC”)
〃
〃
Compal Optoelectronics
(Kunshan) Co., Ltd.
(“CPO”)
Compal System Trading
(Kunshan) Co., Ltd.
(“CST”)
R&D of notebook PC
related products and
components
Manufacturing, sales and
maintenance of monitors
and LCD TVs, and
investment
Sales and manufacturing
of notebook PCs and
investments
Investment
100%
100%
100%
100%
100%
100%
100%
100%
Warranty services and
marketing of monitors
and notebook PCs
Investment
100%
100%
100%
100%
〃
100%
100%
Maintenance and
warranty services of
notebook PCs
Investment
〃
〃
〃
Manufacturing of
notebook PCs
Manufacturing and
warranty service of
mobile phones
Investment
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
〃
100%
100%
Sales of monitors, LCD
TVs and related
components
Manufacturing and sales
of monitors
Manufacturing and sales
of LCD TVs
International trade and
distribution of computers
and electronic
components
100%
100%
100%
100%
100%
100%
100%
100%
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
23
Investor
Name of Subsidiary
Nature of
Operation
Percentage of
ownership
December 31,
2018
December 31,
2017
Description
CPC
Compal Smart Device
(Chongqing) Co., Ltd.
(“CSD”)
CII
〃
〃
〃
Smart International Trading
Ltd. (“Smart”)
Amexcom Electronics Inc.
(“AEI”)
Mexcom Electronics, LLC
(“MEL”)
Mexcom Technologies,
LLC (“MTL”)
Research, manufacture
and sales of
communication devices,
mobile phones,
electronic computer,
smart watch, and provide
related technical service.
Sales of electronic
products and related
components
Sales and maintenance of
LCD TVs
Investment
100%
100%
100%
100%
100%
100%
100%
100%
〃
100%
100%
MEL and MTL CENA Electromex S.A. de
C.V. (“CMX”)
CIH
Compal International
Manufacturing, sales,
and maintenance of LCD
TVs
Investment
100%
100%
100%
100%
〃
〃
〃
Holding (HK) Limited
(“CIH (HK)”)
Jenpal International Ltd.
(“Jenpal”)
Prospect Fortune Group
Ltd. (“PFG”)
Fortune Way Technology
Corp. (“FWT”)
CIH (HK) Compal Electronics
〃
〃
〃
〃
〃
Technology (Kunshan)
Co., Ltd. (“CET”)
Compal Information
(Kunshan) Co., Ltd.
(“CIC”)
Compal Information
Technology
(Kunshan) Co., Ltd.
(“CIT”)
Kunshan Botai Electronics
Co., Ltd. (“BT”)
Compal Information
Research and
Development (Nanjing)
Co., Ltd. (“CIN”)
Compal Digital
Technology (Kunshan)
Co., Ltd. (“CDT”)
BT
Compower Global Service
Co., Ltd. (“CGS”)
CDH (HK)
and CIH (HK)
CIJ
The Company
and Webtek
Compal Investment
(Jiansu) Co., Ltd.
(“CIJ”)
Compal Display
Electronics (Kunshan)
Co., Ltd. (“CDE”)
Etrade Management Co.,
Ltd. (“Etrade”)
〃
100%
100%
Sales of notebook PCs
and related components
Investment
Manufacturing of
notebook PCs
〃
〃
〃
Software and hardware
R&D of computers,
mobile phones and
electronic components
Manufacturing and sales
of notebook PCs, mobile
phones, and digital
products
Maintenance and
warranty service of
notebook PCs
Investment
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Manufacturing and sales
of LCD TVs
100%
100%
Investment
100%
100%
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
24
Investor
Name of Subsidiary
Nature of
Operation
Percentage of
ownership
December 31,
2018
December 31,
2017
Description
The Company Webtek Technology Co.,
Sales of mobile phones
100%
100%
〃
100%
100%
Manufacturing and sales
of computers and
electronic components
Sales of mobile phones
Manufacturing and
processing of mobile
phones and tablet PCs
〃
〃
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
R&D and manufacturing
of electronic
communication
equipment
Sales of mobile phones
Sales of optical disc
drives
Investment
100%
100%
100%
100%
100%
100%
100%
100%
〃
100%
100%
Sales of wireless
network products
Technical support of
wireless network
products
Sales of wireless
network products
100%
100%
100%
100%
100%
100%
〃
〃
〃
Etrade
〃
〃
Forever
〃
ATK
〃
〃
〃
〃
〃
〃
〃
Arcadyan and
Zhi-pal
Arcadyan
〃
〃
Ltd. (“Webtek”)
Forever Young Technology
Inc. (“Forever”)
UniCom Global, Inc.
(“UCGI”)
Palcom International
Corporation (“Palcom”)
Compal Communication
(Nanjing) Co., Ltd.
(“CCI Nanjing”)
Compal Digital
Communication
(Nanjing) Co., Ltd.
(“CDCN”)
Compal Wireless
Communication
(Nanjing) Co., Ltd.
(“CWCN”)
Hanhelt Communication
(Nanjing) Co., Ltd.
(“Hanhelt”)
Giant Rank Trading Ltd.
(“GIA”)
OptoRite Inc.
MSI-ATK Otpics Holding
Corporation
(“MSI-ATK”)
Maitek (BVI) Corporation
(“Maitek”)
Corp. (“Arcadyan
USA”)
Arcadyan Germany
Technology GmbH
(“Arcadyan
Germany”)
Arcadyan Technology
Corporation Korea
(“Arcadyan Korea”)
Arcadyan Holding (BVI)
Corp. (“Arcadyan
Holding”)
Arcadyan Technology
Limited (“Arcadyan
UK”)
Arcadyan Technology
Australia Pty Ltd.
("Arcadyan AU")
Arcadyan do Brasil Ltda.
(“Arcadyan Brasil”)
Zhi-pal Technology Inc.
(“Zhi-pal”)
Tatung Technology Inc.
(“TTI”)
AcBel Telecom Inc.
(“AcBel Telecom”)
Arcadyan Arcadyan Technology N.A.
Investment
100%
100%
Technical support of
wireless network
products
Sales of wireless
network products
Sales of wireless
network products
Investment
R&D and sales of
household digital
electronic products
Investment
100%
100%
100%
100%
100%
100%
100%
100%
61%
61%
51%
51%
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
25
Investor
Name of Subsidiary
Nature of
Operation
Percentage of
ownership
December 31,
2018
December 31,
2017
Description
The Company,
Arcadyan, and its
subsidiaries
Compal Broadband
Network Inc. (“CBN”)
CBN
〃
Speedlink Tradings
Limited
(“Speedlink”)
Compal Broadband
Networks Belgium
BVBA ("CBNB")
Arcadyan
Holding
〃
〃
Sinoprime Global Inc.
(“Sinoprime”)
Arcadyan Technology
(Shanghai) Corp. (“SVA
Arcadyan”)
Arch Holding (BVI) Corp.
(“Arch Holding”)
Arch Holding Compal Networking
(Kunshan) Co., Ltd.
(“CNC”)
AcBel Telecom Leading Images Ltd.
(“Leading Images”)
R&D and sales of cable
modem, digital set-up
box, and other
communication products
Import and export
business
Import and export
business, technical
support and consulting
service of broadband
networks
Sales of wireless
network products
R&D and sales of
wireless network
products
Investment
Manufacturing of
wireless network
products
Investment
Great Arch Group Ltd.
(“Great Arch”)
Sales of wireless
network products
64%
72%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
〃
〃
Quest
Exquisite
HSI
〃
IUE
Goal
Rayonnant
Technology
and CRH
Leading Images Astoria Networks GmbH
(“Astoria GmbH”)
Quest International Group
Co., Ltd. (“Quest”)
TTI
〃
100%
100%
Investment
100%
100%
Sales of household
digital electronic
products
Investment
Manufacturing of
household digital
electronic products
Investment
100%
100%
100%
100%
100%
100%
100%
100%
〃
100%
100%
R&D, manufacturing,
sales, and maintenance
of notebook PCs,
computer monitors, LCD
TVs and electronic
components
Construction of and
investment in
infrastructure in
Ba-Thien industrial
district of Vietnam
Investment
100%
100%
100%
100%
100%
100%
Tatung Technology of
Japan Co., Ltd.
(“TTJC”)
Exquisite Electronic Co.,
Ltd. (“Exquisite”)
Tatung Home Appliances
(Wujiang) Co., Ltd.
(“THAC”)
Intelligent Universal
Enterprise Ltd.
(“IUE”)
Goal Reach Enterprises
Ltd. (“Goal”)
Compal (Vietnam) Co.,
Ltd. (“CVC”)
Compal Development &
Management
(“Vietnam”) Co., Ltd.
(“CDM”)
Allied Power Holding
Corp. (“APH”)
The liquidation
procedure has been
completed on April 23,
2018.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
26
Investor
Name of Subsidiary
Nature of
Operation
Percentage of
ownership
December 31,
2018
December 31,
2017
Description
APH
〃
Rayonnant
Technology
(HK)
Primetek Enterprises
Limited (“PEL”)
Rayonnant Technology
(HK) Co., Ltd.
(“Rayonnant
Technology (HK)”)
Rayonnant Technology
(Taicang) Co., Ltd.
(“Rayonnant
Technology
(Taicang)”)
HengHao HengHao Holdings A Co.,
HHA
Ltd. (“HHA”)
HengHao Holdings B Co.,
Ltd. (“HHB”)
Investment
100%
100%
〃
100%
100%
Manufacturing and sales
of aluminum alloy and
magnesium alloy
products
100%
100%
Investment
100%
100%
〃
100%
100%
HHB
HengHao Trading Co., Ltd. Marketing and
100%
100%
〃
〃
BCI
〃
CMI
PRI
CIS
HengHao Optoelectronics
Technology (Kunshan)
Co., Ltd. (“HengHao
Kunshan”)
Lucom Display
Technology (Kunshan)
Limited (“Lucom”)
Center Mind International
Co., Ltd. (“CMI”)
Prisco International Co.,
Ltd. (“PRI”)
Compal Investment
(Sichuan) Co., Ltd.
(“CIS”)
Compal Electronics
(Chongqing) Co., Ltd.
(“CEQ”)
Compal Electronics
(Chengdu) Co., Ltd.
(“CEC”)
〃
Compal Management
(Chengdu) Co., Ltd.
(“CMC”)
international trade
Production of touch
panels and related
components
100%
100%
Manufacturing of touch
panels and LCD TVs
100%
100%
Investment
100%
100%
〃
100%
100%
Outward investment and
consulting services
100%
100%
R&D, manufacturing and
sales of notebook PCs,
related components,
related maintenance and
warranty services
R&D and manufacturing
of notebook PCs, tablet
PCs, digital products,
network switches,
wireless AP, and
automobile electronic
products
Corporate management
consulting, training and
education, business
information consulting,
financial and tax
consulting, investment
consulting, and
investment management
services
Investment
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
51%
(Continued)
CORE
GLB
Unicore
Billion Sea Holdings
Limited (“BSH”)
Rapha Bio Ltd. (“RBL”) Detector and feature
Raycore Biotech Co., Ltd.
Animal medication retail
and wholesale
(“Raycore”)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
27
(d) Foreign currency
(i)
Foreign currency transaction
Transactions in foreign currencies are translated to the respective functional currencies of the
Group at exchange rates at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are retranslated to the functional
currency at the exchange rate at that date. The foreign currency gain or loss on monetary
items is the difference between the amortized cost in the functional currency at the beginning of
the year adjusted for the effective interest and payments during the period, and the amortized
cost in foreign currency translated at the exchange rate at the reporting date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair
value are retranslated to the functional currency at the exchange rate at the date that the fair
value was determined. Non-monetary items in a foreign currency that are measured based on
historical cost are translated using the exchange rate at the date of translation.
Foreign currency differences arising on retranslation are recognized in profit or loss, except for
the following differences which are recognized in other comprehensive income arising on the
retranslation:
1)
2)
fair value through other comprehensive income (available-for-sale) financial assets;
a financial liability designated as a hedge of the net investment in a foreign operation to
the extent that the hedge is effective; or
3)
qualifying cash flow hedges to the extent the hedge is effective
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments
arising on acquisition, are translated to the Group entities' functional currency at exchange rates
of the reporting date. The income and expenses of foreign operations, excluding foreign
operations in hyperinflationary economies, are translated to the Group entities' functional
currency at average rate. Foreign currency differences are recognized in other comprehensive
income, and presented in the foreign currency translation differences in equity.
When a foreign operation is disposed of such that control, significant influence or joint control
is lost, the cumulative amount in the translation reserve related to that foreign operation is
reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes
of any part of its interest in a subsidiary that includes a foreign operation while retaining
control, the relevant proportion of the cumulative amount is reattributed to non-controlling
interest. When the Group disposes of only part of investment in an associate of joint venture
that includes a foreign operation while retaining significant or joint control, the relevant
proportion of the cumulative amount is reclassified to profit or loss.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
28
When the settlement of a monetary item receivable from or payable to a foreign operation is
neither planned nor likely in the foreseeable future, foreign currency gains and losses arising
from such items are considered to form part of a net investment in the foreign operation and are
recognized in other comprehensive income, and presented in the translation reserve in equity.
(e) Classification of current and non-current assets and liabilities
An entity shall classify an asset as current when:
(i)
It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
(ii)
It holds the asset primarily for the purpose of trading;
(iii) It expects to realize the asset within twelve months after the reporting period; or
(iv) The asset is cash and cash equivalent unless the asset is restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting period.
An entity shall classify all other assets as non-current.
An entity shall classify a liability as current when:
(i)
It expects to settle the liability in its normal operating cycle;
(ii)
It holds the liability primarily for the purpose of trading;
(iii) The liability is due to be settled within twelve months after the reporting period; or
(iv) It does not have an unconditional right to defer settlement of the liability for at least twelve
months after the reporting period. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity instruments do not impact its
classification.
An entity shall classify all other liabilities as non-current.
(f) Cash and cash equivalents
Cash comprise cash on hand and demand deposits. Cash equivalents are subject to an insignificant
risk of changes in their fair value, and are used by the Group in the management of its short-term
commitments.
The time deposits which meet the above definition and are held for the purpose of meeting short-term
cash commitments rather than for investment or other purposes are reclassified as cash equivalents.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
29
(g) Financial instruments
(i)
Financial assets (policy applicable from January 1, 2018)
Financial assets are classified into the following categories: measured at amortized cost, fair
value through other comprehensive income (FVOCI) and fair value through profit or loss
(FVTPL).
The Group shall reclassify all affected financial assets only when it changes its business model
for managing its financial assets.
1)
Financial assets measured at amortized cost
A financial asset is measured at amortized cost if it meets both of the following
conditions and is not designated as at FVTPL:
‧it is held within a business model whose objective is to hold assets to collect contractual
cash flows; and
‧its contractual terms give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.
A financial asset measured at amortized cost is initially recognized at fair value, plus any
directly attributable transaction costs. These assets are subsequently measured at
amortized cost using the effective interest method. The amortized cost is reduced by
impairment losses. Interest income, foreign exchange gains and losses, and impairment
loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in
profit or loss. A regular way purchase or sale of financial assets is recognized and
derecognized, as applicable, using trade date accounting.
2)
Fair value through other comprehensive income (“FVOCI”)
A debt investment is measured at FVOCI if it meets both of the following conditions and
is not designated as at FVTPL:
‧it is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets; and
‧its contractual terms give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.
Some accounts receivables are held within a business model whose objective is achieved
by both collecting contractual cash flows and selling by the Group, therefore, those
receivables are measured at FVOCI and presented as accounts receivable.
On initial recognition of an equity investment that is not held for trading, the Group may
irrevocably elect to present subsequent changes in the investment’s fair value in other
comprehensive income. This election is made on an instrument-by-instrument basis.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
30
A financial asset measured at FVOCI is initially recognized at fair value, plus any
directly attributable transaction costs. These assets are subsequently measured at fair
value. Interest income calculated using the effective interest method, foreign exchange
gains and losses, and impairment losses, deriving from debt investments are recognized
in profit or loss; whereas dividends deriving from equity investments are recognized as
income in profit or loss, unless the dividend clearly represents a recovery of part of the
cost of the investment. Other net gains and losses of financial assets measured at FVOCI
are recognized in OCI. On derecognition, gains and losses accumulated in OCI of debt
investments are reclassified to profit or loss. However, gains and losses accumulated in
OCI of equity investments are reclassified to retain earnings instead of profit or loss. A
regular way purchase or sale of financial assets is recognized and derecognized, as
applicable, using trade date accounting.
Dividend income derived from equity investments is recognized on the date that the
Group’s right to receive payment is established, which in the case of quoted securities is
normally on the date the shareholders' meeting approved the earning distribation.
3)
Fair value through profit or loss (“FVTPL”)
All financial assets not classified as amortized cost or FVOCI described as above are
measured at FVTPL, including derivative financial assets. On initial recognition, the
Group may irrevocably designate a financial asset, which meets the requirements to be
measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or
significantly reduces an accounting mismatch that would otherwise arise.
Financial assets in this category are measured at fair value at initial recognition.
Attributable transaction costs are recognized in profit or loss as incurred. Subsequent
changes that are measured at fair value, which take into account any dividend and interest
income, are recognized in profit or loss. A regular way purchase or sale of financial assets
is recognized and derecognized, as applicable, using trade date accounting.
4)
Impairment of financial assets
The Group recognizes loss allowances for expected credit losses on financial assets
measured at amortized cost (including cash and cash equivalents, financial assets
measured at amortized costs, notes and accounts receivable, other receivable, guarantee
deposit and other financial assets), debt investments measured at FVOCI, and accounts
receivable measured at FVOCI.
The Group measures loss allowances at an amount equal to lifetime expected credit loss
(ECL), except for the following which are measured as 12-month ECL:
‧debt securities that are determined to have low credit risk at the reporting date; and
‧other debt securities and bank balances for which credit risk (i.e. the risk of default
occurring over the expected life of the financial instrument) has not increased
significantly since initial recognition.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
31
Loss allowance for trade receivables and contract assets are always measured at an
amount equal to lifetime ECL.
Lifetime ECLs are the ECLs that result from all possible default events over the expected
life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible
within the 12 month after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual
period over which the Group is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly
since initial recognition and when estimating ECL, the Group considers reasonable and
supportable information that is relevant and available without undue cost or effort. This
includes both quantitative and qualitative information and analysis based on the Group’
s historical experience and informed credit assessment as well as forward-looking
information.
The Group considers a debt security to have low credit risk when its credit risk rating is
equivalent to the globally understood definition of ‘ investment grade which is
considered to be BBB- or higher per Standard & Poor’s, Baa3 or higher per Moody’
s or twA or higher per Taiwan Ratings’.
The Group assumes that the credit risk on a financial asset has increased significantly if it
is more than 30 days past due.
The Group considers a financial asset to be in default when the financial asset is more
than 90 days past due or the borrower is unlikely to pay its credit obligations to the Group
in full.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as
the present value of all cash shortfalls (i.e. the difference between the cash flows due to
the Group in accordance with the contract and the cash flows that the Group expects to
receive). ECLs are discounted at the effective interest rate of the financial asset.
At each reporting date, the Group assesses whether financial assets carried at amortized
cost and debt securities at FVOCI are credit-impaired. A financial asset
is
‘credit-impaired’ when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred. An evidence that a
financial asset is credit-impaired includes the following observable data:
‧significant financial difficulty of the borrower or issuer;
‧a breach of contract such as a default or being more than 90 days past due;
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
32
‧the lender of the borrower, for economic or contractual reasons relating to the
borrower's financial difficulty, having granted to the borrower a concession that the
lender would not otherwise consider;
‧it is probable that the borrower will enter bankruptcy or other financial reorganization;
or
‧the disappearance of an active market for a security because of financial difficulties.
Loss allowances for financial assets measured at amortized cost are deducted from the
gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is
recognized in other comprehensive income instead of reducing the carrying amount of the
asset. The Group recognizes the amount of expected credit losses (or reversal) in profit or
loss, as an impairment gain or loss.
The gross carrying amount of a financial asset is written off (either partially or in full) to
the extent that there is no realistic prospect of recovery. This is generally the case when
the Group determines that the debtor does not have assets or sources of income that could
generate sufficient cash flows to repay the amounts subject to the write-off. However,
financial assets that are written off could still be subject to enforcement activities in order
to comply with the Group’s procedures for recovery of amounts due.
5) Derecognition of financial assets
Financial assets are derecognized when the contractual rights to the cash flows from the
assets expire, or when the Group transfers substantially all the risks and rewards of
ownership of the financial assets.
On derecognition of a debt instrument in its entirety, the Group recognizes the difference
between its carrying amount and the sum of the consideration received or receivable and
any cumulative gain or loss that had been recognized in other comprehensive income and
presented in “other equity – unrealized gains or losses on fair value through other
comprehensive income ” , in profit or loss, and presented it in the line item of
non-operating income.
On derecognition of a financial asset other than in its entirety, the Group allocates the
previous carrying amount of the financial asset between the part it continues to recognize
under continuing involvement, and the part it no longer recognizes on the basis of the
relative fair values of those parts on the date of the transfer. The difference between the
carrying amount allocated to the part that is no longer recognized and the sum of the
consideration received for the part no longer recognized and any cumulative gain or loss
allocated to it that had been recognized in other comprehensive income is recognized in
profit or loss, and presented in the line item of non-operating income and expenses. A
cumulative gain or loss that had been recognized in other comprehensive income is
allocated between the part that continues to be recognized and the part that is no longer
recognized on the basis of the relative fair values of those parts.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
33
(ii) Financial assets (policy applicable before January 1, 2018)
Financial assets are classified into the following categories: financial assets at fair value
through profit or loss, available-for-sale financial assets, and loans and receivables.
1)
Financial assets at fair value through profit or loss
A financial asset is classified in this category if it is classified as held-for-trading or is
designated as such on initial recognition.
Financial assets are classified as held-for-trading if they are acquired principally for the
purpose of selling in the short term. The Group designates financial assets, other than
ones classified as held-for-trading, as at fair value through profit or loss at initial
recognition under one of the following situations:
a) Designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise;
b)
Performance of the financial asset is evaluated on a fair value basis
c) A hybrid instrument contains one or more embedded derivatives.
Financial assets in this category are measured at fair value at initial recognition.
Attributable transaction costs are recognized in profit or loss as incurred. Financial
assets at fair value through profit or loss are measured at fair value, and changes therein,
which take into account any dividend and interest income, are recognized in profit or loss,
and are included in non-operating income and expenses. Under a regular way, purchase
or sale of financial assets shall be recognized and derecognized as applicable using trade
date accounting.
2) Available-for sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated
as available-for-sale or are not classified in any of the other categories of financial assets.
Available-for-sale financial assets are recognized initially at fair value, plus, any directly
attributable transaction cost. Subsequent to initial recognition, they are measured at fair
value, and changes therein, other than impairment losses, interest income calculated using
the effective interest method, dividend income, and foreign currency differences on
available-for-sale debt instruments, are recognized in other comprehensive income and
presented in the fair value reserve in equity. When an investment is derecognized, the
gain or loss accumulated in equity is reclassified to profit or loss, and is included in
non-operating income and expenses. A regular way purchase or sale of financial assets
shall be recognized and derecognized as applicable using trade date accounting.
Investments in equity instruments that do not have a quoted market price in an active
market, and whose fair value cannot be reliably measured, are measured at cost less
impairment losses, and are included in financial assets measured at cost.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
34
Dividend income is recognized in profit or loss on the date that the Group’s right to
receive payment is established, which in the case of quoted securities is normally on the
date the shareholders’ meeting approved the earning distribution. Such dividend
income is included in non-operating income and expenses.
3)
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are
not quoted in an active market. Loans and receivables comprise trade receivables, other
receivables, and investment in debt security with no active market. Such assets are
recognized initially at fair value, plus, any directly attributable transaction costs.
Subsequent to initial recognition, loans and receivables are measured at amortized cost
using the effective interest method, less, any impairment losses other than insignificant
interest on short-term receivables. Under a regular way, purchase or sale of financial
assets shall be recognized and derecognized as applicable using trade-date accounting.
Interest income is recognized in profit or loss, and it is included in non-operating income
and expenses.
4)
Impairment of financial assets
A financial asset is impaired if, and only if, there is an objective evidence of impairment
as a result of one or more events that occurred after the initial recognition of the asset (a
“loss event”) and that loss event (or events) has an impact on the estimated future cash
flows of the financial asset that can be estimated reliably.
The objective evidence that financial assets are impaired includes default or delinquency
by a debtor, restructuring of an amount due to the Group on terms that the Group would
not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse
changes in the payment status of borrowers or issuers, economic conditions that correlate
with defaults, or the disappearance of an active market for a security. In addition, for an
investment in an equity security, a significant or prolonged decline in its fair value below
its cost is accounted for as objective evidence of impairment.
All individually significant receivables are assessed for specific impairment. Receivables
that are not individually significant are collectively assessed for impairment by grouping
together assets with similar risk characteristics. In assessing collective impairment, the
Group uses historical trends of the probability of default, the timing of recoveries, and the
amount of loss incurred, adjusted for management’s judgment as to whether current
economic and credit conditions are such that the actual losses are likely to be greater or
lesser than those suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortized cost is
calculated as the difference between its carrying amount and the present value of the
estimated future cash flows discounted at the asset’s original effective interest rate.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
35
An impairment loss in respect of a financial asset measured at cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash
flows discounted at the current market rate of return for a similar financial asset. Such
impairment loss is not reversible in subsequent periods.
An impairment loss in respect of a financial asset is deducted from the carrying amount,
except for trade receivables, for which an impairment loss is reflected in an allowance
account against the receivables. When it is determined a receivable is uncollectible, it is
written off from the allowance account. Any subsequent recovery of receivable written
off is recorded in the allowance account. Changes in the amount of the allowance
account are recognized in profit or loss.
Impairment losses on available-for-sale financial assets are recognized by reclassifying
the losses accumulated in the fair value reserve in equity to profit or loss.
If, in a subsequent period, the amount of the impairment loss of a financial asset
measured at amortized cost decreases and the decrease can be related objectively to an
event occurring after the impairment was recognized, the decrease in impairment loss is
reversed through profit or loss to the extent that the carrying value of the asset does not
exceed its amortized cost before impairment was recognized at the reversal date.
Impairment losses recognized on an available-for-sale equity security are not reversed
through profit or loss. Any subsequent recovery in the fair value of an impaired
available-for-sale equity security is recognized in other comprehensive income and
accumulated in other equity.
Impairment losses and recoveries are recognized in profit or loss. Recovery and loss on
doubtful debts of account receivables is included in operating expense, others are
included in non-operating income and expense.
5) Derecognition of financial assets
The Group derecognizes financial assets when the contractual rights of the cash inflow
from the asset are terminated, or when the Group transfers substantially all the risks and
rewards of ownership of the financial assets.
On derecognition of a financial asset in its entirety, the difference between the carrying
amount and the sum of the consideration received or receivable and any cumulative gain
or loss that had been recognized in other comprehensive income and presented in other
equity – unrealized gains or losses from available-for-sale financial assets is recognized
in profit or loss, and included in non-operating income or expenses.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
36
The Group separates the part that continues to be recognized and the part that is
derecognized based on the relative fair values of those parts on the date of the transfer.
The difference between the carrying amount allocated to the part derecognized and the
sum of the consideration received for the part derecognized and any cumulative gain or
loss allocated to it that had been recognized in other comprehensive income shall be
recognized in profit or loss, and is included in non-operating income or expenses. A
cumulative gain or loss that had been recognized in other comprehensive income is
allocated between the part that continues to be recognized and the part that is
derecognized based on the relative fair values of those parts.
(iii) Financial liabilities and equity instruments
1) Classification of debt or equity
Debt or equity instruments issued by the Group are classified as financial liabilities or
equity in accordance with the substance of the contractual agreement.
Equity instruments refer to surplus equities of the assets after the deduction of all the
debts for any contracts. Equity instruments issued are recognized as the amount of
consideration received, less, the direct cost of issuing.
Interest and loss or gain related to financial liabilities are recognized as profit or loss and
are reported under non-operating income and expenses. Financial liabilities are
reclassified as equity when converted, and conversions do not generate profit or loss.
2)
Financial liabilities at fair value through profit or loss
A financial liability is classified in this category if acquired principally for the purpose of
selling in the short term. This type of financial liability is measured at fair value at the
time of initial recognition, and attributable transaction costs are recognized in profit or
loss as incurred. Financial liabilities at fair value through profit or loss are measured at
fair value, and changes therein, which take into account any interest expense, are
recognized in profit or loss, and are included in non-operating income or expenses.
3) Other financial liabilities
Financial liabilities not classified as held-for-trading or designated as at fair value
through profit or loss, which comprise loans and borrowings, and trade and other payable,
are measured at fair value, plus, any directly attributable transaction cost at the time of
initial recognition. Subsequent to initial recognition, they are measured at amortized cost
calculated using the effective interest method other than significant interest on short-term
loans and payables. Interest expense not capitalized as capital cost is recognized in
profit or loss, and is included in non-operating income or expenses.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
37
4) Derecognition of financial liabilities
The Group derecognizes a financial liability when its contractual obligation has been
discharged, cancelled or expired. The difference between the carrying amount of a
financial liability removed and the consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognized in profit or loss, and is included in
non-operating income or expenses.
5) Offsetting of financial assets and liabilities
The Group presents financial assets and liabilities on a net basis when the Group has the
legally enforceable right to offset and intends to settle such financial assets and liabilities
on a net basis or to realize the assets and settle the liabilities simultaneously.
(iv) Derivative financial instruments and hedge accounting (policy applicable from January 1,
2018)
The Group holds derivative financial instruments to hedge its foreign currency and interest rate
exposures. Derivatives are initially measured at fair value. Any attributable transaction costs
thereof are recognized in profit or loss as incurred. Subsequent to initial recognition,
derivatives are measured at fair value, and changes therein are recognized in profit or loss and
are included in the line item of non-operating income. When a derivative is designated as, and
effective for, a hedging instrument, its timing of recognition in profit or loss is determined
based on the nature of the hedging relationship. When the fair value of a derivative instrument
is positive, it is classified as a financial asset, whereas when the fair value is negative, it is
classified as a financial liability.
Embedded derivatives are separated from the host contract and accounted for separately if the
economic characteristics and risks of the non-financial asset’s host contract are not closely
related to the embedded derivatives and the host contract is not measured at FVTPL.
The Group designates its hedging instruments, including derivatives, embedded derivatives,
and non-derivative instruments for a hedge of a foreign currency risk, as a fair value hedge,
cash flow hedge, or hedge of a net investment in a foreign operation. Foreign exchange risks of
firm commitments are treated as fair value hedges.
At initial designated hedging relationships, the Group documents the risk management
objectives and strategy for undertaking the hedge. The Group also documents the economic
relationship between the hedged item and the hedging instrument, including whether the
changes in cash flows of the hedged items and hedging instrument are expected to offset each
other.
The Group shall discontinue hedge accounting prospectively only when the hedging
relationship (or a part of a hedging relationship) ceases to meet the qualifying criteria (after
taking into account any rebalancing of the hedging relationship, if applicable). This includes
instances when the hedging instrument expires or is sold, terminated or exercised.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
38
Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion
of changes in the fair value of the derivative is recognized in other comprehensive
income and accumulated in “other equity－gains (losses) on hedging instruments”.
The effective portion of changes in the fair value of the derivative that is recognized in
other comprehensive income is limited to the cumulative change in fair value of the
hedged item, determined on a present value basis, from inception of the hedge. Any
ineffective portion of changes in the fair value of the derivative is recognized
immediately in profit or loss, and is presented in the line item of non-operating income
and expenses in the statement of comprehensive income.
The Group designates only the change in fair value of the spot element of the forward
exchange contract as the hedging instrument in cash flow hedging relationships. The
change in fair value of the forward element of the forward exchange contracts is
separately accounted for as a cost of hedging and accumulated in a separate component
within equity.
When the hedged item is recognized in profit or loss, the amount accumulated in equity
and retained in other comprehensive income is reclassified to profit or loss in the same
period or in the periods during which the hedged item affects the profit or loss, and is
presented in the same accounting item with the hedged item recognized in the
consolidated statement of comprehensive income. However, for a cash flow hedge of a
forecast transaction recognized as a nonfinancial asset or liability, the amount
accumulated in “other equity－gains (losses) on hedging instruments in cash flow
hedging securities” and retained in other comprehensive income is reclassified as the
initial cost of the nonfinancial asset or liability. In addition, if that amount is a loss and
the Group expects that all or a portion of that loss will not be recovered in future periods,
it shall immediately reclassify the amount in profit or loss.
When hedge accounting for cash flow hedges is discontinued, the amount that has been
accumulated in the cash flow hedge reserve (and costs of hedging) remains in equity until
the hedged future cash flows are no longer expected to occur. Otherwise, that amount
would be adjusted within the carrying amount of the non-financial item. For other cash
flow hedges, the amount is reclassified to profit or loss in the same period or in the
periods as the hedged expected future cash flows affect the profit or loss. However, if the
hedged future cash flows are no longer expected to occur, the amount shall immediately
be reclassified from cash flow reserve (and the cost of hedging reserve) to profit or loss.
(v) Derivative financial instruments, including hedge accounting (policy applicable before January
1, 2018)
Except for the following items, the Group applies the same accounting policies as applicable
from January 2018.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
39
For derivatives that are linked to investments in equity instruments that do not have a quoted
market price in an active market and must be settled by delivery of such unquoted equity
instruments, such derivatives that are classified as financial assets are measured at amortized
cost, and are included in financial assets measured at cost; and such derivatives that are
classified as financial liabilities are measured at cost, and are included in financial liabilities
measured at cost.
Embedded derivatives are separated from the host contract and accounted for separately when
the economic characteristics and risk of the host contract and the embedded derivatives are not
closely related.
For all cash flow hedges, including hedges of transactions resulting in the recognition of
non-financial items, the amounts accumulated in the cash flow hedge reserve were reclassified
to profit or loss in the same period or periods during which the hedged expected future cash
flows affected profit or loss. Furthermore, for cash flow hedges that were terminated before
January 1, 2018, forward points were recognized immediately in profit or loss.
(h)
Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is
based on the weighted-average-cost principle and includes expenditure incurred in acquiring the
inventories, production or transition costs, and other costs incurred in bringing them to their existing
location and condition. In the case of manufactured inventories and work in progress, cost includes
an appropriate share of production overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of business, less, the
estimated costs of completion and selling expenses.
(i)
Investment in associates
Associates are those entities in which the Group has significant influence, but not control or join
control, over the financial and operating policies.
Investments in associates are accounted for using the equity method and are recognized initially at
cost. The cost of the investment includes transaction costs. The carrying amount of the
investment in associates includes goodwill arising from the acquisition, less, any accumulated
impairment losses.
The consolidated financial statements include the Group’s share of the profit or loss and other
comprehensive income of equity-accounted investees after adjustments to align the accounting
policies with those of the Group from the date that significant influence commences until the date
that significant influence ceases. When changes in an associate’s equity are not recognized in
profit or loss or other comprehensive income of the associate and such changes do not affect the
Group’s ownership percentage of the associate, the Group recognizes the changes in ownership
interests of its associate in capital surplus in proportion to its ownership.
Unrealized profits resulting from the transactions between the Group and an associate are eliminated
to the extent of the Group’s interest in the associate. Unrealized losses on transactions with
associates are eliminated in the same way, except to the extent that the underlying asset is impaired.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
40
When the Group’s share of losses exceeds its interest in associates, the carrying amount of the
investment, including any long-term interests that form part thereof, is reduced to zero, and the
recognition of further losses is discontinued except to the extent that the Group has an obligation or
has made payments on behalf of the investee.
The Group shall discontinue the use of the equity method from the date when its investment ceases to
be an associate or a joint venture. The Group shall measure the retained interest at fair value. The
difference between the fair value of retained interest and proceeds from disposal, and the carrying
amount of the investment at the date the equity method was discontinued is recognized in profit or
loss. The Group shall account for all the amounts previously recognized in other comprehensive
income in relation to that investment on the same basis as would have been required if the associates
had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in
other comprehensive income would be reclassified to profit or loss on the disposal of the related
assets or liabilities, the entity shall reclassify the gain or loss from equity to profit or loss when the
equity method is discontinued. If an entity’s ownership interest in an associate or a joint venture is
reduced while the entity continues to apply the equity method, the entity shall reclassify the
proportion of the gain or loss that had previously been recognized in other comprehensive income
relating to that reduction in ownership interest to profit or loss.
If an investment in an associate becomes an investment in a joint venture or an investment in a joint
venture becomes an investment in an associate, the Group shall continue to apply the equity method
without remeasuring the retained interest.
When the Group subscribes to additional shares in an associate at a percentage different from its
existing ownership percentage, the resulting carrying amount of the investment differs from the
amount of the Group’s proportionate interest in the net assets of the associate. The Group records
such a difference as an adjustment to investments with the corresponding amount charged or credited
to capital surplus, however, when the balance of the capital surplus arising from the investment was
insufficient, the difference charged or credited to retained earnings. If the Group’s ownership
interest is reduced due to the additional subscription to the shares of associate by other investors, the
proportionate amount of the gains or losses previously recognized in other comprehensive income in
relation to that associate shall be reclassified to profit or loss on the same basis as would be required
if the associate had directly disposed of the related assets or liabilities.
(j)
Joint venture
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement
(i.e. joint ventures) have rights to the net assets of the arrangement. A joint venture shall recognize
its interest in a joint venture as an investment and shall account for that investment using the equity
method in accordance with IAS 28 “Investments in Associates and Joint Ventures”, unless, the
entity is exempted from applying the equity method as specified in that Standard.
When assessing the classification of a joint arrangement, the Group shall consider the structure and
legal form of the arrangement, the terms in the contractual arrangement and other facts and
circumstances. The Group had previously reviewed the contractual structure of the joint
arrangement, and has now decided to reclassify the investments in “Jointly Controlled Entities”
to “Joint Ventures”. Although the investments have been reclassified, they are still recorded
under the equity method. Thus, there is no effect in the recognized assets, liabilities and other
comprehensive income.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
41
(k) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses. Cost includes expenditure that is directly attributed to the
acquisition of the asset. The cost of the software is capitalized as part of the property, plant
and equipment if the purchase of the software is necessary for the property, plant and
equipment to be capable of operating.
Each part of an item of property, plant and equipment with a cost that is significant in relation
to the total cost of the item shall be depreciated separately, unless the useful life and the
depreciation method of a significant part of an item of property, plant and equipment are the
same as the useful life and depreciation method of another significant part of that same item.
The gain or loss arising from the derecognition of an item of property, plant and equipment
shall be determined as the difference between the net disposal proceeds, if any, and the carrying
amount of the item, and it shall be recognized as other gains and losses.
(ii) Subsequent cost
Subsequent expenditure is capitalized only when it is probable that the future economic
benefits associated with the expenditure will flow to the Group. The carrying amount of those
parts that are replaced is derecognized. Ongoing repairs and maintenance are expensed as
incurred.
(iii) Depreciation
The depreciable amount of an asset is determined after deducting its residual amount, and it
shall be allocated on a systematic basis over its useful life. Items of property, plant and
equipment with the same useful life may be grouped in determining the depreciation charge.
The remainder of the items may be depreciated separately. The depreciation charge for each
period shall be recognized in profit or loss.
The depreciable amount of a leased asset is allocated to each accounting period during the
period of expected use on a systematic basis consistent with the depreciation policy the lessee
adopts for depreciable assets that are owned. If there is reasonably certainty that the lessee
will obtain ownership by the end of the lease term, the period of expected use is the useful life
of the asset; otherwise, the asset is depreciated over the shorter of the lease term and its useful
life.
Land has an unlimited useful life and therefore is not depreciated.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
42
The estimated useful lives for the current and comparative years of significant items of
property, plant and equipment are as follows:
1) Buildings: 9~50 years
2) Building improvement: 0.5~20 years
3) Machinery and equipment: 1~10 years
4) Research equipment: 1~10 years
5) Modeling equipment: 0.5~5 years
6) Other equipment: 1~15 years
Depreciation methods, useful lives, and residual values are reviewed at each reporting date. If
expectations differ from the previous estimates, the change is accounted for as a change in an
accounting estimate.
(l) Leases
(i) The Group as lessor
Lease income from operating lease is recognized in income on a straight-line basis over the
lease term. Initial direct costs incurred in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and recognized as an expense over the lease
term on the same basis as the lease income. Incentives granted to the lessee to enter into the
operating lease are spread over the lease term on a straight-line basis so that the lease income
received is reduced accordingly.
(ii) The Group as lessee
Operating leases are not recognized in the Group’s balance sheets.
Payments made under operating lease (excluding insurance and maintenance expenses) are
recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives
received are recognized as an integral part of the total lease expense, over the term of the lease.
(m) Intangible assets
(i) Goodwill
1)
Initial recognition
Goodwill arising from acquisition of subsidiaries is included in intangible assets. The
measurement of initial recognition of goodwill, please refer to note (4)(u).
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
43
2)
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses.
Goodwill related to an investment accounted for using equity method is included in the
carrying amount of the investment, and not allocated to any asset, including goodwill,
forms part of the carrying amount of the investment accounted for using the equity
method.
(ii) Research & Development
During the research phase, activities are carried out to obtain and understand new scientific or
technical knowledge. Expenditures during this phase are recognized in profit or loss as
incurred.
Expenditures arising from the development phase shall be recognized as an intangible asset if
all the conditions described below can be demonstrated; otherwise, they will be recognized in
profit or loss as incurred.
1)
2)
3)
The technical feasibility of completing the intangible asset so that it will be available for
use or sale.
Its intention to complete the intangible asset and use or sell it.
Its ability to use or sell the intangible asset.
4) How the intangible asset will generate probable future economic benefits.
5)
6)
The availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset.
Its ability to measure reliably the expenditure attributable to the intangible asset during its
development.
Capitalized expenditure arising from the development phase is measured at cost less
accumulated amortization and accumulated impairment losses.
(iii) Other intangible assets
Other intangible assets that are acquired by the Group are measured at cost, less accumulated
amortization and any accumulated impairment losses.
(iv) Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditure, including expenditure
on internally generated goodwill and brands, is recognized in profit or loss as incurred.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
44
(v) Amortization
The amortizable amount is the cost of an asset, or other amount substituted for cost, less its
residual value.
Amortization is recognized in profit or loss on a straight-line basis over the estimated useful
lives of intangible assets, other than goodwill and intangible assets with all indefinite useful life,
from the date that they are available for use. The estimated useful lives for the current and
comparative periods are as follows:
1)
Patents: the shorter of contract period and estimated useful lives
2) Royalty: amortized by contract period
3) Computer software: 1~10 years
4) Copyright: 10 years
The residual value, the amortization period, and the amortization method for an intangible asset
with a finite useful life shall be reviewed at least annually at each fiscal year-end. Any
change shall be accounted for as changes in accounting estimates.
(n)
Impairment of non-derivative financial assets
Non-derivative financial assets except for inventories, deferred tax assets, assets arising from
employee benefits and non-current assets classified as held for sale are assessed at the end of each
reporting period whether there is any indication that an asset may be impaired. If any such
indication exists, the Group shall estimate the recoverable amount of the asset. If it is not possible
to determine the recoverable amount (fair value less cost to sell and value in use) for the individual
asset, then the Group will have to determine the recoverable amount for the asset's cash-generating
unit.
The Group assesses goodwill and intangible assets, which have indefinite useful lives and are not
available for use, on an annual basis and recognizes an impairment loss on excess of carrying value
over the recoverable amount.
The recoverable amount for an individual asset or a cash-generating unit is the higher of its fair value,
less costs to sell and its value in use. If, and only if, the recoverable amount of an asset is less than
its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount.
That reduction is an impairment loss. An impairment loss shall be recognized immediately in profit
or loss.
For the purpose of impairment testing, goodwill acquired in a business combination shall, from the
acquisition date, be allocated to each of the acquirer’s cash-generating units, or groups of
cash-generating units that are expected to benefit from the synergies of the combination, irrespective
of whether other assets or liabilities of the acquire are assigned to those units or group of units. If
the carrying amount of the cash-generating units exceeds the recoverable amount of the unit, the
entity shall recognize the impairment loss and the impairment loss shall be allocated to reduce the
carrying amount of each asset in the unit. Reversal of an impairment loss for goodwill is
prohibited.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
45
The Group assesses at the end of each reporting period whether there is any indication that an
impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or
may have decreased. An impairment loss recognized in prior periods for an asset other than
goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine
the asset’s recoverable amount since the last impairment loss was recognized. If this is the case,
the carrying amount of the asset shall be increased to its recoverable amount. That increase is a
reversal of an impairment loss.
(o) Provisions
A provision is recognized if, as a result of a past event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it is probably that an outflow of economic benefits will
be required to settle the obligation. Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects the current market assessments of the time value of money
and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.
A provision for warranties is recognized when the underlying products or services are sold. The
provision is based on historical warranty data and a weighting of all possible outcomes against their
associated probabilities.
(p) Treasury stock
Repurchased shares are recognized under treasury shares (a contra-equity account) based on its
repurchase price (including all directly accountable costs), and net of tax. Gains on disposal of
treasury shares should be recognized under Capital Reserve – Treasury Shares Transactions; losses
on disposal of treasury shares should be offset against existing capital reserves arising from similar
types of treasury shares. If there are insufficient capital reserves to be offset against, then such
losses should be accounted for under retained earnings. The carrying amount of treasury shares
should be calculated using the weighted average different types of repurchase.
During the cancellation of treasury shares, Capital Reserve – Share Premiums and Share Capital
should be debited proportionately. Gains on cancellation of treasury shares should be recognized
under existing capital reserves arising from similar types of treasury shares; losses on cancellation of
treasury shares should be offset against existing capital reserves arising from similar types of treasury
shares. If there are insufficient capital reserves to be offset against, then such losses should be
accounted for under retained earnings.
(q) Recognition of Revenue
(i) Revenue from contracts with customers (policy applicable from January 1, 2018)
Revenue is measured based on the consideration to which the Group expects to be entitled in
exchange for transferring goods or services to a customer. The Group recognizes revenue when
it satisfies a performance obligation by transferring control of a good or a service to a customer.
The accounting policies for the Group’s main types of revenue are explained below.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
46
1)
Sale of goods
The Group manufactures and sells electronic products to electronic products brand
vendor. The Group recognizes revenue when control of the products has transferred,
being when the products are delivered to the customer, the customer has full discretion
over the channel and price to sell the products, and there is no unfulfilled obligation that
could affect the customer’s acceptance of the products. Delivery occurs when the
products have been shipped to the specific location, the risks of obsolescence and loss
have been transferred to the customer, and either the customer has accepted the products
in accordance with the sales contract, the acceptance provisions have lapsed, or the Group
has objective evidence that all criteria for acceptance have been satisfied.
The Group assesses sales discounts based on historical experience, management's
judgment and other known reasons. Such allowances are recognized as a deduction of
sales revenue in the same period in which sales are made. The aforementioned provisions
are expected to settle over the next year. A refund liability is recognized for expected
discounts payable to customers in relation to sales made until the end of the reporting
period. No element of financing is deemed present as the sales of electronic products are
made with a credit term which is consistent with the market practice.
A receivable is recognized when the goods are delivered as this is the point in time that
the Group has a right to an amount of consideration that is unconditional.
2)
Financing components
The Group does not expect to have any contracts where the period between the transfer of
the promised goods or services to the customer and payment by the customer exceeds one
year. As a consequence, the Group does not adjust any of the transaction prices for the
time value of money.
(ii) Revenue (policy applicable before January 1, 2018)
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value
of the consideration received or receivable, net of returns, trade discounts and volume rebates.
Revenue is recognized when persuasive evidence exists, usually in the form of an executed
sales agreement, that the significant risks and rewards of ownership have been transferred to
the customer, recovery of the consideration is probable, the associated costs and possible return
of goods can be estimated reliably, there is no continuing management involvement with the
goods, and the amount of revenue can be measured reliably. If it is probable that discounts
will be granted and the amount can be measured reliably, then the discount is recognized as a
reduction of revenue as the sales are recognized.
The timing of the transfers of risks and rewards varies depending on the individual terms of the
sales agreement.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
47
(r) Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognized as an
employee benefit expense in profit or loss in the periods during which services are rendered by
employees.
(ii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
The Group’s net obligation in respect of defined benefit pension plans is calculated separately
for each plan by estimating the amount of future benefit that employees have earned in return
for their service in the current and prior periods; that benefit is discounted to determine its
present value. The fair value of any plan assets is deducted. The discount rate is the yield at
the reporting date on government bonds that have maturity dates approximating the terms of
the Group’s obligations and that are denominated in the same currency in which the benefits
are expected to be paid.
The calculation of defined benefit obligation is performed annually by a qualified actuary using
the projected unit credit method. When the calculation results in a benefit to the Group, the
recognized asset is limited to the total of the present value of economic benefits available in the
form of any future refunds from the plan or reductions in future contributions to the plan. In
order to calculate the present value of economic benefits, consideration is given to any
minimum funding requirements that apply to any plan in the Group. An economic benefit is
available to the Group if it is realizable during the life of the plan, or on settlement of the plan
liabilities.
If the benefits of a plan are improved, the pension cost incurred from the portion of the
increased benefit relating to past service by employees, is recognized immediately in profit or
loss.
Re-measurement of net defined benefit liability (asset) (including actuarial gains, losses and the
return on plan asset and changes in the effect of the asset ceiling, excluding any amounts
included in net interest) is recognized in other comprehensive income (loss). The effect of
re-measurement of the defined benefit plan is charged to retained earnings.
The Group recognizes gains or losses on the curtailment or settlement of a defined benefit plan
when the curtailment or settlement occurs. The gain or loss on curtailment comprises any
resulting change in the fair value of plan assets and change in the present value of defined
benefit obligation.
(iii) Short term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are
expensed as the related service is provided.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
48
A liability is recognized for the amount expected to be paid under short-term cash bonus or
profit-sharing plans if the Group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee, and the obligation can be
estimated reliably.
(s) Share-based payment
The grant-date fair value of share-based payment awards granted to employee is recognized as
employee expenses, with a corresponding increase in equity, over the period that the employees
become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to
reflect the number of awards which the related service and non-market performance conditions are
expected to be met, such that the amount ultimately recognized as an expense is based on the number
of award that meet the related service and non-market performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant-date fair value of the
share-based payment is measured to reflect such conditions, and there is no true-up for differences
between expected and actual outcomes.
(t)
Income taxes
Income tax expenses include both current taxes and deferred taxes. Except for expenses related to
business combinations or recognized directly in equity or other comprehensive income, all current
and deferred taxes shall be recognized in profit or loss.
Current taxes include tax payables and tax deduction receivables on taxable gains (losses) for the
year calculated using the statutory tax rate on the reporting date or the actual legislative tax rate, as
well as tax adjustments related to prior years.
Deferred taxes arise due to temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and their respective tax bases. Deferred taxes shall not be
recognized for the following exceptions:
(i) Assets and liabilities that are initially recognized but are not related to the business
combination and have no effect on net income or taxable gains (losses) during the transaction.
(ii) Temporary differences arising from equity investments in subsidiaries or joint ventures where
there is a high probability that such temporary differences will not reverse.
(iii) Initial recognition of goodwill.
Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the
period when the asset is realized or the liability is settled based on tax rates that have been enacted or
substantively enacted by the end of the reporting period.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
49
Deferred tax assets and liabilities may be offset against each other if the following criteria are met:
(i) The entity has the legal right to settle tax assets and liabilities on a net basis; and
(ii)
the taxing of deferred tax assets and liabilities fulfill one of the below scenarios:
1)
2)
levied by the same taxing authority; or
levied by different taxing authorities, but where each such authority intends to settle tax
assets and liabilities (where such amounts are significant) on a net basis every year of the
period of expected asset realization or debt liquidation, or where the timing of asset
realization and debt liquidation is matched.
A deferred tax asset should be recognized for the carry-forward of unused tax losses, unused tax
credits, and deductible temporary differences to the extent that it is probable that future taxable profit
will be available against which the unused tax losses, unused tax credits, and deductible temporary
differences can be utilized. Such unused tax losses, unused tax credits, and deductible temporary
differences shall also be re-evaluated every year on the financial reporting date, and they shall be
adjusted based on the probability that future taxable profit that will be available against which the
unused tax losses, unused tax credits, and deductible temporary differences can be utilized.
The surtax on unappropriated earnings is recoded as current tax expense in the following year after
the resolution to appropriate retained earnings is approved in a stockholders’ meeting.
(u) Business combination
Goodwill is measured as an aggregation of the consideration transferred (which generally is
measured at fair value at the acquisition date) and as an amount of any non-controlling interest in the
acquiree, net of the acquisition-date amounts of the identifiable assets acquired and liabilities
assumed (generally at fair value). If the residual balance is negative, the Group shall re-assess
whether it has correctly identified all of the assets acquired and liabilities assumed, and recognize a
gain on the bargain purchase thereafter.
All the transaction costs incurred for the business combination are recognized immediately as the
Group’s expenses when incurred, except for the issuance of debt or equity instruments.
If the business combination is achieved in stages, the Group shall measure any non-controlling equity
interest in the acquire, either at fair value or at the non-controlling interest’s proportionate share of
the acquiree’s identifiable net assets. Other non-controlling interest is measured (1) at fair value
at the acquisition date or (2) by using other valuation techniques acceptable under the IFRS as
endorsed by the FSC.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
50
In a business combination achieved in stages, the Group shall re-measure its previously held equity
interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any,
in profit or loss. In prior reporting periods, the Group may have recognized changes in the value of
its equity interest in the acquiree in other comprehensive income. If so, the amount that was
recognized in other comprehensive income shall be recognized on the same basis as would be
required if the Group had disposed directly of the previously held equity interest. If the disposal of
the equity interest required a reclassification to profit or loss, such an amount shall be reclassified to
profit or loss.
If the initial accounting for a business combination is incomplete by the end of the reporting period
in which the combination occurs, the Group shall report in its financial statements provisional
amounts for the items for which the accounting is incomplete. During the measurement period, the
Group shall retrospectively adjust the provisional amounts recognized at the acquisition date, or
recognize additional assets or liabilities to reflect new information obtained about facts and
circumstances that existed as of the acquisition date. The measurement period shall not exceed one
year from the acquisition date.
(v) Earnings per share
The Group discloses the basic and diluted earnings per share attributable to ordinary equity holders
of the Group. The calculation of basic earnings per share is based on the profit attributable to the
ordinary shareholder of the Group divided by weighted average number of ordinary shares
outstanding. The calculation of diluted earnings per share is based on the profit attributable to
ordinary shareholders of the Group divided by weighted average number of ordinary shares
outstanding after adjustment for the effects of all dilutive potential ordinary shares. Dilutive
potential ordinary shares comprise restricted employee stock and employee compensation not yet
approved by the Board of Directors.
(w) Operating segments
An operating segment is a component of the Group that engages in business activities from which it
may incur revenues and incur expenses (including revenues and expenses relating to transactions
with other components of the Group). Operating results of the operating segment are regularly
reviewed by the Group’s chief operating decision maker to make decisions about resources to be
allocated to the segment and assess its performance. Each operating segment consists of standalone
financial information.
(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:
The preparation of the consolidated financial statements in conformity with the IFRSs endorsed by the
FSC requires management to make judgments, estimates, and assumptions that affect the application of the
accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may
differ from these estimates.
The management continues to monitor the accounting estimates and assumptions. The management
recognizes any changes in accounting estimates during the period and the impact of those changes in
accounting estimates in the next period.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
51
There are no critical judgments in applying the accounting policies that have significant effect on the
amounts recognized in the consolidated financial statements. In addition, information about assumptions
and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next
financial year is as follows:
(a) Recognition and measurement of refund liabilities (provisions)
Because of the sales returns and allowances, the Group records refund liabilities (sales returns and
allowance provisions) for estimated returns and other allowances in the same period the related
revenue is recorded. The estimate is made based on historical experience, market and economic
conditions, and any other known factors using the expected value or the most likely amount, and it
could be different from actual sales returns and allowances, therefore, the management periodically
reviews the adequacy of the estimation used. Refer to note (6)(p) and (6)(r) for further description
of the recognition of provisions and refund liabilities.
(b) Valuation of inventories
As inventories are stated at the lower of cost or net realizable value, the net realizable value of the
inventory is mainly determined based on assumptions as to future demand within a specific time
horizon. Due to the rapid industrial changes, there may be significant differences in the net realizable
value of inventories. Refer to note (6)(j) for further description of the valuation of inventories.
(6) Explanation of significant accounts:
(a) Cash and cash equivalents
Cash on hand
Checking accounts and demand deposits
Time deposits
Bonds purchased under resale agreements
December
31, 2018
December
31, 2017
$
10,834
12,144
12,389,146
6,155,475
57,033,555
63,752,594
863,010
142,500
$
70,296,545
70,062,713
Please refer to note (6)(ad) for the disclosure of the exchange rate risk, the interest rate risk and the
fair value sensitivity analysis of the financial assets and liabilities of the Group.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
52
(b) Financial assets and liabilities at fair value through profit or loss
Mandatorily measured at fair value through profit or loss:
Non-derivative financial assets
Structured deposits
Stock listed in domestic markets
Unlisted fund in domestic or foreign markets
Derivative instruments not used for hedging
Foreign exchange contracts
Swap contracts
Financial assets held-for-trading:
Derivative instruments not used for hedging
Foreign exchange contracts
Total
Current
Non-current
Financial liabilities held-for-trading:
Derivative instruments not used for hedging
Foreign exchange contracts
Swap contracts
Total
December
31, 2018
December
31, 2017
$
3,965,062
633,859
69,390
10,168
2,045
-
-
-
-
-
-
$
$
4,680,524
4,611,134
40,706
40,706
40,706
69,390
-
$
4,680,524
40,706
December
31, 2018
December
31, 2017
$
$
26,913
-
26,913
21,841
2,622
24,463
The Group uses derivative instruments to hedge foreign currency risk the Group is exposed to arising
from its operating activities. The following derivative instruments not applied hedge accounting
were classified as mandatorily measured at fair value through profit or loss on December 31, 2018
and held-for-trading financial instruments on December 31, 2017 (foreign currencies were expressed
in thousands):
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
53
December 31, 2018
Contract amount
(in thousands)
Currency
Maturity date
EUR30,200
EUR to USD January 14~March 28, 2019
USD27,300
USD to TWD February 14, 2019
EUR16,000
USD5,000
EUR1,000
USD136,900
EUR to USD February 26~March 28, 2019
EUR to USD January 10~February 11, 2019
EUR to TWD March 25, 2019
USD to BRL January 3~April 16, 2019
December 31, 2017
Contract amount
(in thousands)
Currency
Maturity date
Derivative financial assets:
Foreign exchange contracts:
Forward exchange sold
Swap contracts:
Currency Swap
Derivative financial liabilities:
Foreign exchange contracts:
Forward exchange sold
Forward exchange sold
Forward exchange sold
Forward exchange purchased
Derivative financial assets:
Foreign exchange contracts:
Forward exchange purchased
USD2,000
USD to MXN
January 30, 2018
Forward exchange purchased
USD66,500
USD to BRL
January 9~February 23, 2018
Forward exchange sold
EUR2,000
EUR to USD
January 10, 2018
Derivative financial liabilities:
Foreign exchange contracts:
Forward exchange sold
Swap contracts:
Currency swap
EUR44,000
EUR to USD
January 12~April 13, 2018
USD29,600
USD to TWD
January 25~April 25, 2018
The aforementioned stocks listed in domestic markets were recorded under available-for-sale
financial assets as of December 31, 2017. Please refer to note (6)(e).
The market risk related to the financial instruments please refer to note (6)(ae).
As of December 31, 2018 and 2017, the Group did not provide any aforementioned financial assets
as collaterals for its loans.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(c) Financial assets at fair value through other comprehensive income
Equity investments at fair value through other comprehensive income:
Stock listed in domestic markets
Stock listed in foreign markets
Stock unlisted in domestic markets
Stock unlisted in foreign markets
Total
54
December 31,
2018
$
2,730,648
400,184
1,990,100
51,363
$
5,172,295
The purpose that the Group invests in the above-mentioned equity securities is for long-term
strategies, but rather for trading purpose. Therefore, these equity securities are designated as at
FVOCI, whereas, were presented under financial assets carried at cost and available-for-sale
financial assets as of December 31, 2017. Please refer to notes (6)(e) and (6)(f).
In 2018, the Group has sold parts of its shares held in Innolux Corporation and Parawin Venture
Capital Corp., which were measured at fair value through other comprehensive income. The fair
value of the shares was $428,635 when disposed and the cumulative losses amounted to $1,513,953,
which has been transferred to retained earnings from other comprehensive income.
If there is an increase (decrease) in the market price by 5% on the reporting date of the equity
securities hold by the Group, the increase (decrease) in other comprehensive income (pre-tax) for the
year ended December 31, 2018, will be $258,615. These analyses are performed on the same basis
for the period and assume that all other variables remain the same.
The Group’s information of market risk please refer to note (6)(ad).
As of December 31, 2018, the Group did not provide any financial assets at fair value through other
comprehensive income as collaterals for its loans.
(d) Financial instruments used for hedging
(i) Cash flow hedge
The Group’s strategy is to use forward exchange contracts to hedge its foreign currency
exposure in respect of forecasted future sales. As of December 31, 2018 and 2017, the Group
did not enter into any hedge contract.
(ii) For the years ended December 31, 2018 and 2017, the profits (losses) of changes in fair value
of derivative financial instruments used for hedging reclassified from other equity to profit or
loss is recognized as revenue in the statement of comprehensive income. Please refer to note
(6)(ac).
(iii) For the years ended December 31, 2018 and 2017, the ineffective portion of cash flow hedge
recognized in loss amounted to $559 and $53,182, recorded as "other gains and losses, net".
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(e) Available-for-sale financial assets
Stocks listed in domestic markets
Stocks listed in foreign markets
Stocks unlisted in domestic markets
Stocks unlisted in foreign markets
Total
Current
Non-current
55
December
31, 2017
$
4,617,045
654,192
2,295,576
126,333
7,693,146
46,479
7,646,667
$
$
$
7,693,146
(i) The Group purchased newly issued shares of Chunghwa Picture Tubes, Ltd. (“CPT”) via
private placement in 2009. The cost was 2.5 New Taiwan dollars per share, totally amounting
to $7,000,000. The Group signed an agreement with Tatung Company (“Tatung”, the
parent company of CPT) on such matter. In accordance with the agreement, the Group has
the right to request Tatung to purchase all the CPT shares obtained via the private placement
within certain agreed periods, at the price the Group originally paid for the CPT shares plus
interest. Accordingly, since the fair value of CPT shares obtained via the private placement
were below the original costs, the Group measured the book value of the shares at its original
cost.
The Group filed an arbitration based on the agreement on March 29, 2013, requesting Tatung to
perform its obligations. The Group received the verdict on May 12, 2014. According to the
verdict, Tatung should pay $2,118,607 to the Group for purchasing all the CPT shares held by
the Group. Additionally, Tatung should pay the interest which is calculated by the annual rate
of 5% in the period from April 3, 2013 to the actual payment date. Therefore, the Group
recognized an impairment loss of $4,730,000 in the first quarter of 2014 accordingly. On
June 13, 2014, the Group filed a civil complaint with the Taiwan Taipei District Court to
revoke the arbitration award. At the end, the Taiwan Supreme Court dismissed the appeal on
January 11, 2017. The Group has sold total shares of CPT to Tatung on February 9, 2017 in
accordance with the arbitration. The selling prices of the Group was totaling $2,272,104
(including the interest), and the total loss of sale was $4,252. The price has been fully
recovered.
(ii) The Company is optimistic about the future growth of IoT, Smart Cloud and the smart products
market, and to deepen customer relationship, the Board of Directors of CIT, a 100% subsidiary
of the Company, decided to purchase the newly issued shares of Leshi Zhixin Electronic
Technology (Tianjin) Limited of March 28, 2017. The total amount of the investment is CNY
700,000 thousands, and the expected ownership interest will be 2.1507%. Since the financial
status and business of the Leshi Group has changed significantly, CIT has determined to
terminate this investment.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
56
(iii) If there is an increase in the market price of the equity securities by 5% on the reporting date,
the increase in other comprehensive income (pre-tax) for the years ended December 31, 2017,
will be $384,657. These analyses are performed on the same basis and assume that all other
variables remain the same.
(iv) As of December 31, 2017, the Group did not provide any available-for-sale financial assets as
collaterals for its loans.
(v) As of December 31, 2018, the aforementioned investments were classified as financial assets at
fair value through profit or loss and financial assets at fair value through other comprehensive
income. Please refer to notes (6)(b) and (6)(c).
(f) Financial assets at cost
Unlisted common stock in domestic markets
Unlisted fund in domestic markets
December
31, 2017
$
$
5,273
48,709
53,982
(i) The aforementioned unlisted stock and fund in domestic or foreign markets held by the Group
are measured at cost, less accumulated impairment losses on the reporting date. The fair values
of these investments cannot be measured reliably because the range of reasonable fair value
estimates is large and the probabilities for each estimate cannot be reasonably determined.
(ii) The value of the financial assets at cost held by the Group has declined materially and
permanently; therefore, the Group recognized the impairment losses of $17,838 for the year
ended December 31, 2017.
(iii) As of December 31, 2017, the Group did not provide any financial assets at cost as collaterals
for its loans.
(iv) As of December 31, 2018, the assets are presented as financial assets at fair value through
profit or loss and financial assets at fair value through other comprehensive income. Please
refer to notes (6)(b) and (6)(c).
(g) Current financial assets measured at amortized costs
Common bonds – Taiwan Star Telecom Corporation Limited (“Taiwan Star”)
$
December
31, 2018
350,000
The Group has assessed that these financial assets are held to maturity to collect contractual cash
flows, which consist solely of payments of principal and interest on the principal amount outstanding.
Therefore, these investments were classified as financial assets measured at amortized cost on
January 1, 2018. As of December 31, 2017, the aforementioned financial assets measured at
amortized costs of the Group were classified as bond investment without active market. Please refer
to note (6)(h).
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
57
As of December 31, 2018, the Group did not provide the aforementioned financial assets as
collaterals for its loans.
(h) Bond investment without active market
Common bonds – Taiwan Star Telecom Corporation Limited (Taiwan Star )
Current
Non-current
December
31, 2017
$
$
$
700,000
350,000
350,000
700,000
The Group subscribed the five-year common bonds issued by Taiwan Star via private placement for
$1,750,000 in June 2014 with an interest rate of 2%. Taiwan Star will repay the amount of
$350,000 per annum from the date of issuance till the maturity of the bond in June 2019. The
aforementioned bond investments were classified as financial assets measured at amortized cost on
December 31, 2018. Please refer to note (6)(g).
As of December 31, 2017, the Group did not provide the aforementioned financial assets as
collaterals for its loans.
(i) Notes and accounts receivable
Notes receivable from operating activities
December
31, 2018
December
31, 2017
$
102,775
158,436
Accounts receivable – measured at amortized cost
184,671,402
181,283,397
Accounts receivable – fair value through other comprehensive
income
Less: allowance for uncollectible accounts
allowance for sales returns and discounts
Notes and accounts receivable
23,020,497
-
207,794,674
181,441,833
(4,020,603)
(4,021,894)
-
(33,214)
$ 203,774,071
177,386,725
$ 203,715,965
177,272,731
Notes and accounts receivable – related parties
$
58,106
113,994
The Group has assessed a portion of its trade receivables that was held within a business model
whose objective is achieved by both collecting contractual cash flows and selling financial assets;
therefore, such trade receivables were measured at fair value through other comprehensive income on
January 1, 2018.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
58
The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of
lifetime expected loss provision for all receivables on December 31, 2018. To measure the expected
credit losses, trade receivables have been grouped based on shared credit risk characteristics and the
days past due, as well as incorporated forward looking information.
(i) The loss allowance provision of IT product segment of the Group as of December 31, 2018 was
determined as follows:
Credit rating
Level A
Level B
Level C
Carrying
amount of
accounts
receivable
$
186,203,302
Weighted- ave
rage
ECL rate
0%
11,907,279
1.208%
3,830,424
100%
$
201,941,005
Lifetime ECLs
-
Credit-impai
red
No
143,862
3,830,424
3,974,286
No
Yes
(ii) The loss allowance provision of strategically integrated product segment of the Group as of
December 31, 2018 was determined as follows:
Carrying
amount of
accounts
receivable
Weighted- aver
age ECL rate Lifetime ECLs
$
Credit rating
Level A
Level B
Level C
Level D~E
Level F
1,550,848
3,024,709
1,247,546
-
0.01%
0.11%
1.00%
-
30,566
100%
$
5,853,669
Credit-impai
red
No
No
No
-
Yes
82
3,194
12,475
30,566
46,317
-
As of December 31, 2018 the aging analysis of accounts receivable, which were past due but
not impaired, was as follows:
Overdue 1 to 180 days
Overdue 181 to 365 days
Overdue 365 days and over
December
31, 2018
$
2,919,586
15,809
25,555
$
2,960,950
As of December 31, 2017, the Group applies the incurred loss model to consider the loss
allowance provision of notes and accounts receivable, and the aging analysis of notes and
accounts receivable, which were past due but not impaired, was as follows:
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Overdue 1 to 180 days
Overdue 181 to 365 days
Overdue 365 days and over
59
December
31, 2017
$
1,293,581
15,611
457
$
1,309,649
For the years ended December 31, 2018 and 2017, the movement in the allowance for notes
and accounts receivable were as follow:
Balance at beginning of the period
$
4,021,894
173,623
858,812
2017
Individually
assessed
impairment
Collectively
assessed
impairment
2018
(IAS 39)
Adjustment on initial application of
IFRS 9
-
Balance at beginning of the period
(IFRS 9)
4,021,894
Assessment category reclassified
Impairment losses recognized
Effect of changes in exchange rates
Balance at the end of the period
$
-
(1,085)
(206)
4,020,603
695,014
2,991,636
-
3,860,273
(695,014)
(2,945)
768
161,621
Allowance for uncollectible accounts is the balance of accounts receivable which are uncollectable.
Except for evaluating the situation of the customers’ payment records and widely analyzing the
credit rating of customers, the Group also takes all the necessary procedures for collection. The
Group believes that there is no doubt for the recovery of the due but unimpaired accounts receivable,
therefore, no allowance recognized. The Group had recognized full loss for the uncollectible
accounts receivables of Leshi, however, the Group will make the utmost effort to recover the
accounts receivable, including taking proper legal actions.
The Group entered into accounts receivable factoring agreements with banks. As of December 31,
2018 and 2017, except for the amount used under the actual sales amount in accordance with certain
agreements, the factoring amount granted by the banks was USD 950,000 thousands and EUR
20,000 thousands, USD 985,000 thousands and EUR 32,000 thousands, respectively. Based on the
agreements, the Group is not responsible for guaranteeing the ability of the accounts receivable
obligor to make payment when it is affected by credit risk. Thus, this is a non-recourse accounts
receivable factoring. After the transfer of the accounts receivable, the Group can request partial
advanced amount, while the interest calculated at an agreed rate is paid to the bank in the period
during the time of receiving advance and the accounts receivable is collected. The remaining
amounts with no advance are received when the accounts receivable are settled by the customers. As
of December 31, 2018 and 2017, the factored accounts receivable with no advance amounting to $0
and $61,888, respectively, are accounted for as other receivables.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
60
The Company, customers, and banks signed the three-party contracts in which the banks purchase
accounts receivable from the Company. The total amount of the accounts receivable should not
exceed the facility limit provided by the banks to the Company’s customers. Based on the contracts,
the banks have no right to request the Company to repurchase the accounts receivable. Thus, this is
a non-recourse accounts receivable transfer. As of December 31, 2018 and 2017, account receivable
factored were recovered and derecognized since the conditions of derecognition were met.
As of December 31, 2018 and 2017, the details of the factored accounts receivable were as follows:
December 31, 2018
Accounts
receivable
factored
(gross)
$ 32,098,074
Accounts
receivable
factored
(gross)
$ 35,475,337
Purchaser
Financial
Institution
Purchaser
Financial
Institution
Advanced
amount
32,098,074
Collateral
-
Amount
derecognized
32,098,074
Interest rate
3.02%~3.52%
December 31, 2017
Advanced
amount
35,413,449
Collateral
-
Amount
derecognized
35,475,337
Interest rate
0.85%~2.56%
As of December 31, 2018 and 2017, the Group did not provide any aforementioned notes and
accounts receivable as collaterals.
(j)
Inventories
Finished goods
Work in progress
Raw materials
Raw materials in transit
December
31, 2018
33,463,627
$
December
31, 2017
22,403,402
6,830,625
7,710,311
38,526,674
38,453,542
327,996
945,457
$
79,148,922
69,512,712
(i) During the years ended December 31, 2018 and 2017, inventory cost recognized as cost of
sales amounted to $937,139,320 and $855,692,390, respectively.
(ii) The write-down of inventories to net realizable value amounted to $263,774 in the year ended
December 31, 2018. The Group reversed its allowance for inventory valuation loss amounting
to $1,447,842 due to the sale and disposal of its obsolete inventories in the year ended
December 31, 2017.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
61
(iii) As of December 31, 2018 and 2017, the Group did not provide any inventories as collaterals
for its loans.
(k)
Investments accounted for using equity method
A summary of the Group’s financial information for equity-accounted investees at the reporting
date is as follows:
Associates
Joint venture
Less: unrealized profits or losses
(i) Associates
December
31, 2018
$
7,469,153
December
31, 2017
11,894,859
16,180
29,963
7,485,333
11,924,822
(120,848)
(117,200)
$
7,364,485
11,807,622
1)
The fair value of the shares of listed company based on the closing price was as follow:
Allied Circuit Co., Ltd. (“Allied Circuit”)
Avalue Technology Inc. (“Avalue”)
December
31, 2018
December
31, 2017
$
1,061,543
1,370,293
586,743
696,471
$
1,648,286
2,066,764
2)
The Group’s share of the net gain (loss) of associates was as follows:
The Group’s share of the gain of associates
2018
2017
$
813,796
620,837
3)
The Group’s financial information for investments accounted for using the equity
method that are individually immaterial was as follows:
Carrying amount of individually immaterial associates
$
7,469,153
December
31, 2018
December
31, 2017
11,894,859
The Group’s share of the net income (loss) of
associates:
Profit from continuing operations
Other comprehensive income (loss)
Total comprehensive income
2018
2017
$
$
813,796
620,837
(287,138)
(30,637)
526,658
590,200
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
62
4)
In August 2018, the Group has sold all of its shares held in LC Future Center Limited Ltd.
(LCFC), with consideration (net of costs of disposal) amounting to USD 246,792
thousands. The transaction has been completed and the price has been fully recovered.
The Group recognized a gain of $2,511,085 (USD 83,925 thousands), which was
accounted for as other gain and loss.
(ii)
Joint venture
In April 2010, the Group and another company established a jointly controlled entity, Compal
Connector Manufacture Ltd. ("CCM"), and obtained an ownership interest of 51%. CCM’s
actual paid-in capital amounted to USD10,000 thousands. Moreover, in May 2014, the Group
and another company established a jointly controlled entity, Zheng Ying Electronics
(Chongqing) Co., Ltd., ("Zheng Ying"), and obtained an ownership interest of 51%. Zheng
Ying’s actual paid-in capital amounted to USD2,500 thousands.
The Group’s financial information for investment accounted for using the equity method that
are individually insignificant was as follows:
December
31, 2018
December
31, 2017
The carrying amount of the Group’s interests in all
individually insignificant joint ventures
$
16,180
29,963
The Group’s share of the net income (loss) of joint ventures:
2018
2017
Losses from continuing operations (also the total
comprehensive losses)
$
(16,428)
(14,270)
(iii) As of December 31, 2018 and 2017, the Group did not provide any investments accounted for
using equity method as collaterals for its loans.
(l) Changes in subsidiaries’ equity
(i) Changes in ownership interests while retaining control (increase in ownership interest)
The Group purchased 3% ownership of HengHao from non-controlling interest with an amount
of $25,203 in 2017; therefore, the Group acquired 100% ownership of HengHao.
The Group purchased shares of TTI from non-controlling interest amounting to $634 and
$10,496, respectively, in 2018 and 2017.
The following summarizes the effect of changes in equity of the parent due to changes in the
ownership interest of the subsidiaries:
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
63
Acquisition of non-controlling interest (carrying amount)
Consideration paid for the non-controlling interest
Difference
2018
2017
631
30,117
(634)
(35,699)
(3)
(5,582)
$
$
Capital surplus – difference between consideration and
carrying amount of subsidiaries acquired or disposed
$
Capital surplus – changes in ownership interests in subsidiaries
Retained earnings
$
-
-
(3)
(3)
(3,492)
89
(2,179)
(5,582)
(ii) Disposal of part of equity ownership of subsidiaries’ interest without losing control
The Group disposed 23% of CBN’s interest in 2017, and the total consideration was $413,257.
The capital surplus – difference between consideration and carrying amount of subsidiaries
acquired or disposal related to above transaction amounted to $36,508.
(iii) Changes in subsidiaries’ equity did not result in the Company’s loss of control
1)
Subsidiaries’ employee stock options exercised
CBN issued 351 thousand and 1,612 thousand new shares because of its employees'
exercised stock options in 2018 and 2017, respectively, which resulted in reducing the
Group’s ownership of CBN by 0.41% and 2.80%, respectively.
2)
Issuance of new shares for cash of subsidiaries
The Group did not purchase newly issued shares of CBN in the fourth quarter of 2018,
which resulted in reducing the Group's ownership of CBN by 7.27%.
3)
Issuance of subsidiaries’ restricted shares
Arcadyan issued 4,500 thousand restricted new shares in the year ended December 31,
2018, which resulted in reducing 0.84% interest of the Group’s ownership of Arcadyan.
4)
The following summarizes the effect of changes in equity of the parent due to changes in
the ownership interest of subsidiaries:
Capital surplus – changes in ownership interest
in subsidiaries
Retained earnings
2018
2017
$
$
(32,703)
(32,160)
(64,863)
53
(424)
(371)
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
64
(m) Material non-controlling interests of subsidiaries
The material non-controlling interests of subsidiaries were as follows:
Subsidiaries
Arcadyan Technology
Corporation
Main operation place
Taiwan
Percentage of
non-controlling interests
December 31,
2018
December 31,
2017
65%
64%
The following information of the aforementioned subsidiaries has been prepared in accordance with
the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Included in
these information are the fair value adjustment made during the acquisition and relevant difference in
accounting principles between the Group as at the acquisition date. Intra-group transactions were not
eliminated in this information.
Arcadyan’s collective financial information
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Non-controlling interests
Sales revenue
Net income
Other comprehensive income
Comprehensive income
Profit, attributable to non-controlling interests
Comprehensive income, attributable to non-controlling interests
Net cash flows from operating activities
Net cash flows from investing activities
Net cash flows from financing activities
December 31,
2018
18,638,678
$
December
31, 2017
13,121,132
2,614,802
2,460,716
(11,620,412)
(6,495,495)
$
$
$
$
$
$
$
$
(159,270)
(161,946)
9,473,798
8,924,407
6,330,768
5,896,398
2018
26,621,262
2017
20,110,209
880,183
650,310
31,652
(67,902)
911,835
582,408
567,101
431,444
587,791
387,988
1,815,108
1,075,838
(369,128)
304,029
702,117
(49,580)
Effect of exchange rate changes on cash and cash equivalents
16,667
(49,844)
Net increase (decrease) in cash and cash equivalents
$
2,164,764
1,280,443
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
65
(n) Property, plant and equipment
The cost, depreciation, and impairment of the property, plant and equipment of the Group for the
years ended December 31, 2018 and 2017, were as follows:
Buildings
and building
improvement Machinery
Other
equipment
Land
Under
construction
and
prepayment for
purchase of
equipment
Total
Cost or deemed cost:
Balance on January 1, 2018
$
1,769,326
15,100,906
23,268,462
9,759,017
1,136,868
51,034,579
Additions
Disposals and derecognitions
Reclassifications
-
-
-
1,787,027
3,354,838
1,467,955
83,609
6,693,429
(55,743)
(109,254)
(423,779)
-
(588,776)
5,030
104,891
104,690
(214,611)
-
Effect of movements in exchange rates
2,888
183,050
(417,340)
(264,979)
(2,376)
(498,757)
Balance on December 31, 2018
Balance on January 1, 2017
$
$
1,772,214
17,020,270
26,201,597
10,642,904
1,003,490
56,640,475
1,776,857
15,616,310
24,000,626
10,457,550
1,059,323
52,910,666
Additions
Disposals and derecognitions
Reclassifications
-
-
-
68,284
1,613,726
1,454,959
427,977
3,564,946
(63,174)
(214,256)
(1,975,885)
-
(2,253,315)
21,634
179,435
73,036
(274,105)
-
Effect of movements in exchange rates
(7,531)
(542,148)
(2,311,069)
(250,643)
(76,327)
(3,187,718)
Balance on December 31, 2017
$
1,769,326
15,100,906
23,268,462
9,759,017
1,136,868
51,034,579
Depreciation and impairments loss:
Balance on January 1, 2018
Depreciation for the period
Disposals and derecognitions
Effect of movements in exchange rates
Balance on December 31, 2018
Balance on January 1, 2017
Depreciation for the period
Disposals and derecognitions
Effect of movements in exchange rates
Balance on December 31, 2017
Carrying amounts:
Balance on December 31, 2018
Balance on January 1, 2017
Balance on December 31, 2017
$
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
9,239,452
17,548,800
6,066,960
738,622
2,309,302
1,547,601
(22,941)
(95,177)
(399,077)
150,520
(1,321,222)
459,407
10,105,653
18,441,703
7,674,891
9,116,263
15,782,175
7,059,551
718,593
2,321,546
1,761,108
(55,122)
(157,629)
(1,968,157)
(540,282)
(397,292)
(785,542)
9,239,452
17,548,800
6,066,960
-
-
-
-
-
-
-
-
-
-
32,855,212
4,595,525
(517,195)
(711,295)
36,222,247
31,957,989
4,801,247
(2,180,908)
(1,723,116)
32,855,212
1,772,214
6,914,617
7,759,894
2,968,013
1,003,490
20,418,228
1,776,857
6,500,047
8,218,451
3,397,999
1,059,323
20,952,677
1,769,326
5,861,454
5,719,662
3,692,057
1,136,868
18,179,367
As of December 31, 2018 and 2017, part of the Group’s property, plant and equipment were
provided as collateral for long-term borrowings. Please refer to note (8).
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
66
(o) Short-term borrowings
The details of short-term borrowings were as following:
Unsecured bank loans
Unused credit line for short-term borrowings
Range of interest rates
December
31, 2018
December 31,
2017
72,350,197
56,515,525
83,720,000
83,710,000
$
$
0.45%~5.87%
0.60%~4.30%
For information on the Group’s interest risk, foreign currency risk and liquidity risk, please refer to
note (6)(ad).
(p) Long-term borrowings
The details of long-term borrowings were as follows:
Unsecured bank loans
December 31, 2018
Annual range of
interest rate
0.79%~1.22%
Currency
TWD
Maturity year
2019~2021
$
Amount
28,396,250
Secured bank loans
TWD
1.67%
2022
Less: current portion
Total
Unused credit lines for
long-term borrowings
Unsecured bank loans
Unsecured bank loans
Secured bank loans
Less: current portion
Total
Unused credit lines for
long-term borrowings
137,813
(17,535,625)
$
10,998,438
$ 5,443,000
Currency
TWD
USD
TWD
December 31, 2017
Annual range of
interest rate
0.78%~1.22%
Maturity year
2018~2020
$
Amount
25,050,000
1.95%~1.96%
2018
1.67%~1.92%
2018~2022
2,083,200
319,688
(6,200,625)
$
21,252,263
$ 4,377,000
For information on the Group’s interest risk, foreign currency risk and liquidity risk, please refer to
note (6)(ad).
The Group pledged property, plant and equipment as collateral for its partial long-term borrowings.
Please refer to note (8).
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
67
(q) Provisions
Warranties
Sales
returns and
allowances
Total
Balance on January 1, 2018
$
387,147
1,440,292
1,827,439
Adjustment on initial application of IFRS 15
-
(1,440,292)
(1,440,292)
Balance on January 1, 2018 per IFRS 15
Provisions made during the period
Provisions used during the period
Provisions reversed during the period
Balance on December 31, 2018
Balance on January 1, 2017
387,147
398,735
(313,832)
(45,069)
426,981
-
-
-
-
-
387,147
398,735
(313,832)
(45,069)
426,981
309,844
1,532,250
1,842,094
$
$
Provisions made during the period
410,214
1,078,600
1,488,814
Provisions used during the period
(245,130)
(219,727)
(464,857)
Provisions reversed during the period
(87,781)
(950,831)
(1,038,612)
Balance on December 31, 2017
$
387,147
1,440,292
1,827,439
Provisions relate to sales of products are assessed based on historical experience, management's
judgment and other known reasons. Such allowances are recognized as a deduction of sales revenue
in the same period in which sales are made. The aforementioned provisions are expected to settle
over the next year. Due to the application of IFRS 15 on January 1, 2018, the sales returns and
allowances provisions were reclassified to refund liabilities.
(r) Refund liabilities
Refund liabilities
December
31, 2018
$
1,579,832
Due to the application of IFRS 15 from January 1, 2018, the provision of sale return and allowance
were reclassified from provision to refund liabilities.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
68
(s) Operating lease
(i) The Group as lessee
1)
The rental payables of the non-cancellable operating lease are as follows:
Less than one year
Between one and five years
More than five years
December
31, 2018
December
31, 2017
$
569,275
598,996
116,349
565,999
859,489
130,664
$
1,284,620
1,556,152
The Group leased several office areas under operating leases with the leasing terms from
1 to 19 years and had an option to renew the leases when the leases expired.
For the years ended December 31, 2018 and 2017, expenses recognized in profit or loss
under operating leases amounted to $612,239 and $565,190, respectively.
The lease contract includes those of the land and building, with their residual values
being assumed by the landlord. The rental is regularly adjusted based on the current
market price. Based on the risks and rewards of leased assets not transferred to the
Group, the Group recognized the lease as operating lease.
2)
Long-term prepaid rent – land leasehold rights
The Group acquired land leasehold rights under operating lease and was expensed
equally over 50 years. As of December 31, 2018 and 2017, land leasehold rights
accounted as long-term prepaid rents amounted to $891,147 and $571,133, respectively.
For the years ended December 31, 2018 and 2017, expenses recognized in profit or loss
under operating lease amounted to $13,302 and $13,135, respectively.
(ii) The Group as lessor
The Group leased out a few offices buildings, plants and equipment to third parties under
operating lease with lease terms of 1 to 7 years. For the years ended December 31, 2018 and
2017, rentals recognized in profit or loss amounted to $5,504 and $8,630, respectively. The
future minimum lease receivables under non-cancellable leases are as follows:
Less than one year
Between one and five years
More than five years
December
31, 2018
December
31, 2017
$
$
1,222
2,951
352
4,525
2,426
2,455
880
5,761
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
69
(t) Employee benefits
(i) Defined benefit plans
Reconciliation of defined benefit obligations at present value and plan assets at fair value were
as follows:
Present value of defined benefit obligations
Fair value of plan assets
Net defined benefit liabilities
December
31, 2018
(1,447,375)
$
December
31, 2017
(1,418,645)
737,229
712,835
$
(710,146)
(705,810)
The Group makes defined benefit plan contributions to the pension fund account with Bank of
Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labor
Standards Law) entitle a retired employee to receive retirement benefits based on years of
service and average salary for the six months prior to retirement.
1) Composition of plan assets
The Group allocates pension funds in accordance with the Regulations for Revenues,
Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds
are managed by the Labor Pension Fund Supervisory Committee. With regard to the
utilization of the funds, minimum earnings in the annual distributions on the final
financial statements shall be no less than the earnings attainable from the amounts
accrued from two-year time deposits with interest rates offered by local banks.
The balance of the Group’s labor pension reserve account in the Bank of Taiwan
amounted to $735,206 (excluding the ending balance of interest receivable) as of
December 31, 2018. For information on the utilization of the labor pension fund assets
including the asset allocation and yield of the fund, please refer to the website of the
Bureau of Labor Funds, Ministry of Labor.
2) Movements in the present value of the defined benefit obligations
The movements in the present value of defined benefit obligations for the Group were as
follows:
Defined benefit obligations on January 1
$
(1,418,645)
2018
Benefit paid by the plan
Current service costs and interest
Remeasurements of net benefit liabilities
33,560
(26,745)
(35,545)
2017
(1,362,362)
53,622
(29,493)
(80,412)
Defined benefit obligations on December 31
$
(1,447,375)
(1,418,645)
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
70
3) Movements of the fair value of defined benefit plan assets
The movements in the fair value of the defined benefit plan assets for the Group were as
follows:
2018
2017
Fair value of plan assets on January 1
$
712,835
Expected return on plan assets
Remeasurements of net benefit plan assets
Contributions paid by the employer
Benefits paid by the plan
Fair value of plan assets on December 31
$
9,841
19,280
28,833
(33,560)
737,229
734,412
11,107
(3,982)
24,920
(53,622)
712,835
4)
Expenses recognized in profit or loss
The expenses recognized in profit or loss for the years ended December 31, 2018 and
2017, were as follows:
2018
2017
Current service cost
Net interest on the net defined benefit liability
(asset)
Cost of sales
Selling expenses
Administrative expenses
Research and development expenses
$
$
$
$
7,023
9,881
16,904
817
986
3,880
11,221
16,904
8,712
10,255
18,967
1,338
1,200
4,736
11,693
18,967
5) Remeasurement of the net defined benefit liability (asset) recognized in other
comprehensive income
The Group’s remeasurements of the net defined benefit liability (assets) recognized in
other comprehensive income were as follows:
Cumulative amount on January 1
Recognized during the period
Cumulative amount on December 31
$
$
487,327
16,265
503,592
402,933
84,394
487,327
2018
2017
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
71
6) Actuarial assumptions
The following were the Group’s principal actuarial assumptions at the reporting date:
Discount rate
December 31,
2018
1.30%~1.375%
December 31,
2017
1.40%~1.63%
Future salary increasing rate
3.00%
3.00%
The expected allocation payment made by the Group to the defined benefit plans for the
one year period after the reporting date is $29,033.
The weighted-average lifetime of the defined benefit plan is 10.3~15.58 years.
7)
Sensitivity analysis
If the main actuarial assumptions had changed, the impact on the present value of the
defined benefit obligation shall be as follows:
December 31, 2018
Discount rate
Future salary increasing rate
December 31, 2017
Discount rate
Future salary increasing rate
Effects to the defined
benefit obligation
Increased
0.25%
Decreased
0.25%
(37,146)
37,746
(37,392)
37,985
38,572
(36,552)
38,773
(36,738)
Reasonably possible changes at the reporting date to one of the relevant actuarial
assumptions, holding other assumptions constant, would have affected the defined benefit
obligation by the amounts shown above. The method used in the sensitivity analysis is
consistent with the calculation on the net defined benefit liabilities in the balance sheets.
The method and assumption used in the sensitivity analysis is consistent with prior
period.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
72
(ii) Defined contribution plans
The Group allocates 6% of each employee’s monthly wages to the labor pension personal
account at the Bureau of the Labor Insurance in accordance with the provisions of the Labor
Pension Act. Under these defined contribution plans, the Group allocates the labor pension at
a specific percentage to the Bureau of the Labor Insurance without additional legal or
constructive obligations.
The Company and all subsidiaries in domestic recognized the pension costs under the defined
contribution method amounting to $381,455 and $358,153 for the years ended December 31,
2018 and 2017, respectively. Payment was made to the Bureau of Labor Insurance.
Other subsidiaries recognized the pension expenses, basic endowment insurance expenses, and
social welfare expenses amounting to $1,319,260 and $1,175,565 for the years ended
December 31, 2018 and 2017, respectively.
(u)
Income taxes
According to the amendments to the "Income Tax Act” enacted by the office of the President of the
Republic of China (Taiwan) on February 7, 2018, an increase in the corporate income tax rate from
17% to 20% is applicable upon filing the corporate income tax return effective from 2018.
(i)
Income tax expenses
1)
The amount of income tax for the years ended December 31, 2018 and 2017, was as
follows:
2018
2017
Current tax expense
Recognized during the period
$
2,092,686
10% surtax on unappropriated earnings
Tax credit of investment
Deferred tax expense
Recognition and reversal of temporary
differences
Adjustment in tax rate
27,288
(183,384)
1,936,590
393,967
(130,273)
263,694
Income tax expense
$
2,200,284
2,304,142
217,616
(337,603)
2,184,155
-
(227,915)
(227,915)
1,956,240
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
73
2)
The amount of income tax recognized in other comprehensive income for the years ended
December 31, 2018 and 2017, was as follows:
2018
2017
Items that will not be reclassified subsequently
to profit or loss:
Remeasurement of the defined benefit
obligation
Unrealized gains (losses) on equity
comprehensive income
Items that will be reclassified subsequently to
profit or loss:
Foreign currency translation differences of
foreign operations
Unrealized gain (loss) of available-for-sale
financial assets
$
$
$
$
(33,202)
(14,348)
(42,630)
(75,832)
-
(14,348)
3,293
(12,305)
-
3,293
33,658
21,353
3)
The income tax expense that was reconciled between the actual income tax expense and
profit before tax for the years ended December 31, 2018 and 2017, was as follows:
Profit before tax
Income tax calculated based on tax rate
Adjustment in tax rate
$
$
2018
11,789,585
3,454,689
(130,273)
2017
8,114,277
2,329,155
-
Estimated tax effect of tax exemption on investment
income, net
Realized investment loss
Investment tax credit
Changes in temporary differences
Adjustment of estimated difference and other
10% surtax on unappropriated earnings
(984,537)
(133,869)
(183,384)
(11,635)
162,005
27,288
(71,001)
(142,901)
(337,603)
(317,852)
278,826
217,616
$
2,200,284
1,956,240
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
74
(ii) Deferred tax assets and liabilities
Changes in the amount of deferred tax assets and liabilities for 2018 and 2017 were as follows:
Refund
liabilities
(Provision-sal
es return and
allowance)
Contract
liabilities
(Unearned
revenue)
Unrealized
exchange
losses, net
Others
Total
Deferred tax assets:
Balance on January 1, 2018
$
Recognized in profit or loss
Recognized in other
259,546
(81,521)
176,283
411,518
504,024
1,351,371
(11,328)
(248,253)
(16,683)
(357,785)
comprehensive income
-
-
-
30,362
30,362
Balance on December 31, 2018 $
Balance on January 1, 2017
$
Recognized in profit or loss
Recognized in other
178,025
296,061
(36,515)
164,955
214,787
(38,504)
163,265
277,308
134,210
517,703
1,023,948
474,830
1,262,986
2,517
61,708
comprehensive income
-
-
-
26,677
26,677
Balance on December 31, 2017 $
259,546
176,283
411,518
504,024
1,351,371
Deferred tax liabilities:
Balance on January 1, 2018
Recognized in profit or loss
Recognized in other comprehensive income
Balance on December 31, 2018
Balance on January 1, 2017
Recognized in profit or loss
Recognized in other comprehensive income
Balance on December 31, 2017
(iii) Unrecognized deferred tax assets
Unrealized
exchange
gains, net
$
$
$
(171,868)
171,868
-
-
(340,343)
168,475
-
(171,868)
Others
Total
(442,569)
(77,777)
42,177
(478,169)
(406,619)
(2,268)
(33,682)
(442,569)
(614,437)
94,091
42,177
(478,169)
(746,962)
166,207
(33,682)
(614,437)
Deferred tax assets have not been recognized in respect of the following items:
Tax effect of deductible temporary differences
Tax effect of loss carryforward
December 31,
2018
December
31, 2017
$
$
716,848
1,249,171
660,167
993,562
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
75
The Group assesses and considers that some of the income tax reduction items may be
unrealized, hence they are not recognized as deferred tax assets. In addition, according to
Income Tax Act, the loss carryforward are the losses incurred in past 10 years assessed by ROC
tax authorities which can be deducted from the net profit of current year before levied. The
items are not recognized as deferred income tax assets due to the fact that the Group may not
have sufficient taxable income in the future for the losses.
As of December 31, 2018, the tax effects on loss carryforward that have not been recognized as
deferred tax assets were as follows:
Year of loss
2009 (Assessed)
2010 (Assessed)
2011 (Assessed)
2012 (Assessed)
2013 (Assessed)
2014 (Assessed)
2015 (Assessed)
2016 (Assessed)
2017 (Assessed/Filed)
2018 (Estimated)
Expiry year
2019
Deductible amount
$
846,347
2020
2021
2022
2023
2024
2025
2026
2027
2028
14,492
399,926
689,013
234,445
41,534
645,620
1,495,220
950,585
928,674
$
6,245,856
(iv) Unrecognized deferred tax assets and liabilities related to investments in subsidiaries
The temporary differences associated with investment in subsidiaries were not recognized as
deferred income tax assets and liabilities as the Company has the ability to control the reversal
of these temporary differences which are not expected to reverse in the foreseeable future.
As of December 31, 2018 and 2017, the aggregate deductible temporary differences relating to
investments in subsidiaries not recognized as deferred tax assets amounted to $2,162,721 and
$3,205,580, respectively.
As of December 31, 2018 and 2017, the aggregate taxable temporary differences relating to
investments in subsidiaries not recognized as deferred tax liabilities amounted to $54,732,941
and $47,799,571, respectively.
(v) Examination and approval
The Company’s tax returns for the year through 2016 were assessed by the Taipei National
Tax Administration. The Company disagreed with the assessment and filed formal tax appeals
for 2012. In accordance with the conservatism, the total amounts of the assessed additional
income tax were recognized in the statements of income. Any differences will be reflected as
an adjustment after the tax is resolved.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
76
The ROC tax authorities have assessed the income tax returns of Zhaopal, Yongpal, Palcom,
Kaipal, Acbel Telecom, Zhipal, Rayonnant Technology and Ripal through 2017, of UCGI, TTI,
CBN, Panpal, Gempal, Hong Ji, Hong Jin, GLB, RBL, HengHao and Mactech Through 2016,
of Arcadyan through 2015, of ATK through June 2009.
(v) Capital and other equities
As of December 31, 2018 and 2017, the Company’s authorized common stock consisting of
6,000,000 thousand shares with a par value of 10 New Taiwan Dollars per shares, amounted to
$60,000,000 of which 4,407,147 thousand shares and 4,419,192 thousand shares, respectively, were
issued. All issued shares were paid up upon issuance.
(i) Ordinary shares
In 2015, the Company issued its employee restricted shares amounting to $493,600, wherein
the amount of $120,450 and $49,690 had been cancelled due to failure in meeting the vested
requirements in the years ended December 31, 2018 and 2017, respectively. As of December
31, 2018, the registration procedure had been completed.
(ii) Capital surplus
The balances of capital surplus were as follows:
Additional paid-in capital
Treasury share transactions
December
31, 2018
December
31, 2017
$
7,183,919
7,898,905
2,421,864
2,361,843
Difference between consideration and carrying amount arising
from acquisition or disposal of subsidiaries
Recognition of changes in ownership interests in subsidiaries
Employee restricted shares
Changes in equity of associates and joint ventures accounted
36,766
15,642
-
36,766
48,348
318,209
for using equity method
274,243
274,702
$
9,932,434
10,938,773
In accordance with the ROC Company Act, realized capital reserves can only be used to
increase the common stock or distributed as cash dividends after offsetting losses. The
aforementioned capital reserves include share premiums and donation gains. In accordance
with the Securities Offering and Issuance Guidelines, the amount of capital reserves to be
reclassified under share capital shall not exceed 10% of the actual share capital amount.
The Company’s shareholders’ meeting held on June 22, 2018 and 2017, approved to
distribute the cash dividend of $881,429 and $884,431, respectively, representing 0.2 New
Taiwan Dollars per share by using the additional paid-in capital.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
77
(iii) Retained earnings
Based on the Company’s articles of incorporation, if there is any profit after closing of books
in a given year, the Company shall first defray tax due, cover accumulated losses and set aside
ten percent of it as legal reserve and then set aside or reverse a special reserve in accordance
with laws and regulations. The balance of earnings available for distribution is composed of
the remainder of the said profit and the unappropriated retained earnings of previous years.
The earnings appropriation proposal to distribute dividend and bonus shall be proposed by the
Board of Directors and approved by the General Shareholders Meeting. The rest of the
unappropriated retained earnings shall be reserved.
The lifecycle of the industry of the Company is in the growing stage. To meet the need of the
Company for the future capital and the need of shareholders for cash flow, if there is any profit
after close of books, the cash dividend allocated by the Company each year shall not be lower
than ten percent of the total dividend (including cash and share dividend) for such year.
According to the law, when there is a deduction from stockholders' equity (excluding treasury
stock and unearned employee benefit) during the year, an amount equal to the deduction item is
set aside as a special reserve before the earnings are appropriated. A special reserve is made
available for earning distribution only after the deduction of the related shareholders’ equity
has been reversed.
1)
Legal reverse
In accordance with the Company Act, 10% of net income should be set aside as legal
reserve until it is equal to the paid-in capital. When a company incurs no loss, it may, in
pursuant to a resolution to be adopted by the shareholders’ meeting as required,
distribute its legal reserve by issuing new shares and distributing stock dividends or
distributing cash to shareholders. Only the portion of the legal reserve which exceeds
25% of the paid-in capital may be distributed.
2)
Special reverse
In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, a portion
of current earnings and previous unappropriated earnings shall be set aside as a special
reserve during earnings distribution. The amount to be set aside should equal the total
amount of contra accounts that are accounted for as deductions to other equity interests.
A portion of previous unappropriated earnings shall be set aside as a special reserve,
which should not be distributed, to account for cumulative changes to other equity
interests pertaining to prior periods. The special reserve shall be made available for
appropriation when the net deductions of other equity interests are reversed in the
subsequent periods.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
78
3)
Earnings distribution
Earnings distribution for 2017 and 2016 was approved by the shareholders during their
annual meeting held on June 22, 2018 and 2017, respectively. The relevant information
was as follows:
2017
2016
Amount
per share
Total
amount
Amount
per share
Total
amount
Cash dividends distributed
to common shareholders
$ 1.0
4,407,147
1.0
4,422,153
Earnings distribution for 2018 was approved by the Board of Directors on March 22,
2019. The relevant information was as follows:
2018
Amount
per share
Total
amount
Cash dividends distributed to common shareholders from
the unappropriated earnings
$
1.0
4,407,147
Cash dividends distributed to common shareholders from
the capital surplus
0.2
881,429
$
5,288,576
The earnings distribution for the year ended December 31, 2018 is still subject to be
approved by the shareholders during their annual meeting. The related information can be
accessed through the Market Observation Post System website after the shareholders’
meeting.
(iv) Treasury stock
The subsidiaries of the Company did not sell the ordinary shares of the Company in the years
ended December 31, 2018 and 2017. As of December 31, 2018, Panpal and Gempal,
subsidiaries of the Company, held 50,017 thousand shares of ordinary shares of the Company,
recorded as the Company’s treasury stock, with a book value of 17.6 New Taiwan dollars per
share. The total cost was $881,247. The fair value of the ordinary shares of the Company
was 17.45 and 21.30 New Taiwan dollars per share as of December 31, 2018 and 2017,
respectively.
Pursuant to the Securities and Exchange Act, the number of treasury shares purchased cannot
exceed 10% of the number of shares issued. The total purchase cost cannot exceed the sum of
retained earnings, paid-in capital in excess of par value and realized capital surplus. The
shares purchased for the purpose of transferring to employees shall be transferred within three
years from the date of share repurchase. Those not transferred within the said limit shall be
deemed as not issued by the Company and it should be cancelled. Furthermore, treasury stock
cannot be pledged for debts, and treasury stock does not carry any shareholder rights until it is
transferred.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
79
(v) Other equity interests (net-of-taxes)
Exchange
differences on
transaction of
foreign operation
financial
statements
Unrealized gain
(loss) from
financial assets at
fair value through
other
comprehensive
income
Unrealized
gain (loss) on
available-for-sale
financial assets
Unearned
compensation
for restricted
employee shares
and others
Total
Balance on January 1, 2018
$
(3,477,376)
-
(5,353,772)
(79,856)
(8,911,004)
(5,847,823)
5,353,772
(494,051)
Effect of retrospective
application
Adjusted balance on January 1,
2018
The Company
Subsidiaries
Associates
(3,477,376)
1,853,763
(5,847,823)
(34,596)
(67,150)
401,300
(162,189)
(125,317)
Balance on December 31, 2018 $
(1,852,952)
(5,606,436)
Balance on January 1, 2017
$
1,324,282
The Company
Subsidiaries
Associates
(4,606,117)
(148,238)
(47,303)
Balance on December 31, 2017 $
(3,477,376)
-
-
-
-
-
(w) Share-based payment
(i) The Company – employee restricted shares
-
-
-
-
(79,856)
79,856
(9,405,055)
1,899,023
-
-
334,150
(287,506)
(7,459,388)
(5,663,830)
(285,105)
(4,624,653)
135,628
157,203
17,227
-
-
205,249
(4,265,240)
8,965
(30,076)
(5,353,772)
(79,856)
(8,911,004)
At the meeting held on June 20, 2014, the Company’s Shareholders’ Meeting adopted a
resolution to issue 100,000 thousand new shares of employee restricted shares with no
consideration to those full time employees who meet certain requirements. The first issuance of
50,000 thousand shares had been approved by the FSC on October 30, 2014. Moreover, the
Company’s Board of Directors resolved to issue 49,980 thousand shares on January 22, 2015,
and 49,360 thousand shares had actually been issued, in which the effective date of the share
issuance was on February 25, 2015.
40%, 30% and 30% of the aforementioned restricted shares are vested, respectively, when the
employees continue to provide service for at least 2 year, 3 years and 4 years from the
registration and effective date and in the mean-time, meet the performance requirement. After
the issuance, the restricted shares are kept by a trust, which is appointed by the Company,
before they are vested. These restricted shares shall not be sold, pledged, transferred, gifted or
by any other means of disposal to third parties during the custody period. The voting rights of
these shares are executed by the custodian, and the custodian shall act based on law and
regulations. If the shares remain unvested after the vesting period, the Company will
purchase all the unvested shares without consideration and cancel the shares thereafter.
Restricted shares could receive cash and stock dividends. The aforementioned new shares are
not considered as restricted shares.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
80
The information of the Company’s restricted shares (in thousands) is as follows:
Outstanding shares on January 1
Vested during the period
Canceled during the period
Outstanding shares on December 31
-
23,571
(11,526)
(12,045)
44,740
(16,200)
(4,969)
23,571
2018
2017
The fair value of the restricted employee shares are evaluated by using the market price of
$23.50 on the grant date. As of December 31, 2018 and 2017, the unearned employee
benefits were $0 and $79,856, respectively. For the years ended December 31, 2018, due to the
failure in meeting the vested requirements of the employee restricted shares, the Group
reversed compensation cost amounted to $156,219 and capital surplus－ employee restricted
shares amounted to $318,209. Besides, due to meet the vested requirements of the employee
restricted shares, the Group recognized capital surplus–additional paid-in capital amounted to
$155,601. The compensation cost related to the employee restricted shares amounted to
$103,356 for the years ended December 31, 2017.
(ii) Arcadyan – employee restricted shares
At the meeting held on June 21, 2018, Arcadyan’s shareholders adopted a resolution to issue
4,500 thousand new shares of employee restricted shares to those Arcadyan’s full-time
employees who meet certain requirements. The issuance of restricted shares had been approved
by the FSC. The Board of Directors resolved to issue all the restricted shares on November 6,
2018, which is also the effective date of the share issuance.
3,500 thousand shares of the aforementioned restricted shares are issued without consideration.
30%, 30% and 40% of the aforementioned restricted shares will be vested, respectively, when
the employees continue to provide service for at least 2 year, 3 years and 4 years from the
registration and the effective date, and at the same time, meet the performance requirement. In
addition, when earnings per share in two continuous and complete fiscal years from the
registration and effective date are no less than 4 New Taiwan Dollars and at the same time, the
employees with the restricted shares meet the performance requirement, the other 1,000
thousand shares of the restricted shares are vested 100% at the date the shareholders approved
the financial statements for the second fiscal year. If the earnings per share in continuous and
complete fiscal years from the registration and effective date are between 3 to 4 New Taiwan
dollars and at the same time, the employees with the restricted shares meet the performance
requirement, the restricted shares are vested 75%. If the earnings per share in two continuous
and complete fiscal years from the registration and effective date are less than 3 New Taiwan
dollars, the employees with the restricted shares whether or not meet the performance
requirement, the restricted shares are vested 0%. The earnings per share mentioned above is
calculated based on the profit approved by the shareholders, and the weighted average number
of ordinary shares outstanding at the date of the restricted shares being approved by the
authority.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
81
After the issuance, the restricted shares are kept by trustee, which is designated by Arcadyan,
before they are vested. These restricted shares shall not be sold, pledged, transferred, gifted or
created other rights or encumbrances, or otherwise disposed in any other means during the
custody period. Before the vesting conditions are fully satisfied, the shareholder rights of
these shares are executed by the custodian, and the custodian shall act based on law and
regulations. If the shares remain unvested after the vesting period, Arcadyan will redeem the
shares without consideration and cancel the shares thereafter. Restricted shares could
participate in cash and stock dividends, and could join cash injection. The aforementioned
new shares arising from dividends are not considered as restricted shares.
The information of Arcadyan’s restricted shares (in thousands) is as follows:
Outstanding shares on January 1
Granted during the period
Outstanding shares on December 31
2018
-
4,500
4,500
The fair value of the restricted employee shares are evaluated by using the market price of
$57.4 on the grant date, and Arcadyan recognized capital surplus-employ restricted shares
amounted to $252,856. As of December 31, 2018, the unearned employee benefit was
$219,616.
The compensation cost related to the restricted shares amounted to $33,240 for the year ended
December 31, 2018.
(iii) TTI – employee stock options
The information about share-based payment of TTI in 2018 and 2017 was as follows:
Grant date
Granted shares (in
thousand)
Contract period
Recipients
Employee stock options
2015.10.29
7 years
Employees of TTI
1,000
Vested condition
Please refer to the issuance terms of the stock options as follows
The issuance terms of the stock options are as follows:
1)
2)
Exercise price: NT$13.5 per share.
Exercisable duration: The employees who received stock options that exceed two years
and meet the performance requirements can exercise a specific percentage in each period
as below. The exercisable duration of the options is seven years. No transfer is
allowed except for inheritance.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
82
Exercisable
40 ％
30 ％
30 ％
Period and performance requirements to exercise options
The share purchase right is effectively vested after the satisfaction
of 2 conditions: (1) Years of service must exceed 2 years after the
issuance of the right. (2) Upon vesting, the average earnings per
share of TTI for the past 2 years must exceed NT$3. If the
criteria for the said earnings per share are not fulfilled, then the
measurement period will be extended to 3 years; under this
extension, the average of the earnings per share of any 2 years
within the 3 year period must exceed NT$3.
The share purchase right is effectively vested after the satisfaction
of 2 conditions: (1) Years of service must exceed 3 years after the
issuance of the right. (2) Upon vesting, the performance
requirements need to be met, otherwise, the earnings per share of
TTI for the following year must exceed NT$3. If the criteria for
the said earnings per share are not fulfilled, then the measurement
period will be extended to another 1 year; the earnings per share
must exceed NT$3 during the extension period.
The share purchase right is effectively vested after the satisfaction
of 2 conditions: (1) Years of service must exceed 4 years after the
issuance of the right. (2) Upon vesting, the performance
requirements need to be met, otherwise, the earnings per share of
TTI for the following year must exceed NT$3. If the criteria for
the said earnings per share are not fulfilled, then the measurement
period will be extended to another 1 year; the earnings per share
must exceed NT$3 during the extension period.
The total measurement periods mentioned above may not exceed 6
years.
The earnings per share mentioned above are based on the financial statements that had
been audited and certified by a certified public accountant.
3)
4)
Exercise method: TTI would issue new shares as the options are exercised.
Exercise procedure: In accordance with TTI’s issuance and exercise rules. After
receiving the payment for share options, the entitlement certification of share options
exercised is registered as ordinary shares.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
83
The information on total options issued was as follows:
2018
2017
Weighted-ave
rage exercise
price
(NT dollars)
Weighted-ave
rage exercise
price
(NT dollars)
Shares
(in thousands)
Shares
(in thousands)
1,000 $
(400)
600
13.5
13.5
13.5
-
-
1,000 $
13.5
-
-
1,000
-
-
13.5
Outstanding shares on
January 1
Canceled during the
period
Outstanding shares on
December 31
Exercisable shares on
December 31
The exercise price range of TTI ’ s outstanding employee stock options and
weighted-average remaining contractual life of the outstanding options are as follows:
Exercise price range
Weighted average remaining contract period
December 31,
2018
December 31,
2017
13.5
3.83
13.5
4.83
The expenses (reverse) related to the share-based payment amounted to $(496) and
$1,289 for the years ended December 31, 2018 and 2017, respectively.
(iv) CBN－employee stock options
At the meeting held on May 30, 2012, May 26, 2014 and May 17, 2016, CBN’s Board of
Directors resolved to issue 1,000,000, 800,000 and 1,500,000 units of employee stock options,
respectively, with an exercisable right of one share of CBN’s ordinary shares per unit. The
information on total options issued was as follows:
1)
The first employee stock option plan
Outstanding shares on January 1
Exercised during the period
Outstanding shares on December 31
Exercisable shares on December 31
2017
Weighted-ave
rage exercise
price
(NT dollars)
Shares
101,800 $
(101,800)
10
10
-
-
-
-
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
84
The employee stock options above have been fully exercised in 2017.
2)
The second employee stock option plan
2018
2017
Weighted-ave
rage exercise
price
(NT dollars)
Shares
Weighted-ave
rage exercise
price
(NT dollars)
Shares
Outstanding shares on January 1
283,767 $
10
376,812 $
Aborted during the period
Expired during the period
Exercised during the period
Outstanding shares on December 31
Exercisable shares on December 31
-
-
(2,565)
(272,292)
8,910
8,910
(16,500)
(22,905)
(53,640)
283,767
131,967
10
10
10
10
10
10
10
10
10
10
As of December 31, 2018 and 2017, the weighted-average remaining contractual life of the
outstanding options was 2.67 and 3.67 years, respectively.
3)
The third employee stock option plan
2018
2017
Outstanding shares on January 1
234,000 $
10
1,490,000 $
Weighted-ave
rage exercise
price
(NT dollars)
Shares
Shares
Weighted-ave
rage exercise
price
(NT dollars)
10
Aborted during the period
Expired during the period
Exercised during the period
Outstanding shares on December 31
Exercisable shares on December 31
-
-
(80,400)
153,600
153,600
-
-
(15,000)
(30,000)
(1,211,000)
234,000
234,000
10
10
10
10
10
10
10
10
As of December 31, 2018 and 2017, the weighted-average remaining contractual life of the
outstanding options was 2.67 and 3.67 years, respectively.
The issuance terms of the share options are as follows:
1)
Exercise price: NT$10 per share.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
85
2)
Exercisable duration:
a)
The first employee stock options plan:
The employees who received share options being granted over two years can
exercise a specific percentage in each period as below. The exercisable duration
of the options is seven years. No transfer is allowed except for inheritance.
After the expiration of the exercisable duration, the unexercised options will be
canceled by CBN and not be re-issued anymore.
Period to exercise options
Exercisable percentage (cumulative)
2 years after options received
3 years after options received
4 years after options received
b)
The second employee stock option plan:
40 ％
70 ％
100 ％
The employees who received share options being granted over two years and are
still employed by CBN and meet requirements can exercise a specific percentage in
each period as stated below. The exercisable duration of the options is seven years.
No transfer is allowed except for inheritance. After the expiration of the exercisable
duration, the unexercised options will be canceled by CBN and not re-issued
anymore.
Period to exercise options
Exercisable percentage (cumulative)
2 years after options received
3 years after options received
4 years after options received
c)
The third employee stock option plan:
40 ％
70 ％
100 ％
The employees who received share options being granted over five months and are
still employed by CBN and meet requirements can exercise a specific percentage in
each period as stated below. The exercisable duration of the options is five years.
No transfer is allowed except for inheritance. After the expiration of the exercisable
duration, the unexercised options will be canceled by CBN and not re-issued
anymore.
Period to exercise options
Exercisable percentage (cumulative)
5 months after options received
100 ％
Exercise method: CBN would issue new shares as the options are exercised.
Exercise procedure: In accordance with CBN’s issuance and exercise rules, after
receiving the consideration of share options, the entitlement certification of share
options exercised is registered as ordinary shares once a quarter.
d)
e)
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
86
The compensation cost for the years ended December 31, 2018 and 2017 were $657 and $6,210,
respectively.
CBN adopted the Black-Scholes model to estimate the fair value on the grant date, and the
assumptions are summarized as follows:
A. The first employee stock option plan:
Original exercise price (NT dollars)
Current price (NT dollars)
Expected dividend yield rate
Expected volatility
Risk-free interest rate
Expected life of the option
10
25
0％
38.25~38.64％
0.91~1.02％
4.5~5.5 years
Weighted average fair value (NT dollars per share)
16.10~16.49
B. The second employee stock option plan:
Original exercise price (NT dollars)
Current price (NT dollars)
Expected dividend yield rate
Expected volatility
Risk-free interest rate
Expected life of the option
Weighted average fair value (NT dollars per share)
C. The third employee stock option plan:
Original exercise price (NT dollars)
Current price (NT dollars)
Expected dividend yield rate
Expected volatility
Risk-free interest rate
Expected life of the option
Weighted average fair value (NT dollars per share)
10
37.02
0%
31.07~32.77％
1.17~1.33％
4.5~5.5 years
27.62~27.92
10
24.62
0%
35.87％
0.56％
2.55 years
14.96
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
87
(v) CBN－Cash injection reserved for employees
CBN's Board of Directors resolved to implement cash injection on June 27, 2018, of which 917
thousand shares were reserved for employees. As of December 31, 2018, the relevant
information was as follows:
Grant date
Number of shares granted (in thousands)
Recipients
Vested condition
2018.11.14
917
(Note 1)
Vest immediately
(Note 1) Those CBN’ s full-time employees who meet certain requirements.
The compensation cost recorded as operating expense related to the cash injection reserved for
employees amounted to $1,053 in 2018.
(x) Earnings per share
The Group’s basic and diluted earnings per share are calculated as follows:
Basic earnings per share:
Profit attributable to ordinary shareholders of the Company
$
8,913,365
5,749,525
2018
2017
Weighted-average number of outstanding ordinary shares (in
thousands)
Diluted earnings per share:
4,356,448
4,344,646
Profit attributable to ordinary shareholders of the Company (after
adjustment of potential diluted ordinary shares)
$
8,913,365
5,749,525
Weighted-average number of outstanding ordinary shares of
potential diluted ordinary shares
Weighted-average number of outstanding ordinary shares (in
thousands)
Effect of potential diluted common stock
Employee compensation (in thousands)
Employee restricted shares (in thousands)
Weighted-average number of ordinary shares (after adjustment of
potential diluted ordinary shares) (in thousands)
4,356,448
4,344,646
59,637
682
39,737
20,670
4,416,767
4,405,053
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
88
(y) Revenue from contracts with customers
(vi) Disaggregation of revenue
2018
Strategically
Integrated
Product
Segment
IT Product
Segment
Total
Primary geographical markets:
United states
China
Netherlands
$
362,250,918
1,701,587
363,952,505
120,591,947
437,494
121,029,441
109,628,794
1,242,067
110,870,861
United Kingdom
43,595,382
2,181,037
45,776,419
Germany
Japan
Others
30,999,459
7,269,974
38,269,433
29,805,482
1,703,425
31,508,907
244,234,624
12,064,221
256,298,845
$
941,106,606
26,599,805
967,706,411
2018
Strategically
Integrated
Product
Segment
IT Product
Segment
Total
Major products:
5C related electronic products
$
939,105,238
26,112,499
965,217,737
Others
2,001,368
487,306
2,488,674
$
941,106,606
26,599,805
967,706,411
For details on revenue for the year ended December 31, 2017, please refer to note (6)(z).
(vii) Contract balances
Notes and accounts receivable (including related parties)
Less: allowance for impairment
Total
Contract liabilities
December
31, 2018
$ 207,794,674
January 1,
2018
181,487,633
(4,020,603)
(4,021,894)
$ 203,774,071
177,465,739
$
1,476,304
1,665,321
For the details on accounts receivable and allowance for impairment, please refer to note (6)(i).
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
89
The amount of revenue recognized for the year ended December 31, 2018 that was included in
the contract liability balance at the beginning of the period was $1,633,141.
The major change in the balance of contract assets and contract liabilities is the difference
between the time frame in the performance obligation to be satisfied and the payment to be
received.
(z) Revenue
The revenue of the Group were as follows:
Sale of goods
Rendering of services and other
2017
$
886,180,529
1,476,430
$
887,656,959
For the details on revenue for the year ended December 31, 2018, please refer to note (6)(y).
(aa) Employees’ and directors’ compensations
Based on the Company’s articles of incorporation, if there is any profit in a fiscal year, the
Company’s pre-tax profits in such fiscal year, prior to deduction of compensations to employees
and directors, shall be distributed to employees as compensations in an amount of not less than two
percent (2%) thereof and to directors as compensations in an amount of not 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 accumulated losses. The compensations to employees as mentioned
above may be distributed in the form of stock or cash. Employees entitled to receive the said stock or
cash may include the employees of the Company’s subordinate companies pursuant to the
Company Act.
The Company accrued and recognized its employee compensation of $930,857 and $624,296, and
directors’ compensation of $49,223 and $33,012 for the years ended December 31, 2018 and 2017,
respectively. The estimated amounts mentioned above are based on the net profit before tax without
the compensations to employees and directors of each respective ending period, multiplied by the
percentage of the compensation to employees and directors, which was approved by the management.
The estimations are recorded under operating expenses and cost. The differences between the
amounts estimated and recognized in the financial statements, if any, are accounted for as changes in
accounting estimates and recognized as profit or loss in the distribution year. If the Board of
Directors approves to distribute employee compensation in the form of stock, the number of the
shares of the employee compensation is based on the closing price of the day before the meeting of
the Board of Directors', the related information can be accessed through the Market Observation Post
System website. There is no difference between the amount approved in the Board of Directors'
meeting and those recognized in the financial statements in 2018 and 2017.
There is no difference between the amount estimated and recognized in the financial statements in
2017. The related information can be accessed through the Market observation Post System website.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
90
(ab) Non-operating income and expenses
(i) Other income
The other income for the years ended December 31, 2018 and 2017, were as follows:
Interest income
Financial assets at amortized cost
Bank deposits
Others
Dividend revenue
Overdue payable reversed as other income
Other revenue
2018
2017
$
9,992
1,444,952
8,714
279,044
41,116
349,046
15,803
845,293
16,274
169,839
251,838
267,428
$
2,132,864
1,566,475
(ii) Other gains and losses
The other gains and losses for the years ended December 31, 2018 and 2017, were as follows:
Gains (losses) on disposal of investments
Gains (losses) on financial assets and liabilities at fair value
through profit or loss, net
Foreign currency exchange gains (losses), net
Gains (losses) on disposal of property, plant, and equipment
2018
2,513,207
$
2017
(4,252)
640,835
(421,148)
(873,855)
(1,582,518)
(23,229)
110,846
$
2,256,958
(1,897,072)
(ac) Reclassification of the components of other comprehensive income
The details of reclassification of the components of other comprehensive income for the years ended
December 31, 2018 and 2017, were as follows:
Cash flow hedge:
Profit (loss) recognized
Less: reclassified to profit or loss
Profit (loss) recognized in other comprehensive income
Available-for-sale financial assets:
Net change in fair value (net of tax)
Net change in fair value reclassified to profit or loss (net of tax)
Net change in fair value recognized in other comprehensive income
2018
2017
$
$
$
3,655
3,655
-
-
-
(141,364)
(141,364)
-
292,381
-
(net of tax)
$ -
292,381
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
91
(ad) Financial instruments
(i) Credit risk
1)
The carrying amount of financial assets represents the maximum amount exposed to
credit risk.
The Group’s customers are mainly from the high-tech industry. The Group does not
concentrate on a specific customer and the sales regions are widely spread, thus there
should be no concern on the significant concentrations of accounts receivable credit risk.
And in order to mitigate accounts receivable credit risk, the Group constantly assesses the
financial status of the customers.
2) Receivables and debt securities
Information of exposure to credit risk of notes and accounts receivable, please refer to
note (6)(i).
Other financial assets at amortized cost include other receivables, investments in
corporate bonds and time deposits (previously classified as bond investment without an
active market on December 31, 2017). These financial assets are considered to have low
risk, and thus, the impairment provision recognized during the period was limited to 12
months expected losses (Regarding how the financial instruments are considered to have
low credit risk, please refer to note (4)(g)). Due to the counter parties and the performing
parties of the Group’s time deposits are financial institutions with investment grade and
above, these time deposits are considered to have low credit risk.
The movement in the allowance for the years ended December 31, 2018 was as follows:
Balance on January 1, 2018 per IAS 39
Adjustment on initial application of IFRS 9
Balance on January 1, 2018 per IFRS 9
Impairment losses reversed
The write-off of the amount which was not be recovered in the
period
Effect of changes in exchange rates
Balance on December 31, 2018
Other receivables
82,014
$
-
82,014
(16,364)
(62,071)
(2)
3,577
$
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
92
(ii) Liquidity risk
The following are the contractual maturities of financial liabilities, excluding estimated interest
payments.
Carrying
Amount
Contractual
cash flows
Within 1 year
1 ~ 2 years Over 2 years
December 31, 2018
Non-derivative financial liabilities
Secured borrowings
Unsecured borrowings
Notes and accounts payable
Other payables
Derivative financial liabilities
137,813
$
(137,813)
100,746,447 (100,746,447)
154,276,713 (154,276,713)
(14,790,757)
14,790,757
(39,375)
(89,846,447)
(154,276,713)
(14,790,757)
Forward exchange contracts:
26,913
Outflow
Inflow
(5,016,249)
4,978,708
$ 269,978,643 (269,989,271)
(5,016,249)
4,978,708
(258,990,833)
December 31, 2017
Non-derivative financial liabilities
(39,375)
(8,600,000)
(59,063)
(2,300,000)
-
-
-
-
-
-
-
-
(8,639,375)
(2,359,063)
$
319,688
83,648,725
(319,688)
(83,648,725)
142,017,824 (142,017,824)
(12,023,718)
12,023,718
(142,017,824)
(12,023,718)
(181,875)
(39,375)
(62,534,275) (13,514,450)
(98,438)
(7,600,000)
Secured borrowings
Unsecured borrowings
Notes and accounts payable
Other payables
Derivative financial liabilities
Forward exchange contracts:
Outflow
Inflow
Currency swap contracts:
Outflow
Inflow
21,841
2,622
(1,565,077)
1,549,062
(1,565,077)
1,549,062
(882,086)
880,896
$ 238,034,418 (238,027,160)
(882,086)
880,896
-
-
-
-
-
-
-
-
-
-
-
-
(216,774,897) (13,553,825)
(7,698,438)
The Group is not expecting that the cash flows included in the maturity analysis could occur
significantly earlier or at significantly different amounts.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
93
(iii) Currency risk
1)
Exposure to foreign currency risk
The Group’s significant exposure to foreign currency risk was as follows:
December 31, 2018
Exchange
rate
Foreign
currency
TWD
December 31, 2017
Exchange
rate
Foreign
currency
TWD
Financial assets
Monetary items
USD to TWD
USD to CNY
EUR to TWD
CNY to USD
Non-monetary items
THB to TWD
Financial liabilities
Monetary items
USD to TWD
USD to CNY
USD to BRL
EUR to TWD
CNY to USD
2)
Sensitivity analysis
$ 7,189,719
30.715 220,832,219 6,843,437
29.76 203,660,685
3,986
6.8672
122,430
7,035
6.5128
209,157
95,397
35.2
3,357,974
78,869
35.57
2,805,370
1,726,768
0.1456
7,722,286 1,909,447
0.1535
8,722,659
423,027
0.946
400,184
712,938
0.9176
654,192
7,145,553
30.715 219,475,660 6,369,012
29.76 189,541,797
5,451
6.8672
167,427
9,803
6.5128
291,452
140,772
3.872
4,323,812
114,225
3.308
3,399,336
31,186
35.2
1,097,747
19,335
35.57
687,746
2,778,232
0.1456
12,424,542 2,033,177
0.1535
9,287,878
The Group’s exposure to foreign currency risk arises from the translation of the foreign
currency exchange gains and losses on cash and cash equivalents, accounts receivable,
other receivables, loans and borrowings, accounts payable, and other payables that are
denominated in foreign currency. Assuming all other variable factors remain constant, a
strengthening (weakening) 5% of appreciation (depreciation) of the each major foreign
currency against Group entities’ functional currency as of December 31, 2018 and
2017, would have increased (decreased) the net profit before tax as follows. The
analysis is performed on the same basis for both periods.
USD (against the TWD)
Strengthening 5%
Weakening 5%
USD (against the CNY)
Strengthening 5%
Weakening 5%
USD (against the BRL)
Strengthening 5%
Weakening 5%
December 31,
2018
December 31,
2017
$
67,828
(67,828)
(2,250)
2,250
705,944
(705,944)
(4,115)
4,115
(216,191)
216,191
(169,967)
169,967
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
94
EUR (against the TWD)
Strengthening 5%
Weakening 5%
CNY (against the USD)
Strengthening 5%
Weakening 5%
December 31,
2018
December 31,
2017
113,011
105,882
(113,011)
(105,882)
(235,113)
235,113
(28,261)
28,261
3)
Exchange gains and losses of monetary items
As the Group deals with diverse foreign currencies, gains or losses on foreign exchange
were summarized as a single amount. For the years ended December 31, 2018 and 2017,
the foreign exchange losses, including both realized and unrealized, amounted to
$873,855 and $1,582,518, respectively.
(iv) Interest rate analysis
The interest risk exposure from financial assets and liabilities has been disclosed in the note of
liquidity risk management.
The following sensitivity analysis is based on the risk exposure to interest rate on the derivative
and non-derivative financial instruments on the reporting date. Regarding the assets and
liabilities with variable interest rates, the analysis is on the basis of the assumption that the
amount of assets and liabilities outstanding at the reporting date were outstanding throughout
the year. The rate of change is expressed as the interest rate increase or decrease by 0.25%,
when reporting to management internally, which also represents the assessment of the Group’
s management for the reasonably possible interval of interest rate change.
Assuming all other variable factors remaining constant, if the interest rate had increased or
decreased by 0.25%, the impact to the net profit before tax would be as follows for the years
ended December 31, 2018 and 2017, which would be mainly resulted from the bank savings
and borrowings with variable interest rates.
Interest increased by 0.25%
Interest decreased by 0.25%
2018
2017
$
(10,551)
10,551
(36,326)
36,326
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
95
(v) Fair value information
1)
The categories and fair value of financial instruments
The Group’s financial assets at fair value through profit or loss and financial assets at
fair value through other comprehensive income (available- for-sale financial assets) were
measured at fair value on a recurring basis. The following table shows the carrying
amounts and fair values of financial assets and financial liabilities, including their levels
in the fair value hierarchy. It shall not include fair value information of the financial
assets and financial liabilities not measured at fair value if the carrying amount is a
reasonable approximation of fair value and investments in equity instruments which do
not have any quoted price in an active market in which the fair value cannot be
reasonably measured.
December 31, 2018
Fair Value
Book value
Level 1
Level 2
Level 3
Total
Financial assets at fair value through profit
or loss–current and non-current
Derivative financial assets for non-hedging $
12,213
-
12,213
-
12,213
Non-derivative financial assets mandatorily
measured at fair value through profit or
loss
4,668,311
633,859
3,965,062
69,390
4,668,311
Subtotal
4,680,524
Financial assets at fair value through
other comprehensive income
Stocks listed on domestic markets
$
2,730,648
2,730,648
Stocks listed on foreign markets
400,184
400,184
Stocks unlisted on domestic markets
Stocks unlisted on foreign markets
Accounts receivable
Subtotal
Financial assets measured at amortized
cost
Cash and cash equivalents
Corporate bonds－current
1,990,100
51,363
23,020,497
28,192,792
70,296,545
350,000
Notes and accounts receivable, net
180,695,468
Notes and accounts receivable due from
related parties, net
Other receivables
Guarantee deposits
Subtotal
Total
58,106
1,665,249
401,753
253,467,121
$ 286,340,437
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,730,648
400,184
1,990,100
1,990,100
51,363
51,363
23,020,497
-
23,020,497
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
96
December 31, 2018
Fair Value
Book value
Level 1
Level 2
Level 3
Total
Financial liabilities at fair value through
profit or loss
Derivative financial liabilities for
non-hedging
Financial liabilities measured at
amortized cost
Short-term borrowings
Notes and accounts payable
Notes and accounts payable to related
parties
Other payables
Long-term borrowings current portion
Long-term borrowings
Subtotal
Total
$
26,913
72,350,197
152,300,093
1,976,620
14,790,757
17,535,625
10,998,438
269,951,730
$ 269,978,643
-
-
-
-
-
-
-
26,913
-
-
-
-
-
-
-
-
-
-
-
-
-
26,913
-
-
-
-
-
-
December 31, 2017
Fair Value
Book value
Level 1
Level 2
Level 3
Total
Financial assets at fair value through profit
or loss
Derivative financial assets for non-hedging $
40,706
-
40,706
Available-for-sale financial assets
Stocks listed on domestic markets
Stocks listed on foreign markets
Stocks unlisted on domestic markets
Stocks unlisted on foreign markets
Subtotal
Financial assets at cost (non-current)
Loans and receivables
Cash and cash equivalents
Bond investment without active
market-including current and non-current
Notes and accounts receivable, net
Notes and accounts receivable due from
related parties, net
Other receivables
Guarantee deposits
Subtotal
Total
4,617,045
654,192
2,295,576
126,333
7,693,146
53,982
70,062,713
700,000
177,272,731
113,994
988,008
234,493
249,371,939
$ 257,159,773
4,617,045
654,192
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,295,576
126,333
40,706
4,617,045
654,192
2,295,576
126,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
97
December 31, 2017
Fair Value
Book value
Level 1
Level 2
Level 3
Total
Financial liabilities at fair value through
profit or loss
Derivative financial liabilities for
non-hedging
Financial liabilities measured at amortized
cost
Short-term borrowings
Notes and accounts payable
Notes and accounts payable to related
parties
Other payables
Long-term borrowings current portion
Long-term borrowings
Subtotal
Total
$
24,463
56,515,525
140,381,168
1,636,656
12,023,718
6,200,625
21,252,263
238,009,955
$ 238,034,418
-
-
-
-
-
-
-
24,463
-
-
-
-
-
-
-
-
-
-
-
-
-
24,463
-
-
-
-
-
-
2)
Fair value valuation technique of financial instruments not measured at fair value
The Group estimates financial instruments that not measured at fair value by methods and
assumption as follows:
a) Bond investment without active market and financial liabilities at amortized cost
If there is quoted price generated by transactions, the recent transaction price and
quoted price data is used as the basis for fair value measurement. However, if no
quoted prices are available, the discounted cash flows are used to estimate fair
values.
3) Fair value valuation technique of financial instruments measured at fair value
a) Non-derivative financial instruments
Financial instruments trade in active markets is based on quoted market prices. The
quoted price of a financial instrument obtained from main exchanges and
on-the-run bonds from Taipei Exchange can be used as a base to determine the fair
value of the listed companies’ equity instrument and debt instrument of the
quoted price in an active market.
If a quoted price of a financial instrument can be obtained in time and often from
exchanges, brokers, underwriters, industrial union, pricing institute, or authorities
and such price can reflect those actual trading and frequently happen in the market,
then the financial instrument is considered to have a quoted price in an active
market. If a financial instrument is not in accord with the definition mentioned
above, then it is considered to be without a quoted price in an active market. In
general, market with low trading volume or high bid-ask spreads is an indication of
a non-active market.
The fair value of the listed company is determined by reference to the market
quotation.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
98
The measurements on fair value of the financial instruments without an active
market are determined using the valuation technique or the quoted market price of
its competitors. Fair value measured using the valuation technique can be
extrapolated from similar financial instruments, discounted cash flow method, or
other valuation techniques which include the model used in calculating the
observable market data at the consolidated balance sheet date.
The measurement of fair value of a non-active market financial instruments held by
the Group which do not have quoted market prices are based on the comparable
market approach, with the use of key assumptions of price-book ratio multiple or
earnings multiple of comparable listed companies as its basic measurement. These
assumptions have been adjusted for the effect of discount without the marketability
of the equity securities.
b) Derivative financial instruments
Measurement of the fair value of derivative instruments is based on the valuation
techniques that are generally accepted by the market participants. For instance,
discount method or option pricing models. Fair value of forward currency exchange
is usually determined by using the forward currency rate.
4) Transfer from one level to another
There was no transfer from one level to another in 2018 and 2017.
5) Changes in level 3
The change in level 3 at fair value in the years ended December 31, 2018 and 2017, were
as follow:
Financial assets at
fair value through
profit or loss
-
$
48,709
48,709
Financial assets
at fair value
through other
comprehensive
income
(available-for-sale
financial assets)
2,421,909
5,273
2,427,182
(475,442)
107,877
(15,082)
(3,072)
2,041,463
(3,064)
-
23,745
-
-
-
Balance on January 1, 2018
Effects of retrospective application
Adjusted balance on January 1, 2018
Total gains and losses recognized:
In profit or loss
In other comprehensive income
Purchased
Proceeds of capital reduction of investment
Disposal
Balance on December 31, 2018
$
69,390
Total
2,421,909
53,982
2,475,891
(3,064)
(475,442)
131,622
(15,082)
(3,072)
2,110,853
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
99
Financial assets at
fair value through
profit or loss
-
$
Balance on January 1, 2017
Total gains and losses recognized:
In other comprehensive income
Purchased
Proceeds of capital reduction of investment
Disposal
Balance on December 31, 2017
$
-
-
-
-
-
Financial assets
at fair value
through other
comprehensive
income
(available-for-sale
financial assets)
Total
4,511,044
4,511,044
149,300
60,180
(28,615)
(2,270,000)
2,421,909
149,300
60,180
(28,615)
(2,270,000)
2,421,909
For the years ended December 31, 2018 and 2017, total gains and losses that were
included in “other gains and losses, net”, “other comprehensive income, before tax,
available-for-sale financial assets” and “other comprehensive income, before tax,
equity instruments at fair value through other comprehensive income” were as follows:
Total gains and losses recognized:
In profit or loss before tax (as “other gains
and losses, net”)
In other comprehensive income (as “other
comprehensive income, before tax,
available-for-sale financial assets”)
In other comprehensive income (as “other
comprehensive income, before tax, equity
instruments at fair value through other
comprehensive income”)
2018
2017
(3,064)
-
-
149,300
$
$
$
(475,442)
-
6) The quantified information for significant unobservable inputs (level 3) used in fair value
measurement
The Group’s financial instruments that use level 3 input to measure fair values include
financial assets at fair value through other comprehensive income－equity instruments,
financial assets at fair value through profit or loss－equity securities investment and
available-for-sale financial assets－equity investment.
Most of fair value measurements of the Group which are categorized as equity investment
into level 3 have several significant unobservable inputs. Significant unobservable
inputs of equity investments without quoted price are independent of each other.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
100
The quantified information for significant unobservable inputs was as follows:
Valuation
technique
Comparable
market approach
(Price-Book ratio
method and
Earnings
multiplier
method)
Item
Financial assets at fair
value through other
comprehensive
income
(available-for-sale
financial assets)－
equity investment
without an active
market
Significant
unobservable inputs
Price-Book ratio
multiples (1.33~5.86
and 1.7671~2.63,
respectively, on
December 31, 2018
and 2017)
Multiples of earnings
(2.32~14.97 and 15,
respectively, on
December 31 2018
and 2017)
Lack-of-Marketability
discount rate
(40%~82% and
20%~65%,
respectively, on
December 31, 2018
and 2017)
Net asset value
Inter-relationships
between significant
unobservable inputs
and fair value
The higher the
multiple is, the
higher the fair value
will be.
The higher the
multiple is, the
higher the fair value
will be.
The higher the
Lack-of-Marketabilit
y discount rate is,
the lower the fair
value will be.
Inapplicable
Net asset value
method
Financial assets at fair
value through other
comprehensive
income
(available-for-sale
financial assets)
Financial assets at fair
value through profit or
loss – investment in
private placement and
private equity fund
Net asset value
method
Net asset value
Inapplicable
7) Sensitivity analysis for fair value of financial instruments using level 3 inputs
The Group’s fair value measurement on financial instruments is reasonable. However,
the measurement would be different if different valuation models or valuation parameters
are used. For financial instruments using level 3 inputs, if the valuation parameters
changed, the impact on other comprehensive income or loss are as follows:
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
101
Other comprehensive
income
Input
Move up
or down
Favorable
change
Unfavorable
change
December 31, 2018
Financial assets at fair
value through other
comprehensive
income
December 31, 2017
Available-for-sale
financial assets
Price-Book ratio
multiples
Multiples of earnings
Lack-of-Marketability
discount rate
Price-Book ratio
multiples
Multiples of earnings
Lack-of-Marketability
discount rate
5%
$
28,137
28,119
5%
5%
5%
5%
5%
$
$
$
$
$
28,210
2,093
27,202
2,053
2,656
5,112
5,944
2,774
5,097
6,047
The favorable and unfavorable changes reflect the movement of the fair value, in which
the fair value is calculated by using the different unobservable inputs in the valuation
technique. The table above shows the effects of one unobservable input, without
considering the inter-relationships with another unobservable input for financial
instrument, if there are one or more unobservable inputs.
8) Offsetting financial assets and financial liabilities
The Group has financial instruments transactions applicable to the International Financial
Reporting Standards No. 32 Sections 42 endorsed by the FSC which required for
offsetting. Financial assets and liabilities relating to those transactions are recognized in
the net amount of the balance sheets.
The following tables present the aforesaid offsetting financial assets and financial
liabilities.
Unit: thousands of New Taiwan Dollars / thousands of US Dollars
December 31, 2018
Financial assets that are offset which have an exercisable master netting arrangement or
similar agreement
Gross
amounts of
financial
liabilities
offset
in the
balance
Gross amounts
of recognized
financial assets
(a)
Net
amount of
financial
assets
presented
in
Amounts not offset in the
balance sheet (d)
the balance
sheet
Financial
instrumen
Cash
collateral
Net amount
(e)=(c)-(d)
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
101
sheet
(b)
(c)=(a)-(b)
Other current assets $
306,259
306,259
-
(USD 9,971 )
(USD
9,971 )
ts
-
received
-
-
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
102
December 31, 2018
Financial liabilities that are offset which have an exercisable master netting arrangement or
similar agreement
Gross
amounts of
financial
assets
offset in
the
balance
sheet
(b)
Gross amounts
of recognized
financial liabilities
(a)
Net
amount of
financial
liabilities
presented
in
Amounts not offset in the
balance sheet (d)
the balance
sheet
(c)=(a)-(b)
Financial
instrumen
ts
Cash
collateral
received
Net amount
(e)=(c)-(d)
Short-term borrowings $
306,259
306,259
-
-
-
-
(USD 9,971 )
(USD
9,971 )
(ae) Financial risk management
(i) Overview
The Group is exposed to the following risks arising from financial instruments:
1) Credit risk
2) Liquidity risk
3) Market risk
In this note expressed the information on risk exposure and objectives, policies and procedures
of risk measurement and management of the Group. For detailed information, please refer to
the related notes of each risk.
(ii) Structure of risk management
The Group’s finance management department provides business services for the overall
internal department. It sets the objectives, policies and processes for managing the risk and
the methods used to measure the risk arising from both the domestic and international financial
market operations.
The Group minimizes the risk exposure through derivative financial instruments. The Board
of Directors regulated the use of derivative financial instruments in accordance with the Group’
s policy about risks arising from financial instruments such as currency risk, interest rate risk,
credit risk, the use of derivative and non-derivative financial instruments and the investments
of excess liquidity. The internal auditors of the Group continue with the review of the amount
of the risk exposure in accordance with the Group’s policies and the risk management
policies and procedures. The Group has no transactions in financial instruments (including
derivative financial instruments) for the purpose of speculation.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
102
(iii) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the Group’s
receivables from customers and investment securities.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
103
1) Accounts receivable and other receivables
The Group has established a credit policy under which each new customer is analyzed
individually for creditworthiness before the Group’s standard payment and delivery
terms and conditions are offered. The Group’s review includes external ratings, when
available, and in some cases bank references. Purchase limits are established for each
customer, and these limits are reviewed periodically.
2)
Investments
The credit risks exposure in the bank deposits, investments with fixed income and other
financial instruments are measured and monitored by the Group’s finance department.
Since the Group ’ s transaction counterparties and the contractually obligated
counterparties are banks, financial institutes and corporate organizations with good
credits, there are no compliance issues, and therefore, no significant credit risk.
3) Guarantees
Pursuant to the Group’s policies, it is only permissible to provide financial guarantees
to subsidiaries and companies that the Group has business with. As of December 31,
2018 and 2017, the Group did not provide any guarantees to other companies besides its
subsidiaries.
(iv) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations
associated with its financial liabilities which be settled by delivering cash or another financial
asset.
The Group manages and maintains sufficient cash and cash equivalents so as to cope with its
operations and mitigate the effects of fluctuations in cash flows. The Group’s management
supervises the banking facilities and ensures in compliance with the terms of the loan
agreements. Please refer to notes (6)(o) and (6)(p) for unused credit lines of short-term and
long-term borrowings as of December 31, 2018 and 2017.
(v) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest
rates and equity prices which will affect the Group’s income or the value of its holdings of
financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimizing the return.
1) Currency risk
The Group is exposed to currency risk on sales, purchases and borrowings that are
denominated in a currency other than the functional currencies of the Group. The
currencies used in these transactions are primarily denominated in TWD, USD, EUR and
CNY.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
104
As for other monetary assets and liabilities denominated in other foreign currencies, when
short-term imbalance takes place, the Group buys or sells foreign currencies at spot rate
to ensure that the net exposure is kept on an acceptable level.
2)
Interest rate risk
The Group borrows funds on fixed and variable interest rates, which has a risk exposure
to changes in fair value and cash flow. Therefore, the Group manages the interest rates
risk by maintaining an adequate combination of fixed and variable interest rates.
3) Other price risk
The Group is exposed to equity price risk arising from investments in listed equity
securities.
(af) Capital management
The policy of capital management made by the Board of Directors is to maintain a strong capital base
so as to stabilize the confidence of the investors, creditors and the public market and to sustain future
development of the business. Capital consists of ordinary shares, capital surplus, retained earnings
and non-controlling interests. The Board of Directors monitors the return on capital as well as the
level of dividends to ordinary shareholders.
The Group monitors the capital structure by way of periodical review the debt ratio. As of
December 31, 2018 and 2017, the debt ratio was as follows:
Total liabilities
Total assets
Debt ratio
December 31,
2018
$ 286,632,975
December
31, 2017
254,708,449
$ 399,794,823
363,356,421
72
%
70
%
The Group could purchase its own shares in the public market in accordance with the corresponding
rules and regulations. The timing of the purchases depends on market prices.
As of December 31, 2018, there were no changes in the Group’s approach of capital management.
(ag) Investing and financing activities not affecting current cash flow
There are no investing and financing activities which did not affect the current cash flow in the year
ended December 31, 2018.
Reconciliations of liabilities arising from financing activities were as follows:
Long-term borrowings
Short-term borrowings
Total liabilities from financing activities
January 1,
2018
27,452,888
56,515,525
83,968,413
$
$
Cash flow
1,081,175
15,834,672
16,915,847
December
31, 2018
28,534,063
72,350,197
100,884,260
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
105
(7) Related-party transactions:
(a) Name and relationship with related parties
The followings are the entities that have had transactions with related party during the periods
covered in the financial statement.
Name of related party
Relationship with the Group
Compal Precision Module (Jiangsu) Co., Ltd.
Changbao Electronic Technology (Chongqing) Co.,
An associate
An associate
Ltd.
An associate
LCFC (Note 1)
An associate
Avalue Technology Inc. (“Avalue”)
Crownpo Technology Inc. (“Crownpo”)
An associate
Allied Circuit Co., Ltd. (“Allied Circuit”) An associate
An associate
Kinpo Group Management Consultant Company
(“Kinpo Group Management”)
Compal Connector Manufacture Ltd. (“CCM”) A joint venture company
AcBel Polytech Inc. (“AcBel”) and its
The same chairman of the board with the
Company
subsidiaries
Note 1: In August 2018, the Group had sold all its shares of LCFC and no longer had significant
influence over it. Therefore LCFC is not a related party of the Group since September 2018.
(b) Transactions with key management personnel
Key management personnel remunerations comprised:
Short-term employee benefits
Post-employment benefits
Share-based payments
2018
2017
$
660,609
508,624
7,984
(78,216)
8,319
71,545
$
590,377
588,488
There are no termination benefits and other long-term benefits. Please refer to note (6)(w) for
explanations related to share-based payments.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
106
(c) Significant related-party transactions
(i)
Sale of goods to related parties
The amounts of significant sales transactions between the Group and related parties were as
follows:
Associates
Other related parties
2018
2017
$
$
323,587
529,006
4,455
2,020
328,042
531,026
Sales prices for related parties were similar to those of the third-party customers. The
collection period was 60~120 days for related parties.
(ii) Purchase of goods from related parties
The amounts of significant purchase transactions between the Group and related parties were as
follows:
Associates
Other related parties
Joint venture
2018
2017
$
4,010,999
4,446,200
1,365,892
95,900
610,635
77,638
$
5,472,791
5,134,473
Purchase prices and payment period from related parties were similar to those from third-party
suppliers. The payment period was 60~165 days for related parties.
(iii) Receivables due from relate parties
The receivables arising from the transactions mentioned above and others on behalf of related
parties were as follows:
Account
Related-party categories
Notes and accounts
Associates
receivable
Notes and accounts
Other related parties
receivable
Other receivables
Joint venture
December
31, 2018
December
31, 2017
$
56,701
113,988
1,405
120
6
179
$
58,226
114,173
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
107
(iv) Payables to related parties
The payables arising from the transactions mentioned above and rendering of services from
other related parties were as follows:
Account
Notes and accounts
payable
Related-party categories
Associates
December
31, 2018
December
31, 2017
$
1,245,574
1,351,036
Notes and accounts
Other related parties
705,761
245,253
payable
Notes and accounts
Joint venture
payable
Other payables
Associates
25,285
40,367
1,019
154
$
1,977,639
1,636,810
(8) Pledged assets:
The carrying values of pledged assets were as follows:
Pledged Assets
Other current assets
Subject
December
31, 2018
December
31, 2017
Bail for court mandatory execution
$
41,090
26,510
Property, plant and
Long-term borrowings (including current portion)
equipment
(note)
715,913
1,151,730
Other non-current assets Guarantee of post-release duty payment to the
customs and guarantee of the customs
500
14,241
$
757,503
1,192,481
Note: Part of long-term borrowings had been settled in 2018, but the assets of property－land still were
pledged as collaterals.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
108
(9) Commitments and contingencies:
The details of commitments and contingencies were as follows:
(a) On May 17, 2017, Qualcomm Inc. filed a lawsuit to the Southern District Court of California, USA
against the Group for not paying the royalties of the patent license agreement. The Group has filed
counterclaims against Qualcomm Inc. based on the antitrust law in the same court on July 19, 2017.
The Group has engaged counsels to defend the lawsuits. The final result of this case is subject to
future litigation procedures; therefore, there is no significant impact on the Group's business and
financial performance in the current year.
(b) The Group entered into various patent license agreements with third parties, and was required to
make royalty payments of a predetermined amount periodically.
(c) As of December 31, 2018 and 2017, the Group's signed commitments to purchase property, plant and
equipment amounted to $187,872 and $395,217, respectively.
(d) Please refer to note (6)(s) for the rental payables in the future years, which are calculated based on
the agreements signed by the Group for the office areas and plants under operating leases.
(10) Losses due to major disasters: None
(11) Subsequent events: None
(12) Other:
(e) The employee benefits, depreciation and amortization expenses by categorized function are
summarized as follows:
By function
2018
By item
Employee benefits
Operating
costs
Operating
expenses
Total
Operating
costs
2017
Operating
expenses
Total
Salary
17,181,336 11,515,507 28,696,843
14,724,727
10,308,761 25,033,488
Labor and health insurance
826,628
744,593
1,571,221
770,050
723,811
1,493,861
Pension
Others
Depreciation
Amortization
1,242,331
475,288
1,717,619
1,101,172
451,513
1,552,685
2,641,948
578,881
3,220,829
2,598,425
558,734
3,157,159
4,100,520
495,005
4,595,525
4,331,671
469,576
4,801,247
55,897
289,250
345,147
16,274
367,151
383,425
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
109
(13) Other disclosures:
(a)
Information on significant transactions:
The following were the information on significant transactions required by the “Regulations
Governing the Preparation of Financial Reports by Securities Issuers” for the Group for the year
ended December 31, 2018:
(i) Loans to other parties:
Name of
lender
Name of
borrower
Account
name
The
UCGI
Company
The
HengHao
Other
receivables
〃
Y
Related
party
Y
No
0
0
Highest
balance of
financing to
other parties
during the
period
Ending
balance
500,000
250,000
402,354
199,618
Actual
usage
amount
during the
period
220,000
Range of
interest rates
during the
period
1.2%
Purposes of
fund
financing for
the borrower
Short-term
financing
199,618 1.8%~2.82% 〃
Company
1 CIH
2 CPI
2 CPI
3 CET
4 CPC
5 CIT
5 CIT
6 PFG
CEP
CEB
CVC
CDE
CDE
〃
Y
108,343
107,503
44,537
3.50%
〃
〃
Y
437,925
-
-
2.50%
〃
〃
Y
307,150
307,150
127,467
3.2%
〃
〃
Y
1,405,800
-
-
4.35%
〃
〃
Y
1,377,900 1,341,600 1,341,600
2.20%
〃
CCI Nanjing 〃
Y
4,316,900 2,150,050 2,150,050 2.50%~2.76% 〃
Rayonnant
〃
Y
67,080
67,080
-
4.35%
〃
(Taicang)
CEB
〃
Y
309,550
307,150
307,150
2.50%
〃
Transaction
amount for
business
between two
parties
-
-
-
-
-
-
-
-
-
-
Reasons
for
short-term
financing
Operating
demand
〃
〃
〃
〃
〃
〃
〃
〃
〃
7 Arcadyan
Arcadyan
〃
Y
122,860
122,860
-
1.00%
AU
7 Arcadyan
Arcadyan
〃
Y
245,720
245,720
33,787
1.00%
Arcadyan
Brasil
CNC
8
Holding
〃
Y
522,155
522,155
-
1.00%
Transaction
for business
between two
parties
〃
1,535,750
307,150
-
-
Short-term
financing
-
Operating
financing
(In Thousands of New Taiwan Dollars)
Collateral
Allowance
for bad debt Item Value
Individual
funding loan
limits
Maximum
limit of fund
financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
900,177
900,177
4,824,445
21,144,729 42,289,458
(Note 1)
21,144,729 42,289,458
(Note 1)
34,926,977 34,926,977
(Note 2)
900,177
(Note 3)
900,177
(Note 3)
4,824,445
(Note 4)
2,040,377
(Note 5)
20,445,466 20,445,466
(Note 6)
20,445,466 20,445,466
(Note 6)
421,799
(Note 7)
3,626,457
(Note 8)
2,040,377
1,228,600
421,799
245,720
970,670
3,626,457
(Note 8)
970,670
(Note 9)
Note 1: According to the Company’s Procedures of Lending Funds to Other Parties, the total amount of loans to others shall not exceed 40% of the net worth of the Company.
When a short-term financing facility with the Company is necessary, the total amount for lending to any company shall not exceed 80% of the borrower’s net worth,
nor shall it be more than 50% of the Company’s lendable amount limit, and shall be combined with the company’s endorsements/guarantees for calculation. In
addition, the total amount lendable to 100% directly or indirectly owned subsidiaries by the Company is unrestricted by the aforesaid restriction of 80%, but the
maximum amount shall not exceed 50% of the Company’s lendable limit, and shall be combined with the company’s amount of loans to others when calculating.
Note 2. According to CIH’s Procedures for Lending Funds to Other Parties, the total amount of loans to others shall not exceed 40% of the net worth of CIH. When a
short-term financing facility with CIH is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed
50% of CIH’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the
ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the
maximum amount shall not exceed the net worth of CIH, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 3. According to CPI’s Procedures for Lending Funds to Other Parties, the total amount of loans to others shall not exceed 40% of the net worth of CPI. When a
short-term financing facility with CPI is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed
50% of CPI’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the
ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the
maximum amount shall not exceed the net worth of CPI, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 4. According to CET’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CET. When a
short-term financing facility with CET is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed
50% of CET’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to
the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but
the maximum amount shall not exceed the net worth of CET, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 5. According to CPC’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CPC. When a
short-term financing facility with CPC is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed
50%
of CPC’s total amount of capital lent, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate
parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum
amount shall not exceed the net worth of CPC, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
110
Note 6. According to CIT’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CIT. When a
short-term financing facility with CIT is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed
50%
of CIT’s total amount of capital lent, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate
parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum
amount shall not exceed the net worth of CIT, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 7. According to PFG’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of PFG. When a
short-term financing facility with PFG is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed
50% of PFG’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the
ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the
maximum amount shall not exceed the net worth of PFG, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 8. According to Arcadyan’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Arcadyan. To
borrowers having business relationship with Arcadyan, the total amount for lending the borrower shall not exceed 80% of the transaction amount in the last fiscal year
or the expecting amount for the current year, nor shall it exceed 20% of the net worth of Arcadyan. Also, the amount shall be combined with the Arcadyan’s
endorsements/guarantees for the borrower when calculating. When a short-term financing facility is necessary, the borrower should be Arcadyan’s investee. The total
amount for lending the borrower shall not exceed 80% of the net worth of the borrower, nor shall it exceed 20% of the net worth of Arcadyan, and shall be combined
with the Arcadyan’s endorsements/guarantees for the borrower when calculating.
Note 9. According to Arcadyan Holding’s Procedures of Lending Funds to Other Parties, the total amount of loans to others shall not exceed the net worth of Arcadyan
Holding. When a short-term financing facility is necessary, the borrower should be Arcadyan Holding’s investee. The total amount for lending the borrower shall
not exceed the net worth of Arcadyan Holding, and shall be combined with the Arcadyan Holding’s endorsements/ guarantees for the borrower when calculating.
Note 10. The transactions had been eliminated in the consolidated financial statements.
(ii) Guarantees and endorsements for other parties:
Name of
guarantor Name
The
CEB
No.
0
Company
0 〃
CEP
1 Arcadyan Arcadya
n Brasil
Counter-party of
guarantee and
endorsement
Relationship
with the
Company
(Note 3)
Balance of
guarantees
Limitation on
amount of
guarantees and
endorsements
for a specific
enterprise
Highest
balance for
guarantees and
endorsements
during
the period
26,430,911
61,910
and
endorsements
as of
reporting date
61,430
Actual
usage
amount
during the
period
61,430
Property
pledged for
guarantees and
endorsements
(Amount)
-
Ratio of
accumulated
amounts of
guarantees and
endorsements
to net worth of
the latest
financial
statements
Maximum
amount for
guarantees
and
endorsements
0.06% 52,861,823
(Note 1)
(In Thousands of New Taiwan Dollars)
Parent
company
endorsements/
Subsidiary
endorsements/
guarantees to
third parties on
behalf of
subsidiary
Y
guarantees
to third parties
on behalf of
parent company
-
Endorsements/
guarantees to
third parties
on behalf of
companies in
Mainland
China
-
(Note 2)
26,430,911
315,364
263,749 263,749
(Note 5)
1,208,819
245,720
245,720
-
-
-
0.25% 52,861,823
(Note 1)
2.71%
3,626,457
(Note 4)
Y
Y
-
-
-
-
Note 1: According to the Company’s Procedures for Endorsement and Guarantee, the total amount of endorsements/ guarantees the Company or the Group is permitted to make
shall not exceed 50% of the Company’s net worth. Endorsements/ guarantees the Company and the Group are permitted to make for a single company shall not exceed
25% of the Company’s net worth. For entities having business relationship with the Company, the amount of endorsements/ guarantees for a single company shall not
exceed 80% of the transaction amount in the last fiscal year or the expecting amount of the current year, and shall be combined with the amount lend to others when
calculating. The amount of endorsements/ guarantees permitted to make between subsidiaries whose over 90% of its voting shares are owned, directly or indirectly, by
the Company shall be no more than 10% of the net worth of the Company. The amount of endorsements/ guarantees permitted to make between directly or indirectly
wholly owned subsidiaries is not limited by the aforementioned restriction, only the maximum amount shall be no more than 25% of the net worth of the Company.
Note 2: Subsidiary whose over 50% common stock is directly owned.
Note 3: Subsidiary whose over 50% common stock is indirectly owned.
Note 4: According to Arcadyan's Procedures for Endorsement and Guarantee, the total amount shall not exceed 40% of the net worth for latest financial statements audited or
reviewed by Certified Public Accountants, and the amount for a single company shall not exceed 1/3 of the total amount.
Note 5: Subsidiary whose 100% common stock is directly owned by Arcadyan.
(iii) Securities held as of December 31, 2018 (excluding investment in subsidiaries, associates and
joint ventures):
Name of
holder
The
Company
Category and
name of
security
Common bond－Taiwan Star
Relationship
with security
issuer
-
Taiwan Star
-
Account
name
Financial assets at
amortized cost-current
Financial assets at fair
value through other
comprehensive
income-non-current
Ending balance
Shares/Unit
s
(thousands)
-
Carrying
value
Holding
percentage
(%)
Fair value
350,000 -
-
(In Thousands of shares/ units)
The highest holding
in the period
Shares/
Units
(thousands)
-
Holding
percentage
(%)
-
Note
98,046
734,368 3%
734,368
98,046 3%
Kinpo Electronics, Inc. ("Kinpo") The same
Cal-Comp Electronics
("Thailand") Public Co., Ltd.
Innolux Corporation
(“Innolux”)
chairman of the
Company
〃
-
〃
〃
〃
124,044
1,252,842 9%
1,252,842
124,044 9%
239,631
400,184 5%
400,184
239,631 5%
109,227
1,061,690 1%
1,061,690
134,877 1%
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
111
Name of
holder
Category and
name of
security
Chipbond Technology Corp.
(“Chipbond”)
Relationship
with security
issuer
-
HWA VI Venture Capital Corp.
HWA Chi Venture Capital Corp.
mProbe Ltd.
Global BioPharma, Inc.
Chen Feng Optoelectronics
PrimeSensor Technology Inc.
Macroblock, Inc.
Others
-
-
-
-
-
-
-
Total
Panpal
Compal Electronics, Inc.
Kinpo
CDIB Partners Investment
Holding Corp.
AcBel
Chipbond
Taiwan Biotech Co., Ltd.
The parent
company
The same
chairman of the
Company
-
The same
chairman of the
Company
-
-
Ending balance
Account
name
Shares/Unit
s
(thousands)
Carrying
value
Holding
percentage
(%)
Fair value
The highest holding
in the period
Shares/
Units
(thousands)
Holding
percentage
(%)
Note
Financial assets at fair
value through profit or
loss-current
Financial assets at fair
value through other
comprehensive
income-non-current
〃
〃
〃
〃
〃
〃
Financial assets at fair
value through profit or
loss and other
comprehensive income
Financial assets at fair
value through other
comprehensive
income-non-current
〃
〃
〃
Financial assets at fair
value through profit or
loss-current
Financial assets at fair
value through other
comprehensive
income-non-current
〃
4,593
284,768 1%
284,768
13,542 2%
290
20,551 10%
20,551
290 10%
1,053
4,000
2,000
5,829
22,926 11%
22,926
1,053 11%
50,040 3%
40,740 3%
50,040
4,000 3%
40,740
2,000 3%
22,909 13%
22,909
5,829 13%
1,357
14,542 3%
14,542
2,009 4%
749
67,903 2%
67,903
749 2%
66,968
66,968
4,040,431
31,648
552,259 1%
552,259
31,648 1%
(Note 2)
23,172
234,042 2%
234,042
23,172 2%
54,000
817,020 5%
817,020
54,000 5%
5,677
107,289 1%
107,289
5,677 1%
5,251
325,560 1%
325,560
5,251 1%
4,897
119,589 3%
119,589
4,897 3%
76,178
2,231,937
76,178
18,369
320,545 -
320,545
18,369 -
(Note 2)
Others
Total
Gempal
Compal Electronics, Inc.
Lian Hong Art. Co., Ltd.
Global BioPharma, Inc.
Others
Total
Hong Ji
SUYIN Optronics Co., Ltd.
(“SUYIN Optronics”)
Hong Jin
SUYIN Optronics
Arcadyan
GeoThings Inc.
AirHop Communication Inc.
Adant Technologies Inc.
IOT EYE, Inc.
TIEF Fund, L.P
The parent
company
Financial assets at fair
value through other
comprehensive
income-non-current
-
-
-
-
-
-
-
-
-
〃
〃
〃
2,140
2,000
34,921 8%
40,740 3%
2,277
398,483
34,921
2,140 8%
40,740
2,000 3%
2,277
Financial assets at fair
value through other
comprehensive
income-non-current
Financial assets at fair
value through other
comprehensive
income-non-current
Financial assets at fair
value through profit or
loss-non current
〃
〃
〃
〃
380
182 1%
182
380 1%
332
160 1%
160
332 1%
200
1,152
349
60
-
-
-
-
9%
7%
6%
6%
-
-
-
-
200 9%
(Note 1)
1,152 7%
349 6%
60 6%
〃
〃
〃
-
45,645 7%
45,645
-
7%
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
112
Name of
holder
Category and
name of
security
Hitron Technologies Inc.
Relationship
with security
issuer
-
RichWare Technology Corp.
Wistron NeWeb Corp.
Total
Mactech
Taichung International Golf
Country Club
HHB
CPO
CET
CIC
CEC
CPC
HWALLAR OPTRONICS
(Fuzhou) CO., LTD.
Structured deposits–SPD Bank
Yield Plus Structured Deposit
Structured deposits–Bank of
Communications Yun Tong Cai
Fu. Structured Deposit
Total
Structured deposits–Bank of
Communications Yun Tong Cai
Fu, Structured Deposit
Structured deposits–Agricultural
Bank of China "HuiLiFeng"
customization RMB Structured
Deposit
Structured deposits–The RMB
"Open On Schedule "Financial
Product
Total
Structured deposits–SPD Bank
Yield Plus Structured Deposit
Structured deposits–Bank of
Communications Yun Tong Cai
Fu, Structured Deposit
Structured deposits–The RMB
"Open On Schedule "Financial
Product
Structured deposits–SPD Bank
Yield Plus Structured Deposit
Total
CEQ
Structured deposits–Industrial
Bank Structured Deposit
Structured deposits–Bank of
Communications Yun Tong Cai
Fu. Structured Deposit.
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Ending balance
Account
name
Shares/Unit
s
(thousands)
Carrying
value
Holding
percentage
(%)
Fair value
The highest holding
in the period
Shares/
Units
(thousands)
Holding
percentage
(%)
Note
Financial assets at fair
value through profit or
loss-current
〃
〃
Financial assets at fair
value through other
comprehensive
income-non-current
Financial assets at fair
value through profit or
loss-non current
Financial assets at fair
value through profit or
loss-current
〃
Financial assets at fair
value through profit or
loss-current
〃
〃
Financial assets at fair
value through profit or
loss-current
Financial assets at fair
value through profit or
loss-current
Financial assets at fair
value through profit or
loss-current
〃
Financial assets at fair
value through profit or
loss-current
〃
-
-
-
-
-
-
-
-
-
-
-
-
543
10,426 -
10,426
543 -
110
100
5,115 -
7,990 -
69,176
7,980 -
5,115
7,990
110 -
100 -
7,980
-
-
(Note 1)
-
19%
-
480,285 -
480,285
448,948 -
448,948
929,233
225,651 -
225,651
676,881 -
676,881
451,154 -
451,154
1,353,686
179,699
179,699
576,466 -
576,466
-
-
226,281
179,963
406,244
259,705
226,281
179,963
259,705
260,029
260,029
519,734
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19%
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Note 1: The carrying value is the remaining amount after deducting accumulated impairment.
Note 2: The transaction had been eliminated in the consolidated financial statements.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
113
(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of
NT$300 million or 20% of the capital stock:
Beginning Balance
Purchases
Sales
Others
Ending Balance
(In Thousands of New Taiwan Dollars/CNY)
Name of
company
The
Category
and name
of security
Chipbond
Relationship
with the
company
-
Shares/ Units
(thousands)
Amount
13,542
763,771
Shares/ Units
(thousands)
-
Amount
-
Shares/ Units
(thousands)
8,949
Price
574,528
Cost
574,528
Gain (loss) on
disposal
-
Shares/ Units
(thousands) Amount
Shares/ Units
(thousands)
Amount
-
95,525
(Note 1)
4,593
284,768
LC Future Center
(Hong Kong) Ltd.
-
147,000 4,742,832
-
-
147,000 7,384,102
(Note 3)
4,873,017
2,511,085
-
130,185
(Note 2)
Company
BSH
CPC
CPC
CEC
CEC
CEQ
CPO
CPO
Account
name
Financial
assets at
fair value
through
profit or
loss-curre
nt
Investmen
ts
accounted
for using
equity
method
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Structured
deposits–The
RMB "Open On
Schedule
"Financial
Product
Structured
deposits–SPD
Bank Yield Plus
Structured
Deposit
Structured
deposits–
Win-win Interest
Rate Structure
RMB Structural
Deposits
Structured
deposits-Bank of
Communications
Yun Tong Cai
Fu. Structured
Deposit
Structured
deposits-Bank of
Communications
Yun Tong Cai
Fu. Structured
Deposit
Structured
deposits–
Agricultural Bank
of China "Golden
Key. Ben Li
Feng" RMB
finance products
Structured
deposits–SPD
Bank Yield Plus
Structured
Deposit
Name of
counter-party
-
Hefei Zhi Ju
Sheng Bao Equity
Investment Co.,
Ltd.
Bank of China
Shanghai Pudong
Development
-
Bank
China CITTIC
-
Bank
Bank of
Communications
Bank of
Communications
Agricultural Bank
of China
-
Shanghai Pudong
Development
Bank
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
543,072
(RMB$
119,000)
-
325,989
(RMB$
69,448)
318,780
(RMB$
69,000)
7,209
(RMB$448)
(Note 2)
-
508,363
(RMB$
110,000)
328,275
(RMB$
70,264)
328,930
(RMB$
70,000)
(655)
(RMB264)
(Note 2)
699,581
(RMB$
153,000)
-
715,328
(RMB$
154,881)
706,643
(RMB$
153,000)
8,686
(RMB$1,881)
(Note 2)
838,610
(RMB$
188,000)
-
276,248
(RMB$
60,595)
273,535
(RMB$
60,000)
2,713
(RMB$595)
(Note 2)
702,920
(RMB$
158,000)
-
462,760
(RMB$
101,111)
443,503
(RMB$
100,000)
19,256
(RMB$1,111)
(Note 2)
523,488
(RMB$
112,000)
-
528,448
(RMB$
113,061)
523,488
(RMB$
112,000)
4,960
(RMB$1,061)
(Note 2)
953,248
(RMB$
214,000)
-
492,965
(RMB$
108,132)
474,652
(RMB$
107,000)
18,314
(RMB$
1,132)
-
-
-
-
-
-
-
1,989
(RMB$444)
(Note 1)
530
(RMB$118)
(Note 1)
-
3,958
(RMB$885)
(Note 1)
610
(RMB$137)
(Note 1)
-
1,689
(RMB$378)
(Note 1)
-
-
-
-
-
-
-
-
-
226,281
(RMB$
50,444)
179,963
(RMB$
40,118)
-
576,466
(RMB$
128,885)
260,029
(RMB$
58,137)
-
480,285
(RMB$
107,378)
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
114
Beginning Balance
Purchases
Sales
Others
Ending Balance
Name of
counter-party
Bank of
Communications
Relationship
with the
company
Shares/ Units
(thousands)
-
Amount
-
Shares/ Units
(thousands)
-
Shares/ Units
(thousands)
-
Amount
890,886
(RMB$
200,000)
Price
460,437
(RMB$
100,997)
Cost
443,600
(RMB$
100,000)
16,838
(RMB$
997)
Gain (loss) on
disposal
Shares/ Units
(thousands) Amount
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
578,442
(RMB$
130,000)
310,456
(RMB$
70,000)
670,906
(RMB$
150,000)
669,025
(RMB$
150,000)
357,794
(RMB$
80,000)
367,162
(RMB$
80,537)
354,807
(RMB$
80,000)
16,308
(RMB$
537)
323,446
(RMB$
70,948)
310,456
(RMB$
70,000)
16,573
(RMB$
948)
-
-
-
231,780
(RMB$
50,841)
221,754
(RMB$
50,000)
12,199
(RMB$
841)
184,258
(RMB$
40,417)
178,897
(RMB$
40,000)
5,361
(RMB$
417)
Shares/ Units
(thousands)
-
Amount
448,948
(RMB$
100,371)
-
-
-
-
-
225,651
(RMB$
50,460)
-
676,881
(RMB$
151,365)
451,154
(RMB$
10,888)
179,699
(RMB$
40,184)
-
-
-
-
-
-
1,662
(RMB$371)
(Note 1)
2,016
(RMB$460)
(Note 1)
-
5,975
(RMB$|
1,365)
(Note 1)
3,883
(RMB$|
888)
(Note 1)
802
(RMB$|
184)
(Note 1)
Name of
company
CPO
CET
CET
CET
CET
CIC
Category
and name
of security
Structured
deposits–Bank of
Communications
Yun Tong Cai
Fu. Structured
Deposit.
Structured
deposits–Bank of
Communications
Yun Tong Cai
Fu. Structured
Deposit.
Structured
deposits–SPD
Bank Yield Plus
Structured
Deposit
Account
name
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Bank of
Communications
Shanghai Pudong
Development
-
Bank
Agricultural Bank
of China
Structured
deposits-Agricult
ural Bank of
China
"HuiLiFeng"
customization
RMB structured
Financial
assets at
fair value
through
profit or
loss-curre
nt
deposit
Bank of China
Structured
deposits-The
RMB "Open on
schedule"
Financial Product
Structured
deposits-SPD
Bank YieldPlus
Structured
Deposit
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Shanghai Pudong
Development
Bank
Note 1: Others were valuation gains and losses and foreign exchange gains and losses.
Note 2: These were gains and losses on disposal and foreign exchange gains and losses.
Note 3: The related transactions costs were deducted from the selling price.
(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or
20% of the capital stock: None
(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20%
of the capital stock: None
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
115
(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of
NT$100 million or 20% of the capital stock:
Transaction details
Transactions with terms different
from others
Notes/Accounts receivable
(payable)
(In Thousands of New Taiwan Dollars)
Company
Name
Counter
party
The
Company
CBN
Nature of
relationship
The Company's
subsidiaries
Purchase/
(Sale)
Sale
Percentage
of total
purchases/(s
ales)
(0.2) %
Amount
(2,138,005)
Payment terms
90 days
CIH and its
subsidiaries
Subsidiaries wholly
owned by the
Company
Purchase
111,112,129
12.4 %
120 days
Sale
(238,388)
Purchase
132,833
-
-
Purchase
770,924
0.1 %
〃
〃
〃
UCGI
Just and its
subsidiaries
BCI and its
subsidiaries
Bizcom
Palcom
Webtek
〃
〃
〃
〃
〃
Sale
Sale
(121,850)
(114,565)
-
-
45~180 days
Net 60 days from delivery
Similar to
non-related
parties
〃
There is no
significant
difference
〃
Subsidiaries wholly
owned by the
Company
Purchase
108,584,993
Forever
〃
Purchase
66,812,621
12.1 % Net 60 days from purchase Markup based
on Webtek's
cost
Markup based
on Forever's
cost
7.5 %
〃
There is no
significant
difference
Sale
(68,265,549)
(63.3) % Net 60 days from delivery According to
Just and its
subsidiaries
Webtek
With the same
ultimate parent
company
Forever
CIH and its
subsidiaries
〃
〃
Sale
(30,470,633)
(28.3) %
〃
Purchase
387,992
4.0 % Net 60 days from purchase
The Company Parent Company
Sale
(132,833)
(0.1) %
120 days
CIH and its
subsidiaries
The Company Parent Company
Sale
(113,457,780)
(77.1) %
〃
〃
Unit price
Payment Terms
Ending
Balance
Percentage
of total
notes/
accounts
receivable
(payable)
Note
Similar to
non-related
parties
Similar to
non-related
parties
Similar to
non-related
parties
Similar to
non-related
parties
〃
There is no
significant
difference
There is no
significant
difference, and
adjustments will be
made based on
demand for funding
if necessary
There is no
significant
difference
There is no
significant
difference, and
adjustments will be
made based on
demand for funding
if necessary
〃
739,065
0.4 % (Note 2)
(49,114,165)
(31.6) % 〃
89,586
0.1 % 〃
(504,568)
(0.3) % 〃
(758,108)
(0.5) % 〃
99,370
0.1 % 〃
23,209
-
% 〃
(7,073,274)
(4.6) % 〃
markup pricing
Similar to
non-related
parties
Similar to
non-related
parties
Similar to
non-related
parties
〃
(20,843,862)
(13.4) % 〃
Adjustments will be
made based on
demand for funding
〃
20,177,943
74.6 % 〃
6,472,633
23.9 % 〃
〃
(308,041)
(6.9) % 〃
There is no
significant
difference, and
adjustments will be
made based on
demand for funding
if necessary
There is no
significant
difference, and
adjustments will be
made based on
demand for funding
if necessary
Adjustments will be
made based on
demand for funding
〃
504,568
1.5 % 〃
49,114,165
45.4 % 〃
8,931,246
8.3 % 〃
308,041
0.3 % 〃
Forever
Just and its
subsidiaries
BCI and its
subsidiaries
CEB
With the same
ultimate parent
company
〃
〃
〃
Sale
Sale
(29,538,636)
(20.1) % Net 60 days from delivery According to
markup pricing
(387,992)
(0.3) %
〃
〃
Purchase
30,045,061
27.3 %
120 days
Purchase
(145,211)
(0.1) %
〃
Similar to
non-related
parties
〃
(9,852,148)
(24.1) % 〃
Similar to
non-related
parties
There is no
significant
difference
45,759
-
〃
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
116
Transaction details
Transactions with terms different
from others
Notes/Accounts receivable
(payable)
Counter
party
Nature of
relationship
The Company Parent Company
Purchase/
(Sale)
Purchase
Percentage
of total
purchases/(s
ales)
Amount
Payment terms
2,126,356
57.0 % Net 90 days from delivery
The Company
〃
Sale
(783,081)
(2.3) %
120 days
Company
Name
CBN
BCI and its
subsidiaries
CIH and its
subsidiaries
With the same
ultimate parent
company
Sale
(30,045,061)
(89.3) %
CEB
〃
Sale
(1,892,352)
(5.6) %
〃
〃
Webtek
The Company Parent Company
Sale
(108,584,993)
(100.0) % Net 60 days from delivery
CEB
Etrade and
its
subsidiaries
Forever
UCGI
Palcom
Bizcom
THAC
TTI
THAC
CNC
Arcadyan
With the same
ultimate parent
company
〃
With the same
ultimate parent
company
Purchase
40,334,951
37.1 % Net 60 days from purchase
Purchase
68,265,549
62.9 %
〃
Purchase
1,903,878
17.3 %
120 days
〃
Purchase
148,236
1.4 %
120 days
Similar to
non-related
parties
〃
There is no
significant
difference
〃
Etrade and its
subsidiaries
Just and its
subsidiaries
BCI and its
subsidiaries
CIH and its
subsidiaries
Webtek
With the same
ultimate parent
company
Sale
(40,334,951)
(100.0) % Net 60 days from delivery According to
markup pricing
The Company Parent Company
Sale
(66,812,621)
(85.6) %
〃
〃
CIH and its
subsidiaries
Just and its
subsidiaries
With the same
ultimate parent
company
〃
Purchase
29,538,636
38.0 % Net 60 days from purchase Similar to
Purchase
30,470,633
39.0 %
〃
The Company Parent company
Purchase
241,529
72.8 %
120 days
The Company Parent company
Purchase
114,565
100.0 % Net 120 days from delivery
The Company Parent company
Purchase
121,850
(78.8) %
45~180 days
TTI
THAC
CNC
THAC
With the same
ultimate parent
company
With the same
ultimate parent
company
〃
〃
Arcadyan
Germany
Arcadyan
USA
Arcadyan's
subsidiaries
〃
Sale
Sale
Sale
Sale
Sale
Sale
(383,948)
(100.0) % Net 60 days from the end of
the moth of delivery
According to
markup pricing
Purchase
393,948
4.0 %
〃
Purchase
164,591
3.0 % Net 90 days from the ended of
(164,591)
(1.0) %
the month of delivery
〃
(2,457,020)
(11.0) % Net 120 days from delivery
(496,199)
(2.0) % Net 60 days from the end of
the month of delivery
(1,329,743)
(6.0) % Net 45 days from the end of
the month of delivery
〃
Arcadyan AU
〃
CNC
〃
Arcadyan
Germany
Arcadyan
USA
Arcadyan
AU
Arcadyan
Arcadyan
AcBel
Polytech
Arcadyan
Arcadyan
Arcadyan
CNC
The Company's
subsidiaries
Same Director of
Board as ultimate
parent company
The Company's
subsidiaries
The Company's
subsidiaries
〃
Arcadyan's
subsidiaries
(11,249,751)
(100.0) % Net 45ays from the end of the
month of delivery
According to
markup pricing
Purchase
108,030
1.0 % Net 120 days from the end of
the month of delivery
Purchase
2,457,020
100.0 % Net 120 days from delivery
Purchase
496,199
100.0 % Net 60 days from the end of
the month of delivery
Purchase
1,329,743
100.0 % Net 45 days from the end of
the month of delivery
Purchase
11,249,751
35.0 % Net 45ays from the end of the
month of delivery
-
-
-
-
According to
markup pricing
Note 1: The remaining balance is the net value of commissioned processing and sales of raw material.
Percentage
of total
notes/
accounts
receivable
(payable)
Note
Ending
Balance
(739,183)
(87.0) % (Note 2)
758,108
6.3 % 〃
9,852,148
81.5 % 〃
562,737
4.7 % 〃
7,073,274
100.0 % 〃
(4,489,304)
(18.2) % 〃
Payment Terms
There is no
significant
difference
Adjustments will be
made based on
demand for funding
if necessary
〃
There is no
significant
difference
Adjustments will be
made based on
demand for funding
〃
〃
(20,177,943)
(81.8) % 〃
Unit price
-
According to
markup pricing
〃
〃
〃
〃
〃
non-related
parties
〃
〃
〃
〃
-
-
-
-
-
Adjustments will be
made based on
demand for funding
〃
〃
〃
There is no
significant
difference
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
(558,273)
(38.2) % 〃
(45,479)
(3.1) % 〃
4,489,304
100.0 % 〃
20,843,862
91.0 % 〃
(8,931,246)
(34.0) % 〃
(6,472,633)
(25.0) % 〃
(89,586)
(84.5) % 〃
(23,209)
(100.0) % 〃
(99,370)
(85.2) % 〃
351,268
100.0 % (Note 1)
(351,268)
(28.0) % 〃
(64,808)
(59.0) % 〃
64,808
2.0 % 〃
805,017
14.0 % (Note 2)
104,031
2.0 % 〃
727,600
13.0 % 〃
3,404,030
98.0 % (Notes 1
and 2)
(79,455)
(2.0) % 〃
(805,017)
(100.0) % (Note 2)
(104,031)
(100.0) % 〃
(727,600)
(100.0) % 〃
(3,404,030)
(40.0) % (Notes 1
and 2)
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
116
Transaction details
Transactions with terms different
from others
Notes/Accounts receivable
(payable)
Company
Name
Counter
party
Nature of
relationship
Purchase/
(Sale)
Amount
Percentage
of total
purchases/(s
ales)
Payment terms
Unit price
Payment Terms
Note 2: The transactions had been eliminated in the consolidated financial statements.
Percentage
of total
notes/
accounts
receivable
(payable)
Note
Ending
Balance
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
117
(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20%
of the capital stock:
(In Thousands of New Taiwan Dollars)
Name of
Nature of
Ending
Turnover
Overdue
company
Counter-party
relationship
balance
rate
Amounts
received in Allowance
subsequent
period
for bad
debts
-
Note
The Company CBN
Just and its
subsidiaries
Forever
〃
Webtek
The Company's
subsidiary
With the same
ultimate parent
company
With the same
ultimate parent
company
Parent company
739,065
1.98
6,472,633
6.32
20,177,943
6.18
504,568
0.27
Parent company
49,111,165
2.25
With the same
ultimate parent
With the same
ultimate parent
Parent company
With the same
ultimate parent
company
With the same
ultimate parent
company
Parent company
8,931,246
4.05
308,041
1.24
758,108
1.65
9,852,148
2.91
562,737
3.31
20,843,862
4.09
Parent company
7,073,274
15.01
Compal Electronic,
Inc.
Compal Electronic,
Inc.
Forever
Just and its
subsidiaries
Compal Electronic,
Inc.
CIH and its
subsidiaries
CEB
Compal Electronic,
Inc.
Compal Electronic,
Inc.
Webtek
With the same
ultimate parent
company
TTI
TTI
Arcadyan AU
Arcadyan USA
Arcadyan Germany Arcadyan's
subsidiary
Arcadyan's
subsidiary
Arcadyan's
subsidiary
Arcadyan's
subsidiary
Arcadyan's
subsidiary
Arcadyan's
subsidiary
The Company's
subsidiary
With the same
ultimate parent
company
With the same
ultimate parent
company
Just and its
subsidiaries
Speedlink
Arcadyan
THAC
4,489,304
7.71
805,017
3.08
104,031
4.32
727,600
3.54
172,161
(Note 5)
351,268
(Note 4)
207,119
(Note 5)
3,404,030
(Note 4)
242,069
(Note 4)
242,069
(Note 4)
0.11
10.14
12.43
2.46
-
-
Amount
-
Action
taken
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,528
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,528 Enhanced
the
collection
434,844
(Note 1)
6,277,163
(Note 1)
20,177,943
(Note 1)
-
(Note 1)
30,770,107
(Note 1)
8,050,832
(Note 1)
-
(Note 1)
70,422
(Note 1)
6,788,977
(Note 1)
316,880
(Note 1)
14,413,628
(Note 1)
7,073,274
(Note 1)
4,489,304
(Note 1)
581,083
(Note 2)
11,688
(Note 2)
521,951
(Note 2)
169,496
(Note 2)
351,268
(Note 2)
207,119
(Note 2)
2,311,269
(Note 2)
174,680
(Note 3)
174,680
(Note 3)
CIH and its
subsidiaries
〃
BCI and its
subsidiaries
〃
〃
Forever
Webtek
Etrade and its
subsidiaries
Arcadyan
〃
〃
THAC
TTI
CNC
CBN
Speedlink
Note 1: Balance as of March 15, 2019.
Note 2: Balance as of February 27, 2019.
Note 3: Balance as of March 8, 2019.
Note 4: Other receivables due to processing and sales of raw material.
Note 5: Other receivables due to purchasing on behalf of THAC.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
118
(ix) Trading in derivative instruments: Please refer to notes (6)(b) and (6)(d)
(x) Business relationships and significant intercompany transactions:
No.
(Note
1)
0
Company name
Counter party
The Company
Bizcom
Relationship
(Note 2)
1
Accounts name
Sales Revenue
Amount
Terms
121,850 There is no significant
Percentage of the
consolidated net
revenue or total
assets
-
Intercompany transactions
(In Thousands of New Taiwan Dollars)
0
The Company
CEP
0
The Company
Auscom
0
The Company
CBN
0
The Company
UCGI
1
1
1
1
1 CIH and its
The Company
2
subsidiaries
Accounts
Receivable
Product
warranty
service
expenses
Technical
service
expense
Accrued
expenses
payable
Sales Revenue
Accounts
Receivable
Sales Revenue
Accounts
Receivable
Sales Revenue
1 CIH and its
subsidiaries
Just and its
subsidiaries
Accounts
Receivable
Sales Revenue
3
difference of price to
non-related parties. The
credit period is net
45~180 days.
〃
99,370
230,911 There is no significant
difference of price to
non-related parties. The
credit period is net 120
days.
154,412 The price is based on
the operating cost of
Auscom. The credit
period is net 120 days.
〃
167,329
2,138,005 There is no significant
difference of price to
non-related parties. The
credit period is net 90
days.
739,065
〃
238,388 There is no significant
difference of price to
non-related parties. The
credit period is net 120
days.
〃
89,586
-
-
-
-
-
-
0.2%
0.2%
113,457,780 There is no significant
11.7%
difference of price to
non-related parties. The
credit period is net 120
days, and will be
adjusted if necessary.
〃
49,114,165
387,992 There is no significant
-
difference of price to
non-related parties. The
credit period is net 60
days from delivery, and
will be adjusted if
necessary.
〃
12.3%
0.1%
(Continued)
Accounts
Receivable
308,041
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
119
No.
(Note
1)
1 CIH and its
subsidiaries
Company name
Counter party
Forever
Relationship
(Note 2)
3
Accounts name
Sales Revenue
Amount
29,538,636 The price is based on
Terms
Percentage of the
consolidated net
revenue or total
assets
3.1%
Intercompany transactions
2
Just and its
subsidiaries
Webtek
3
2
Just and its
subsidiaries
Forever
3
2
Just and its
subsidiaries
The Company
2
3 BCI and its
The Company
2
subsidiaries
3 BCI and its
subsidiaries
CIH and its
subsidiaries
3 BCI and its
CEB
subsidiaries
3
3
the operating cost. The
credit period is net 60
days from delivery, and
will be adjusted if
necessary.
〃
8,931,246
68,265,549 The price is based on
the operating cost. The
credit period is net 60
days from delivery, and
will be adjusted if
necessary.
〃
20,177,943
30,470,633 There is no significant
difference of price to
non-related parties. The
credit period is net 60
days from delivery, and
will be adjusted if
necessary.
〃
6,472,633
132,833 There is no significant
-
difference of price to
non-related parties. The
credit period is net 120
days, and will be
adjusted if necessary.
〃
504,568
783,081 There is no significant
difference of price to
non-related parties. The
credit period is net 120
day, and will be
adjusted if necessary.
〃
758,108
30,045,061 There is no significant
difference of price to
non-related parties. The
credit period is net 120
days, and will be
adjusted if necessary.
〃
9,852,148
1,892,352 There is no significant
Accounts
Receivable
Sales Revenue
Accounts
Receivable
Sales Revenue
Accounts
Receivable
Sales Revenue
Accounts
Receivable
Sales Revenue
Accounts
Receivable
Sales Revenue
Accounts
Receivable
Sales Revenue
difference of price to
non-related parties. The
credit period is net 120
days.
〃
Accounts
Receivable
562,737
2.2%
7.1%
5.0%
3.1%
1.6%
0.1%
0.1%
0.2%
3.1%
2.5%
0.2%
0.1%
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
120
No.
(Note
1)
4 Webtek
Company name
Counter party
The Company
Relationship
(Note 2)
2
Accounts name
Sales Revenue
Amount
108,584,993 The price is based on
Terms
Percentage of the
consolidated net
revenue or total
assets
11.2%
Intercompany transactions
5
Forever
The Company
2
6
Etrade and its
subsidiaries
Webtek
7 Arcadyan
Arcadyan
Germany
7 Arcadyan
TTI
3
3
3
Accounts
Receivable
Sales Revenue
Accounts
Receivable
Sales Revenue
Accounts
Receivable
Sales Revenue
Accounts
Receivable
Other
Receivable
the operating cost. The
credit period is net 60
days from delivery, and
will be adjusted if
necessary.
〃
7,073,274
66,812,621 The price is based on
the operating cost. The
credit period is net 60
days from delivery, and
will be adjusted if
necessary.
〃
20,843,862
40,334,951 The price is based on
the operating cost. The
credit period is net 60
days from delivery, and
will be adjusted if
necessary.
〃
4,489,304
2,457,020 There is no significant
difference of price to
non-related parties. The
credit period is net 120
days from delivery.
〃
805,017
172,161 The price is based on
-
the operating cost. The
credit period is net 90
days from the end of
month of delivery.
1.8%
6.9%
5.2%
4.2%
1.1%
0.3%
0.2%
7 Arcadyan
Arcadyan USA
3
Sales Revenue
496,199 There is no significant
0.1%
7 Arcadyan
Arcadyan AU
3
8 CNC
Arcadyan
3
Accounts
Receivable
Sales Revenue
Accounts
Receivable
Processing
Revenue
difference of price to
non-related parties. The
credit period is net 60
days from the end of the
month of delivery.
〃
104,031
-
1,329,743 There is no significant
0.1%
difference of price to
non-related parties. The
credit period is net 45
days from delivery.
〃
727,600
11,249,751 The price is based on
the operating cost. The
credit period is net 45
days from the end of the
month of delivery and
depended on funding
demand.
〃
0.2%
1.2%
0.9%
(Continued)
Accounts
Receivable
3,404,030
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
121
No.
(Note
1)
8 CNC
Company name
Counter party
THAC
Relationship
(Note 2)
3
9
TTI
THAC
10 THAC
TTI
11 CBN
Speedlink
12 CBN
CBNB
3
3
3
3
Accounts name
Processing
Revenue
Accounts
Receivable
Other
Receivable
Processing
Revenue
Accounts
Receivable
Other
Receivable
Sales Revenue
Intercompany transactions
Amount
Terms
164,591 The price is based on
the operating cost. The
credit period is net 90
days from the end of the
month of delivery.
〃
64,808
Percentage of the
consolidated net
revenue or total
assets
-
-
207,119 There is no significant
0.1%
difference of price
between non-related
parties. The credit
period is net 90 days
from delivery and
depended on funding
demand.
383,948 The price is based on
-
the operating cost. The
credit period is net 60
days from invoice date.
〃
351,268
242,069 The credit period is net
60 days from the end of
the month.
3,274 There is no significant
difference of price to
non-related parties. The
credit period is net 60
days from the end of the
month, and will be
adjusted if necessary.
0.1%
0.1%
-
Note 1: The numbers filled in as follows:
1.0 represents the Company.
2. Subsidiaries are sorted in a numerical order starting from 1.
Note 2: Transactions labeled as follows:
1. represents transactions between the parent company and its subsidiaries.
2. represents transactions between the subsidiaries and the parent company.
3. represents transactions between subsidiaries.
(b)
Information on investees:
The following is the information on investees for the year ended December 31, 2018 (excluding information on
investees in Mainland China):
Investor
Investee
Company
Company
The Company Bizcom
Location
Milpitas, USA
Just
CIH
Panpal
Gempal
British Virgin
Islands
British Virgin
Islands
Taipei City
Main
Original Investment
Amount
Businesses and
Products
December 31,
2018
December
31, 2017
Ending Balance
Percentage
of
Ownership
Carrying
Value
Shares
(thousands)
(In Thousands of New Taiwan Dollars/ USD/ shares)
The highest holdings
in the period
Shares/ Units
(thousands)
Holding
percentage
(%)
Net income
Share of
(losses)
of investee
profits/losses of
investee
Note
Warranty services and
marketing of LCD TV s
and notebook PCs
Manufacturing, sales and
maintenance of monitors
and LCD TVs, and
investment
Sales and manufacturing
of notebook PCs and
investments
Investment
36,369
36,369
100 100%
440,755
100 100%
8,082
8,082 (Note 2)
1,480,509 1,480,509
48,010 100%
7,982,139
48,010 100%
85,523
85,523 〃
1,787,680 1,787,680
53,001 100%
34,939,825
53,001 100%
1,081,596
1,081,596 〃
5,171,837 5,171,837
500,000 100%
4,890,099
500,000 100%
135,442
97,464 〃
(Note 1)
Taipei City
Investment
900,036
900,036
90,000 100%
1,580,854
90,000 100%
88,488
66,445 〃
(Note 1)
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
122
Investor
Investee
Company
Company
Location
Kinpo Group
Taipei City
management
consultant
company (“Kinpo
Group
management”)
Ripal
Tainan City
Main
Original Investment
Amount
Businesses and
Products
December 31,
2018
December
31, 2017
Ending Balance
Percentage
of
Ownership
Carrying
Value
Shares
(thousands)
The highest holdings
in the period
Shares/ Units
(thousands)
Holding
percentage
(%)
Net income
Share of
(losses)
of investee
profits/losses of
investee
Note
Consultation, training
services, etc.
Manufacturing of
electric appliance and
audiovisual electric
products
3,000
3,000
300 38%
4,538
300 38%
371
139
60,000
60,000
6,000 100%
51,798
6,000 100%
20,946
20,942 (Note 2)
Avalue Technology,
New Taipei City Manufacturing,
559,189
559,189
15,240 22%
595,790
15,240 22%
244,100
53,166
processing, and import
and export business of
industrial motherboards
Animal medication retail
and wholesale
Investment
Production and sales of
PCB boards
Investment
200,000
200,000
20,000 100%
164,648
20,000 100%
(21,756)
(20,162) (Note 2)
34
34
1 100%
3,619,817
1 100%
-
-
〃
395,388
395,388
10,158 20%
331,092
10,158 20%
366,180
74,756
1,260
1,260
126 23%
3,174
126 23%
(203)
(9,552)
Cayman Islands
Investment
489,450
489,450
98 49%
652,532
98 49%
617,951
302,796
Netherlands
Investment
197,463
197,463
6,427 100%
Hsinchu City
202,908
202,908
899 28%
827,329
10,371
6,427 100%
899 28%
284,489
141
130,819 (Note 2)
39 〃
Inc.
Unicore
Taipei City
British Virgin
Islands
Taoyuan City
Taipei City
CEH
Allied Circuit
Maxima Ventures I,
Inc. (“Maxima”)
Lipo Holding Co., Ltd.
(“Lipo”)
CPE
ATK
Crownpo Technology
Inc. (“Crownpo”)
Taipei City
149,547
149,547
3,739 33%
75,267
3,739 33%
71,765
23,849
Design, research &
development, and selling
of DVD, Combo,
CD-RW Drives
Manufacturing,
processing, and selling
resistor chips,
networking chips,
diodes, multilayer
ceramic capacitors,
semiconductor devices,
and selling electronic
products
Investment
Arcadyan
Hsinchu City
Hong Ji
Hong Jin
Auscom
FGH
HSI
CEP
Zhaopal
Yongpal
Kaipal
Taipei City
1,000,000 1,000,000
100,000 100%
1,067,825
100,000 100%
Taipei City
Investment
295,000
295,000
29,500 100%
Austin, TX USA R&D of notebook PC
101,747
101,747
3,000 100%
328,852
125,912
29,500 100%
3,000 100%
46,621
20,358
4,757
45,946 (Note 2)
20,358 〃
4,757 〃
related products and
components
R&D, manufacturing and
sales of wireless
network, integrated
household electronics,
and mobile office
products
Investment
1,325,132 1,325,132
41,305 21%
2,055,316
41,305 21%
871,519
189,715 〃
2,754,741 2,754,741
89,755 100%
4,545,364
89,755 100%
275,557
275,557 〃
Investment
1,346,814 1,346,814
42,700 100%
734,227
42,700 100%
(35,898)
(35,898) 〃
90,156
90,156
136 100%
15,589
136 100%
(16,749)
(21,694) 〃
British Virgin
Islands
British Virgin
Islands
Poland
Taipei City
Maintenance and
warranty services of
notebook PCs
Investment
Taipei City
Investment
1,188,500 1,188,500
118,850 100%
Taipei City
Investment
510,500
510,500
51,050 100%
1,358,000 1,358,000
135,800 100%
6,190
5,509
3,110
135,800 100%
118,850 100%
51,050 100%
(183)
(184)
(185)
(183) 〃
(184) 〃
(185) 〃
Manufacturing of
electric appliance and
audiovisual electric
products
42,000
42,000
2,772 42%
-
2,772 42%
-
-
Hsinchu County Manufacturing of
109,837
109,837
5,650 27%
21,553
42 27%
12
3
Lead-Honor
Taoyuan City
Optronics. Co.,
Ltd.
(“Lead-Honor”)
Infinno Technology
Corporation
(“Infinno”)
HengHao
Taipei City
Mactech
Taichung City
BCI
CBN
British Virgin
Islands
Hsinchu County
Rayonnant
Taipei City
CRH
British Virgin
Islands
electronic components,
wholesale and retail sale
of precision instruments
and electronic materials
Manufacturing of PCs,
computer periphery
devices, and electronic
components
Manufacturing of
equipment and lighting,
retailing of equipment
and international trading
Investment
R&D and sales of
cable modem, digital
set-up box, and other
communication products
Manufacturing and sales
of PCs, computer
periphery devices, and
electronic components
Investment
5,329,757 5,329,757
63,815 100%
(118,482)
131,498 100%
(737,747)
(736,708) (Note 2)
219,601
219,601
21,756 53%
246,787
21,756 53%
76,500
39,053 〃
2,636,051 2,636,051
90,820 100%
6,037,985
90,820 100%
261,806
261,806 〃
284,827
284,827
29,060 43%
782,491
29,060 43%
184,370
87,802 〃
295,000
295,000
29,500 100%
41,138
29,500 100%
(51,684)
(48,528) 〃
377,328
377,328
12,500 100%
107,301
12,500 100%
(72,347)
(72,347) 〃
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Investor
Investee
Company
Company
Ascendant Private
Equity Investment
Ltd. (“APE”)
Location
British Virgin
Islands
Main
Original Investment
Amount
Businesses and
Products
December 31,
2018
December
31, 2017
Ending Balance
Percentage
of
Ownership
Carrying
Value
Shares
(thousands)
The highest holdings
in the period
Shares/ Units
(thousands)
Holding
percentage
(%)
Investment
943,922
943,922
31,253 35%
935,555
31,253 35%
123
Net income
Share of
(losses)
of investee
profits/losses of
investee
111,326
38,655
Note
Investment
4,318,860 4,318,860
147,000 100%
7,625,407
147,000 100%
2,604,284
2,604,284 (Note 2)
Investment
1,532,029 1,532,029
46,900 65%
(298,023)
46,900 65%
Selling of mobile phones
3,340
3,340
100 100%
583,463
100 100%
Selling of mobile phones
1,575
1,575
50 100%
1,488,011
50 100%
(225,609)
(124,210) 〃
(101,398)
(101,398) 〃
33
33 〃
100,000
100,000
10,000 100%
(376,263)
10,000 100%
(139,243)
(144,069) 〃
New Taipei City Manufacturing and
246,860
246,860
15,000 50%
100,000
100,000
10,000 100%
109,663
260,934
10,000 100%
15,000 50%
1,465
46,429
1,465 〃
23,218 〃
14,598
-
2,500 100%
5,438
2,500 100%
(24,820)
(24,820) 〃
82,070,125
4,198,330
763,125
457,875
(US$15,000)
(US$25,000)
25,000 35%
(165,051)
25,000 35%
(225,609)
(US$(5,374))
(US$(7,482))
Selling of mobile phones
-
-
-
100%
-
-
-%
-
Investment
gain(losses)
recognized by
Webtek
Investment
gain(losses)
recognized by
Forever
(Note 2)
〃
〃
180,968
180,968
6,827 4%
387,911
6,827 4%
871,519 Investment
gain(losses)
recognized by
Panpal
148,263
148,263
2,927 6%
95,407
2,927 6%
366,180 〃
203,500
203,500
7,846 4%
588,641
469,719
7,846 4%
871,519 Investment
gain(losses)
recognized by
Gempal
(Note 2)
53,645
53,645
3,220 6%
104,948
3,220 6%
366,180 〃
Just
CDH (HK)
Hong Kong
Investment
1,913,468
1,913,468
(US$62,298)
(US$62,298)
62,298 100%
3,604
5,615,616
(US$182,830)
62,298 100%
Investment
283,960
283,960
9,245 100%
220,282
9,245 100%
(22,263)
(US$9,245)
(US$9,245)
15,358
15,358
500 100%
(US$500)
(US$500)
(US$7,172)
897,261
(US$29,212)
(US$(738))
500 100%
-
〃
(US$-)
75,505
(US$2,504)
Investment
gain(losses)
recognized by Just
〃
30,715
30,715
1,000 100%
49,452
1,000 100%
(US$1,000)
(US$1,000)
252,907
252,907
(US$8,234)
(US$8,234)
31
(US$1)
(US$1)
31
(US$1)
(US$1)
31
31
-
-
100%
100%
1 100%
(US$1,610)
258,826
(US$8,427)
31
400
(US$1)
(US$13)
-
-
100%
100%
1 100%
247,256
247,256
32,903 100%
258,826
32,903 100%
Investment
gain(losses)
recognized by CII
〃
(577)
(US$(19))
(16,489)
(US$(547))
-
〃
(US$-)
(US$-)
(11)
〃
(16,489)
(US$8,050)
(US$8,050)
(US$8,427)
(US$(547))
CIH
CIH (HK)
Hong Kong
Investment
2,297,559
(US$74,803)
2,297,559
(US$74,803)
74,803 100%
Jenpal
CCM
PFG
FWT
British Virgin
Islands
British Virgin
Islands
British Virgin
Islands
British Virgin
Islands
Investment
225,755
225,755
7,350 100%
(US$7,350)
(US$7,350)
Investment
156,647
156,647
5,100 51%
(US$5,100)
(US$5,100)
31
31
1 100%
(US$1)
(US$1)
Sales of notebook PCs
and related components
Investment
457,654
457,654
(US$14,900)
(US$14,900)
14,900 100%
457,964
14,900 100%
(US$14,910)
1 100%
-
〃
74,803 100%
7,350 100%
5,100 51%
32,986,019
(US$1,073,93
8)
105,048
(US$3,420)
56,804
(US$1,849)
421,800
(US$13,733)
Investment
gain(losses)
recognized by
MEL and MTL
Investment
gain(losses)
recognized by
CIH
〃
1,062,037
(US$35,223)
2,521
(US$84)
(2,521)
〃
(US$(84))
(US$-)
(US$3)
79
〃
(Note 2)
〃
〃
〃
〃
〃
〃
〃
〃
〃
(Note 2)
〃
CORE
Etrade
Webtek
Forever
UCGI
Palcom
GLB
British Virgin
Islands
British Virgin
Islands
British Virgin
Islands
British Virgin
Islands
Taipei City
Taipei City
Manufacturing and retail
sale of computers and
electronic components
Selling of mobile phones
Shennona
Delaware. USA
wholesale of medical
equipment
Medical care IOT
business
Webtek
Etrade
British Virgin
Islands
Investment
Forever
GIA
British Virgin
Islands
Panpal
Arcadyan
Hsinchu City
Allied Circuit
Taoyuan City
Others
Gempal
Arcadyan
Hsinchu City
Allied Circuit
Taoyuan City
Others
CII
CPI
CII
AEI
MEL
MTL
Smart
CMX
MEL and
MTL
British Virgin
Islands
British Virgin
Islands
U.S.A
U.S.A
U.S.A
British Virgin
Islands
Mexico
Telecommunication
equipment and apparatus
manufacturing,
electronic parts and
components
manufacturing,
restrained telecom radio
frequency equipments
and materials import and
manufacturing
Production and selling of
PCB boards
Telecommunication
equipment and apparatus
manufacturing,
electronic parts and
components
manufacturing,
restrained telecom radio
frequency equipments
and materials import and
manufacturing
Production and selling of
PCB boards
Sales of monitors, LCD
TVs and related
components.
Sales and maintenance of
LCD TVs
Investment
Investment
Sales of electronic
products and related
components
Manufacturing, sales and
maintenance of LCD
TVs
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Main
Original Investment
Amount
Businesses and
Products
December 31,
2018
December
31, 2017
Ending Balance
Percentage
of
Ownership
Carrying
Value
Shares
(thousands)
The highest holdings
in the period
Shares/ Units
(thousands)
Holding
percentage
(%)
203,500
203,500
7,846 4%
469,713
7,846 4%
124
Net income
Share of
(losses)
of investee
profits/losses of
investee
871,519 Investment
gain(losses)
recognized by
Hong Ji
Note
(Note 2)
Investor
Investee
Company
Company
Hong Ji
Arcadyan
Location
Hsinchu City
Allied Circuit
Taoyuan City
Hong Jin
Arcadyan
Hsinchu City
Arcadyan
Arcadyan Holding
British Virgin
Islands
Arcadyan USA
U.S.A
Arcadyan Germany
Germany
Arcadyan Korea
Korea
Zhi-Pal
TTI
Taipei City
Taipei City
AcBel Telecom
Taipei City
Arcadyan UK
UK
Arcadyan AU
Australia
CBN
Hsinchu County
Golden Smart Home
Technology Corp.
Taipei City
Arcadyan Brasil
Brazil
Telecommunication
equipment and apparatus
manufacturing,
electronic parts and
components
manufacturing,
restrained telecom radio
frequency equipments
and materials import and
manufacturing
Production and selling of
PCB boards
Telecommunication
equipment and apparatus
manufacturing,
electronic parts and
components
manufacturing,
restrained telecom radio
frequency equipments
and materials import and
manufacturing
Investment
Sales of wireless
network products
Technology support and
sales of wireless network
products
Sales of wireless
network products
Investment
R&D and sales of
household digital
products
Investment
Technical support of
wireless network
products
Sales of wireless
network products
Sales of communication
and electronic
components
Selling of hardware and
software integration of
high-tech systems
Sales of wireless
network products
12,274
12,274
1,041 2%
27,977
1,041 2%
366,180 〃
112,569
112,569
4,340 2%
239,239
4,340 2%
871,519 Investment
gain(losses)
recognized by
Hong Jin
(Note 2)
1,240,526
962,291
32,780 100%
1,221,252
32,780 100%
23,055
23,055
1 100%
51,226
1 100%
1,125
1,125
0.5 100%
64,388
0.5 100%
2,879
2,879
20 100%
7,789
20 100%
48,000
48,000
34,980 100%
308,726
306,925
25,028 61%
450,366
583,890
34,980 100%
25,028 61%
23,000
23,000
4,494 51%
1,988
1,988
50 100%
33,952
2,683
4,494 51%
50 100%
1,161
1,161
50 100%
6,200
50 100%
11,925
11,925
533 1%
14,460
533 1%
15,692
15,692
1,229 16%
-
1,229 16%
81,593
81,593
968 100%
14,381
968 100%
59,092 Investment
gain(losses)
recognized by
Arcadyan
4,547 〃
11,439 〃
3,116 〃
40,042 〃
45,883 〃
(18,989) 〃
317 〃
5,296 〃
184,370 〃
(30,339) 〃
(25,526) 〃
Arcadyan and
Zhi-pal
Arcadyan
Holding
Sinoprime
British Virgin
Islands
Investment
277,971
1,536
9,050 100%
278,800
9,050 100%
(US$50)
(US$50)
(US$9,077)
(US$29)
874
Arch Holding
British Virgin
Islands
Investment
338,203
338,203
(US$11,011)
(US$11,011)
35 100%
834,649
(US$27,174)
35 100%
TTI
Quest
Samoa
Investment
36,858
36,858
1,200 100%
65,774
1,200 100%
(US$1,200)
(US$1,200)
TTJC
Japan
Sales of household
digital electronic
products
1,341
1,341
-
100%
765
-
100%
Quest
Exquisite
Samoa
Investment
35,937
35,937
1,170 100%
72,272
1,170 100%
(US$1,170)
(US$1,170)
(US$2,353)
(US$861)
Investment
gain(losses)
recognized by
Arcadyan
Holding
〃
52,580
(US$1,744)
25,977 Investment
gain(losses)
recognized by
TTI
(610) 〃
25,958
Investment
gain(losses)
recognized by
Quest
AcBel
Telecom
Leading Images
British Virgin
Islands
Investment
1,536
1,536
50 100%
9,931
50 100%
(US$50)
(US$50)
Great Arch
British Virgin
Islands
Sales of wireless
network products
-
1,536
-
-
-
50 100%
(US$-)
(US$50)
(18,420) Investment
gain(losses)
recognized by
AcBel Telecom
〃
(6)
Leading
Images
Astoria GmbH
Germany
Sales of wireless
network products
880
880
25 100%
9,522
25 100%
(EUR25)
(EUR25)
(US$310)
(US$(2))
(60)
Investment
gain(losses)
recognized by
Leading Images
Zhi-pal
CBN
Hsinchu county
Produces and sales of
communication and
electronic components
36,272
38,032
13,140 20%
356,317
13,640 23%
184,370 Investment
gain(losses)
recognized by
Zhi-pal
〃
〃
〃
〃
〃
〃
〃
(Note 2)
〃
〃
〃
〃
〃
(Note 2)
〃
〃
〃
Note 2
(Note 2)
〃
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
125
Investor
Investee
Company
Company
HSI
IUE
Goal
CVC
IUE
Location
British Virgin
Islands
British Virgin
Islands
Vietnam
Goal
CDM
Vietnam
Rayonnant
APH
British Virgin
Islands
Forming Co., Ltd.
Taoyuan City
CRH
APH
HHT
HHA
British Virgin
Islands
British Virgin
Islands
Investment
Investment
R&D, manufacturing,
sales, and maintenance
of notebook PCs,
computer monitors, LCD
TVs and electronic
components
Construction of and
investment in
infrastructure in
Ba-Thien industrial
district of Vietnam
Investment
R&D and manufacturing
of electronic materials
Investment
Main
Original Investment
Amount
Businesses and
Products
December 31,
2018
December
31, 2017
Ending Balance
Percentage
of
Ownership
Carrying
Value
Shares
(thousands)
The highest holdings
in the period
Shares/ Units
(thousands)
Holding
percentage
(%)
Net income
Share of
(losses)
of investee
profits/losses of
investee
30,000 100%
455,400
30,000 100%
(38,498)
(US$14,827)
(US$(1,277))
921,450
921,450
(US$30,000)
(US$30,000)
390,081
(US$12,700)
921,450
(US$30,000)
390,081
(US$12,700)
921,450
(US$30,000)
12,700 100%
306,789
12,700 100%
(US$9,988)
(US$86)
2,600
30,000 100%
480,087
30,000 100%
(38,498)
(US$15,630)
(US$(1,277))
Investment
gain(losses)
recognized by H
SI
〃
Investment
gain(losses)
recognized by
IUE
390,081
390,081
(US$12,700)
(US$12,700)
12,700 100%
365,367
12,700 100%
(US$11,895)
257,454
257,454
8,651 41%
68,240
8,651 41%
27,300
27,300
1,820 21%
-
1,820 21%
(US$86)
2,600
Investment
gain(losses)
recognized by
Goal
(132,974) Investment
gain(losses)
recognized by
Rayonnant
〃
-
383,938
383,938
(US$12,500)
(US$12,500)
12,500 59%
107,300
12,500 59%
(132,974)
(US$3,493)
(US$(4,410))
Investment
gain(losses)
recognized by
CRH
Investment
1,429,235 1,429,235
46,882 100%
251,850
46,882 100%
(229,806) Investment
gain(losses)
recognized by
HHT
HHA
HHB
British Virgin
Islands
Investment
1,439,982
(US$46,882)
1,439,982
(US$46,882)
46,882 100%
269,419
46,882 100%
(229,820)
(US$8,772)
(US$(7,622))
Investment
gain(losses)
recognized by
HHA
HHB
HengHao Trading Co.,
Ltd.
British Virgin
Islands
Marketing and
international trade
307
307
10 100%
401
10 100%
(US$10)
(US$10)
(US$13)
(US$2)
CBN
Speedlink
British Virgin
Islands
Import and export
business
1,514
1,514
50 100%
2,015
50 100%
CBNB
Belgium
FGH
Wah Yuen Technology
Holding Ltd. and its
subsidiaries
Mauritius
The import and export
business of broad band
network products and
related components, as
well as technical support
and advisory services
Investment
CORE
BSH
British Virgin
Islands
Investment
6,842
6,842
20 100%
6,919
20 100%
2,756,840
(US$89,755)
2,756,840
(US$89,755)
4,515,105
(US$147,000)
4,515,105
(US$147,000
)
95,862 37%
4,615,937
(US$150,283)
95,862 37%
147,000 100%
7,625,407
(US$248,263)
147,000 100%
BSH
LCFC (HK)
Hong Kong
Investment and trading
-
4,515,105
(US$147,000
)
-
-
-
-
-%
APH
PEL
British Virgin
Islands
Investment
96,783
96,783
3,151 100%
53,590
3,151 100%
(11,161)
(US$3,151)
(US$3,151)
(US$1,745)
(US$(370))
Rayonnant (HK)
Hong Kong
Investment
BCI
CMI
British Virgin
Islands
Investment
PRI
GLB
Rapha
British Virgin
Islands
New Taipei City
Investment
Detectors and test strip
552,870
(US$18,000)
2,482,386
(US$80,820)
552,870
(US$18,000)
2,482,386
(US$80,820)
307,150
(US$10,000)
307,150
(US$10,000)
6,500
6,500
18,000 100%
113,797
18,000 100%
80,820 100%
(US$3,705)
3,787,256
(US$123,303)
80,820 100%
10,000 100%
2,250,729
(US$73,278)
10,000 100%
1,275 100%
460
1,275 100%
Unicore
Raycore
Taipei
Animal medication retail
and wholesale
25,500
25,500
1,275 51%
22,307
1,275 51%
Note 1: The carrying value had been deducted $559, 812 and $321, 435 of the Company’s stock held by Panpal and Gempal, respectively.
Note 2: The transactions had been eliminated in the consolidated financial statements.
Note 3: It was liquidated in April 2018.
49
Investment
gain(losses)
recognized by
HHB
267 Investment
gain(losses)
recognized by
CBN
(95)
〃
275,379
(US$9,133)
2,604,284
(US$86,372)
201,793
(US$6,693)
(121,813)
(US$(4,040))
112,153
(US3,720)
Investment
gain(losses)
recognized by
FGH
Investment
gain(losses)
recognized by
CORE
Investment
gain(losses)
recognized by
BSH
Investment
gain(losses)
recognized by
APH
〃
Investment
gain(losses)
recognized by
BCI
〃
149,653
(US$4,963)
(98) Investment
gain(losses)
recognized by
GLB
(6,024) Investment
gain(losses)
recognized by
Unicore.
Note
(Note 2)
〃
〃
〃
〃
(Note 2)
〃
〃
〃
〃
〃
(Note 2)
(Note 2)
〃
〃
〃
〃
〃
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
126
(c)
Information on investment in Mainland China:
(i) The names of investees in Mainland China, the main businesses and products, and other
information:
Name of
investee
Main
businesses
and
products
Total amount
of paid-in capital
Method
of
investment
Accumulated
outflow of
investment
from
Taiwan as of
January 1,
2018
Investment flows
Outflow
Inflow
Accumulated
outflow of
investment
from Taiwan as
of
December 31,
2018
Net
income
The highest holding in the
period
(losses)
of the investee
Percentage
of
ownership
Shares/
Units
(thousands)
Holding
percentage
(%)
Investment
income (losses)
Book
value
Accumu-
lated
remittance of
earnings in
current period
(Unit: Thousands of CNY/thousands of US Dollars)
1,136,455
(US$37,000)
614,300
(US$20,000)
(Note 1)
(Note 2)
1,136,455
(US$37,000)
614,300
(US$20,000)
368,580
(US$12,000)
268,363
(RMB$60,000)
30,715
(US$1,000)
8,945
(RMB2,000)
(Note 2)
(Note 2)
(Note 2)
368,580
(US$12,000)
(Note 3)
30,715
(US$1,000)
(Note 2)
(Note 3)
-
-
-
-
-
-
-
-
-
-
-
-
1,136,455
(US$37,000)
614,300
(US$20,000)
(272,595)
(US$(9,041))
(69,038)
(US$(2,290))
368,580
(US$12,000)
-
30,715
(US$1,000)
116,086
(US$3,850)
(201,551)
(RMB(44,210))
(105,760)
(US$(3,508))
-
(14,673)
(RMB(3,218))
100 %
100 %
100 %
100 %
100 %
100 %
-
-
-
-
-
-
100 %
100 %
(272,595)
(US$(9,041))
(69,038)
(US$(2,290))
2,048,874
(US$66,706)
196,193
(US$6,388)
100 %
100 %
100 %
116,086
(US$3,850)
(201,551)
(RMB(44,210))
(105,760)
(US$(3,508))
4,832,564
(US$157,336)
(252,598)
(RMB(56,475)
(192,357)
(US$(6,263))
100 %
(14,673)
(RMB(3,218))
(37,432)
(RMB(8,369))
982,880
(US$32,000)
(Note 1)
409,431
(US$13,330)
-
-
409,431
(US$13,330)
667,227
(US$22,129)
43 %
-
43 %
288,109
(US$9,555)
597,867
(US$19,465)
614,300
(US$20,000)
(Note 1)
45,151
(US$1,470)
-
-
45,151
(US$1,470)
225,064
(US$7,464)
48 %
-
48 %
107,243
(US$3,557)
441,006
(US14,358)
70,562
(RMB15,776)
(Note 2)
(Note 3)
-
-
-
(27,269)
(RMB(5,982))
51 %
-
51 %
(13,907)
(RMB(3,051))
(73,016)
(RMB(16,325))
368,580
(US$12,000)
371,652
(US$12,100)
737,160
(US$24,000)
8,139,475
(US$265,000)
(Note 2)
(Note 1)
(Note 2)
(Note 1)
368,580
(US$12,000)
371,652
(US$12,100)
737,160
(US$24,000)
3,988,343
(US$129,850)
-
-
-
-
-
-
-
-
368,580
(US$12,000)
371,652
(US$12,100)
737,160
(US$24,000)
3,988,343
(US$129,850)
268,390
(US$8,901)
94,641
(US$3,139)
769,672
(US$25,527)
201,793
(US$6,693)
100 %
100 %
100 %
-
-
-
-
-
100 %
100 %
100 %
268,390
(US$8,901)
94,641
(US$3,139)
769,672
(US$25,527)
49 %
-
7,471,213
(US$243,243)
2,796,954
(US$91,061)
20,445,466
(US$665,651)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
CPC
CDT
CET
CSD
BT
CGS
LIZ
Electronics
(Kunshan) Co.,
Ltd.
LIZ
Electronics
(Nantong) Co.,
Ltd.
Zheng Ying
Electronics
(Chongqing)
Co., Ltd.
CIC
CPO
CIT
LCFC (Hefei)
Electronics
Technology
Co., Ltd.
Manufacturing and
sales of monitors
Manufacturing and
sales of notebook
PCs, mobile phones,
and Digital products
Manufacturing of
notebook PCs
Manufacturing of
notebook PCs
Maintenance and
warranty service of
notebook PCs
Production and
processing
chip-resistors,
ceramic capacitors,
diodes, and other
latest electronic
components and
related precision
electronic
equipment; selling
self-produced
products
Research &
development, and
manufacturing chip
components( chip
resistors, ceramic
chip diode； selling
self-produced
products and
providing after-sales
service. Performing
wholesale and
trading business of
electronic
components,
semiconductors,
special materials for
electronic
components, and
spare parts
Research,
manufacture and
sales of
communication
devices, mobile
phones, electronic
computer, smart
watch, and provide
related technology
service
Research &
development, and
manufacturing latest
electronic
components,
precision cavity
mold, design and
manufacturing for
standard parts for
molds, and selling
self -produced
products
Manufacturing of
notebook PCs
Manufacturing and
sales of LCD TVs
Manufacturing of
notebook PCs
Manufacturing and
selling of personal
computers and
related components,
and providing
related maintenance
and after-sales
service
(Continued)
127
Accumu-
lated
remittance of
earnings in
current period
-
Book
value
49,419
(US$1,609)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Accumulated
outflow of
investment
from
Taiwan as of
January 1,
2018
43,001
(US$1,400)
Method
of
investment
(Note 2)
Investment flows
Outflow
-
Inflow
-
Accumulated
outflow of
investment
from Taiwan as
of
December 31,
2018
43,001
(US$1,400)
Net
income
The highest holding in the
period
(losses)
of the investee
(3,174)
(US$(105))
Percentage
of
ownership
100 %
Shares/
Units
(thousands)
-
Holding
percentage
(%)
100 %
Investment
income (losses)
(3,174)
(US$(105))
Total amount
of paid-in capital
43,001
(US$1,400)
61,430
(US$2,000)
(Note 2)
61,430
(US$2,000)
307,150
(US$10,000)
(Note 2)
156,647
(US$5,100)
479,154
(US$15,600)
460,725
(US$15,000)
2,482,386
(US$80,820)
2,457,200
(US$80,000)
(Note 2)
(Note 2)
(Note 1)
479,154
(US$15,600)
(Note 3)
2,482,386
(US$80,820)
(Note 2)
(Note 3)
-
-
-
-
-
-
-
-
-
-
-
-
24,572 (US$800)
(Note 2)
(Note 3)
-
-
61,430
(US$2,000)
(29)
(US$(1))
100 %
-
100 %
(29)
(US$(1))
755
(US$25)
156,647
(US$5,100)
1,440
(US$48)
51 %
-
51 %
734
(US$24)
59,231
(US$1,928)
479,154
(US$15,600)
-
2,482,386
(US$80,820)
-
-
339,351
(US$11,255)
335,680
(US$11,133)
112,153
(US$3,720)
112,135
(US$3,719)
100 %
100 %
100 %
100 %
-
-
-
-
100 %
100 %
100 %
339,351
(US$11,255)
335,680
(US$11,133)
112,153
(US$3,720)
952,554
(US$31,013)
923,056
(US$30,052)
3,787,256
(US$123,303)
100 %
112,135
(US$3,719)
3,756,356
(US$122,297)
99
(US$3)
100 %
-
100 %
99
(US$3)
24,398
(US$794)
307,150
(US$10,000)
(Note 1)
307,150
(US$10,000)
-
-
307,150
(US$10,000)
149,653
(US$4,963)
100 %
-
100 %
149,653
(US$4,963)
2,250,729
(US$73,278)
12,593,150
(US$410,000)
(Note 2)
2,537,888
(US$82,627)
1,842,900
(US$60,000)
(Note 2)
351,871
(US$11,456)
552,870
(US$18,000)
(Note 2)
383,938
(US$12,500)
CCI Nanjing Manufacturing and
CDCN
CWCN
Hanhelt
processing of mobile
phones and tablet
PCs
Manufacturing and
processing of mobile
phones and tablet
PCs
Manufacturing and
processing of mobile
phones and tablet
PCs
R&D and
manufacturing of
electronic
communication
equipment
675,730
(US$22,000)
(Note 1)
675,730
(US$22,000)
178,147
(US$5,800)
(Note 1)
178,147
(US$5,800)
1,197,885
(US$39,000)
(Note 1)
583,585
(US$19,000)
61,430
(US$2,000)
(Note 1)
61,430
(US$2,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,537,888
(US$82,627)
791,080
(US$26,237)
37 %
-
37 %
289,693
(US$9,608)
5,684,301
(US$185,066)
351,871
(US$11,456)
110,851
(US$3,676)
37 %
-
37 %
40,594
(US$1,346)
1,019,634
(US$33,197)
383,938
(US$12,500)
(121,811)
(US$(4,040))
100 %
-
100 %
(121,811)
(US$(4,040))
114,396
(US3,724)
675,730
(US$22,000)
(102,215)
(US$(3,390))
100 %
178,147
(US$5,800)
754
(US$25)
100 %
583,585
(US$19,000)
(210,490)
(US$(6,981))
100 %
61,430
(US$2,000)
30
(US$1)
100 %
-
-
-
-
100 %
(102,215)
(US$(3,390))
(1,026,526)
(US$(33,421))
100 %
754
(US$25)
85,388
(US$2,780)
100 %
(210,490)
(US$(6,981))
434,617
(US$14,150)
100 %
30
(US$1)
3,133
(US$102)
Name of
investee
CST
CIN
Sheng Bao
Precision
Electronics
(Taicang) Co.,
Ltd.
CIJ
CDE
CIS
CEC
CMC
CEQ
Compal
Precision
Module
(Jiangsu) Co.,
Ltd.
Changbao
Electronic
Technology
(Chongqing)
Co., Ltd.
Rayonnant
(Taicang)
Main
businesses
and
products
International trade
and distribution of
computers and
electronic
components
Software and
hardware R&D of
computers, mobile
phones and
electronic
components
Research &
development, and
manufacturing latest
electronic
components,
precision cavity
mold, design and
manufacturing for
standard parts for
molds, and selling
self-produced
products"
Investment and
consulting services
Manufacturing and
sales of LCD TVs
Outward investment
and consulting
services
R&D and
manufacturing of
notebook PCs, tablet
PCs, digital
products, network
switches, wireless
AP, and automobile
electronic products
Corporate
management
consulting, financial
and tax consulting,
investment
consulting, and
investment
management
consulting services
R&D, manufacturing
and sales of
notebook PCs and
related components.
Also provides
related maintenance
and warranty
services
Manufacturing and
selling of
magnesium alloy
injection molding
Production and
marketing of
magnesium alloy
molding
Manufacturing and
sales of aluminum
alloy and
magnesium alloy
products
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
128
Main
businesses
and
products
Total amount
of paid-in capital
Method
of
investment
Name of
investee
Arcadyan
Accumulated
outflow of
investment
from
Taiwan as of
January 1,
2018
Investment flows
Outflow
Inflow
Accumulated
outflow of
investment
from Taiwan as
of
December 31,
2018
Net
income
The highest holding in the
period
(losses)
of the investee
Percentage
of
ownership
Shares/
Units
(thousands)
Holding
percentage
(%)
Investment
income (losses)
Book
value
Accumu-
lated
remittance of
earnings in
current period
CNC
SVA Arcadyan R&D and sales of
wireless network
products
Manufacturing and
wireless network
products
Manufacturing of
household
electronics products
THAC
402,367
(US$13,100)
382,402
(US$12,450)
102,895
(US$3,350)
(Note 1)
(Note 1)
565,770
(US$18,420)
(Note 7)
338,203
(US$11,011)
(Note 8)
(Notes 1、10)
35,322
(US$1,150)
Production of touch
panels and related
components
1,228,600
(US$40,000)
(Note 1)
1,222,549
(US$39,803)
-
-
-
-
Manufacturing of
notebook PCs and
related modules
460,725
(US$15,000)
(Note 2)
199,617
-
(US$6,499)
(Note 12)
HengHao
HengHao
Optoelectronic
Technology
(Kunshan) Co.,
Ltd. (“Heng
Hao
Kunshan”)
Lucom Display
Technology
(Kunshan)
Limited
(“Lucom”)
-
-
-
-
-
565,770
(US$18,420)
7,175
(US$238)
338,203
(US$11,011)
52,580
(US$1,744)
35,322
(US$1,150)
25,958
(US$861)
100 %
100 %
100 %
-
-
-
100 %
7,175
(US$238)
126,607
(US$4,122)
100 %
52,580
(US$1,744)
834,649
(US$27,174)
100 %
23,958
(US$861)
71,750
(US$2,336)
1,222,549
(US$39,803)
(230,717)
(US$(7,652))
100 %
-
100 %
(230,717)
(US$(7,652))
116,874
(US$3,805)
199,617
(US$6,499)
849
(US$28)
100 %
-
100 %
849
(US$28)
134,882
(US$4,391)
-
-
-
-
-
(ii) Limitation on investment in Mainland China:
Accumulated Investment in
Mainland China as of
December 31, 2018
16,725,454 (USD544,537)
(Note 5)
Investment Amounts
Authorized by Investment
Commission of Ministry of
Economic Affairs
23,069,606 (USD 751,086)
Limitation on
investment in
Mainland China by
Investment
Commission of
Ministry of Economic
Affairs
(Note 6)
939,303 (USD 30,581)
939,303 (USD 30,581)
1,439,674 (USD 46,872)
1,439,674 (USD 46,872)
5,439,686
365,077
Names of
Company
The Company
Arcadyan
HengHao
Note 1: Indirectly investment in Mainland China through companies registered in the third region.
Note 2: Indirectly investment in Mainland China through an existing company registered in the third region.
Note 3: Investees held by Kunshan Botai Electronics Co., Ltd. (“BT”), Compal Investment (Jiansu) Co., Ltd. (“CIJ”), Compal Electronic
(Sichuan) Co., Ltd. (“CIS”), and Compal Electronics (China) Co., Ltd. (“CPC”) through their own funds.
Note 4: The investment income (loss) was determined based on the financial report audited by CPA.
Note 5: Including the investment amount of sold or dissolved companies, including Beijing Compower Xuntong Electronic Technology Co., Ltd,
VAP Optoelectronics (NanJing) Corp., Flextronics Technology (Shanghai) Ltd. Lucom and the increased investment amount form merging
with Compal Communication Co., Ltd.
Note 6: As the Company has obtained the certificate of being qualified for operating headquarters, issued by Industrial Development Bureau, MOEA,
the upper limit on investment in mainland China is not applicable.
Note 7: Arcadyan paid US$18,420 thousands and acquired 100% shares of SVA Arcadyan from Accton Asia through Arcadyan Holding in 2010.
Note 8: Arcadyan paid US$8,561 thousands and acquired 100% shares of CNC from Just through Arcadyan Holding in 2007.
Note 9: SVA Arcadyan decreased its capital amounting to US$15,000 thousands to offset accumulated losses in March 2009.
Note 10: Arcadyan’s subsidiary, TTI, obtained the control over THAC with US$1,150 thousands on February 28, 2013 (the date of stock
transferring).
Note 11: The amounts in New Taiwan Dollars were translated at the exchange rates at the balance sheet date or the average exchange rate.
Note 12: The Company had an accumulated investment amounting to US$7,350 thousands in the previous years. In the first half of 2014, HengHao
paid the Company and LG US$3,184 thousands and US$3,315 thousands, respectively, for organization restructure, to obtain 100%
ownership of Lucom.
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
129
(iii) Significant transactions:
For the years ended December 31, 2018, the significant inter-company transactions with the
subsidiary in Mainland China, which were eliminated in the preparation of consolidated
financial statements, are disclosed in “Information on significant transactions”.
(14) Segment information:
(a) General information
The Group’s information technology product segment is primarily engaged in the development,
manufacture and sale of information technology products and mobile communication products. The
strategy integrate product segment is primarily engaged in the research, development, manufacture
and sale of networking products.
(b) Reportable segments and operating segment information
Accounting policies for the operating segments correspond to those stated in note 4. The profit and
loss of the operating segment of the Group is measured by earnings before taxes and as the basis for
performance measurement. The amount of the Group's reportable segments is consistent with the
report that the operating decision maker would use, and the Group does not allocate assets and
liabilities to the reportable segments for the purpose of operating decisions to measure assets and
liabilities of segments.
The operating segment information was as follows:
For the year ended December 31, 2018
Information
technology
product segment
Strategy
integrated
product segment
Adjustment and
elimination
Total
$ 941,106,606
26,599,805
-
967,706,411
Revenue
Revenue from external
customers
Interest revenue
Total revenue
Interest expense
$
$
Depreciation and amortization
Investment gain (loss)
Other significant non-cash
items:
1,420,529
43,129
942,527,135
26,642,934
2,599,996
4,692,636
797,368
36,447
248,036
-
-
Impairment of assets
-
Reportable segment profit
$
10,714,350
1,075,235
Reportable segment assets
Reportable segment
liabilities
-
-
-
-
-
-
-
1,463,658
969,170,069
2,636,443
4,940,672
797,368
-
11,789,585
$
399,794,823
$ 286,632,975
(Continued)
COMPAL ELECTRONICS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
130
For the year ended December 31, 2017
Information
technology
product segment
Strategy
integrated
product segment
Adjustment and
elimination
Total
Revenue
Revenue from external
$
867,546,750
20,110,209
customers
Interest revenue
Total revenue
Interest expense
Depreciation and amortization
Investment gain (loss)
Other significant non-cash
$
$
857,450
19,920
868,404,200
1,284,833
4,932,969
610,738
20,130,129
13,132
251,703
(4,171)
items:
Impairment of assets
Reportable segment profit
Reportable segment assets
Reportable segment
liabilities
(c) Products information
-
7,496,635
$
(19,405)
617,642
-
-
-
-
-
-
-
-
887,656,959
877,370
888,534,329
1,297,965
5,184,672
606,567
(19,405)
8,114,277
363,356,421
254,708,449
$
$
The information of revenue from external customers:
Products and services
5C related electronic products
Others
2018
965,217,737
2017
885,276,070
2,488,674
2,380,889
967,706,411
887,656,959
$
$
(Continued)
(d) Geographic information
Stated below are the geographic information on the Group’s sales presented by destination of sales
and non-current assets presented by location.
(i) Revenue from external customers:
Country
United States
China
Netherlands
United Kingdom
Germany
Japan
Others
(ii) Non-current assets:
Country
China
Taiwan
Others
2018
363,952,505
$
2017
334,716,487
121,029,441
112,830,897
110,870,861
100,397,742
45,776,419
39,644,227
38,269,433
37,059,476
31,508,907
30,217,778
256,298,845
263,008,130
$
967,706,411
887,656,959
2018
15,023,523
$
7,345,390
1,050,542
2017
11,621,004
7,603,298
1,139,823
$
23,419,455
20,364,125
Non-current assets include plant, property, and equipment, intangible assets, and other assets,
excluding deferred tax assets.
(e) The details of sales revenue from external customers more than 10% of the amount in the
consolidated statements of comprehensive income are as follows:
D Company
F Company
A Company
E Company
2018
414,474,616
$
2017
353,750,583
187,925,666
154,122,521
128,790,649
126,400,242
66,783,151
97,284,723
$
797,974,082
731,558,069
Attachment II
Stock Code:2324
COMPAL ELECTRONICS, INC.
Parent Company Only Financial Statements
With Independent Auditors’’’’ Report
For the Years Ended December 31, 2018 and 2017
Address:
Telephone: (02)8797-8588
No.581 & 581-1, Ruiguang Rd., Neihu District, Taipei, Taiwan
Table of contents
Contents
1. Cover Page
2. Table of Contents
3. Independent Auditors’ Report
4. Balance Sheets
5. Statements of Comprehensive Income
6. Statements of Changes in Equity
7. Statements of Cash Flows
8. Notes to the Parent Company Only-Financial Statements
(1) Company history
(2) Approval date and procedures of the financial statements
(3) New standards, amendments and interpretations adopted
(4) Summary of significant accounting policies
(5) Significant accounting assumptions and judgments, and major sources of
estimation uncertainty
(6) Explanation of significant accounts
(7) Related-party transactions
(8) Pledged assets
(9) Commitments and contingencies
(10) Losses due to major disasters
(11) Subsequent events
(12) Other
(13) Other disclosures
(a) Information on significant transactions
(b) Information on investees
(c) Information on investment in Mainland China
(14) Segment information
9. List of major accounting items
2
Page
1
2
3
4
5
6
7
8
8
8～17
17～39
39～40
40～79
79～85
85
86
86
86
86
87～96
96～99
100～102
102
103～112
3
Independent Auditor’’’’s Report
To COMPAL ELECTRONICS, INC.:
Opinion
We have audited the financial statements of COMPAL ELECTRONICS, INC. (the “Company”), which
comprise the balance sheets as of December 31, 2018 and 2017, the statement of comprehensive income,
changes in equity and cash flows for the years ended December 31, 2018 and 2017, 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, 2018 and 2017, and its financial performance and its cash flows for
the years then ended December 31, 2018 and 2017, 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 Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company in accordance with
the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have
fulfilled our other ethical responsibilities in accordance with the Code. 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 shown in Note (6)(h) of the financial statements.
3-1
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.
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 reviewing if the measurement of impairment loss of accounts receivable is accordance with
accounting policy, examining the historical recovery records, analyzing the aging of accounts receivable, 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)(j) of the 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 Company, our key
audit procedures included reviewing the consistency of prior year and 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.
3-2
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.
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 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
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 statements, including the disclosures,
and whether the 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 investment in other
entities accounted for using the equity method to express an opinion on the financial statements. 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 thought 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 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 auditors’ report are Szu-Chuan Chien and
Yiu-Kwan Au.
KPMG
Taipei, Taiwan (Republic of China)
March 22, 2019
The accompanying parent company only financial statements are intended only to present the parent company only financial statements 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 parent company
only financial statements are those generally accepted and applied in the Republic of China.
Notes to Readers
COMPAL ELECTRONICS, INC.
Balance Sheets
December 31, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars)
Assets
Current assets:
Cash and cash equivalents (note (6)(a))
Current financial assets at fair value through profit or loss (note (6)(b))
Current available-for-sale financial assets (note (6)(d))
Current financial assets at amortized cost (note (6)(f))
Current bond investments without active market (note (6)(g))
Notes and accounts receivable, net (note (6)(h))
Notes and accounts receivable due from related parties, net (notes (6)(h) and 7)
Other receivables, net (notes (6)(h), (6)(i) and 7)
Inventories (note (6)(j))
Other current assets
Non-current assets:
Investments accounted for using equity method (note (6)(k))
Non-current financial assets at fair value through profit or loss (note (6)(b))
Non-current financial assets at fair value through other comprehensive income (note (6)(c))
Non-current available-for-sale financial assets (note (6)(d))
Non-current financial assets at cost (note (6)(e))
Non-current bond investments without active market (note (6)(g))
Property, plant and equipment (note (6)(m))
Intangible assets
Deferred tax assets (note 6(t))
Other non-current assets
1100
1110
1125
1136
1147
1170
1180
1200
1310
1470
1550
1510
1517
1523
1543
1546
1600
1780
1840
1990
December 31, 2018
December 31, 2017
Amount
%
Amount
%
$
20,446,378
284,768
5.7
0.1
-
350,000
0.1
-
-
28,343,534
8.6
-
-
46,479
-
-
-
-
350,000
0.1
189,496,594 53.3
165,540,785 50.5
1,318,230
1,418,750
0.4
0.4
2,095,570
711,293
0.7
0.2
51,517,159 14.5
42,985,363 13.1
541,027
0.1
604,564
0.2
265,372,906 74.6
240,677,588 73.4
83,299,238 23.5
77,919,870 23.7
23,745
-
3,731,918
1.0
-
-
-
-
-
-
-
-
-
-
2,128,181
378,745
760,580
0.6
0.1
0.2
5,735,334
1.8
2,333
-
350,000
2,092,272
0.1
0.7
146,813
-
1,065,112
0.3
117,500
-
106,744
-
90,439,907 25.4
87,418,478 26.6
2100
2130
2170
2180
2200
2230
2250
2300
2313
2365
2322
2540
2570
2640
2670
3110
3200
3300
3400
3500
Liabilities and Equity
Current liabilities:
Short-term borrowings (note (6)(n))
Current contract liabilities (note (6)(x))
Notes and accounts payable
Notes and accounts payable to related parties (note 7)
Other payables (note 7)
Current tax liabilities
Current provisions (note (6)(p))
Other current liabilities
Unearned revenue
Current refund liabilities (note (6)(q))
Long-term borrowings, current portion (note (6)(o))
Non-Current liabilities:
Long-term borrowings (note (6)(o))
Deferred tax liabilities (note (6)(t))
Non-current net defined benefit liability (note (6)(s))
Non-current liabilities, others (note (6)(k))
Total liabilities
Equity:
Ordinary share (note (6)(u))
Capital surplus (note (6)(u))
Retained earnings (note (6)(u))
Other equity interest (notes (6)(u) and (6)(v))
Treasury shares (note (6)(u))
Total equity
4
December 31, 2018
December 31, 2017
Amount
%
Amount
%
$
51,305,682 14.4
41,386,000 12.6
1,405,452
0.4
-
-
77,050,816 21.7
72,212,035 22.0
78,376,843 22.0
71,456,277 21.9
8,392,511
1,787,434
-
-
1,480,446
17,496,250
2.4
0.5
-
-
0.4
4.9
587,308
0.2
7,052,029
1,644,175
1,440,292
664,918
1,617,626
-
2.1
0.5
0.5
0.2
0.5
-
6,018,750
1.8
237,882,742 66.9
203,492,102 62.1
10,900,000
386,555
621,581
298,289
12,206,425
3.0
0.1
0.2
0.1
3.4
21,114,450
543,621
612,131
438,178
22,708,380
6.4
0.2
0.2
0.1
6.9
250,089,167 70.3
226,200,482 69.0
44,071,466 12.4
44,191,916 13.5
9,932,434
2.8
10,938,773
3.3
60,060,381 16.9
56,557,146 17.2
(7,459,388) (2.1)
(8,911,004) (2.7)
(881,247) (0.3)
(881,247) (0.3)
105,723,646 29.7
101,895,584 31.0
Total assets
$
355,812,813
100.0
328,096,066
100.0
Total liabilities and equity
$
355,812,813
100.0
328,096,066
100.0
See accompanying notes to financial statements.
COMPAL ELECTRONICS, INC.
Statements of Comprehensive Income
For the years ended December 31, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Share)
5
%
2017
Amount %
2018
Amount
$ 911,050,122 100.0 841,309,602 100.0
889,171,625 97.6 819,765,642 97.4
2.6
-
2.6
21,543,960
(480)
21,544,440
21,878,497
(2,344)
21,880,841
2.4
-
2.4
3,157,897
2,389,356
9,396,882
14,944,135
6,936,706
0.3
0.3
1.0
1.6
0.8
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
(126,030)
(1,938,044)
887,354
4,198,330
3,021,610
9,958,316
1,044,951
8,913,365
-
(0.2)
0.1
0.4
0.3
1.1
0.1
1.0
(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
Net sales revenue (notes (6)(x), (6)(y) and 7)
Cost of sales (notes (6)(j), (6)(s), 7 and 12)
Gross profit
Less: Unrealized profit (loss) from sales
Gross profit
Operating expenses: (notes (6)(r), (6)(s) and 12)
Selling expenses
Administrative expenses
Research and development expenses
Net operating income
Non-operating income and expenses:
4000
5000
5910
6100
6200
6300
7020
7050
7190
7370
7900
7950
8300
8310
8311
8316
Other gains and losses, net (notes (6)(d), (6)(k) and (6)(aa))
Finance costs
Other income (notes (6)(r) and (6)(aa))
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 (note (6)(t))
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
Other comprehensive income, before tax, equity instruments at fair value through other
comprehensive income
(20,189)
-
(79,683)
(1,096,846) (0.1)
-
8330
Share of other comprehensive income (loss) of subsidiaries, associates and joint ventures
accounted for using equity method, components of other comprehensive income that will not
be reclassified to profit or loss
(212,493)
-
(1,970)
8349
Income tax related to components of other comprehensive income that will not be reclassified to
profit or loss
8360
8361
8362
8380
Components of other comprehensive income that will not be reclassified 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
Share of other comprehensive income (loss) of subsidiaries, associates and joint ventures
accounted for using equity method, components of other comprehensive income that will be
reclassified to profit or loss
8399
Income tax relating to components of other comprehensive income that will be reclassified to
69,926
(1,259,602) (0.1)
-
13,546
(68,107)
1,853,763
-
0.1
-
(4,606,117) (0.5)
147,849
-
(229,339)
-
(21,111)
-
-
-
-
-
-
-
profit or loss
Components of other comprehensive income (loss) that will be reclassified to profit or loss
8300
8500
9750
9850
Other comprehensive income (loss), net
Total comprehensive income
Earnings per share (note 6(w))
Basic earnings per share
Diluted earnings per share
-
1,624,424
364,822
9,278,187
-
0.1
-
1.0
2.05
2.02
$
$
$
See accompanying notes to financial statements.
(12,221)
(4,491,600) (0.5)
(4,559,707) (0.5)
0.4
1,189,818
1.32
1.31
COMPAL ELECTRONICS, INC.
Statements of Changes in Equity
For the years ended December 31, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars)
Retained earnings
Total other equity interest
6
Capital
surplus
11,779,274
Legal
reserve
17,439,772
Special
reserve
Unappropriated
retained
earnings
Ordinary
shares
$ 44,241,606
-
-
-
Balance at January 1, 2017
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 of ordinary share
Cash dividends from capital surplus
Difference between consideration and carrying amount arising from acquisition or
disposal 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
Effects of retrospective application
Adjusted balance at January 1, 2018
Profit for the year ended December 31, 2018
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve appropriated
Special reserve appropriated
Cash dividends of ordinary share
Cash dividends from capital surplus
Changes in ownership interests in subsidiaries
Changes in equity of associates and joint ventures accounted for using equity
method
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(49,690)
14,217
(63,472)
-
44,191,916
60,027
10,938,773
-
-
-
-
44,191,916
10,938,773
18,252,861
4,339,549
18,252,861
4,339,549
-
-
-
-
-
-
(884,431)
33,016
142
-
-
-
-
-
-
(881,429)
(32,706)
(459)
(151,766)
-
-
-
813,089
-
-
-
-
-
-
-
-
3,199,674
-
-
-
-
1,139,875
-
-
-
-
-
-
-
-
-
-
574,953
-
-
-
-
-
-
-
-
-
-
-
-
4,491,599
-
-
-
-
-
-
-
-
9,932,434
18,827,814
8,831,148
Share-based payments transaction
Adjustments of capital surplus for company's cash dividends received by
(120,450)
subsidiaries
-
60,021
Disposal of investments in equity instruments measured at fair value through
other comprehensive income
Balance at December 31, 2018
-
$ 44,071,466
See accompanying notes to financial statements.
Unrealized
gains
(losses) on
financial
assets
measured at
fair value
through other
comprehensiv
e income
-
-
-
-
Exchange
differences on
translation of
foreign
financial
statements
1,324,282
-
(4,801,658)
(4,801,658)
Unrealized
gains
(losses) on
available-for-
sale financial
assets
(5,663,830)
-
310,058
310,058
Unearned
employee
benefit and
others
Total other
equity
interest
(285,105)
-
-
-
(4,624,653)
-
(4,491,600)
(4,491,600)
Treasury
shares
Total equity
(881,247) 105,804,389
5,749,525
(4,559,707)
1,189,818
-
-
-
-
-
-
-
-
-
-
-
-
(3,477,376)
-
(3,477,376)
-
1,624,424
1,624,424
-
-
-
-
-
-
-
-
-
(1,852,952)
-
-
-
-
-
-
-
-
-
-
(5,847,823)
(5,847,823)
-
(1,273,696)
(1,273,696)
-
-
-
-
489,483
1,130
-
-
1,024,470
(5,606,436)
-
-
-
-
-
-
-
-
-
(5,353,772)
5,353,772
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
205,249
-
(79,856)
-
(79,856)
-
-
-
-
-
-
-
-
-
-
-
-
79,856
-
-
-
-
-
-
-
205,249
-
(8,911,004)
(494,051)
(9,405,055)
-
350,728
350,728
-
-
-
-
489,483
1,130
79,856
-
1,024,470
(7,459,388)
-
-
-
-
-
-
-
-
-
-
(4,422,153)
(884,431)
30,837
(282)
14,023
103,356
-
60,027
(881,247) 101,895,584
-
-
(881,247) 101,895,584
8,913,365
364,822
9,278,187
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,407,147)
(881,429)
(64,866)
(485)
(156,219)
60,021
-
(881,247) 105,723,646
Total
retained
earnings
55,289,409
5,749,525
(68,107)
5,681,418
-
-
(4,422,153)
-
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
(2,179)
(424)
(194)
11,269
33,964,736
494,051
34,458,787
8,913,365
14,094
8,927,459
(574,953)
(4,491,599)
(4,407,147)
-
(521,643)
-
56,557,146
494,051
57,051,197
8,913,365
14,094
8,927,459
-
-
(4,407,147)
-
(521,643)
(1,156)
36,141
(1,156)
36,141
-
-
(1,024,470)
32,401,419
(1,024,470)
60,060,381
COMPAL ELECTRONICS, INC.
Statements of Cash Flows
For the years ended December 31, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars)
Cash flows from (used in) operating activities:
Profit before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation and amortization
Increase in expected credit loss /allowance for uncollectible accounts
Net gain on financial assets or liabilities at fair value through profit or loss
Finance cost
Interest income
Dividend income
Compensation cost of share-based payments
Share of profit of subsidiaries, associates and joint ventures accounted for using equity method
Loss on disposal of investments
Total adjustments to reconcile profit (loss)
Changes in operating assets and liabilities:
Changes in operating 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 refund liabilities
Increase (decrease) in provisions
Increase (decrease) in unearned revenue
Increase (decrease) in contract liabilities
Increase (decrease) in other current liabilities
Others
Total changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash inflow (outflow) generated from 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 financial assets at amortized cost
Acquisition of investments accounted for using equity method and financial assets at fair value through other comprehensive income
Proceeds from disposal of investments accounted for using equity method and financial assets at fair value through other comprehensive
income
Acquisition of financial assets at fair value through profit or loss
Proceeds from disposal of financial assets at fair value through profit or loss
Proceeds from capital reduction of investments
Acquisition of property, plant and equipment
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
See accompanying notes to financial statements.
7
2018
2017
$
9,958,316
6,678,720
456,117
1,065
(95,526)
1,938,044
(332,905)
(212,129)
(156,219)
(4,198,330)
-
(2,599,883)
(23,179,534)
(629,912)
(8,531,796)
63,537
(32,277,705)
11,759,347
1,172,349
40,154
-
-
(212,174)
(77,610)
(12,315)
12,669,751
(19,607,954)
(22,207,837)
(12,249,521)
314,650
592,252
(1,769,911)
(684,300)
(13,796,830)
350,000
(137,435)
291,435
(23,745)
574,529
8,054
(203,186)
(321,840)
(521,722)
(10,572)
5,518
9,919,682
34,258,000
(32,994,950)
(5,288,576)
-
5,894,156
(7,897,156)
28,343,534
20,446,378
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
$
COMPAL ELECTRONICS, INC.
Notes to the Parent Company Only-Financial Statements
For the years ended December 31, 2018 and 2017
(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
8
(1) Company history
Compal Electronics, Inc. (the "Company") was incorporated in June 1984 as a company limited by shares
and registered under the Ministry of Economic Affairs, R.O.C. The address of the Company's registered
office is No.581 and No.581-1 Ruiguang Rd., Neihu Dist., Taipei City, Taiwan. In accordance with
Article 19 of the Business Mergers and Acquisitions Act, the Company merged its subsidiary, Compal
Communications, Inc. ("CCI") (the "Merger"), pursuant to the resolutions of the Board of Directors in
November, 2013. The Company was the surviving company and CCI was the dissolved company. The
effective date of the Merger was February 27, 2014. The Company is primarily involved in the
manufacture and sale of notebook personal computers ("notebook PCs"), monitors, LCD TVs, mobile
phones and various components and peripherals.
(2) Approval date and procedures of the financial statements:
The accompanying parent-company-only financial statements were authorized for issuance by the Board of
Directors and issued on March 22, 2019.
(3) New standards, amendments and interpretations adopted:
(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the
Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.
The following new standards, interpretations and amendments have been endorsed by the FSC and
are effective for annual periods beginning on or after January 1, 2018.
New, Revised or Amended Standards and Interpretations
Amendment to IFRS 2 “Classification and Measurement of Share-based
Payment Transactions”
Amendments to IFRS 4 “Applying IFRS 9 Financial Instruments with IFRS 4
Insurance Contracts”
IFRS 9 “Financial Instruments”
IFRS 15 “Revenue from Contracts with Customers”
Amendment to IAS 7 “Statement of Cash Flows–Disclosure Initiative”
Amendment to IAS 12 “Income Taxes–Recognition of Deferred Tax Assets for
Unrealized Losses”
Amendments to IAS 40 “Transfers of Investment Property”
Effective date
per IASB
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2017
January 1, 2018
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
9
New, Revised or Amended Standards and Interpretations
Annual Improvements to IFRS Standards 2014–2016 Cycle:
Amendments to IFRS 12
Amendments to IFRS 1 and Amendments to IAS 28
IFRIC 22 “Foreign Currency Transactions and Advance Consideration”
Effective date
per IASB
January 1, 2017
January 1, 2018
January 1, 2018
Except for the following items, the Company believes that the adoption of the above IFRSs would
not have any material impact on its financial statements. The extent and impact of significant
changes are as follows:
(i)
IFRS 15 “Revenue from Contracts with Customers”
IFRS 15 establishes principles for recognizing revenue that apply to all contracts with
customers, using a five-step model framework to determine the method, timing and amount of
revenue recognized. This standard replaces existing revenue recognition guidance, including
IAS 18, Revenue, IAS 11, Construction Contracts, and the related interpretations. The
Company applies this standard retrospectively with the cumulative effect, it needs not restate
those contracts, but instead, continues to apply IAS 11, IAS 18 and the related Interpretations
for comparative reporting period. Upon the initial application of this standard, there was no
cumulative effect and no adjustment was made to retained earnings on January 1, 2018.
The following are the nature and impacts on changing of accounting policies:
1)
Sales of goods
For the sale of the Company's products, revenue was used to be recognized when the
goods are delivered to the customers’ premises, which is taken to be the point in time at
which the customer accepts the goods and the related risks and rewards of ownership
transfer, the revenue and costs can be measured reliably, the recovery of the consideration
is probable and there is no continuing management involvement with the goods. Under
IFRS 15, revenue will be recognized when a customer obtains control of the goods. The
Company believes that the point at which the related risks and rewards of ownership
transfer to the customers is similar to the point of control transfer. Therefore, the changes
in accounting policy of the above-mentioned sales of goods do not result in a material
adjustment of the financial statements.
2)
Impacts on financial statements
The following tables summarize the impacts of adopting IFRS 15 on the Company’s
financial statements for the year ended December 31, 2018:
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
10
December 31, 2018
January 1, 2018
Carrying
amount under
IAS 18 and
related
standards and
interpretations
Adjustments
from
changes in
accounting
policies
Carrying
amount
under IFRS
15
Carrying
amount under
IAS 18 and
related
standards and
interpretations
Adjustments
from
changes in
accounting
policies
Carrying
amount
under IFRS
15
Impacted line items on the
balance sheet
Current contract liabilities
(note 2)
$
Current provisions (note 1)
-
1,480,446
1,405,452
(1,480,446)
Unearned revenue (note 2)
1,405,452
(1,405,452)
1,405,452
-
-
-
1,440,292
1,617,626
(1,440,292)
1,617,626
(1,617,626)
1,617,626
-
-
Current refund liabilities
(note 1)
Impact on liabilities
-
1,480,446
1,480,446
-
1,440,292
1,440,292
$
-
-
For the year ended December 31, 2018
Carrying
amount under
IAS 18 and
related
standards and
interpretations
Adjustments
from changes
in accounting
policies
Carrying
amount under
IFRS 15
Impacted line items on the
statement of cash flows
Cash flows from (used in) operating activities:
Adjustments:
Increase (decrease) in contract liabilities
$
-
(212,174)
(212,174)
Increase (decrease) in provisions
40,154
(40,154)
Increase (decrease) in unearned revenue
(212,174)
212,174
-
-
Increase (decrease) in refund liabilities
-
40,154
40,154
Cash inflow (outflow) generated from
$
-
operations
Note 1: Prior to the adoption of IFRS 15, the sales returns and discounts were recognized as
sales returns and allowances provisions. Under IFRS 15, it was recognized as refund
liabilities.
Note 2: Prior to the adoption of IFRS 15, unearned revenue were recognized as other current
liabilities or expressed it alone. Under IFRS 15, it was recognized as contract
liabilities.
(ii)
IFRS 9 “Financial Instruments”
IFRS 9 replaces IAS 39 “Financial Instruments: Recognition and Measurement” which
contains classification and measurement of financial instruments, impairment and hedge
accounting.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
11
As a result of the adoption of IFRS 9, the Company adopted the consequential amendments to
IAS 1 “Presentation of Financial Statements” which requires impairment of financial assets
to be presented in a separate line item in the statement of profit or loss and OCI. Previously, the
Company’s approach was to include the impairment of trade receivables in selling expenses.
Additionally, the Company adopted the consequential amendments to IFRS 7 “Financial
Instruments: Disclosures” that are applied to disclosures about 2018 but generally have not
been applied to comparative information.
The detail of new significant accounting policies and the nature and effect of the changes to
previous accounting policies are set out below:
1) Classification of financial assets and financial liabilities
IFRS 9 contains three principal classification categories for financial assets: measured at
amortized cost, fair value through other comprehensive income (“FVOCI”) and fair
value through profit or loss (“FVTPL”). The classification of financial assets under
IFRS 9 is generally based on the business model in which a financial asset is managed
and its contractual cash flow characteristics. The standard eliminates the previous IAS 39
categories of held to maturity, loans and receivables and available for sale. Under IFRS 9,
derivatives embedded in contracts where the host is a financial asset in the scope of the
standard are never bifurcated. Instead, the hybrid financial instrument as a whole is
assessed for classification. For an explanation of how the Company classifies and
measures financial assets and accounts for related gains and losses under IFRS 9, please
see note (4)(f).
The adoption of IFRS 9 did not have any significant impact on its accounting policies on
financial liabilities.
2)
Impairment of financial assets
IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with the ‘expected credit loss’
(“ECL”) model. The new impairment model applies to financial assets measured at
amortized cost, contract assets and debt investments at FVOCI, but not to investments in
equity instruments. Under IFRS 9, credit losses are recognized earlier than those under
IAS 39. Please see note (4)(f).
3)
Transition
The adoption of IFRS 9 have been applied retrospectively, except as described below,
‧Differences in the carrying amounts of financial assets and financial liabilities resulting
from the adoption of IFRS 9 are recognized in retained earnings and reserves as on
January 1, 2018. Accordingly, the information presented for 2017 does not generally
reflect the requirements of IFRS 9 and therefore is not comparable to the information
presented for 2018 under IFRS 9.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
12
‧The following assessments have been made on the basis of the facts and circumstances
that existed at the date of initial application.
－The determination of the business model within which a financial asset is held.
－The designation of certain investments in equity instruments not held for trading
as at FVOCI.
‧If an investment in a debt security had low credit risk at the date of initial application of
IFRS 9, then the Company assumed that the credit risk on its asset will not increase
significantly since its initial recognition.
4) Classification of financial assets on the date of initial application of IFRS 9
The following table shows the original measurement categories under IAS 39 and the
new measurement categories under IFRS 9 for each class of the Company’s financial
assets as of January 1, 2018 (no change in measurement categories and carrying amounts
for financial liabilities).
IAS 39
IFRS 9
Measurement categories
Carrying
Amount
Measurement categories
Carrying
Amount
Financial Assets
Cash and cash equivalents
Loans and receivables (note 3)
$
28,343,534 Amortized cost
Debt securities
Loans and receivables (Bond
700,000 Amortized cost
investment without active
market-current and
non-current) (note 1)
Investment in equity
At cost (note 2)
2,333 FVOCI
instruments
Available for sale–current and
763,771 FVTPL
non-current (note 2)
Available for sale–current and
5,018,042 FVOCI
non-current (note 2)
28,343,534
700,000
2,333
763,771
5,018,042
Notes and accounts
Loans and receivables (note 3)
128,447,972 Amortized cost
128,447,972
receivable net (including
related parties)
Notes and accounts
Loans and receivables (note 4)
39,188,383 FVOCI
39,188,383
receivable, net (including
related parties)
Other receivables and
Loans and receivables (note 3)
818,037 Amortized cost
818,037
guarantee deposits
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
13
Note1: The corporate debt securities that were previously classified as bond investment
without an active market are now classified at amortized cost. The Company
intends to hold the assets to maturity to collect contractual cash flows and these
cash flows consist solely of payments of principal and interest on the principal
amount outstanding.
Note2: These equity securities (including financial assets measured at cost) represent
investments that the Company intends to hold for the long term for strategic
purposes. As permitted by IFRS 9, the Company has designated these
investments at the date of initial application as measured at FVOCI and FVTPL.
Accordingly, a decrease of $377,309 thousands in the reserves, as well as the
increase of $377,309 thousands in retained earnings were recognized on January
1, 2018. Besides, on the date of initial application, a decrease of $ 116,742
thousands in the reserve, as well as the increase of $116,742 thousands in
retained earnings were recognizes due to the adjustment resulted from
investments accounted for using equity method.
Note3: Cash and cash equivalents, notes and accounts receivable (including related
parties), other receivables and guarantee deposits that were classified as loans
and receivables under IAS 39 are now classified at amortized cost.
Note4: Accounts receivable are held within a business model whose objective is achieved
by both collecting the contractual cash flows and by selling accounts receivables
that were classified as loans and receivables under IAS 39 are now classified at
FVOCI, and recorded as accounts receivable.
The following table reconciles the carrying amounts of financial assets under IAS 39 to
the carrying amounts under IFRS 9 upon transition to IFRS 9 on January 1, 2018.
Reclassifications
Remeasurements
Fair value through profit or loss
Beginning balance of FVTPL (IAS 39)
Additions – equity instruments:
From available for sale
Total
Fair value through other comprehensive income
Beginning balance of available for sale (including
measured at cost) (IAS 39)
Addition – debt instruments:
From loans and receivables
Subtractions – debt instruments:
From available for sale
Total
Amortized cost
2017.12.31
IAS 39
Carrying
Amount
$
$
$
-
-
-
5,784,146
-
-
$
5,784,146
-
-
763,771
763,771
39,188,383
(763,771)
38,424,612
Beginning balance of cash and cash equivalents,
$
197,391,197
-
bond investment without an active market, trade
and other receivables, and other financial assets
Subtractions – debt instrument:
To FVOCI
Total
-
$
197,391,197
(39,188,383)
(39,188,383)
-
-
-
-
-
-
-
-
-
-
2018.1.1
IFRS 9
Carrying
Amount
2018.1.1
Adjustments
to retained
earnings
2018.1.1
Adjustments
to other
equity
-
-
763,771
125,134
125,134
(125,134)
(125,134)
252,175
(252,175)
-
-
-
-
44,208,758
252,175
(252,175)
-
-
-
-
-
-
158,202,814
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
14
(iii) Amendments to IAS 7 “Disclosure Initiative”
The amendments require disclosures that enable users of financial statements to evaluate
changes in liabilities arising from financing activities, including both changes arising from cash
flow and non-cash changes.
To satisfy the new disclosure requirements, the Company presents a reconciliation between the
opening and closing balances for liabilities with changes arising from financing activities as
note 6(af).
(iv) Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Loss”
The amendments clarify the accounting for deferred tax assets for unrealized losses on debt
instruments measured at fair value.
The Company believes that the above changes in accounting policies would not have any
material impact on its parent-company-only financial statements.
(b) The impact of IFRS endorsed by FSC but not yet effective
The following new standards, interpretations and amendments have been endorsed by the FSC and
are effective for annual periods beginning on or after January 1, 2019 in accordance with Ruling No.
1070324857 issued by the FSC on July 17, 2018:
New, Revised or Amended Standards and Interpretations
IFRS 16 “Leases”
IFRIC 23 “Uncertainty over Income Tax Treatments”
Amendments to IFRS 9 “Prepayment features with negative compensation”
Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement”
January 1, 2019
Amendments to IAS 28 “Long-term interests in associates and joint ventures” January 1, 2019
January 1, 2019
January 1, 2019
Effective date
per IASB
January 1, 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle
January 1, 2019
Except for the following items, the Company believes that the adoption of the above IFRSs would
not have any material impact on its financial statements. The extent and impact of signification
changes are as follows:
(i)
IFRS 16“Leases”
IFRS 16 replaces the existing leases guidance, including IAS 17 “Leases”, IFRIC 4
“Determining whether an Arrangement contains a Lease”, SIC-15 “Operating Leases –
Incentives” and SIC-27 “Evaluating the Substance of Transactions Involving the Legal
Form of a Lease”.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
15
IFRS 16 introduces a single and an on-balance sheet lease accounting model for lessees. A
lessee recognizes a right-of-use asset representing its right to use the underlying asset and a
lease liability representing its obligation to make lease payments. In addition, the nature of
expenses related to those leases will now be changed since IFRS 16 replaces the straight-line
operating lease expense with a depreciation charge for right-of-use assets and interest expense
on lease liabilities. There are recognition exemptions for short-term leases and leases of
low-value items. The lessor accounting remains similar to the current standard – i.e. the lessors
will continue to classify leases as finance or operating leases.
1) Determining whether an arrangement contains a lease
On transition to IFRS 16, the Company can choose to apply either of the following:
‧ IFRS 16 definition of a lease to all its contracts; or
‧ a practical expedient that does not need any reassessment whether a contract is, or
contains, a lease.
The Company plans to apply the practical expedient to grandfather the definition of a
lease upon transition. This means that it will apply IFRS 16 to all contracts entered into
before January 1, 2019 and identified as leases in accordance with IAS 17 and IFRIC 4.
2)
Transition
As a lessee, the Company can apply the standard using either of the following:
‧ retrospective approach; or
‧ modified retrospective approach with optional practical expedients.
The lessee applies the election consistently to all of its leases.
On January 1, 2019, the Company plans to initially apply IFRS 16 using the modified
retrospective approach. Therefore, the cumulative effect of adopting IFRS 16 will be
recognized as an adjustment to the opening balance of retained earnings at January 1,
2019, with no restatement of comparative information.
When applying the modified retrospective approach to leases previously classified as
operating leases under IAS 17, the lessee can elect, on a lease-by-lease basis, whether to
apply a number of practical expedients on transition. The Company chooses to elect the
following practical expedients:
– apply a single discount rate to a portfolio of leases with similar characteristics.
– apply the exemption not to recognize the right-of-use assets and liabilities to
leases with lease term that ends within 12 months of the date of initial application.
– exclude the initial direct costs from measuring the right-of-use assets at the date of
initial application.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
16
– use hindsight when determining the lease term if the contract contains options to
extend or terminate the lease.
3)
So far, the most significant impact identified is that the Company will have to recognize
the new assets and liabilities for the operating leases of its offices, warehouses, and
factory facilities. The Company estimated that the right-of-use assets and the lease
liabilities to increase by $823,996 thousands and $823,996 thousands respectively, on
January 1, 2019.
(ii)
IFRIC 23 Uncertainty over Income Tax Treatments
In assessing whether and how an uncertain tax treatment affects the determination of taxable
profit (tax loss), tax bases, unused tax losses, unused tax credits, as well as tax rates, an entity
shall assume that a taxation authority will examine the amounts it has the right to examine and
have a full knowledge on all related information when making those examinations.
If an entity concludes that it is probable that the taxation authority will accept an uncertain tax
treatment, the entity shall determine the taxable profit (tax loss), tax bases, unused tax losses,
unused tax credits, as well as tax rates consistently with the tax treatment used or planned to be
used in its income tax filings. Otherwise, an entity shall reflect the effect of uncertainty for
each uncertain tax treatment by using either the most likely amount or the expected value,
depending on which method the entity expects to better predict the resolution of the
uncertainty.
So far, the company believes that above changes in accounting policies would not have any
material impact on its financial statements.
The actual impacts of adopting the standards may change depending on the economic
conditions and events which may occur in the future.
(c) The impact of IFRS issued by IASB but not yet endorsed by the FSC
As of the date, the following IFRSs that have been issued by the International Accounting Standards
Board (IASB), but have yet to be endorsed by the FSC:
New, Revised or Amended Standards and Interpretations
Amendments to IFRS 3 “Definition of a Business”
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between
an Investor and Its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IAS 1 and IAS 8 “Definition of Material”
Effective date
per IASB
January 1, 2020
Effective date to
be determined
by IASB
January 1, 2021
January 1, 2020
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
17
Those which may be relevant to the Company are set out below:
Issuance / Release
Dates
October 31, 2018
Standards or
Interpretations
Amendments to IAS 1 and IAS
8 “Definition of Material”
Content of amendment
The amendments clarify the definition of
material and how it should be applied by
including in the definition guidance that until
IFRS
in
featured elsewhere
now has
Standards. In addition,
the explanations
accompanying
the definition have been
improved. Finally, the amendments ensure
that the definition of material is consistent
across all IFRS Standards.
The Company is evaluating the impact on its financial position and financial performance upon the
initial adoption of the above-mentioned standards or interpretations. The results thereof will be
disclosed when the Company completes its evaluation.
(4) Summary of significant accounting policies:
The significant accounting policies presented in the parent-company-only financial statements are
summarized as follows. The following accounting policies were applied consistently throughout the
periods presented in the financial statements.
(a) Statement of compliance
These parent-company-only financial statements have been prepared in accordance with the
Regulations Governing the Preparation of Financial Reports by Securities Issuers.
(b) Basis of preparation
(i) Basis of measurement
Except for the following significant accounts in the statement of financial position, the
parent-company-only financial statements have been prepared on the historical cost basis:
1)
2)
3)
Financial instruments measured at fair value through profit or loss are measured at fair
value;
Financial instruments measured at fair value through other comprehensive income
(Available-for-sale) are measured at fair value;
The defined benefit liability (or asset) is recognized as plan assets less the present value
of the defined benefit obligation and the effect of the asset ceiling mentioned in note
(4)(q).
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
18
(ii) Functional and presentation currency
The functional currency of the Company is determined based on the primary economic
environment in which the Company operates. The parent-company-only financial statements
are presented in New Taiwan Dollar, which is the Company's functional currency. All
financial information presented in New Taiwan Dollar has been rounded to the nearest
thousand.
(c) Foreign currency
(i)
Foreign currency transaction
Transactions in foreign currencies are translated to the respective functional currencies of the
Company at exchange rates at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are retranslated to the functional
currency at the exchange rate at that date. The foreign currency gain or loss on monetary
items is the difference between the amortized cost in the functional currency at the beginning of
the year adjusted for the effective interest and payments during the period, and the amortized
cost in foreign currency translated at the exchange rate at the reporting date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair
value are retranslated to the functional currency at the exchange rate at the date that the fair
value was determined. Non-monetary items in a foreign currency that are measured based on
historical cost are translated using the exchange rate at the date of translation.
Foreign currency differences arising on retranslation are recognized in profit or loss, except for
the following differences which are recognized in other comprehensive income arising on the
retranslation:
1)
2)
fair value through other comprehensive income (available-for-sale) financial assets
financial assets;
a financial liability designated as a hedge of the net investment in a foreign operation to
the extent that the hedge is effective; or
3)
qualifying cash flow hedges to the extent the hedge is effective
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments
arising on acquisition, are translated to the Company’s functional currency at exchange rates
of the reporting date. The income and expenses of foreign operations, excluding foreign
operations in hyperinflationary economies, are translated to the Company’s functional
currency at average rate. Foreign currency differences are recognized in other comprehensive
income, and presented in the foreign currency translation differences in equity.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
19
When a foreign operation is disposed of such that control, significant influence or joint control
is lost, the cumulative amount in the translation reserve related to that foreign operation is
reclassified to profit or loss as part of the gain or loss on disposal. When the Company
disposes of any part of its interest in a subsidiary that includes a foreign operation while
retaining control, the relevant proportion of the cumulative amount is reattributed to
non-controlling interest. When the Company disposes of only part of investment in an
associate of joint venture that includes a foreign operation while retaining significant or joint
control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
When the settlement of a monetary item receivable from or payable to a foreign operation is
neither planned nor likely in the foreseeable future, foreign currency gains and losses arising
from such items are considered to form part of a net investment in the foreign operation and are
recognized in other comprehensive income, and presented in the translation reserve in equity.
(d) Classification of current and non-current assets and liabilities
An entity shall classify an asset as current when:
(i)
It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
(ii)
It holds the asset primarily for the purpose of trading;
(iii) It expects to realize the asset within twelve months after the reporting period; or
(iv) The asset is cash and cash equivalent unless the asset is restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting period.
An entity shall classify all other assets as non-current.
An entity shall classify a liability as current when:
(i)
It expects to settle the liability in its normal operating cycle;
(ii)
It holds the liability primarily for the purpose of trading;
(iii) The liability is due to be settled within twelve months after the reporting period; or
(iv) It does not have an unconditional right to defer settlement of the liability for at least twelve
months after the reporting period. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity instruments do not impact its
classification.
An entity shall classify all other liabilities as non-current.
(e) Cash and cash equivalents
Cash comprise cash on hand and demand deposits. Cash equivalents are subject to an insignificant
risk of changes in their fair value, and are used by the Company in the management of its short-term
commitments.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
20
The time deposits which meet the above definition and are held for the purpose of meeting short-term
cash commitments rather than for investment or other purposes are reclassified as cash equivalents.
(f) Financial instruments
(i)
Financial assets (policy applicable from January 1, 2018)
Financial assets are classified into the following categories: measured at amortized cost, fair
value through other comprehensive income (FVOCI) and fair value through profit or loss
(FVTPL).
The Company shall reclassify all affected financial assets only when it changes its business
model for managing its financial assets.
1)
Financial assets measured at amortized cost
A financial asset is measured at amortized cost if it meets both of the following
conditions and is not designated as at FVTPL:
‧it is held within a business model whose objective is to hold assets to collect contractual
cash flows; and
‧its contractual terms give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.
A financial asset measured at amortized cost is initially recognized at fair value, plus any
directly attributable transaction costs. These assets are subsequently measured at
amortized cost using the effective interest method. The amortized cost is reduced by
impairment losses. Interest income, foreign exchange gains and losses, and impairment
loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in
profit or loss. A regular way purchase or sale of financial assets is recognized and
derecognized, as applicable, using trade date accounting.
2)
Fair value through other comprehensive income (FVOCI )
A debt investment is measured at FVOCI if it meets both of the following conditions and
is not designated as at FVTPL:
‧it is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets; and
‧its contractual terms give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.
Some accounts receivables are held within a business model whose objective is achieved
by both collecting contractual cash flows and selling by the Company, therefore, those
receivables are measured at FVOCI and presented as accounts receivable.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
21
On initial recognition of an equity investment that is not held for trading, the Company
may irrevocably elect to present subsequent changes in the investment’s fair value in
other comprehensive income. This election is made on an instrument-by-instrument basis.
A financial asset measured at FVOCI is initially recognized at fair value, plus any
directly attributable transaction costs. These assets are subsequently measured at fair
value. Interest income calculated using the effective interest method, foreign exchange
gains and losses, and impairment losses, deriving from debt investments are recognized
in profit or loss; whereas dividends deriving from equity investments are recognized as
income in profit or loss, unless the dividend clearly represents a recovery of part of the
cost of the investment. Other net gains and losses of financial assets measured at FVOCI
are recognized in OCI. On derecognition, gains and losses accumulated in OCI of debt
investments are reclassified to profit or loss. However, gains and losses accumulated in
OCI of equity investments are reclassified to retain earnings instead of profit or loss. A
regular way purchase or sale of financial assets is recognized and derecognized, as
applicable, using trade date accounting.
Dividend income derived from equity investments is recognized on the date that the
Company’s right to receive payment is established, which in the case of quoted
securities is normally the ex-dividend date.
3)
Fair value through profit or loss (FVTPL)
All financial assets not classified as amortized cost or FVOCI described as above are
measured at FVTPL, including derivative financial assets. On initial recognition, the
Company may irrevocably designate a financial asset, which meets the requirements to be
measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or
significantly reduces an accounting mismatch that would otherwise arise.
Financial assets in this category are measured at fair value at initial recognition.
Attributable transaction costs are recognized in profit or loss as incurred. Subsequent
changes that are measured at fair value, which take into account any dividend and interest
income, are recognized in profit or loss. A regular way purchase or sale of financial assets
is recognized and derecognized, as applicable, using trade date accounting.
4)
Impairment of financial assets
The Company recognizes loss allowances for expected credit losses on financial assets
measured at amortized cost (including cash and cash equivalents, financial assets
measured at amortized costs, notes and accounts receivable, other receivable, guarantee
deposit and other financial assets), debt investments measured at FVOCI, and accounts
receivable measured at FVOCI.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
22
The Company measures loss allowances at an amount equal to lifetime expected credit
loss (ECL), except for the following which are measured as 12-month ECL:
‧debt securities that are determined to have low credit risk at the reporting date; and
‧other debt securities and bank balances for which credit risk (i.e. the risk of default
occurring over the expected life of the financial instrument) has not increased
significantly since initial recognition.
Loss allowance for trade receivables and contract assets are always measured at an
amount equal to lifetime ECL.
Lifetime ECLs are the ECLs that result from all possible default events over the expected
life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible
within the 12 month after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual
period over which the Company is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly
since initial recognition and when estimating ECL, the Company considers reasonable
and supportable information that is relevant and available without undue cost or effort.
This includes both quantitative and qualitative information and analysis based on the
Company ’ s historical experience and informed credit assessment as well as
forward-looking information.
The Company considers a debt security to have low credit risk when its credit risk rating
is equivalent to the globally understood definition of ‘investment grade which is
considered to be BBB- or higher per Standard & Poor’s, Baa3 or higher per Moody’
s or twA or higher per Taiwan Ratings’.
The Company assumes that the credit risk on a financial asset has increased significantly
if it is more than 30 days past due.
The Company considers a financial asset to be in default when the financial asset is more
than 90 days past due or the borrower is unlikely to pay its credit obligations to the
Company in full.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as
the present value of all cash shortfalls (i.e. the difference between the cash flows due to
the Company in accordance with the contract and the cash flows that the Company
expects to receive). ECLs are discounted at the effective interest rate of the financial
asset.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
23
At each reporting date, the Company assesses whether financial assets carried at
amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is
‘credit-impaired’ when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred. An evidence that a
financial asset is credit-impaired includes the following observable data:
‧significant financial difficulty of the borrower or issuer;
‧a breach of contract such as a default or being more than 90 days past due;
‧the lender of the borrower, for economic or contractual reasons relating to the
borrower's financial difficulty, having granted to the borrower a concession that the
lender would not otherwise consider;
‧it is probable that the borrower will enter bankruptcy or other financial reorganization;
or
‧the disappearance of an active market for a security because of financial difficulties.
Loss allowances for financial assets measured at amortized cost are deducted from the
gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is
recognized in other comprehensive income instead of reducing the carrying amount of the
asset. The Company recognizes the amount of expected credit losses (or reversal) in
profit or loss, as an impairment gain or loss.
The gross carrying amount of a financial asset is written off (either partially or in full) to
the extent that there is no realistic prospect of recovery. This is generally the case when
the Company determines that the debtor does not have assets or sources of income that
could generate sufficient cash flows to repay the amounts subject to the write-off.
However, financial assets that are written off could still be subject to enforcement
activities in order to comply with the Company’s procedures for recovery of amounts
due.
5) Derecognition of financial assets
Financial assets are derecognized when the contractual rights to the cash flows from the
assets expire, or when the Company transfers substantially all the risks and rewards of
ownership of the financial assets.
On derecognition of a debt instrument in its entirety, the Company recognizes the
difference between its carrying amount and the sum of the consideration received or
receivable and any cumulative gain or loss that had been recognized in other
comprehensive income and presented in “other equity – unrealized gains or losses on
fair value through other comprehensive income”, in profit or loss, and presented it in the
line item of non-operating income.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
24
On derecognition of a financial asset other than in its entirety, the Company allocates the
previous carrying amount of the financial asset between the part it continues to recognize
under continuing involvement, and the part it no longer recognizes on the basis of the
relative fair values of those parts on the date of the transfer. The difference between the
carrying amount allocated to the part that is no longer recognized and the sum of the
consideration received for the part no longer recognized and any cumulative gain or loss
allocated to it that had been recognized in other comprehensive income is recognized in
profit or loss, and presented in the line item of non-operating income and expenses. A
cumulative gain or loss that had been recognized in other comprehensive income is
allocated between the part that continues to be recognized and the part that is no longer
recognized on the basis of the relative fair values of those parts.
(ii) Financial assets (policy applicable before January 1, 2018)
Financial assets are classified into the following categories: financial assets at fair value
through profit or loss, available-for-sale financial assets, and loans and receivables.
1)
Financial assets at fair value through profit or loss
A financial asset is classified in this category if it is classified as held-for-trading or is
designated as such on
Financial assets are classified as
held-for-trading if they are acquired principally for the purpose of selling in the short
term. The Company designates financial assets, other than ones classified as
held-for-trading, as at fair value through profit or loss at initial recognition under one of
the following situations:
initial recognition.
a) Designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise;
b)
Performance of the financial asset is evaluated on a fair value basis
c) A hybrid instrument contains one or more embedded derivatives.
Financial assets in this category are measured at fair value at initial recognition.
Attributable transaction costs are recognized in profit or loss as incurred. Financial
assets at fair value through profit or loss are measured at fair value, and changes therein,
which take into account any dividend and interest income, are recognized in profit or loss,
and are included in non-operating income and expenses. Under a regular way, purchase
or sale of financial assets shall be recognized and derecognized as applicable using trade
date accounting.
2) Available-for sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated
as available-for-sale or are not classified in any of the other categories of financial assets.
Available-for-sale financial assets are recognized initially at fair value, plus, any directly
attributable transaction cost. Subsequent to initial recognition, they are measured at fair
value, and changes therein, other than impairment losses, interest income calculated using
the effective interest method, dividend income, and foreign currency differences on
available-for-sale debt instruments, are recognized in other comprehensive income and
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
25
presented in the fair value reserve in equity. When an investment is derecognized, the
gain or loss accumulated in equity is reclassified to profit or loss, and is included in
non-operating income and expenses. A regular way purchase or sale of financial assets
shall be recognized and derecognized as applicable using trade date accounting.
Investments in equity instruments that do not have a quoted market price in an active
market, and whose fair value cannot be reliably measured, are measured at cost less
impairment losses, and are included in financial assets measured at cost.
Dividend income is recognized in profit or loss on the date that the Company’s right to
receive payment is established, which in the case of quoted securities is normally on the
date the shareholders’ meeting approved the earning distribution. Such dividend
income is included in non-operating income and expenses.
3)
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are
not quoted in an active market. Loans and receivables comprise trade receivables, other
receivables, and investment in debt security with no active market. Such assets are
recognized initially at fair value, plus, any directly attributable transaction costs.
Subsequent to initial recognition, loans and receivables are measured at amortized cost
using the effective interest method, less, any impairment losses other than insignificant
interest on short-term receivables. Under a regular way, purchase or sale of financial
assets shall be recognized and derecognized as applicable using trade date accounting.
Interest income is recognized in profit or loss, and it is included in non-operating income
and expenses.
4)
Impairment of financial assets
A financial asset is impaired if, and only if, there is an objective evidence of impairment
as a result of one or more events that occurred after the initial recognition of the asset (a
“loss event”) and that loss event (or events) has an impact on the estimated future cash
flows of the financial asset that can be estimated reliably.
The objective evidence that financial assets are impaired includes default or delinquency
by a debtor, restructuring of an amount due to the Company on terms that the Company
would not consider otherwise, indications that a debtor or issuer will enter bankruptcy,
adverse changes in the payment status of borrowers or issuers, economic conditions that
correlate with defaults, or the disappearance of an active market for a security. In
addition, for an investment in an equity security, a significant or prolonged decline in its
fair value below its cost is accounted for as objective evidence of impairment.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
26
All individually significant receivables are assessed for specific impairment. Receivables
that are not individually significant are collectively assessed for impairment by grouping
together assets with similar risk characteristics. In assessing collective impairment, the
Company uses historical trends of the probability of default, the timing of recoveries, and
the amount of loss incurred, adjusted for management’s judgment as to whether current
economic and credit conditions are such that the actual losses are likely to be greater or
lesser than those suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortized cost is
calculated as the difference between its carrying amount and the present value of the
estimated future cash flows discounted at the asset’s original effective interest rate.
An impairment loss in respect of a financial asset measured at cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash
flows discounted at the current market rate of return for a similar financial asset. Such
impairment loss is not reversible in subsequent periods.
An impairment loss in respect of a financial asset is deducted from the carrying amount,
except for trade receivables, for which an impairment loss is reflected in an allowance
account against the receivables. When it is determined a receivable is uncollectible, it is
written off from the allowance account. Any subsequent recovery of receivable written
off is recorded in the allowance account. Changes in the amount of the allowance
account are recognized in profit or loss.
Impairment losses on available-for-sale financial assets are recognized by reclassifying
the losses accumulated in the fair value reserve in equity to profit or loss.
If, in a subsequent period, the amount of the impairment loss of a financial asset
measured at amortized cost decreases and the decrease can be related objectively to an
event occurring after the impairment was recognized, the decrease in impairment loss is
reversed through profit or loss to the extent that the carrying value of the asset does not
exceed its amortized cost before impairment was recognized at the reversal date.
Impairment losses recognized on an available-for-sale equity security are not reversed
through profit or loss. Any subsequent recovery in the fair value of an impaired
available-for-sale equity security is recognized in other comprehensive income and
accumulated in other equity.
Impairment losses and recoveries are recognized in profit or loss. Recovery and loss on
doubtful debts of account receivables is included in operating expense, others are
included in non-operating income and expense.
5) Derecognition of financial assets
The Company derecognizes financial assets when the contractual rights of the cash
inflow from the asset are terminated, or when the Company transfers substantially all the
risks and rewards of ownership of the financial assets.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
27
On derecognition of a financial asset in its entirety, the difference between the carrying
amount and the sum of the consideration received or receivable and any cumulative gain
or loss that had been recognized in other comprehensive income and presented in other
equity – unrealized gains or losses from available-for-sale financial assets is recognized
in profit or loss, and included in non-operating income or expenses.
The Company separates the part that continues to be recognized and the part that is
derecognized based on the relative fair values of those parts on the date of the transfer.
The difference between the carrying amount allocated to the part derecognized and the
sum of the consideration received for the part derecognized and any cumulative gain or
loss allocated to it that had been recognized in other comprehensive income shall be
recognized in profit or loss, and is included in non-operating income or expenses. A
cumulative gain or loss that had been recognized in other comprehensive income is
allocated between the part that continues to be recognized and the part that is
derecognized based on the relative fair values of those parts.
(iii) Financial liabilities and equity instruments
1) Classification of debt or equity
Debt or equity instruments issued by the Company are classified as financial liabilities or
equity in accordance with the substance of the contractual agreement.
Equity instruments refer to surplus equities of the assets after the deduction of all the
debts for any contracts. Equity instruments issued are recognized as the amount of
consideration received, less, the direct cost of issuing.
Interest and loss or gain related to financial liabilities are recognized as profit or loss and
are reported under non-operating income and expenses. Financial liabilities are
reclassified as equity when converted, and conversions do not generate profit or loss.
2)
Financial liabilities at fair value through profit or loss
A financial liability is classified in this category if acquired principally for the purpose of
selling in the short term. This type of financial liability is measured at fair value at the
time of initial recognition, and attributable transaction costs are recognized in profit or
loss as incurred. Financial liabilities at fair value through profit or loss are measured at
fair value, and changes therein, which take into account any interest expense, are
recognized in profit or loss, and are included in non-operating income or expenses.
3) Other financial liabilities
Financial liabilities not classified as held-for-trading or designated as at fair value
through profit or loss, which comprise loans and borrowings, and trade and other payable,
are measured at fair value, plus, any directly attributable transaction cost at the time of
initial recognition. Subsequent to initial recognition, they are measured at amortized
cost calculated using the effective interest method other than significant interest on
short-term loans and payables. Interest expense not capitalized as capital cost is
recognized in profit or loss, and is included in non-operating income or expenses.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
28
4) Derecognition of financial liabilities
The Company derecognizes a financial liability when its contractual obligation has been
discharged, cancelled or expired. The difference between the carrying amount of a
financial liability removed and the consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognized in profit or loss, and is included in
non-operating income or expenses.
5) Offsetting of financial assets and liabilities
The Company presents financial assets and liabilities on a net basis when the Company
has the legally enforceable right to offset and intends to settle such financial assets and
liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.
(iv) Derivative financial instruments (policy applicable from January 1, 2018)
The Company holds derivative financial instruments to hedge its foreign currency and interest
rate exposures. Derivatives are initially measured at fair value. Any attributable transaction
costs thereof are recognized in profit or loss as incurred. Subsequent to initial recognition,
derivatives are measured at fair value, and changes therein are recognized in profit or loss and
are included in the line item of non-operating income. When a derivative is designated as, and
effective for, a hedging instrument, its timing of recognition in profit or loss is determined
based on the nature of the hedging relationship. When the fair value of a derivative instrument
is positive, it is classified as a financial asset, whereas when the fair value is negative, it is
classified as a financial liability.
Embedded derivatives are separated from the host contract and accounted for separately if the
economic characteristics and risks of the non-financial asset’s host contract are not closely
related to the embedded derivatives and the host contract is not measured at FVTPL.
(v) Derivative financial instruments (policy applicable before January 1, 2018)
Except for the following items, the Company applies the same accounting policies as
applicable from January 1, 2018.
For derivatives that are linked to investments in equity instruments that do not have a quoted
market price in an active market and must be settled by delivery of such unquoted equity
instruments, such derivatives that are classified as financial assets are measured at amortized
cost, and are included in financial assets measured at cost; and such derivatives that are
classified as financial liabilities are measured at cost, and are included in financial liabilities
measured at cost.
Embedded derivatives are separated from the host contract and accounted for separately when
the economic characteristics and risk of the host contract and the embedded derivatives are not
closely related, and the host contract is measured as at fair value through profit or loss.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
29
(g)
Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is
based on the weighted-average-cost principle and includes expenditure incurred in acquiring the
inventories, production or transition costs, and other costs incurred in bringing them to their existing
location and condition. In the case of manufactured inventories and work in progress, cost includes
an appropriate share of production overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of business, less, the
estimated costs of completion and selling expenses.
(h)
Investment in associates
Associates are those entities in which the Company has significant influence, but not control or join
control, over their financial and operating policies.
Investments in associates are accounted for using the equity method and are recognized initially at
cost. The cost of the investment includes transaction costs. The carrying amount of the
investment in associates includes goodwill arising from the acquisition, less, any accumulated
impairment losses.
The parent-company-only financial statements include the Company’s share of the profit or loss
and other comprehensive income of equity-accounted investees after adjustments to align the
accounting policies with those of the Company from the date that significant influence commences
until the date that significant influence ceases. When changes in an associate’s equity are not
recognized in profit or loss or other comprehensive income of the associate and such changes do not
affect the Company’s ownership percentage of the associate, the Company recognizes the changes
in ownership interests of its associate in capital surplus in proportion to its ownership.
Unrealized profits resulting from the transactions between the Company and an associate are
eliminated to the extent of the Company’s interest in the associate. Unrealized losses on
transactions with associates are eliminated in the same way, except to the extent that the underlying
asset is impaired.
When the Company’s share of losses exceeds its interest in associates, the carrying amount of the
investment, including any long-term interests that form part thereof, is reduced to zero, and the
recognition of further losses is discontinued except to the extent that the Company has an obligation
or has made payments on behalf of the investee.
The Company shall discontinue the use of the equity method from the date when its investment
ceases to be an associate or a joint venture. The Company shall measure the retained interest at fair
value. The difference between the fair value of retained interest and proceeds from disposal, and the
carrying amount of the investment at the date the equity method was discontinued is recognized in
profit or loss. The Company shall account for all the amounts previously recognized in other
comprehensive income in relation to that investment on the same basis as would have been required
if the associates had directly disposed of the related assets or liabilities. If a gain or loss previously
recognized in other comprehensive income would be reclassified to profit or loss on the disposal of
the related assets or liabilities, the entity shall reclassify the gain or loss from equity to profit or loss
(as a reclassification adjustment) when the equity method is discontinued. If an entity’s ownership
interest in an associate or a joint venture is reduced while the entity continues to apply the equity
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
30
method, the entity shall reclassify the proportion of the gain or loss that had previously been
recognized in other comprehensive income relating to that reduction in ownership interest to profit or
loss.
If an investment in an associate becomes an investment in a joint venture or an investment in a joint
venture becomes an investment in an associate, the Company shall continue to apply the equity
method without remeasuring the retained interest.
When the Company subscribes to additional shares in an associate at a percentage different from its
existing ownership percentage, the resulting carrying amount of the investment differs from the
amount of the Company’s proportionate interest in the net assets of the associate. The Company
records such a difference as an adjustment to investments with the corresponding amount charged or
credited to capital surplus, however, when the balance of the capital surplus arising from the
investment was insufficient, the difference charged or credited to retained earnings. If the Company’
s ownership interest is reduced due to the additional subscription to the shares of associate by other
investors, the proportionate amount of the gains or losses previously recognized in other
comprehensive income in relation to that associate shall be reclassified to profit or loss on the same
basis as would be required if the associate had directly disposed of the related assets or liabilities.
(i)
Investment in subsidiaries
When preparing the parent-company-only financial statements, investment in subsidiaries which are
controlled by the Company is accounted for using the equity method. Under the equity method, the
amounts of net income, other comprehensive income and equity attributable to shareholders of the
Company in the parent-company-only financial statement are equal to those in the consolidated
financial statements.
Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control
are accounted for as equity transactions
(j) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses. Cost includes expenditure that is directly attributed to the
acquisition of the asset. The cost of the software is capitalized as part of the property, plant
and equipment if the purchase of the software is necessary for the property, plant and
equipment to be capable of operating.
Each part of an item of property, plant and equipment with a cost that is significant in relation
to the total cost of the item shall be depreciated separately, unless the useful life and the
depreciation method of a significant part of an item of property, plant and equipment are the
same as the useful life and depreciation method of another significant part of that same item.
The gain or loss arising from the derecognition of an item of property, plant and equipment
shall be determined as the difference between the net disposal proceeds, if any, and the carrying
amount of the item, and it shall be recognized as other gains and losses.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
31
(ii) Subsequent cost
Subsequent expenditure is capitalized only when it is probable that the future economic
benefits associated with the expenditure will flow to the Company. The carrying amount of
those parts that are replaced is derecognized. Ongoing repairs and maintenance are expensed as
incurred.
(iii) Depreciation
The depreciable amount of an asset is determined after deducting its residual amount, and it
shall be allocated on a systematic basis over its useful life. Items of property, plant and
equipment with the same useful life may be grouped in determining the depreciation charge.
The remainder of the items may be depreciated separately. The depreciation charge for each
period shall be recognized in profit or loss.
The depreciable amount of a leased asset is allocated to each accounting period during the
period of expected use on a systematic basis consistent with the depreciation policy the lessee
adopts for depreciable assets that are owned. If there is reasonably certainty that the lessee
will obtain ownership by the end of the lease term, the period of expected use is the useful life
of the asset; otherwise, the asset is depreciated over the shorter of the lease term and its useful
life.
Land has an unlimited useful life and therefore is not depreciated.
The estimated useful lives for the current and comparative years of significant items of
property, plant and equipment are as follows:
1) Buildings: 35~50 years
2) Building improvement: 8~15 years
3) Research equipment: 3 years
4) Other equipment: 0.5~5 years
Depreciation methods, useful lives, and residual values are reviewed at each reporting date. If
expectations differ from the previous estimates, the change is accounted for as a change in an
accounting estimate.
(k) Leases
(i) The Company as lessor
Lease income from operating lease is recognized in income on a straight-line basis over the
lease term. Initial direct costs incurred in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and recognized as an expense over the lease
term on the same basis as the lease income. Incentives granted to the lessee to enter into the
operating lease are spread over the lease term on a straight-line basis so that the lease income
received is reduced accordingly.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
32
(ii) The Company as lessee
Operating leases are not recognized in the Company’s balance sheets.
Payments made under operating lease (excluding insurance and maintenance expenses) are
recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives
received are recognized as an integral part of the total lease expense, over the term of the lease.
(l)
Intangible assets
(i) Goodwill
1)
Initial recognition
Goodwill arising from acquisition of subsidiaries is included in intangible assets. The
measurement of initial recognition of goodwill, please refer to note (4)(t).
2)
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses.
Goodwill related to an investment accounted for using equity method is included in the
carrying amount of the investment, and not allocated to any asset, including goodwill,
forms part of the carrying amount of the investment accounted for using the equity
method.
(ii) Research & Development
During the research phase, activities are carried out to obtain and understand new scientific or
technical knowledge. Expenditures during this phase are recognized in profit or loss as
incurred.
Expenditures arising from the development phase shall be recognized as an intangible asset if
all the conditions described below can be demonstrated; otherwise, they will be recognized in
profit or loss as incurred.
1)
2)
3)
The technical feasibility of completing the intangible asset so that it will be available for
use or sale.
Its intention to complete the intangible asset and use or sell it.
Its ability to use or sell the intangible asset.
4) How the intangible asset will generate probable future economic benefits.
5)
6)
The availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset.
Its ability to measure reliably the expenditure attributable to the intangible asset during its
development.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
33
Capitalized expenditure arising from the development phase is measured at cost less
accumulated amortization and accumulated impairment losses.
(iii) Other intangible assets
Other intangible assets that are acquired by the Company are measured at cost, less
accumulated amortization and any accumulated impairment losses.
(iv) Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditure, including expenditure
on internally generated goodwill and brands, is recognized in profit or loss as incurred.
(v) Amortization
The amortizable amount is the cost of an asset, or other amount substituted for cost, less its
residual value.
Amortization is recognized in profit or loss on a straight-line basis over the estimated useful
lives of intangible assets, other than goodwill and intangible assets with all indefinite useful life,
from the date that they are available for use. The estimated useful lives for the current and
comparative periods are as follows:
1)
Patents: the shorter of contract period and estimated useful lives
2) Computer software: 1~3 years
The residual value, the amortization period, and the amortization method for an intangible asset
with a finite useful life shall be reviewed at least annually at each fiscal year-end. Any
change shall be accounted for as changes in accounting estimates.
(m) Impairment of non-derivative financial assets
Non-derivative financial assets except for inventories, deferred tax assets, and assets arising from
employee benefits are assessed at the end of each reporting period whether there is any indication
that an asset may be impaired. If any such indication exists, the Company shall estimate the
recoverable amount of the asset. If it is not possible to determine the recoverable amount (fair value
less cost to sell and value in use) for the individual asset, then the Company will have to determine
the recoverable amount for the asset's cash-generating unit.
The Company assesses goodwill and intangible assets, which have indefinite useful lives and are not
available for use, on an annual basis and recognizes an impairment loss on excess of carrying value
over the recoverable amount.
The recoverable amount for an individual asset or a cash-generating unit is the higher of its fair value,
less costs to sell and its value in use. If, and only if, the recoverable amount of an asset is less than
its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount.
That reduction is an impairment loss. An impairment loss shall be recognized immediately in profit
or loss.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
34
For the purpose of impairment testing, goodwill acquired in a business combination shall, from the
acquisition date, be allocated to each of the acquirer’s cash-generating units, or groups of
cash-generating units that are expected to benefit from the synergies of the combination, irrespective
of whether other assets or liabilities of the acquire are assigned to those units or group of units. If
the carrying amount of the cash-generating units exceeds the recoverable amount of the unit, the
entity shall recognize the impairment loss and the impairment loss shall be allocated to reduce the
carrying amount of each asset in the unit. Reversal of an impairment loss for goodwill is
prohibited.
The Company assesses at the end of each reporting period whether there is any indication that an
impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or
may have decreased. An impairment loss recognized in prior periods for an asset other than
goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine
the asset’s recoverable amount since the last impairment loss was recognized. If this is the case,
the carrying amount of the asset shall be increased to its recoverable amount. That increase is a
reversal of an impairment loss.
(n) Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or
constructive obligation that can be estimated reliably, and it is probably that an outflow of economic
benefits will be required to settle the obligation. Provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects the current market assessments of the time
value of money and the risks specific to the liability. The unwinding of the discount is recognized
as finance cost.
(o) Treasury stock
Repurchased shares are recognized under treasury shares (a contra-equity account) based on its
repurchase price (including all directly accountable costs), and net of tax. Gains on disposal of
treasury shares should be recognized under Capital Reserve – Treasury Shares Transactions; losses
on disposal of treasury shares should be offset against existing capital reserves arising from similar
types of treasury shares. If there are insufficient capital reserves to be offset against, then such
losses should be accounted for under retained earnings. The carrying amount of treasury shares
should be calculated using the weighted average different types of repurchase.
During the cancellation of treasury shares, Capital Reserve – Share Premiums and Share Capital
should be debited proportionately. Gains on cancellation of treasury shares should be recognized
under existing capital reserves arising from similar types of treasury shares; losses on cancellation of
treasury shares should be offset against existing capital reserves arising from similar types of treasury
shares. If there are insufficient capital reserves to be offset against, then such losses should be
accounted for under retained earnings.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
35
(p) Recognition of revenue
(i) Revenue from contracts with customers (policy applicable from January 1, 2018)
Revenue is measured based on the consideration to which the Company expects to be entitled
in exchange for transferring goods or services to a customer. The Company recognizes revenue
when it satisfies a performance obligation by transferring control of a good or a service to a
customer. The accounting policies for the Company’s main types of revenue are explained
below.
1)
Sale of goods
The Company manufactures and sells electronic products to electronic products brand
vendor. The Company recognizes revenue when control of the products has transferred,
being when the products are delivered to the customer, the customer has full discretion
over the channel and price to sell the products, and there is no unfulfilled obligation that
could affect the customer’s acceptance of the products. Delivery occurs when the
products have been shipped to the specific location, the risks of obsolescence and loss
have been transferred to the customer, and either the customer has accepted the products
in accordance with the sales contract, the acceptance provisions have lapsed, or the
Company has objective evidence that all criteria for acceptance have been satisfied.
The Company assesses sales discounts based on historical experience, management's
judgment and other known reasons. Such allowances are recognized as a deduction of
sales revenue in the same period in which sales are made. The aforementioned provisions
are expected to settle over the next year. A refund liability is recognized for expected
discounts payable to customers in relation to sales made until the end of the reporting
period. No element of financing is deemed present as the sales of electronic products are
made with a credit term which is consistent with the market practice.
A receivable is recognized when the goods are delivered as this is the point in time that
the Company has a right to an amount of consideration that is unconditional.
2)
Financing components
The Company does not expect to have any contracts where the period between the
transfer of the promised goods or services to the customer and payment by the customer
exceeds one year. As a consequence, the Company does not adjust any of the transaction
prices for the time value of money.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
36
(ii) Revenue (policy applicable before January 1, 2018)
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value
of the consideration received or receivable, net of returns, trade discounts and volume rebates.
Revenue is recognized when persuasive evidence exists, usually in the form of an executed
sales agreement, that the significant risks and rewards of ownership have been transferred to
the customer, recovery of the consideration is probable, the associated costs and possible return
of goods can be estimated reliably, there is no continuing management involvement with the
goods, and the amount of revenue can be measured reliably. If it is probable that discounts
will be granted and the amount can be measured reliably, then the discount is recognized as a
reduction of revenue as the sales are recognized.
The timing of the transfers of risks and rewards varies depending on the individual terms of the
sales agreement.
(q) Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognized as an
employee benefit expense in profit or loss in the periods during which services are rendered by
employees.
(ii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
The Company’s net obligation in respect of defined benefit pension plans is calculated
separately for each plan by estimating the amount of future benefit that employees have earned
in return for their service in the current and prior periods; that benefit is discounted to
determine its present value. The fair value of any plan assets is deducted. The discount rate
is the yield at the reporting date on government bonds that have maturity dates approximating
the terms of the Company’s obligations and that are denominated in the same currency in
which the benefits are expected to be paid.
The calculation of defined benefit obligation is performed annually by a qualified actuary using
the projected unit credit method. When the calculation results in a benefit to the Company, the
recognized asset is limited to the total of the present value of economic benefits available in the
form of any future refunds from the plan or reductions in future contributions to the plan. In
order to calculate the present value of economic benefits, consideration is given to any
minimum funding requirements that apply to any plan in the Company. An economic benefit
is available to the Company if it is realizable during the life of the plan, or on settlement of the
plan liabilities.
If the benefits of a plan are improved, the pension cost incurred from the portion of the
increased benefit relating to past service by employees, is recognized immediately in profit or
loss.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
37
Re-measurement of net defined benefit liability (asset) (including actuarial gains, losses and the
return on plan asset and changes in the effect of the asset ceiling, excluding any amounts
included in net interest) is recognized in other comprehensive income (loss). The effect of
re-measurement of the defined benefit plan is charged to retained earnings.
The Company recognizes gains or losses on the curtailment or settlement of a defined benefit
plan when the curtailment or settlement occurs. The gain or loss on curtailment comprises
any resulting change in the fair value of plan assets and change in the present value of defined
benefit obligation.
(iii) Short term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are
expensed as the related service is provided.
A liability is recognized for the amount expected to be paid under short-term cash bonus or
profit-sharing plans if the Company has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee, and the obligation can be
estimated reliably.
(r) Share-based payment
The grant-date fair value of share-based payment awards granted to employee is recognized as
employee expenses, with a corresponding increase in equity, over the period that the employees
become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to
reflect the number of awards which the related service and non-market performance conditions are
expected to be met, such that the amount ultimately recognized as an expense is based on the number
of award that meet the related service and non-market performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant-date fair value of the
share-based payment is measured to reflect such conditions, and there is no true-up for differences
between expected and actual outcomes.
(s)
Income taxes
Income tax expenses include both current taxes and deferred taxes. Except for expenses related to
business combinations or recognized directly in equity or other comprehensive income, all current
and deferred taxes shall be recognized in profit or loss.
Current taxes include tax payables and tax deduction receivables on taxable gains (losses) for the
year calculated using the statutory tax rate on the reporting date or the actual legislative tax rate, as
well as tax adjustments related to prior years.
Deferred taxes arise due to temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and their respective tax bases. Deferred taxes shall not be
recognized for the following exceptions:
(i) Assets and liabilities that are initially recognized but are not related to the business
combination and have no effect on net income or taxable gains (losses) during the transaction.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
38
(ii) Temporary differences arising from equity investments in subsidiaries or joint ventures where
there is a high probability that such temporary differences will not reverse.
(iii) Initial recognition of goodwill.
Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the
period when the asset is realized or the liability is settled based on tax rates that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities may be offset against each other if the following criteria are met:
(i) The entity has the legal right to settle tax assets and liabilities on a net basis; and
(ii)
the taxing of deferred tax assets and liabilities fulfill one of the below scenarios:
1)
2)
levied by the same taxing authority; or
levied by different taxing authorities, but where each such authority intends to settle tax
assets and liabilities (where such amounts are significant) on a net basis every year of the
period of expected asset realization or debt liquidation, or where the timing of asset
realization and debt liquidation is matched.
A deferred tax asset should be recognized for the carry-forward of unused tax losses, unused tax
credits, and deductible temporary differences to the extent that it is probable that future taxable profit
will be available against which the unused tax losses, unused tax credits, and deductible temporary
differences can be utilized. Such unused tax losses, unused tax credits, and deductible temporary
differences shall also be re-evaluated every year on the financial reporting date, and they shall be
adjusted based on the probability that future taxable profit that will be available against which the
unused tax losses, unused tax credits, and deductible temporary differences can be utilized.
The surtax on unappropriated earnings is recoded as current tax expense in the following year after
the resolution to appropriate retained earnings is approved in a stockholders’ meeting.
(t) Business combination
Goodwill is measured as an aggregation of the consideration transferred (which generally is
measured at fair value at the acquisition date) and as an amount of any non-controlling interest in the
acquiree, net of the acquisition-date amounts of the identifiable assets acquired and liabilities
assumed (generally at fair value). If the residual balance is negative, the Company shall re-assess
whether it has correctly identified all of the assets acquired and liabilities assumed, and recognize a
gain on the bargain purchase thereafter.
All the transaction costs incurred for the business combination are recognized immediately as the
Company’s expenses when incurred, except for the issuance of debt or equity instruments.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
39
If the business combination is achieved in stages, the Company shall measure any non-controlling
equity interest in the acquire, either at fair value or at the non-controlling interest’s proportionate
share of the acquiree’s identifiable net assets. Other non-controlling interest is measured (1) at
fair value at the acquisition date or (2) by using other valuation techniques acceptable under the IFRS
as endorsed by the FSC.
In a business combination achieved in stages, the Company shall re-measure its previously held
equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss,
if any, in profit or loss. In prior reporting periods, the Company may have recognized changes in
the value of its equity interest in the acquiree in other comprehensive income. If so, the amount that
was recognized in other comprehensive income shall be recognized on the same basis as would be
required if the Company had disposed directly of the previously held equity interest. If the disposal
of the equity interest required a reclassification to profit or loss, such an amount shall be reclassified
to profit or loss.
If the initial accounting for a business combination is incomplete by the end of the reporting period
in which the combination occurs, the Company shall report in its financial statements provisional
amounts for the items for which the accounting is incomplete. During the measurement period, the
Company shall retrospectively adjust the provisional amounts recognized at the acquisition date, or
recognize additional assets or liabilities to reflect new information obtained about facts and
circumstances that existed as of the acquisition date. The measurement period shall not exceed one
year from the acquisition date.
(u) Earnings per share
The Company discloses the basic and diluted earnings per share attributable to ordinary equity
holders of the Company. The calculation of basic earnings per share is based on the profit
attributable to the ordinary shareholder of the Company divided by weighted average number of
ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit
attributable to ordinary shareholders of the Company divided by weighted average number of
ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.
Dilutive potential ordinary shares comprise restricted employee stock and employee compensation
not yet approved by the Board of Directors.
(v) Operating segments
The operating segment information is disclosed within the consolidated financial statements but not
disclosed in the parent-company-only financial statement.
(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:
The preparation of the financial statements in conformity with the IFRSs endorsed by the FSC requires
management to make judgments, estimates, and assumptions that affect the application of the accounting
policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from
these estimates.
The management continues to monitor the accounting estimates and assumptions. The management
recognizes any changes in accounting estimates during the period and the impact of those changes in
accounting estimates in the next period.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
40
There are no critical judgments in applying the accounting policies that have significant effect on the
amounts recognized in the financial statements. In addition, information about assumptions and estimation
uncertainties that have a significant risk of resulting in a material adjustment within the next financial year
is as follows:
(a) Recognition and measurement of refund liabilities (provisions)
Because of the sales returns and allowances, the Company records refund liabilities (sales returns and
allowances provisions) for estimated returns and other allowances in the same period the related
revenue is recorded. The estimate is made based on historical experience, market and economic
conditions, and any other known factors using the expected value or the most likely amount, and it
could be different from actual sales returns and allowances, therefore, the management periodically
reviews the adequacy of the estimation used. Refer to notes 6(p) and 6(q) for further description of
the recognition of provisions and refund liabilities.
(b) Valuation of inventories
As inventories are stated at the lower of cost or net realizable value, the net realizable value of the
inventory is mainly determined based on assumptions as to future demand within a specific time
horizon. Due to the rapid industrial changes, there may be significant differences in the net realizable
value of inventories. Refer to note (6)(j) for further description of the valuation of inventories.
(6) Explanation of significant accounts:
(a) Cash and cash equivalents
Cash on hand
Checking accounts and demand deposits
Time deposits
Bonds purchased under resale agreements
December
31, 2018
December
31, 2017
$
1,596
1,358
3,972,558
812,541
15,609,214
27,387,135
863,010
142,500
$
20,446,378
28,343,534
Please refer to note (6)(ac) for the disclosure of the exchange rate risk, the interest rate risk and the
fair value sensitivity analysis of the financial assets and liabilities of the Company.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
41
(b) Financial assets and liabilities at fair value through profit or loss
Mandatorily measured at fair value through profit or loss:
Non-derivative financial assets
Stock listed in domestic markets
Unlisted fund in foreign markets
Total
Current
Non-current
December
31, 2018
$
$
$
$
284,768
23,745
308,513
284,768
23,745
308,513
The aforementioned stock listed in domestic markets were recorded under available-for-sale financial
assets as of December 31, 2017. Please refer to note (6)(d).
The market risk related to the financial instruments please refer to note (6)(ad).
As of December 31, 2018, the Company did not provide any aforementioned financial assets as
collaterals for its loans.
(c) Financial assets at fair value through other comprehensive income
Equity investments at fair value through other comprehensive
income:
Stock listed in domestic markets
Stock listed in foreign markets
Stock unlisted in domestic markets
Stock unlisted in foreign markets
Total
December 31,
2018
$
2,383,976
400,184
896,395
51,363
$
3,731,918
The purpose that the Company invests in the abovementioned equity securities is for long-term
strategies, but rather for trading purpose. Therefore, these equity securities are designated as at
FVOCI, whereas, were presented under financial assets carried at cost and available-for-sale
financial assets as of December 31, 2017. Please refer to note (6)(d) and (6)(e).
In 2018, the Company has sold parts of its shares held in Innolux Corporation measured at fair value
through other comprehensive income. The fair value of the shares was $291,435 when dispose, and
the cumulative losses amounted to $1,024,470, which has been transferred to retained earnings from
other comprehensive income.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
42
If there is an increase (decrease) in the market price by 5% on the reporting date of the equity
securities hold by the Company, the increase (decrease) in other comprehensive income (pre-tax) for
the year ended December 31, 2018, will be $186,596. These analyses are performed on the same
basis for the period and assume that all other variables remain the same.
The Company’s information of market risk please refer to note (6)(ad).
As of December 31, 2018, the Company did not provide any financial assets at fair value through
other comprehensive income as collaterals for its loans.
(d) Available-for-sale financial assets
Stocks listed in domestic markets
Stocks listed in foreign markets
Stocks unlisted in domestic markets
Stocks unlisted in foreign markets
Total
Current
Non-current
December
31, 2017
$
3,794,069
654,192
1,207,219
126,333
5,781,813
46,479
5,735,334
$
$
$
5,781,813
(i) The Company and its subsidiaries, Zhaopal Investment Co., Ltd. (“Zhaopal”), Yongpal
Investment Co., Ltd. (“Yongpal”) and Kaipal Investment Co., Ltd. (“Kaipal”) (“the
Company and its subsidiaries”), purchased newly issued shares of Chunghwa Picture Tubes,
Ltd. (“CPT”) via private placement in 2009. The cost was 2.5 New Taiwan dollars per share,
totally amounting to $7,000,000. The Company signed an agreement with Tatung Company
(“Tatung”, the parent company of CPT) on such matter. In accordance with the agreement,
the Company and its subsidiaries have the right to request Tatung to purchase all the CPT
shares obtained via the private placement within certain agreed periods, at the price the
Company and its subsidiaries originally paid for the CPT shares plus interest. Accordingly,
since the fair value of CPT shares obtained via the private placement were below the original
costs, the Company measured the book value of the shares at its original cost.
The Company filed an arbitration based on the agreement on March 29, 2013, requesting
Tatung to perform its obligations. The Company received the verdict on May 12, 2014.
According to the verdict, Tatung should pay $2,118,607 to the Company and its subsidiaries for
purchasing all the CPT shares held by the Company and its subsidiaries. Additionally, Tatung
should pay the interest which is calculated by the annual rate of 5% in the period from April 3,
2013 to the actual payment date. Therefore, the Company recognized both the impairment loss
of $1,689,000 and the related share of loss of associates and joint ventures accounted for using
equity method of $3,041,000 in the first quarter of 2014 accordingly. On June 13, 2014, the
Company filed a civil complaint with the Taiwan Taipei District Court to revoke the arbitration
award. At the end, the Taiwan Supreme Court dismissed the appeal on January 11, 2017. The
Company and its subsidiaries sold all shares of CPT to Tatung on
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
43
February 9, 2017 in accordance with the arbitration. The selling prices of the Company and its
subsidiaries amounted to $811,466 (including the interest) and $1,460,638 (including the
interest), respectively, totaling $2,272,104 (including the interest). The loss of sale was $1,804
and $2,448, respectively, and the total loss was $4,252. The total price has been fully
recovered.
(ii)
If there is an increase (decrease) in the market price of the equity securities by 5% on the
reporting date, the increase (decrease) in other comprehensive income (pre-tax) for the year
ended December 31, 2017, will be $289,091. These analyses is performed on the same basis
and assume that all other variables remain the same.
(iii) As of December 31, 2017, the Company did not provide any available-for-sale financial assets
as collaterals for its loans.
(iv) As of December 31, 2018, the aforementioned investments were classified as financial assets at
fair value through profit or loss and financial assets at fair value through other comprehensive
income. Please refer to note (6)(b) and (6)(c).
(e) Financial assets at cost
Unlisted common stock in domestic markets
December
31, 2017
$
2,333
(i) The aforementioned unlisted common stock in domestic markets held by the Company were
measured at cost, less accumulated impairment losses on the reporting date. The fair values of
these investments cannot be measured reliably because the range of reasonable fair value
estimates is large and the probabilities for each estimate cannot be reasonably determined.
(ii) As of December 31, 2017, the Company did not provide any financial assets at cost as
collaterals for its loans.
(iii) The aforementioned investments were classified as financial assets at fair value through other
comprehensive income on December 31, 2018. Please refer to note (6)(c).
(f) Current financial assets measured at amortized costs
Common bonds – Taiwan Star Telecom Corporation Limited
(Taiwan Star )
December
31, 2018
$
350,000
The Company has assessed that these financial assets are held to maturity to collect contractual cash
flows, which consist solely of payments of principal and interest on the principal amount outstanding.
Therefore, these investments were classified as financial assets measured at amortized cost on
January 1, 2018. As of December 31, 2017, the aforementioned financial assets measured at
amortized costs of the Company were classified as bond investment without as active market. Please
refer to note (6)(g).
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
44
As of December 31, 2018, the Company did not provide the aforementioned financial assets as
collaterals for its loans.
(g) Bond investment without active market
Common bonds – Taiwan Star Telecom Corporation Limited (Taiwan Star )
Current
Non-current
December
31, 2017
$
$
$
700,000
350,000
350,000
700,000
The Company subscribed the five-year common bonds issued by Taiwan Star via private placement
for $1,750,000 in June 2014 with an interest rate of 2%. Taiwan Star will repay the amount of
$350,000 per annum from the date of issuance till the maturity of the bond in June 2019. The
aforementioned bond investments was classified as financial assets measured at amortized cost on
December 31, 2018. Please refer to note (6)(f).
As of December 31, 2017, the Company did not provide the aforementioned financial assets as
collaterals for its loans.
(h) Notes and accounts receivable
Notes receivable from operating activities
December
31, 2018
December
31, 2017
$
1,218
605
Accounts receivable – measured as amortized cost
171,635,955
171,353,245
Accounts receivable – fair value through other comprehensive
income
Less: allowance for uncollectible accounts
Notes and accounts receivable
22,896,211
-
194,533,384
171,353,850
(3,718,560)
(3,717,495)
$ 190,814,824
167,636,355
$ 189,496,594
165,540,785
Notes and accounts receivable – related parties
$
1,318,230
2,095,570
The Company has assessed a portion of its trade receivables that was held within a business model
whose objective is achieved by both collecting contractual cash flows and selling financial assets;
therefore, such trade receivables were measured at fair value through other comprehensive income on
January 1, 2018.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
45
The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of
lifetime expected loss provision for all receivables on December 31, 2018. To measure the expected
credit losses, trade receivables have been grouped based on shared credit risk characteristics and the
days past due, as well as incorporated forward looking information. The loss allowance provision of
the Company as of December 31, 2018 was determined as follows:
Credit rating
Level A
Level B
Level C
Carrying
amount of
accounts
receivable
$
187,485,567
Weighted- ave
rage
ECL rate
0%
3,424,080
2.769%
3,623,737
100%
$
194,533,384
Lifetime ECLs
-
Credit-impai
red
No
94,823
3,623,737
3,718,560
No
Yes
As of December 31, 2018 the aging analysis of accounts receivable, which were past due but not
impaired, was as follows:
Overdue 1 to 180 days
December
31, 2018
$
1,770,814
As of December 31, 2017, the Company applies the incurred loss model to consider the loss
allowance provision of notes and accounts receivable, and the aging analysis of notes and accounts
receivable, which were past due but not impaired, was as follows:
Overdue 1 to 180 days
December
31, 2017
$
344,920
For the years ended December 31, 2018 and 2017, the movement in the allowance for notes and
accounts receivable were as follow:
Balance at beginning of the period (IAS 39) $
3,717,495
Adjustment on initial application of IFRS 9
-
Balance at beginning of the period (IFRS 9)
3,717,495
2018
2017
Individually
assessed
impairment
-
Collectively
assessed
impairment
788,948
Assessment category reclassified
-
689,097
(689,097)
Impairment losses recognized
1,065
Balance at the end of the period
$
3,718,560
2,929,599
3,618,696
(1,052)
98,799
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
46
Allowance for uncollectible account is the balance of accounts receivables which are uncollectable.
Except for evaluating the situation of the customers’ payment records and widely analyzing the
credit rating of customers, the Company also takes all the necessary procedures for collection. The
Company believes that there is no doubt for the recovery of the due but unimpaired account
receivable, therefore, no allowance recognized. The Company had recognized full loss for the
uncollectible accounts receivables of Leshi, however, the Company will make the utmost effort to
recover the accounts receivable, including taking proper legal actions.
The Company entered into accounts receivable factoring agreements with banks. As of December
31, 2018 and 2017, except for the amount used under the actual sales amount in thousand accordance
with certain agreements, the factoring amount granted by the banks was USD 950,000 thousands and
USD 985,000 thousands, respectively. Based on the agreements, the Company is not responsible
for guaranteeing the ability of the accounts receivable obligor to make payment when it is affected by
credit risk. Thus, this is a non-recourse accounts receivable factoring. After the transfer of the
accounts receivable, the Company can request partial advanced amount, while the interest calculated
at an agreed rate is paid to the bank in the period during the time of receiving advance and the
accounts receivable is collected. The remaining amounts with no advance are received when the
accounts receivable are settled by the customers. As of December 31, 2018 and 2017, the factored
accounts receivable with no advance amounting to $0 and $44,641, respectively, are accounted for as
other receivables.
The Company, customers, and banks signed the three-party contracts in which the banks purchase
accounts receivable from the Company. The total amount of the accounts receivable should not
exceed the facility limit provided by the banks to the Company’s customers. Based on the contracts,
the banks have no right to request the Company to repurchase the accounts receivable. Thus, this is
a non-recourse accounts receivable transfer. As of December 31, 2018 and 2017, accounts receivable
factored were recovered and derecognized since the conditions of derecognition were met.
As of December 31, 2018 and 2017, the details of the factored accounts receivable were as follows:
December 31, 2018
Accounts
receivable
factored
(gross)
$ 32,098,074
Accounts
receivable
factored
(gross)
$ 35,315,810
Purchaser
Financial
Institution
Purchaser
Financial
Institution
Advanced
amount
32,098,074
Collateral
-
Amount
derecognized
32,098,074
Interest rate
3.02%~3.52%
December 31, 2017
Advanced
amount
35,271,169
Collateral
-
Amount
derecognized
35,315,810
Interest rate
1.79%~2.56%
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
47
As of December 31, 2018 and 2017, the Company did not provide any aforementioned notes and
accounts receivable as collaterals.
(i) Other receivables
Other accounts receivable - loans to subsidiaries
Other accounts receivable - related parties
Others
December
31, 2018
December
31, 2017
$
301,137
360,473
144,455
25,829
973,158
324,991
$
1,418,750
711,293
As of December 31, 2018 and 2017, none of other receivables were past due.
(j)
Inventories
Finished goods
Work in progress
Raw materials
Raw materials in transit
December
31, 2018
18,779,873
$
December
31, 2017
11,546,680
44,008
45,980
32,693,278
30,826,430
-
566,273
$
51,517,159
42,985,363
(i) During the years ended December 31, 2018 and 2017, inventory cost recognized as cost of
sales amounted to $889,171,625 and $819,765,642, respectively.
(ii) The write-down of inventories to net realizable value amounted to $171,790, in the year ended
December 31, 2018. The Company reversed its allowance for inventory valuation loss
amounting to $494,472 due to the sale and disposal of its obsolete inventories in the year ended
December 31, 2017.
(iii) As of December 31, 2018 and 2017, the Company did not provide any inventories as collaterals
for its loans.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
48
(k)
Investments accounted for using equity method
A summary of the Company’s financial information for equity-accounted investees at the reporting
date is as follows:
Subsidiaries
Associates
Plus: Other receivables–related parties
Credit balance of investment in equity method (other
non-current liability)
Less: unrealized profits or losses
December
31, 2018
79,891,379
$
December
31, 2017
74,925,869
2,619,501
2,330,648
82,510,880
77,256,517
494,744
232,194
298,023
(4,409)
437,912
(6,753)
$
83,299,238
77,919,870
(i)
Subsidiaries
Please refer to the consolidated financial statement for the year ended December 31, 2018.
(ii) Associates
1)
The fair value of the shares of listed company based on the closing price was as follow:
Allied Circuit Co., Ltd. ("Allied Circuit")
$
Avalue Technology Inc. ("Avalue")
December
31, 2018
December
31, 2017
621,653
586,743
802,461
696,471
$
1,208,396
1,498,932
2)
The Company’s share of the net gain (loss) of associates was as follows:
The Company’s share of the gain of associates
$
483,812
138,286
2018
2017
3)
The Company’s financial information for investments accounted for using the equity
method that are individually immaterial was as follows:
Carrying amount of individually immaterial associates
December
31, 2018
December
31, 2017
$
2,619,501
2,330,648
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
49
The Company’s share of the net income (loss) of
associates:
Profit from continuing operations
Other comprehensive income (loss)
Total comprehensive income
2018
2017
$
$
483,812
(97,800)
386,012
138,286
(89,325)
48,961
(iii) As of December 31, 2018 and 2017, the Company did not provide any investments accounted
for using equity method as collaterals for its loans.
(l) Changes in subsidiaries’ equity
(i) Changes in ownership interests while retaining control (increase in ownership interest)
The Company purchased 3% ownership of HengHao Technology Co., Ltd. ("HengHao") from
non-controlling interest with an amount of $25,203 in 2017; therefore, the Company has
acquired 100% ownership of HengHao.
The Company's subsidiary, Arcadyan Technology Corp. ("Arcadyan"), purchased shares of
other subsidiaries from non-controlling interest amounting to $634 and $10,496, respectively,
in 2018 and 2017.
The following summarizes the effect of changes in equity of the parent due to changes in the
ownership interest of the subsidiaries:
Acquisition of non-controlling interest (carrying amount)
Consideration paid for the non-controlling interest
Difference
$
$
Capital surplus – difference between consideration and carrying
$
amount of subsidiaries acquired or disposed
Capital surplus – changes in ownership interests in subsidiaries
Retained earnings
$
2018
2017
631
30,117
(634)
(35,699)
-
-
(3)
(3)
(3)
(5,582)
(3,492)
89
(2,179)
(5,582)
(ii) Disposal of part of equity ownership of subsidiaries interest without losing control
The Company's subsidiaries disposed 23% interest of Compal Broadband Network Inc.
("CBN") in 2017, and the total consideration was $413,257. The capital surplus－difference
between consideration and carrying amount of subsidiaries acquired or disposal related to
above transaction amounted to $36,508.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
50
(iii) Changes in subsidiaries’ equity did not result in the Company’s loss of control
1)
Subsidiaries’ employee stock options exercised
CBN issued 351 thousand and 1,612 thousand new shares because of its employees’
exercised stock options in 2018 and 2017, respectively, which resulted in reducing the
Company and its subsidiaries' ownership of CBN by 0.41% and 2.80%, respectively.
2)
Issuance of new shares for cash of subsidiaries
The Company and its subsidiaries did not purchase newly issued shares of CBN in the
fourth quarter of 2018, which resulted in reducing the Company and its subsidiaries'
ownership of CBN by 7.27%.
3)
Issuance of subsidiaries’ restricted shares
Arcadyan issued 4,500 thousand restricted new shares in the year ended Decebmer 31,
2018, which resulted in reducing 0.84% interest of the Company and its subsidiaries'
ownership of Arcadyan.
4)
The following summarizes the effect of changes in equity of the parent due to changes in
the ownership interest of subsidiaries:
Capital surplus – changes in ownership interest in
subsidiaries
Retained earnings
2018
2017
$
$
(32,703)
(32,160)
(64,863)
53
(424)
(371)
(m) Property, plant and equipment
The cost, depreciation, and impairment of the property, plant and equipment of the Company for the
years ended December 31, 2018 and 2017, were as follows:
Buildings
and building
improvement
Other
equipment
Land
Under
construction
and
prepayment for
purchase of
equipment
Total
Cost or deemed cost:
Balance on January 1, 2018
$
1,047,797
2,173,951
2,002,114
27,007
5,250,869
Additions
Disposals and derecognitions
Reclassifications
-
-
-
18,716
124,095
60,375
203,186
(476)
(62,516)
-
(62,992)
2,570
48,325
(50,895)
-
Balance on December 31, 2018
$
1,047,797
2,194,761
2,112,018
36,487
5,391,063
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
51
Buildings
and building
improvement
Other
equipment
Land
Under
construction
and
prepayment for
purchase of
equipment
Total
Balance on January 1, 2017
$
1,047,797
2,135,715
2,042,004
2,478
5,227,994
Additions
Disposals and derecognitions
Reclassifications
-
-
-
28,876
57,171
40,061
126,108
(395)
(102,838)
-
(103,233)
9,755
5,777
(15,532)
-
Balance on December 31, 2017
$
1,047,797
2,173,951
2,002,114
27,007
5,250,869
Depreciation and impairments loss:
Balance on January 1, 2018
Depreciation for the period
Disposals and derecognitions
Balance on December 31, 2018
Balance on January 1, 2017
Depreciation for the period
Disposals and derecognitions
Balance on December 31, 2017
Carrying amounts:
Balance on December 31, 2018
Balance on January 1, 2017
Balance on December 31, 2017
$
$
$
$
$
$
$
-
-
-
-
-
-
-
-
1,312,069
1,846,528
57,362
108,965
(476)
(61,566)
1,368,955
1,893,927
1,261,391
1,834,489
51,073
114,792
(395)
(102,753)
1,312,069
1,846,528
-
-
-
-
-
-
-
-
3,158,597
166,327
(62,042)
3,262,882
3,095,880
165,865
(103,148)
3,158,597
1,047,797
825,806
218,091
36,487
2,128,181
1,047,797
874,324
207,515
2,478
2,132,114
1,047,797
861,882
155,586
27,007
2,092,272
As of December 31, 2018 and 2017, the Company did not provide property, plant and equipment as
collateral for its borrowing.
(n) Short-term borrowings
The details of short-term borrowings were as following:
Unsecured bank loans
Unused credit line for short-term borrowings
Range of interest rates
December
31, 2018
December 31,
2017
51,305,682
41,386,000
40,694,000
35,919,000
$
$
0.72%~3.56%
0.60%~2.54%
For information on the Company’s interest risk, foreign currency risk and liquidity risk, please refer
to note (6)(ac).
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
52
(o) Long-term borrowings
The details of long-term borrowings were as follows:
Unsecured bank loans
Less: current portion
Total
Unused credit line for
long-term borrowings
December 31, 2018
Annual range of
interest rates
0.79%~1.22%
Currency
TWD
Maturity year
2019~2021
Amount
$
28,396,250
(17,496,250)
10,900,000
5,414,750
$
$
Unsecured bank loans
December 31, 2017
Annual range of
interest rates
0.78%~1.22%
Currency
TWD
Maturity year
2018~2020
Amount
$
25,050,000
Unsecured bank loans
USD
1.95%~1.96%
2018
Less: current portion
Total
Unused credit line for
long-term borrowings
2,083,200
(6,018,750)
21,114,450
4,377,000
$
$
For information on the Company’s interest risk, foreign currency risk and liquidity risk, please refer
to note (6)(ac).
(p) Provisions
Balance on January 1, 2017
Provisions made during the period
Provisions used during the period
Provisions reversed during the period
Balance on December 31, 2017
Sales
returns and
allowances
$
1,532,250
1,078,600
(219,727)
(950,831)
$
1,440,292
Provisions related to sales of products are assessed based on historical experience, management's
judgment and other known reasons. Such allowances are recognized as a deduction of sales revenue
in the same period in which sales are made. The aforementioned provisions are expected to settle
over the next year. Due to the application of IFRS 15 on January 1, 2018, the sales returns and
allowances provisions were reclassified as refund liabilities.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
53
(q) Refund liabilities
Refund liabilities
December
31, 2018
$
1,480,446
Due to the application of IFRS 15 from January 1, 2018, the provision of sale return and allowance
were reclassified from provision to refund liabilities.
(r) Operating lease
(i) The Company as lessee
1)
The rental payables of the non-cancellable operating lease are as follows:
Less than one year
Between one and five years
December
31, 2018
December
31, 2017
$
$
264,145
257,020
521,165
300,385
387,446
687,831
The Company leased several office areas under operating leases with the leasing terms
from 1 to 5 years and had an option to renew the leases when the leases expired.
For the years ended December 31, 2018 and 2017, expenses recognized in profit or loss
under operating leases amounted to $297,582 and $273,839, respectively.
The lease contract includes those of the land and building, with their residual values
being assumed by the landlord. The rental is regularly adjusted based on the current
market price. Based on the risks and rewards of leased assets not transferred to the
Company, the Company recognized the lease as operating lease.
(ii) The Company as lessor
The Company leased out a few offices buildings, plants and equipments to third parties under
operating lease with lease terms of 1 to 7 years. For the years ended December 31, 2018 and
2017, rentals recognized in profit or loss amounted to $5,533 and $8,630, respectively. The
future minimum lease receivables under non-cancellable leases are as follows:
Less than one year
Between one and five years
More than five years
December
31, 2018
December
31, 2017
$
$
1,222
2,951
352
4,525
2,426
2,455
880
5,761
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
54
(s) Employee benefits
(i) Defined benefit plans
Reconciliation of defined benefit obligations at present value and plan assets at fair value were
as follows:
Present value of defined benefit obligations
Fair value of plan assets
Net defined benefit liabilities
December
31, 2018
(1,246,221)
December
31, 2017
(1,220,613)
$
624,640
608,482
$
(621,581)
(612,131)
The Company makes defined benefit plan contributions to the pension fund account with Bank
of Taiwan that provides pensions for employees upon retirement. The plans (covered by the
Labor Standards Law) entitle a retired employee to receive retirement benefits based on years
of service and average salary for the six months prior to retirement.
1) Composition of plan assets
The Company allocates pension funds in accordance with the Regulations for Revenues,
Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds
are managed by the Labor Pension Fund Supervisory Committee. With regard to the
utilization of the funds, minimum earnings in the annual distributions on the final
financial statements shall be no less than the earnings attainable from the amounts
accrued from two-year time deposits with interest rates offered by local banks.
The balance of the Company’s labor pension reserve account in the Bank of Taiwan
amounted to $618,575 (excluding the ending balance of interest receivable) as of
December 31, 2018. For information on the utilization of the labor pension fund assets
including the asset allocation and yield of the fund, please refer to the website of the
Bureau of Labor Funds, Ministry of Labor.
2) Movements in the present value of the defined benefit obligations
The movements in the present value of defined benefit obligations for the Company were
as follows:
Defined benefit obligations on January 1
$
(1,220,613)
2018
Current service costs and interest
Remeasurements of net benefit liabilities
Benefit paid by the plan
Balance on December 31
2017
(1,172,961)
(25,168)
(76,106)
53,622
(22,168)
(37,000)
33,560
$
(1,246,221)
(1,220,613)
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
55
3) Movements of the fair value of defined benefit plan assets
The movements in the fair value of the defined benefit plan assets for the Company were
as follows:
2018
2017
Fair value of plan assets on January 1
$
608,482
Expected return on plan assets
Remeasurements of net benefit plan assets
Contributions paid by the employer
Benefits paid by the plan
Fair value of plan assets on December 31
$
8,141
16,811
24,766
(33,560)
624,640
631,268
9,724
(3,577)
24,689
(53,622)
608,482
4)
Expenses recognized in profit or loss
The expenses recognized in profit or loss for the Company were as follows:
Current service cost
Net interest on the net defined benefit liability
(asset)
Cost of sales
Selling expenses
Administrative expenses
Research and development expenses
2018
2017
5,635
6,981
8,392
14,027
436
745
3,395
9,451
14,027
8,463
15,444
423
825
4,301
9,895
15,444
$
$
$
$
5) Remeasurement of the net defined benefit liability (asset) recognized in other
comprehensive income
The Company’s remeasurements of the net defined benefit liability (assets) recognized
in other comprehensive income were as follows:
Cumulative amount on January 1
Recognized during the period
Cumulative amount on December 31
$
$
406,910
20,189
427,099
327,227
79,683
406,910
2018
2017
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
56
6) Actuarial assumptions
The following were the Company’s principal actuarial assumptions at the reporting
date:
Discount rate
December 31,
2018
1.30%
December 31,
2017
1.40%
Future salary increase rate
3.00%
3.00%
The expected allocation payment made by the Company to the defined benefit plans for
the one year period after the reporting date is $24,967.
The weighted-average lifetime of the defined benefit plan is 10.3 years.
7)
Sensitivity analysis
If the main actuarial assumptions had changed, the impact on the present value of the
defined benefit obligation shall be as follows:
December 31, 2018
Discount rate
Future salary increasing rate
December 31, 2017
Discount rate
Future salary increasing rate
Effects to the defined
benefit obligation
Increased
0.25%
Decreased
0.25%
(31,218)
31,779
(31,448)
32,086
32,390
(30,797)
32,670
(31,054)
Reasonably possible changes at the reporting date to one of the relevant actuarial
assumptions, holding other assumptions constant, would have affected the defined benefit
obligation by the amounts shown above. The method used in the sensitivity analysis is
consistent with the calculation on the net defined benefit liabilities in the balance sheets.
The method and assumption used in the sensitivity analysis is consistent with prior
period.
(ii) Defined contribution plans
The Company allocates 6% of each employee’s monthly wages to the labor pension personal
account at the Bureau of Labor Insurance in accordance with the provisions of the Labor
Pension Act. Under these defined contribution plans, the Company allocates the labor
pension at a specific percentage to the Bureau of the Labor Insurance without additional legal
or constructive obligations.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
57
The Company recognized the pension costs under the defined contribution method amounting
to $306,912 and $286,820 for the years ended December 31, 2018 and 2017, respectively.
Payment was made to the Bureau of Labor Insurance.
(t)
Income taxes
According to the amendments to the "Income Tax Act” enacted by the office of the President of the
Republic of China (Taiwan) on February 7, 2018, an increase in the corporate income tax rate from
17% to 20% is applicable upon filing the corporate income tax return effective from 2018.
(i)
Income tax expenses
1)
The amount of income tax for the years ended December 31, 2018 and 2017, was as
follows:
Current tax expense
Recognized during the period
$
1,010,943
1,290,833
2018
2017
10% surtax on unappropriated earnings
Tax credit of investment
Deferred tax expense
-
168,132
(183,384)
(322,319)
827,559
1,136,646
Recognition and reversal of temporary differences
292,600
(207,451)
Adjustment in tax rate
Income tax expense
(75,208)
-
217,392
(207,451)
$
1,044,951
929,195
2)
The amount of income tax recognized in other comprehensive income for the years ended
December 31, 2018 and 2017, was as follows:
2018
2017
Items that will not be reclassified subsequently to profit
or loss:
Remeasurement of defined benefit obligation
$
(32,146)
(13,546)
Unrealized gains (losses) on equity instruments at fair
value through other comprehensive income
(37,780)
-
$
(69,926)
(13,546)
Items that will be reclassified subsequently to profit or
loss:
Unrealized gain (loss) of available-for-sale financial
assets
$
-
12,221
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
58
3)
The income tax expense that was reconciled between the actual income tax expense and
profit before tax for the years ended December 31, 2018 and 2017, was as follows:
Profit before tax
Income tax calculated based on tax rate
Adjustment in tax rate
Estimated tax effect of tax exemption on investment
income, net
Realized investment loss
Investment tax credit
Changes in temporary differences
Adjustment of estimated difference and other
10% surtax on unappropriated earnings
2018
9,958,316
2017
6,678,720
1,991,663
1,135,382
$
$
(75,208)
-
(877,600)
49,686
(133,869)
(142,901)
(183,384)
(322,319)
(56,660)
(342,691)
380,009
-
$
1,044,951
383,906
168,132
929,195
(ii) Deferred tax assets and liabilities
Changes in the amount of deferred tax assets and liabilities for 2018 and 2017 were as follows:
Refund
liabilities
(Provision-sal
es return and
allowance)
Contract
liabilities
(Unearned
revenue)
Exchange
differences on
translation
Unrealized
exchange
losses, net
Others
Total
Deferred tax assets:
Balance on January 1, 2018
$
9,823
Recognized in profit or loss
-
259,546
(81,521)
176,283
365,646
253,814
1,065,112
(11,328)
(259,120)
15,291
(336,678)
Recognized in other
comprehensive income
-
-
-
-
32,146
32,146
Balance on December 31, 2018 $
Balance on January 1, 2017
$
9,823
9,823
Recognized in profit or loss
-
178,025
295,900
(36,354)
164,955
202,893
(26,610)
106,526
246,246
119,400
301,251
760,580
257,728
1,012,590
(17,460)
38,976
Recognized in other
comprehensive income
-
-
-
-
13,546
13,546
Balance on December 31, 2017 $
9,823
259,546
176,283
365,646
253,814
1,065,112
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
59
Deferred tax liabilities:
Balance on January 1, 2018
Recognized in profit or loss
Recognized in other comprehensive income
Balance on December 31, 2018
Balance on January 1, 2017
Recognized in profit or loss
Recognized in other comprehensive income
Balance on December 31, 2017
(iii) Unrecognized deferred tax assets
Unrealized
exchange
gains, net
$
$
$
$
(171,868)
171,868
-
-
(340,343)
168,475
-
(171,868)
Others
Total
(371,753)
(52,582)
37,780
(386,555)
(359,532)
-
(12,221)
(371,753)
(543,621)
119,286
37,780
(386,555)
(699,875)
168,475
(12,221)
(543,621)
Deferred tax assets have not been recognized in respect of the following items:
Tax effect of deductible temporary differences
December 31,
2018
December
31, 2017
$
362,131
325,419
The Company assesses and considers that some of the income tax reduction items may be
unrealized, hence they are not recognized as deferred tax assets.
(iv) Unrecognized deferred tax assets and liabilities related to investments in subsidiaries
The temporary differences associated with investment in subsidiaries were not recognized as
deferred income tax assets and liabilities as the Company has the ability to control the reversal
of these temporary differences which are not expected to reverse in the foreseeable future.
As of December 31, 2018 and 2017, the aggregate deductible temporary differences relating to
investments in subsidiaries not recognized as deferred tax assets amounted to $2,162,721 and
$3,205,580, respectively.
As of December 31, 2018 and 2017, the aggregate taxable temporary differences relating to
investments in subsidiaries not recognized as deferred tax liabilities amounted to $54,430,545
and $47,433,268, respectively.
(i) Examination and approval
The Company’s tax returns for the year through 2016 were assessed by the Taipei National
Tax Administration. The Company disagreed with the assessment and filed formal tax appeals
for 2012. In accordance with the conservatism, the total amounts of the assessed additional
income tax were recognized in the statements of income. Any differences will be reflected as
an adjustment after the tax is resolved.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
60
(u) Capital and other equities
As of December 31, 2018 and 2017, the Company’s authorized common stock consisting of
6,000,000 thousand shares with a par value of 10 New Taiwan dollar per share amounted to
$60,000,000 of which 4,407,147 thousand shares and 4,419,192 thousand shares, respectively, were
issued. All issued shares were paid up upon issuance.
(i) Ordinary shares
In 2015, the Company issued its employee restricted shares amounting to $493,600, wherein
the amount of $120,450 and $49,690 had been cancelled due to failure in meeting the vested
requirements in the years ended December 31, 2018 and 2017, respectively. As of December
31, 2018, the registration procedure had been completed.
(ii) Capital surplus
The balances of capital surplus were as follows:
Additional paid-in capital
Treasury share transactions
December
31, 2018
December
31, 2017
$
7,183,919
7,898,905
2,421,864
2,361,843
Difference between consideration and carrying amount arising
from acquisition or disposal of subsidiaries
Recognition of changes in ownership interests in subsidiaries
Employee restricted shares
Changes in equity of associates and joint ventures accounted
36,766
15,642
-
36,766
48,348
318,209
for using equity method
274,243
274,702
$
9,932,434
10,938,773
In accordance with the ROC Company Act, realized capital reserves can only be used to
increase the common stock or distributed as cash dividends after offsetting losses. The
aforementioned capital reserves include share premiums and donation gains. In accordance
with the Securities Offering and Issuance Guidelines, the amount of capital reserves to be
reclassified under share capital shall not exceed 10% of the actual share capital amount.
The Company’s shareholders’ meeting held on June 22, 2018 and 2017, approved to
distribute the cash dividend of $881,429 and $884,431, respectively, representing 0.2 New
Taiwan dollars per share by using the additional paid-in capital.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
61
(iii) Retained earnings
Based on the Company’s articles of incorporation, if there is any profit after closing of books
in a given year, the Company shall first defray tax due, cover accumulated losses and set aside
ten percent of it as legal reserve and then set aside or reverse a special reserve in accordance
with laws and regulations. The balance of earnings available for distribution is composed of
the remainder of the said profit and the unappropriated retained earnings of previous years.
The earnings appropriation proposal to distribute dividend and bonus shall be proposed by the
Board of Directors and approved by the General Shareholders Meeting. The rest of the
unappropriated retained earnings shall be reserved.
The lifecycle of the industry of the Company is in the growing stage. To meet the need of the
Company for the future capital and the need of shareholders for cash flow, if there is any profit
after close of books, the cash dividend allocated by the Company each year shall not be lower
than ten percent of the total dividend (including cash and share dividend) for such year.
According to the law, when there is a deduction from stockholders' equity (excluding treasury
stock and unearned employee benefit) during the year, an amount equal to the deduction item is
set aside as a special reserve before the earnings are appropriated. A special reserve is made
available for earning distribution only after the deduction of the related shareholders’ equity
has been reversed.
1)
Legal reverse
In accordance with the Company Act, 10% of net income should be set aside as legal
reserve until it is equal to the paid-in capital. When a company incurs no loss, it may, in
pursuant to a resolution to be adopted by the shareholders’ meeting as required,
distribute its legal reserve by issuing new shares and distributing stock dividends or
distributing cash to shareholders. Only the portion of the legal reserve which exceeds
25% of the paid-in capital may be distributed.
2)
Special reverse
In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, a portion
of current earnings and previous unappropriated earnings shall be set aside as a special
reserve during earnings distribution. The amount to be set aside should equal the total
amount of contra accounts that are accounted for as deductions to other equity interests.
A portion of previous unappropriated earnings shall be set aside as a special reserve,
which should not be distributed, to account for cumulative changes to other equity
interests pertaining to prior periods. The special reserve shall be made available for
appropriation when the net deductions of other equity interests are reversed in the
subsequent periods.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
62
3)
Earnings distribution
Earnings distribution for 2017 and 2016 was approved by the shareholders during their
annual meeting held on June 22, 2018 and 2017, respectively. The relevant information
was as follows:
2017
2016
Amount
per share
Total
amount
Amount
per share
Total
amount
Cash dividends distributed to
common shareholders
$ 1.0
4,407,147
1.0
4,422,153
Earnings distribution for 2018 was approved by the Board of Directors on March 22,
2019. The relevant information was as follows:
2018
Amount
per share
Total
amount
Cash dividends distributed to common shareholders from
the unappropriated earnings
$ 1.0
4,407,147
Cash dividends distributed to common shareholders from
the capital surplus
0.2
881,429
$ 5,288,576
The earnings distribution for the year ended December 31, 2018 is still subject to be
approved by the shareholders during their annual meeting. The related information can be
accessed through the Market Observation Post System website after the shareholders’
meeting.
(iv) Treasury stock
The subsidiaries of the Company did not sell the ordinary shares of the Company in the years
ended December 31, 2018 and 2017. As of December 31, 2018, Panpal and Gempal,
subsidiaries of the Company, held 50,017 thousand shares of ordinary shares of the Company,
recorded as the Company’s treasury stock, with a book value of 17.6 New Taiwan dollars per
share. The total cost was $881,247. The fair value of the ordinary shares of the Company
was 17.45 and 21.30 New Taiwan dollars per share as of December 31, 2018 and 2017,
respectively.
Pursuant to the Securities and Exchange Act, the number of treasury shares purchased cannot
exceed 10% of the number of shares issued. The total purchase cost cannot exceed the sum of
retained earnings, paid-in capital in excess of par value and realized capital surplus. The
shares purchased for the purpose of transferring to employees shall be transferred within three
years from the date of share repurchase. Those not transferred within the said limit shall be
deemed as not issued by the Company and it should be cancelled. Furthermore, treasury stock
cannot be pledged for debts, and treasury stock does not carry any shareholder rights until it is
transferred.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
63
(v) Other equity interests (net-of-taxes)
Exchange
differences on
transaction of
foreign operation
financial
statements
Unrealized gain
(loss) from
financial assets at
fair value through
other
comprehensive
income
Unrealized
gain (loss) on
available-for-sale
financial assets
Unearned
compensation
for restricted
employee shares
and others
Total
Balance on January 1, 2018
$
(3,477,376)
-
(5,353,772)
(79,856)
(8,911,004)
Effect of retrospective
application
Adjusted balance on January 1,
2018
The Company
Subsidiaries
Associates
-
(5,847,823)
5,353,772
(3,477,376)
(5,847,823)
1,853,763
(34,596)
(67,150)
401,300
(162,189)
(125,317)
-
-
-
-
-
-
-
-
-
(494,051)
(79,856)
79,856
(9,405,055)
1,899,023
334,150
(287,506)
(7,459,388)
Balance on December 31, 2018 $
(1,852,952)
(5,606,436)
Balance on January 1, 2017
$
1,324,282
The Company
Subsidiaries
Associates
(4,606,117)
(148,238)
(47,303)
Balance on December 31, 2017 $
(3,477,376)
-
-
-
-
-
(5,663,830)
(285,105)
(4,624,653)
135,628
205,249
(4,265,240)
157,203
17,227
-
-
8,965
(30,076)
(5,353,772)
(79,856)
(8,911,004)
(v) Share-based payment
At the meeting held on June 20, 2014, the Company’s Shareholders’ Meeting adopted a
resolution to issue 100,000 thousand new shares of employee restricted stock with no consideration
to those full time employees who meet certain requirements. The first issuance of 50,000 thousand
shares had been approved by the FSC on October 30, 2014. Moreover, the Company’s Board of
Directors resolved to issue 49,980 thousand shares on January 22, 2015, and 49,360 thousand shares
had actually been issued, in which the effective date of the share issuance was on February 25, 2015.
40%, 30% and 30% of the aforementioned restricted shares are vested, respectively, when the
employees continue to provide service for at least 2 years, 3 years and 4 years from the registration
and effective date and in the meantime, meet the performance requirement. After the issuance, the
restricted shares are kept by a trust, which is appointed by the Company, before they are vested.
These restricted shares shall not be sold, pledged, transferred, gifted or by any other means of
disposal to third parties during the custody period. The voting rights of these shares are executed by
the custodian, and the custodian shall act based on law and regulations. If the shares remain
unvested after the vesting period, the Company will purchase all the unvested shares without
consideration and cancel the shares thereafter. Restricted shares could receive cash and stock
dividends. The aforementioned new shares are not considered as restricted shares.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
64
The information of the Company’s restricted shares (in thousands) is as follows:
Outstanding shares on January 1
Vested during the period
Canceled during the period
Outstanding shares on December 31
2018
2017
23,571
44,740
(11,526)
(16,200)
(12,045)
-
(4,969)
23,571
The fair value of the restricted employee shares are evaluated by using the market price of $23.50 on
the grant date. As of December 31, 2018 and 2017, the unearned employee benefits were $0 and
$79,856, respectively. For the year ended December 31, 2018, due to the failure in meeting the
vested requirements of the employee restricted shares, the Company reversed compensation cost
amounted to $156,219 and capital surplus－employee restricted shares amounted to $318,209.
Besides, due to meet the vested requirements of the employee restricted shares, the Company
recognized capital surplus–additional paid-in capital amounted to $155,601. The compensation
cost related to the employee restricted shares amounted to $103,356 for the year ended December 31,
2017.
(w) Earnings per share
The Company’s basic and diluted earnings per share are calculated as follows:
2018
2017
Basic earnings per share:
Profit attributable to ordinary shareholders of the Company
$
8,913,365
5,749,525
Weighted-average number of outstanding ordinary shares (in
thousands)
Diluted earnings per share:
4,356,448
4,344,646
Profit attributable to ordinary shareholders of the Company (after
adjustment of potential diluted ordinary shares)
$
8,913,365
5,749,525
Weighted-average number of outstanding ordinary shares of
potential diluted ordinary shares
Weighted-average number of outstanding ordinary shares (in
thousands)
Effect of potential diluted common stock
Employee compensation (in thousands)
Employee restricted shares (in thousands)
Weighted-average number of ordinary shares (after adjustment of
4,356,448
4,344,646
59,637
682
39,737
20,670
potential diluted ordinary shares) (in thousands)
4,416,767
4,405,053
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
65
(x) Revenue from contracts with customers
(i) Disaggregation of revenue
Primary geographical markets:
United states
China
Netherlands
United Kingdom
Others
Major products：
5C electronics
Others
2018
IT Product
Segment
$
361,991,920
110,187,798
109,185,154
43,573,507
286,111,743
$
911,050,122
$
910,647,211
402,911
$
911,050,122
For details on revenue for the year ended December 31, 2017, please refer to note (6)(y).
(ii) Contract balance
Notes and accounts receivable (including related parties)
Less: allowance for impairment
Total
Contract liabilities
December
31, 2018
$ 194,533,384
(3,718,560)
January 1,
2018
171,353,850
(3,717,495)
$ 190,814,824
1,405,452
$
167,636,355
1,617,626
For the details on accounts receivable and allowance for impairment, please refer to note (6)(h).
The amount of revenue recognized for the year ended December 31, 2018 that was included in
the contract liability balance at the beginning of the period was $1,585,446.
The major change in the balance of contract assets and contract liabilities is the difference
between the time frame in the performance obligation to be satisfied and the payment to be
received.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
66
(y) Revenue
The detail of revenue for the year ended December 31, 2017 of the Company was as follows:
Sale of goods
Rendering of services and other
2017
$
840,684,789
624,813
$
841,309,602
For the details on revenue for the year ended December 31, 2018, please refer to note (6)(x).
(z) Employees’ and directors’ compensations
Based on the Company’s articles of incorporation, if there is any profit in a fiscal year, the
Company’s pre-tax profits in such fiscal year, prior to deduction of compensations to employees
and directors, shall be distributed to employees as compensations in an amount of not less than two
percent (2%) thereof and to directors as compensations in an amount of not 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 accumulated losses. The compensations to employees as mentioned
above may be distributed in the form of stock or cash. Employees entitled to receive the said stock or
cash may include the employees of the Company’s subordinate companies pursuant to the
Company Act.
The Company accrued and recognized its employee compensation of $930,857 and $624,296,
respectively, and directors’ compensation of $49,223 and $33,012 for the years ended December
31, 2018 and 2017, respectively. The estimated amounts mentioned above are based on the net profit
before tax without the compensations to employees and directors of each respective ending period,
multiplied by the percentage of the compensation to employees and directors, which was approved
by the management. The estimations are recorded under operating expenses and cost. The
differences between the amounts estimated and recognized in the financial statements, if any, are
accounted for as changes in accounting estimates and recognized as profit or loss in the distribution
year. If the Board of Directors approve to distribute employee compensation in the form of stock, the
number of the shares of the employee compensation is based on the closing price of the day before
the Board of Directors’ meeting, the related information can be accessed through the Market
Observation Post System website. There is no differences between the amount approved in the
Board of Directors’ meeting and those recognized in the financial statements in 2018 and 2017.
There is no differences between the amount estimated and recognized in the financial statements in
2017. The related information can be accessed through the Market observation Post System website.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
67
(aa) Non-operating income and expenses
(i) Other income
The other income for the years ended December 31, 2018 and 2017, were as follows:
Interest income
Financial assets at amortized cost
Bank deposits
Others
Dividend revenue
Overdue payable reversed as other income
Sale of expensed assets
Other revenue
2018
2017
$
$
9,992
313,098
9,815
212,129
37,657
162,265
142,398
887,354
15,803
206,990
16,601
117,742
210,862
180,230
189,443
937,671
(ii) Other gains and losses
The other gains and losses for the years ended December 31, 2018 and 2017, were as follows:
Losses on disposal of investments
Gains (losses) on financial assets and liabilities at fair value
through profit or loss, net
Foreign currency exchange gains (losses), net
Others
2018
-
$
2017
(1,804)
97,682
-
(221,786)
(1,613,222)
(1,926)
(85)
$
(126,030)
(1,615,111)
(ab) Reclassification of the components of other comprehensive income
The details of reclassification of the components of other comprehensive income for the years ended
December 31, 2018 and 2017, were as follows:
2018
2017
Available-for-sale financial assets:
Net change in fair value (net of tax)
$
Net change in fair value reclassified to profit or loss (net of
tax)
-
-
135,628
-
Net change in fair value recognized in other comprehensive
income (net of tax)
$ -
135,628
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
68
(ac) Financial instruments
(i) Credit risk
1)
The carrying amount of financial assets represents the maximum amount exposed to
credit risk.
The Company’s customers are mainly from the high-tech industry. The Company does
not concentrate on a specific customer and the sales regions are widely spread, thus there
should be no concern on the significant concentrations of accounts receivable credit risk.
And in order to mitigate accounts receivable credit risk, the Company constantly assesses
the financial status of the customers.
2) Receivables and debt securities
Information of exposure to credit risk of notes and accounts receivable, please refer to
note (6)(h).
Other financial assets at amortized cost includes other receivables, investments in
corporate bonds and time deposits (previously classified as bond investment without an
active market on December 31, 2017). These financial assets are considered to have low
risk, and thus, the impairment provision recognized during the period was limited to 12
months expected losses (Regarding how the financial instruments are considered to have
low credit risk, please refer to note (4)(f).). Due to the counter parties and the
performing parties of the Company’s time deposits are financial institutions with
investment grade and above, these time deposits are considered to have low credit risk.
(ii) Liquidity risk
The following are the contractual maturities of financial liabilities, excluding estimated interest
payments.
Carrying
Amount
Contractual
cash flows Within 1 year 1 ~ 2 years Over 2 years
December 31, 2018
Non-derivative financial
liabilities
Unsecured borrowings
Notes and accounts payable
Other payables
$
79,701,932
(68,801,932)
(79,701,932)
155,427,659 (155,427,659) (155,427,659)
(5,044,541)
(5,044,541)
$ 240,174,132 (240,174,132) (229,274,132)
5,044,541
December 31, 2017
Non-derivative financial
liabilities
Unsecured borrowings
Notes and accounts payable
Other payables
$
68,519,200
(47,404,750)
(68,519,200)
143,668,312 (143,668,312) (143,668,312)
(4,346,361)
(4,346,361)
$ 216,533,873 (216,533,873) (195,419,423)
4,346,361
(8,600,000)
(2,300,000)
-
-
-
-
(8,600,000)
(2,300,000)
(13,514,450)
-
-
(13,514,450)
(7,600,000)
-
-
(7,600,000)
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
69
The Company is not expecting that the cash flows included in the maturity analysis could occur
significantly earlier or at significantly different amounts.
(iii) Currency risk
1)
Exposure to foreign currency risk
The Company’s significant exposure to foreign currency risk was as follows:
December 31, 2018
Exchange
rate
Foreign
currency
TWD
December 31, 2017
Exchange
rate
Foreign
currency
TWD
Financial assets
Monetary items
USD to TWD
Non-monetary items
THB to TWD
Financial liabilities
Monetary items
USD to TWD
2)
Sensitivity analysis
$ 6,889,285
30.715 211,604,389 6,517,889
29.76 193,972,377
423,027
0.946
400,184
712,938
0.9176
654,192
6,819,596
30.715 209,463,891 6,125,248
29.76 182,287,380
The Company’s exposure to foreign currency risk arises from the translation of the
foreign currency exchange gains and losses on cash and cash equivalents, accounts
receivable, other receivables, loans and borrowings, accounts payable, and other payables
that are denominated in foreign currency. Assuming all other variable factors remain
constant, a strengthening (weakening) 5% of appreciation (depreciation) of the each
major foreign currency against the Company’s functional currency as of December 31,
2018 and 2017, would have increased (decreased) the net profit before tax as follows.
The analysis is performed on the same basis for both periods.
USD (against the TWD)
Strengthening 5%
Weakening 5%
3)
Exchange gains and losses of monetary items
December
31, 2018
December
31, 2017
$
107,025
584,250
(107,025)
(584,250)
As the Company deals with diverse foreign currencies, gains or losses on foreign
exchange were summarized as a single amount. For the years ended December 31, 2018
and 2017, the foreign exchange losses, including both realized and unrealized, amounted
to $221,786 and $1,613,222, respectively.
(iv) Interest rate analysis
The interest risk exposure from financial assets and liabilities has been disclosed in the note of
liquidity risk management.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
70
The following sensitivity analysis is based on the risk exposure to interest rate on the derivative
and non-derivative financial instruments on the reporting date. Regarding the assets and
liabilities with variable interest rates, the analysis is on the basis of the assumption that the
amount of assets and liabilities outstanding at the reporting date were outstanding throughout
the year. The rate of change is expressed as the interest rate increase or decrease by 0.25%,
when reporting to management internally, which also represents the assessment of the
Company’s management for the reasonably possible interval of interest rate change.
Assuming all other variable factors remaining constant, if the interest rate had increased or
decreased by 0.25%, the impact to the net profit before tax would be as follows for the years
ended December 31, 2018 and 2017, which would be mainly resulted from the bank savings
and borrowings with variable interest rates.
Interest increased by 0.25%
Interest decreased by 0.25%
(v) Fair value information
2018
2017
$
(30,511)
(47,830)
30,511
47,830
1)
The categories and fair value of financial instruments
The Company’s financial assets at fair value through profit or loss and financial assets
at fair value through other comprehensive income (available- for-sale financial assets)
were measured at fair value on a recurring basis. The following table shows the carrying
amounts and fair values of financial assets and financial liabilities, including their levels
in the fair value hierarchy. It shall not include fair value information of the financial
assets and financial liabilities not measured at fair value if the carrying amount is a
reasonable approximation of fair value and investments in equity instruments which do
not have any quoted price in an active market in which the fair value cannot be
reasonably measured.
Financial assets at fair value through profit
December 31, 2018
Fair Value
Book value
Level 1
Level 2
Level 3
Total
or loss–current and non-current
Non-derivative financial assets
Mandatorily measured at fair value
through profit or loss
Financial assets at fair value through
other comprehensive income
Stocks listed on domestic markets
Stocks listed on foreign markets
Stocks unlisted on domestic markets
Stocks unlisted on foreign markets
Accounts receivable
Subtotal
$
308,513
284,768
2,383,976
2,383,976
400,184
896,395
51,363
22,896,211
26,628,129
400,184
-
-
-
-
-
-
-
-
23,745
308,513
-
-
896,395
51,363
2,383,976
400,184
896,395
51,363
22,896,211
-
22,896,211
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
71
December 31, 2018
Fair Value
Book value
Level 1
Level 2
Level 3
Total
Financial assets measured at amortized
cost
Cash and cash equivalents
Corporate bonds－current
20,446,378
350,000
Notes and accounts receivable, net
166,600,383
Notes and accounts receivable due from
related parties, net
Other receivables
Guarantee deposits
Subtotal
Total
Financial liabilities measured at
amortized cost
Short-term borrowings
Notes and accounts payable
Notes and accounts payable to related
parties
Other payables
Long-term borrowings current portion
Long-term borrowings
Total
1,318,230
1,418,750
117,500
190,251,241
$ 217,187,883
$ 51,305,682
77,050,816
78,376,843
5,044,541
17,496,250
10,900,000
$ 240,174,132
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
December 31, 2017
Fair Value
Book value
Level 1
Level 2
Level 3
Total
Available-for-sale financial assets
Stocks listed on domestic markets
Stocks listed on foreign markets
Stocks unlisted on domestic markets
Stocks unlisted on foreign markets
Subtotal
Financial assets at cost (non-current)
Loans and receivables
Cash and cash equivalents
Bond investment without active
market-including current and
non-current
Notes and accounts receivable, net
Notes and accounts receivable due from
related parties, net
Other receivables
Guarantee deposits
Subtotal
Total
$
3,794,069
3,794,069
654,192
654,192
1,207,219
126,333
5,781,813
2,333
28,343,534
700,000
165,540,785
2,095,570
711,293
106,744
197,497,926
$ 203,282,072
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,794,069
654,192
1,207,219
1,207,219
126,333
126,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
72
December 31, 2017
Fair Value
Book value
Level 1
Level 2
Level 3
Total
Financial liabilities measured at amortized
cost
Short-term borrowings
Notes and accounts payable
Notes and accounts payable to related
parties
Other payables
Long-term borrowings current portion
Long-term borrowings
Total
$ 41,386,000
72,212,035
71,456,277
4,346,361
6,018,750
21,114,450
$ 216,533,873
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2)
Fair value valuation technique of financial instruments not measured at fair value
The Company estimates financial instruments that not measured at fair value by methods
and assumption as follows:
a) Financial assets measured at amortized cost (bond investment without active market)
and financial liabilities measured at amortized cost
If there is quoted price generated by transactions, the recent transaction price and
quoted price data is used as the basis for fair value measurement. However, if no
quoted prices are available, the discounted cash flows are used to estimate fair
values.
3) Fair value valuation technique of financial instruments measured at fair value
a) Non-derivative financial instruments
Financial instruments trade in active markets is based on quoted market prices. The
quoted price of a financial instrument obtained from main exchanges and
on-the-run bonds from Taipei Exchange can be used as a base to determine the fair
value of the listed companies’ equity instrument and debt instrument of the
quoted price in an active market.
If a quoted price of a financial instrument can be obtained in time and often from
exchanges, brokers, underwriters, industrial union, pricing institute, or authorities
and such price can reflect those actual trading and frequently happen in the market,
then the financial instrument is considered to have a quoted price in an active
market. If a financial instrument is not in accord with the definition mentioned
above, then it is considered to be without a quoted price in an active market. In
general, market with low trading volume or high bid-ask spreads is an indication of
a non-active market.
The fair value of the listed company is determined by reference to the market
quotation.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
73
The measurements on fair value of the financial instruments without an active
market are determined using the valuation technique or the quoted market price of
its competitors. Fair value measured using the valuation technique can be
extrapolated from similar financial instruments, discounted cash flow method, or
other valuation techniques which include the model used in calculating the
observable market data at the balance sheet date.
The measurement of fair value of a non-active market financial instruments held by
the Company which do not have quoted market prices are based on the comparable
market approach, with the use of key assumptions of price-book ratio multiple or
earnings multiple of comparable listed companies as its basic measurement. These
assumptions have been adjusted for the effect of discount without the marketability
of the equity securities.
b) Derivative financial instruments
Measurement of the fair value of derivative instruments is based on the valuation
techniques that are generally accepted by the market participants. For instance,
discount method or option pricing models. Fair value of forward currency exchange
is usually determined by using the forward currency rate.
4) Transfer from one level to another
There was no transfer from one level to another in 2018 and 2017.
5) Changes in level 3
The change in level 3 at fair value in the years ended December 31, 2018 and 2017, were
as follow:
Balance on January 1, 2018
Effects of retrospective application
Adjusted balance on January 1, 2018
Total gains and losses recognized:
In other comprehensive income
Purchased
Proceeds of capital reduction of investment
Financial assets at
fair value through
profit or loss
-
$
-
-
-
-
23,745
Balance on December 31, 2018
$
23,745
Financial assets
at fair value
through other
comprehensive
income
(available-for-sale
financial assets)
1,333,552
2,333
1,335,885
(487,950)
107,877
(8,054)
947,758
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
74
Financial assets
at fair value
through other
comprehensive
income
(available-for-sale
financial assets)
2,101,861
(4,440)
60,180
(13,049)
(811,000)
1,333,552
Financial assets at
fair value through
profit or loss
-
$
-
-
-
-
-
Balance on January 1, 2017
Total gains and losses recognized:
In other comprehensive income
Purchased
Proceeds of capital reduction of investment
Disposal
Balance on December 31, 2017
$
For the years ended December 31, 2018 and 2017, total gains and losses that were
included in “other comprehensive income, before tax, available-for-sale financial assets”
and “other comprehensive income, before tax, equity instruments at fair value through
other comprehensive income” were as follows:
Total gains and losses recognized:
In other comprehensive income (as “other
comprehensive income, before tax, available-for-sale
financial assets”)
In other comprehensive income (as “other
2018
2017
$
-
(4,440)
comprehensive income, before tax, equity instruments
at fair value through other comprehensive income”) $
(487,950)
-
6) The quantified information for significant unobservable inputs (level 3) used in fair value
measurement
The Company’s financial instruments that use level 3 input to measure fair values
include financial assets at fair value through other comprehensive income –equity
instruments, financial assets at fair value through profit or loss –equity securities
investment and available-for-sale financial assets – equity investment.
Most of fair value measurements of the Company which are categorized as equity
investment into level 3 have several significant unobservable inputs. Significant
unobservable inputs of equity investments without quoted price are independent of each
other.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
75
The quantified information for significant unobservable inputs was as follows:
Significant
unobservable inputs
Price-Book ratio
multiples (1.33~5.86,
1.7671~2.63,
respectively, on
December 31, 2018
and 2017)
Multiples of earnings
(2.32~2.95 on
December 31, 2018)
Lack-of-Marketability
discount rate
(40%~82%, and
45%~65%,
respectively, on
December 31, 2018
and 2017)
Net asset value
Inter-relationships
between significant
unobservable inputs
and fair value
The higher the
multiple is, the
higher the fair value
will be.
The higher the
multiple is, the
higher the fair value
will be.
The higher the
Lack-of-Marketabilit
y discount rate is,
the lower the fair
value will be.
Inapplicable
Valuation
technique
Comparable
market approach
Item
Financial assets at fair
value through other
comprehensive
income
(available-for-sale
financial assets)－
equity investment
without an active
market
Net asset value
method
Financial assets at fair
value through other
comprehensive
income
(available-for-sale
financial
assets)- investment in
private placement
7) Sensitivity analysis for fair value of financial instruments using level 3 inputs
The Company ’ s fair value measurement on financial instruments is reasonable.
However, the measurement would be different if different valuation models or valuation
parameters are used. For financial instruments using level 3 inputs, if the valuation
parameters changed, the impact on other comprehensive income or loss are as follows:
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
76
Other comprehensive
income
Input
Move up
or down
Favorable
change
Unfavorable
change
December 31, 2018
Financial assets at
fair value through
other comprehensive
income
December 31, 2017
Available-for-sale
financial assets
Price-Book ratio
multiples
Multiples of earnings
Lack-of-Marketability
discount rate
Price-Book ratio
multiples
Lack-of-Marketability
discount rate
5%
$
24,924
24,935
5%
5%
5%
5%
$
$
$
$
18,629
4,913
17,648
4,925
2,531
4,633
2,602
4,562
The favorable and unfavorable changes reflect the movement of the fair value, in which
the fair value is calculated by using the different unobservable inputs in the valuation
technique. The table above shows the effects of one unobservable input, without
considering the inter-relationships with another unobservable input for financial
instrument, if there are one or more unobservable inputs.
(ad) Financial risk management
(i) Overview
The Company is exposed to the following risks arising from financial instruments:
1) Credit risk
2) Liquidity risk
3) Market risk
In this note expressed the information on risk exposure and objectives, policies and procedures
of risk measurement and management of the Company. For detailed information, please refer to
the related notes of each risk.
(ii) Structure of risk management
The Company’s finance management department provides business services for the overall
internal department. It sets the objectives, policies and processes for managing the risk and
the methods used to measure the risk arising from both the domestic and international financial
market operations.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
77
The Company minimizes the risk exposure through derivative financial instruments. The
Board of Directors regulated the use of derivative financial instruments in accordance with the
Company’s policy about risks arising from financial instruments such as currency risk,
interest rate risk, credit risk, the use of derivative and non-derivative financial instruments and
the investments of excess liquidity. The internal auditors of the Company continue with the
review of the amount of the risk exposure in accordance with the Company’s policies and the
risk management policies and procedures. The Company has no transactions in financial
instruments (including derivative financial instruments) for the purpose of speculation.
(iii) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a
financial instrument fails to meet its contractual obligations, and arises principally from the
Company’s receivables from customers and investment securities.
1) Accounts receivable and other receivables
The Company has established a credit policy under which each new customer is analyzed
individually for creditworthiness before the Company’s standard payment and delivery
terms and conditions are offered. The Company’s review includes external ratings,
when available, and in some cases bank references. Purchase limits are established for
each customer, and these limits are reviewed periodically.
2)
Investments
The credit risks exposure in the bank deposits, investments with fixed income and other
financial instruments are measured and monitored by the Company ’ s finance
department. Since the Company’s transaction counterparties and the contractually
obligated counterparties are banks, financial institutes and corporate organizations with
good credits, there are no compliance issues, and therefore, no significant credit risk.
3) Guarantees
Pursuant to the Company’ s policies, it is only permissible to provide financial
guarantees to subsidiaries and companies that the Company has business with. As of
December 31, 2018 and 2017, The guarantees provide to the subsidiaries amounted to
$325,179 and $372,963, respectively.
(iv) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations
associated with its financial liabilities which be settled by delivering cash or another financial
asset.
The Company manages and maintains sufficient cash and cash equivalents so as to cope with
its operations and mitigate the effects of fluctuations in cash flows. The Company’s
management supervises the banking facilities and ensures in compliance with the terms of the
loan agreements. Please refer to notes (6)(n) and (6)(o) for unused credit lines of short-term
and long-term borrowings as of December 31, 2018 and 2017.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
78
(v) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest
rates and equity prices which will affect the Company’s income or the value of its holdings of
financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimizing the return.
1) Currency risk
The Company is exposed to currency risk on sales, purchases and borrowings that are
denominated in a currency other than the functional currencies of the Company, primarily
USD.
As for other monetary assets and liabilities denominated in other foreign currencies, when
short-term imbalance takes place, the Company buys or sells foreign currencies at spot
rate to ensure that the net exposure is kept on an acceptable level.
2)
Interest rate risk
The Company borrows funds on fixed and variable interest rates, which has a risk
exposure to changes in fair value and cash flow. Therefore, the Company manages the
interest rates risk by maintaining an adequate combination of fixed and variable interest
rates.
3) Other price risk
The Company is exposed to equity price risk arising from investments in listed equity
securities.
(ae) Capital management
The policy of capital management made by the Board of Directors is to maintain a strong capital base
so as to stabilize the confidence of the investors, creditors and the public market and to sustain future
development of the business. Capital consists of ordinary shares, capital surplus and retained
earnings. The Board of Directors monitors the return on capital as well as the level of dividends to
ordinary shareholders.
The Company monitors the capital structure by way of periodical review the debt ratio. As of
December 31, 2018 and 2017, the debt ratio was as follows:
Total liabilities
Total assets
Debt ratio
December 31,
2018
$ 250,089,167
December
31, 2017
226,200,482
$ 355,812,813
328,096,066
70
%
69
%
The Company could purchase its own shares in the public market in accordance with the
corresponding rules and regulations. The timing of the purchases depends on market prices.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
79
As of December 31, 2018, there were no changes in the Company’s approach of capital
management.
(af) Investing and financing activities not affecting current cash flow
There is no investing and financing activities which did not affect the current cash flow in the year
ended December 31, 2018.
Reconciliation of liabilities arising from financial activities were as follows:
Long-term borrowings
Short-term borrowings
January 1,
2018
27,133,200
$
Cash flow
1,263,050
December
31, 2018
28,396,250
41,386,000
9,919,682
51,305,682
Total liabilities from financing activities
$
68,519,200
11,182,732
79,701,932
(7) Related-party transactions:
(a) Name and relationship with related parties
The following are the subsidiaries and entities that have transactions with related party during the
periods covered in the financial statements.
Name of related party
Panpal Technology Corp. (“Panpal”)
Gempal Technology Corp. (“Gempal”)
Hong Ji Capital Co., Ltd. (“Hong Ji”)
Hong Jin Investment Co., Ltd. (“Hong Jin”)
Zhaopal
Yongpal
Kaipal
Accesstek, Inc. (“ATK”)
Arcadyan
Rayonnant Technology Co., Ltd. (“Rayonnant Technology”)
HengHao
Ripal Optortronics Co., Ltd. (“Ripal”)
Auscom Engineering Inc. (“Auscom”)
Just International Ltd. (“Just”)
Compal International Holding Co., Ltd. (“CIH”)
Compal Electronics (Holding) Ltd. (“CEH”)
Bizcom Electronics, Inc. (“Bizcom”)
Country of incorporation
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
80
Name of related party
Flight Global Holding Inc. (“FGH”)
High Shine Industrial Corp. (“HSI”)
Compal Europe (Poland) Sp. z o.o. (“CEP”)
Big Chance International Co., Ltd. (“BCI”)
Compal Rayonnant Holdings Limited (“CRH”)
Core Profit Holdings Limited (“CORE”)
Compalead Electronics B.V. (“CPE”)
Country of incorporation
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
Compalead Eletronica do Brasil Industria e Comercio Ltda. (“CEB”)
The Company's subsidiary
Compal Display Holding (HK) Limited (“CDH (HK)”)
Compal Electronics International Ltd. (“CII”)
Compal International Ltd. (“CPI”)
Compal Electronics (China) Co., Ltd. (“CPC”)
Compal Optoelectronics (Kunshan) Co., Ltd. (“CPO”)
Compal System Trading (Kunshan) Co., Ltd. (“CST”)
Smart International Trading Ltd. (“Smart”)
Amexcom Electronics Inc. (“AEI”)
Mexcom Electronics, LLC (“MEL”)
Mexcom Technologies, LLC (“MTL”)
CENA Electromex, S.A. de C.V. (“CMX”)
Compal International Holding (HK) Limited (“CIH (HK)”)
Jenpal International Ltd. (“Jenpal”)
Prospect Fortune Group Ltd. (“PFG”)
Compal Electronics Technology (Kunshan) Co., Ltd. (“CET”)
Compal Information (Kunshan) Co., Ltd. (“CIC”)
Compal Information Technology (Kunshan) Co., Ltd. (“CIT”)
Kunshan Botai Electronics Co., Ltd. (“BT”)
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
Compal Information Research and Development (Nanjing) Co., Ltd. (“CIN”) The Company's subsidiary
Compal Digital Technology (Kunshan) Co., Ltd. (“CDT”)
Compower Global Service Co., Ltd. (“CGS”)
Compal Investment (Jiansu) Co., Ltd. (“CIJ”)
Compal Display Electronics (Kunshan) Co., ltd. (“CDE”)
Etrade Management Co., Ltd. (“Etrade”)
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
81
Name of related party
Webtek Technology Co., Ltd. (“Webtek”)
Forever Young Technology Inc. (“Forever”)
Unicom Global, Inc. (“UCGI”)
Palcom International Corporation (“Palcom”)
Compal Communication (Nanjing) Co., ltd. (“CCI Nanjing”)
Compal Digital Communication (Nanjing) Co., Ltd. (“CDCN”)
Country of incorporation
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
Compal Wireless Communication (Nanjing) Co., Ltd. (“CWCN”)
The Company's subsidiary
Hanhelt Communication (Nanjing) Co., Ltd. (“Hanhelt”)
Giant Rank Trading Ltd. (“GIA”)
OptoRite Inc.
MSI-ATK Otpics Holding Corporation (“MSI-ATK”)
Maitek (BVI) Corporation (“Maitek”)
Arcadyan Technology N.A. Corp. (“Arcadyan USA”)
Arcadyan Germany Technology GmbH (“Arcadyan Germany”)
Arcadyan Technology Corporation Korea (“Arcadyan Korea”)
Arcadyan Holding (BVI) Corp. (“Arcadyan Holding”)
Arcadyan do Brasil Ltda. (“Arcadyan Brasil”)
Arcadyan Technology Limited (“Arcadyan UK”)
Arcadyan Technology Australia Pty Ltd. (“Arcadyan AU”)
Zhi-pal Technology Inc. (“Zhi-pal”)
Tatung Technology Inc. (“TTI”)
AcBel Telecom Inc. (“AcBel Telecom”)
CBN
Speedlink Tradings Limited (“Speedlink”)
Compal Broadband Networks Belgium BVBA ("CBNB”)
Sinoprime Global Inc. (“Sinoprime”)
Arcadyan Technology (Shanghai) corp. (“SVA Arcadyan”)
Arch Holding (BVI) Corp. (“Arch Holding”)
Compal Networking (Kunshan) Co., Ltd. (“CNC”)
Leading Images Ltd. (“Leading Images”)
Great Arch Group Ltd. (“Great Arch”)
Astoria Networks GmbH (“Astoria GmbH”)
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
82
Name of related party
Quest International Group Co., Ltd. (“Quest”)
Exquisite Electronic Co., Ltd. (“Exquisite”)
Tatung Home Appliances (Wujiang) Co., Ltd. (“THAC”)
Tatung Technology of Japan Co., Ltd.
Intelligent Universal Enterprise Ltd. (“IUE”)
Goal Reach Enterprises Ltd. (“Goal”)
Compal (Vietnam) Co., Ltd. (“CVC”)
Country of incorporation
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
Compal Development &Management (Vietnam) Co., Ltd. (“CDM”)
The Company's subsidiary
Allied Power Holding Corp. (“APH”)
Primetek Enterprises Limited (“PEL”)
The Company's subsidiary
The Company's subsidiary
Rayonnant Technology (HK) Co., Ltd. (“Rayonnant Technology (HK)”)
The Company's subsidiary
Royonnant Technology (Taicang) Co., Ltd. (“Rayonnant Technology
The Company's subsidiary
(Taicang)”)
HengHao Holdings A Co., Ltd. (“HHA”)
HengHao Holdings B Co., Ltd. (“HHB”)
HengHao Trading Co., Ltd.
HengHao Optoelectronics Technology (Kunshan) Co., Ltd.
LUCOM Display Technology (Kunshan) Limited (“Lucom”)
Center Mind International Co., Ltd. (“CMI”)
Prisco International Co., Ltd. (“PRI”)
Compal Electronic (Sichuan) Co., Ltd. (“CIS”)
Compal Electronic (Chongqing) Co., Ltd. (“CEQ”)
Compal Electronic (Chengdu) Co., Ltd. (“CEC”)
Compal Management (Chengdu) Co., Ltd. (“CMC”)
Compal Smart Device (Chongqing) Co., Ltd. (“CSD”)
Billion Sea Holdings Limited (“BSH”)
Fortune Way Technology Corp. (“FWT”)
General Life Biotechnology Co., Ltd. (“GLB”)
Mactech Co., Ltd. (“Mactech”)
Rapha Bio Ltd. (“Rapha”)
Compal Electronics India Private Limited (“CEIN”)
Shennona Corporation (“Shennona”)
Unicore BioMedical Co., Ltd. (“Unicore”)
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
The Company's subsidiary
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
83
Raycore Biotech Co., Ltd. (“Raycore”)
Name of related party
AcBel Polytech Inc. (AcBel) and its subsidiaries (“AcBel”)
Avalue Technology Inc (“Avaulue”)
Crownpo Technology Inc (“Crownpo”)
Kinpo Group Management Consultant Company (“Kinpo Group
Management”)
Allied Circuit Co., Ltd. (“Allied Circuit”)
Compal Connector Manufacture Ltd. (“CCM”)
(b) Transactions with key management personnel
Key management personnel remunerations comprised:
Short-term employee benefits
Post-employment benefits
Share-based payments
Country of incorporation
The Company's subsidiary
The same chairman of the
board with the Company
An associate
An associate
An associate
An associate
A joint venture company
2018
2017
$
487,007
385,294
5,913
(91,809)
6,226
68,529
$
401,111
460,049
There are no termination benefits and other long-term benefits. Please refer to note (6)(v) for
explanations related to share-based payments.
(c) Significant related-party transactions
(i)
Sale of goods to related parties
The amounts of significant sales transactions between the Company and related parties were as
follows:
Subsidiaries
Associates
Other related parties
2018
2017
$
2,649,187
3,767,204
246
-
216
1,630
$
2,649,433
3,769,050
Sales prices for related parties were similar to those of the third-party customers. The
collection period was 45~180 days for related parties.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
84
(ii) Purchase of goods from related parties
The amounts of significant purchase transactions between the Company and related parties
were as follows:
Subsidiaries
Associates
Joint venture
2018
2017
$
$
287,509,094
9,234
370
287,518,698
223,224,665
915
122
223,225,702
Purchase prices and payment period from related parties were similar to those from third-party
suppliers. The payment period was 60~120 days for related parties.
(iii) Product warranty service expenses
The product warranty service expenses paid to subsidiaries for the years ended December 31,
2018 and 2017, amounted to $278,993 and $331,126, respectively. As of December 31, 2018
and 2017, the unpaid warranty service expenses were record as other payables.
(iv) Technical service expense
The Company engaged its subsidiaries to research and develop of notebooks, and the related
technical service expenses for the years ended December 31, 2018 and 2017, amounted to
$154,412 and $155,085, respectively. As of December 31, 2018 and 2017, the unpaid technical
service expenses were recorded as other payables.
(v) Receivable due from relate parties
The receivables arising from the transactions mentioned above, the sale of machinery and
equipment to related parties, and the purchasing of machinery, equipment and others on behalf
of the related parties as of December 31, 2018 and 2017, were as follows:
Account
Related party
categories
December 31,
2018
December 31,
2017
Notes and accounts receivable
Subsidiaries
$
1,318,230
2,095,564
Notes and accounts receivable
Other receivables
Other receivables
Other receivables
Other related
parties
Subsidiaries
Joint venture
Other related
parties
-
520,598
120
6
204,779
179
-
127
1,838,948
2,300,655
Less: Credit balance of investments
accounted for using equity
method
(376,263)
$
1,462,685
(179,256)
2,121,399
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
85
As of December 31, 2018 and 2017, the Company’s investment accounted for using the
equity method in subsidiaries was a credit balance, recorded as a deduction from other
receivable (other receivables) – related party. Please refer to note (6)(k).
(vi) Payable to related parties
The payables to related parties as of December 31, 2018 and 2017, were as follows:
Account
Related party
categories
Notes and accounts payable
Subsidiaries
Notes and accounts payable
Associates
Notes and accounts payable
Joint venture
Other payable
Other payable
Subsidiaries
Associates
December 31,
2018
78,367,526
$
December 31,
2017
71,455,385
9,157
160
782
110
199,328
159,814
1,019
-
$
78,577,190
71,616,091
(vii) Loan to related parties
The interest rate of unsecured loans to subsidiaries was 1.20%~2.82%, and the Company had
assessed that no bad debt expenses should be recognized. As of December 31, 2018 and 2017,
the loans due to related parties were recorded as other receivables.
Account
Related party
categories
December 31,
2018
December 31,
2017
Other receivable
Subsidiaries
Less: Credit balance of investments
accounted for using the equity
method
$
$
419,618
413,411
(118,481)
301,137
(52,938)
360,473
As of December 31, 2018 and 2017, the Company’s investment accounted for using the
equity method in some subsidiaries was a credit balance, recorded as a deduction from other
receivable (other receivables) – related parties. Please refer to note (6)(k).
(viii) Guarantees
As of December 31, 2018 and 2017, the guarantees provided to subsidiaries were $325,179
and $372,963, respectively.
(8) Pledged assets: None.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Parent-Company-Only Financial Statements
86
(9) Commitments and contingencies:
The details of commitments and contingencies were as follows:
(a) On May 17, 2017, Qualcomm Inc. filed a lawsuit to the Southern District Court of California, USA
against the Company for not paying the royalties of the patent license agreement. The Company has
filed counterclaims against Qualcomm Inc. based on the antitrust law in the same court on July 19,
2017. The Company has engaged counsels to defend the lawsuits. The final result of this case is
subject to future litigation procedures; therefore, there is no significant impact on the Company’s
business and financial performance in the current year.
(b) The Company entered into various patent license agreements with third parties, and was required to
make royalty payments of a predetermined amount periodically.
(10) Losses due to major disasters: None
(11) Subsequent events: None
(12) Other:
(c) The employee benefits, depreciation and amortization expenses by categorized function are
summarized as follows:
By function
2018
Operating
costs
Operating
expenses
Total
Operating
costs
2017
Operating
expenses
Total
By item
Employee benefits
Salary
322,825
8,227,841
8,550,666
293,925
7,023,336
7,317,261
Labor and health insurance
Pension
27,602
12,469
517,757
545,359
308,470
320,939
24,351
11,124
Remuneration of directors
-
59,182
59,182
-
Others
Depreciation
Amortization
48,089
15,342
40,050
385,959
434,048
150,985
166,327
249,740
289,790
45,473
17,912
7,271
496,735
291,140
41,531
374,941
147,953
307,387
521,086
302,264
41,531
420,414
165,865
314,658
The Company had 7,405 and 6,590 employees as of December 31, 2018 and 2017, of which 11 and 11,
directors were not in concurrent employment, respectively.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
87
(13) Other disclosures:
(a)
Information on significant transactions:
The following were the information on significant transactions required by the “Regulations
Governing the Preparation of Financial Reports by Securities Issuers” for the Company for the year
ended December 31, 2018:
(i) Loans to other parties:
Name of
lender
Name of
borrower
Account
name
Related
party
Y
Other
No
0
0
The
UCGI
Company
The
HengHao
receivables
〃
〃
〃
〃
〃
〃
CEP
CEB
CVC
CDE
CDE
Company
1 CIH
2 CPI
2 CPI
3 CET
4 CPC
5 CIT
5 CIT
6 PFG
CCI Nanjing 〃
Rayonnant
Technology
〃
(Taicang)
CEB
〃
7 Arcadyan
Arcadyan
〃
AU
7 Arcadyan
Arcadyan
〃
Arcadyan
Brasil
CNC
8
Holding
〃
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Highest
balance of
financing to
other parties
during the
period
Ending
balance
500,000
250,000
402,354
199,618
Actual
usage
amount
during the
period
220,000
Range of
interest rates
during the
period
1.2%
199,618 1.8%~2.82%
Purposes of
fund
financing for
the borrower
Short-term
financing
〃
108,343
107,503
44,537
3.50%
437,925
-
-
2.50%
307,150
307,150
127,467
3.2%
1,405,800
-
-
4.35%
1,377,900 1,341,600 1,341,600
2.20%
4,316,900 2,150,050 2,150,050 2.50%~2.76
67,080
67,080
-
%
4.35%
309,550
307,150
307,150
2.50%
〃
〃
〃
〃
〃
〃
〃
〃
Transaction
amount for
business
between two
parties
-
-
-
-
-
-
-
-
-
-
Reasons
for
short-term
financing
Operating
demand
〃
〃
〃
〃
〃
〃
〃
〃
〃
122,860
122,860
-
245,720
245,720
33,787
1.00% Transaction
for business
between two
parties
〃
1.00%
1,535,750
307,150
-
-
522,155
522,155
-
1.00%
Short-term
financing
-
Operating
financing
(In Thousands of New Taiwan Dollars)
Collateral
Allowance
for bad debt Item Value
Individual
funding loan
limits
Maximum
limit of fund
financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
900,177
900,177
21,144,729 42,289,458
(Note 1)
21,144,729 42,289,458
(Note 1)
34,926,977 34,926,977
(Note 2)
900,177
(Note 3)
900,177
(Note 3)
4,824,445
(Note 4)
2,040,377
(Note 5)
20,445,466 20,445,466
(Note 6)
20,445,466 20,445,466
(Note 6)
4,824,445
2,040,377
421,799
1,228,600
245,720
970,670
421,799
(Note 7)
3,626,457
(Note 8)
3,626,457
(Note 8)
970,670
(Note 9)
Note 1: According to the Company’s Procedures of Lending Funds to Other Parties, the total amount of loans to others shall not exceed 40% of the net worth of the Company.
When a short-term financing facility with the Company is necessary, the total amount for lending to any company shall not exceed 80% of the borrower’s net worth,
nor shall it be more than 50% of the Company’s lendable amount limit, and shall be combined with the company’s endorsements/guarantees for calculation. In
addition, the total amount lendable to 100% directly or indirectly owned subsidiaries by the Company is unrestricted by the aforesaid restriction of 80%, but the
maximum amount shall not exceed 50% of the Company’s lendable limit, and shall be combined with the company’s amount of loans to others when calculating.
Note 2. According to CIH’s Procedures for Lending Funds to Other Parties, the total amount of loans to others shall not exceed 40% of the net worth of CIH. When a
short-term financing facility with CIH is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed
50% of CIH’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the
ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the
maximum amount shall not exceed the net worth of CIH, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 3. According to CPI’s Procedures for Lending Funds to Other Parties, the total amount of loans to others shall not exceed 40% of the net worth of CPI. When a
short-term financing facility with CPI is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed
50% of CPI’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the
ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the
maximum amount shall not exceed the net worth of CPI, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 4. According to CET’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CET. When a
short-term financing facility with CET is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed
50% of CET’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to
the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but
the maximum amount shall not exceed the net worth of CET, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 5. According to CPC’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CPC. When a
short-term financing facility with CPC is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed
50%
of CPC’s total amount of capital lent, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate
parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum
amount shall not exceed the net worth of CPC, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
88
Note 6. According to CIT’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CIT. When a
short-term financing facility with CIT is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed
50%
of CIT’s total amount of capital lent, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate
parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum
amount shall not exceed the net worth of CIT, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 7. According to PFG’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of PFG. When a
short-term financing facility with PFG is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed
50% of PFG’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the
ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the
maximum amount shall not exceed the net worth of PFG, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 8. According to Arcadyan’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Arcadyan. To
borrowers having business relationship with Arcadyan, the total amount for lending the borrower shall not exceed 80% of the transaction amount in the last fiscal year
or the expecting amount for the current year, nor shall it exceed 20% of the net worth of Arcadyan. Also, the amount shall be combined with the Arcadyan’s
endorsements/guarantees for the borrower when calculating. When a short-term financing facility is necessary, the borrower should be Arcadyan’s investee. The total
amount for lending the borrower shall not exceed 80% of the net worth of the borrower, nor shall it exceed 20% of the net worth of Arcadyan, and shall be combined
with the Arcadyan’s endorsements/guarantees for the borrower when calculating.
Note 9. According to Arcadyan Holding’s Procedures of Lending Funds to Other Parties, the total amount of loans to others shall not exceed the net worth of Arcadyan
Holding. When a short-term financing facility is necessary, the borrower should be Arcadyan Holding’s investee. The total amount for lending the borrower shall
not exceed the net worth of Arcadyan Holding, and shall be combined with the Arcadyan Holding’s endorsements/ guarantees for the borrower when calculating.
(ii) Guarantees and endorsements for other parties:
Name of
guarantor Name
The
CEB
No.
0
Company
0 〃
CEP
1 Arcadyan Arcadya
n Brasil
Counter-party of
guarantee and
endorsement
Relationship
with the
Company
(Note 3)
Balance of
guarantees
Limitation on
amount of
guarantees and
endorsements
for a specific
enterprise
Highest
balance for
guarantees and
endorsements
during
the period
26,430,911
61,910
and
endorsements
as of
reporting date
61,430
Actual
usage
amount
during the
period
61,430
Property
pledged for
guarantees and
endorsements
(Amount)
-
Ratio of
accumulated
amounts of
guarantees and
endorsements
to net worth of
the latest
financial
statements
Maximum
amount for
guarantees
and
endorsements
0.06% 52,861,823
(Note 1)
(In Thousands of New Taiwan Dollars)
Parent
company
endorsements/
Subsidiary
endorsements/
guarantees to
third parties on
behalf of
subsidiary
Y
guarantees
to third parties
on behalf of
parent company
-
Endorsements/
guarantees to
third parties
on behalf of
companies in
Mainland
China
-
(Note 2)
26,430,911
315,364
263,749 263,749
(Note 5)
1,208,819
245,720
245,720
-
-
-
0.25% 52,861,823
(Note 1)
2.71%
3,626,457
(Note 4)
Y
Y
-
-
-
-
Note 1: According to the Company’s Procedures for Endorsement and Guarantee, the total amount of endorsements/ guarantees the Company or the Group is permitted to make
shall not exceed 50% of the Company’s net worth. Endorsements/ guarantees the Company and the Group are permitted to make for a single company shall not exceed
25% of the Company’s net worth. For entities having business relationship with the Company, the amount of endorsements/ guarantees for a single company shall not
exceed 80% of the transaction amount in the last fiscal year or the expecting amount of the current year, and shall be combined with the amount lend to others when
calculating. The amount of endorsements/ guarantees permitted to make between subsidiaries whose over 90% of its voting shares are owned, directly or indirectly, by
the Company shall be no more than 10% of the net worth of the Company. The amount of endorsements/ guarantees permitted to make between directly or indirectly
wholly owned subsidiaries is not limited by the aforementioned restriction, only the maximum amount shall be no more than 25% of the net worth of the Company.
Note 2: Subsidiary whose over 50% common stock is directly owned.
Note 3: Subsidiary whose over 50% common stock is indirectly owned.
Note 4: According to Arcadyan's Procedures for Endorsement and Guarantee, the total amount shall not exceed 40% of the net worth for latest financial statements audited or
reviewed by Certified Public Accountants, and the amount for a single company shall not exceed 1/3 of the total amount.
Note 5: Subsidiary whose 100% common stock is directly owned by Arcadyan.
(iii) Securities held as of December 31, 2018 (excluding investment in subsidiaries, associates and
joint ventures):
Name of
holder
The
Company
Category and
name of
security
Common bond－Taiwan Star
Relationship
with security
issuer
-
Taiwan Star
-
Kinpo Electronics, Inc. (“Kinpo”)
Cal-Comp Electronics (“Thailand”)
Public Co., Ltd.
Innolux Corporation (“Innolux”)
Chipbond Technology Corp.
(“Chipbond”)
The same
chairman of the
Company
〃
-
-
(In Thousands of Shares / Units)
Shares/Unit
s
(thousands)
-
Ending balance
Carrying
value
Holding
percentage
(%)
Fair value
Note
350,000 -
-
98,046
734,368 3%
734,368
124,044
1,252,842 9%
1,252,842
239,631
400,184 5%
400,184
109,227
1,061,690 1%
1,061,690
4,593
284,768 1%
284,768
Account
name
Financial assets at
amortized cost-current
Financial assets at fair value
through other
comprehensive
income-non-current
〃
〃
〃
Financial assets at fair value
through profit or
loss-current
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
89
Name of
holder
The
Company
Category and
name of
security
HWA VI Venture Capital Corp.
Relationship
with security
issuer
-
Account
name
Ending balance
Shares/Unit
s
(thousands)
Carrying
value
Holding
percentage
(%)
Fair value
Note
Financial assets at fair value
through other
comprehensive
income-non-current
290
20,551 10%
20,551
〃
〃
〃
〃
〃
〃
1,053
4,000
2,000
5,829
1,357
749
22,926 11%
50,040 3%
40,740 3%
22,909 13%
14,542 3%
67,903 2%
22,926
50,040
40,740
22,909
14,542
67,903
66,968
HWA Chi Venture Capital Corp.
mProbe Ltd.
Global BioPharma, Inc.
Chen Feng Optoelectronics
PrimeSensor Technology Inc.
Macroblock, Inc.
Others
-
-
-
-
-
-
Total
Panpal
Compal Electronics, Inc.
Kinpo
CDIB Partners Investment Holding
Corp.
AcBel
Chipbond
The parent
company
The same
chairman of the
Company
-
The same
chairman of the
Company
-
Taiwan Biotech Co., Ltd.
-
Financial assets at fair value
through profit or loss and
other comprehensive
income
Financial assets at fair value
through other
comprehensive
income-non-current
〃
〃
〃
Financial assets at fair value
through profit or
loss-current
Financial assets at fair value
through other
comprehensive
income-non-current
〃
Others
Total
Gempal
Compal Electronics, Inc.
Lian Hong Art. Co., Ltd.
Global BioPharma, Inc.
Others
Total
Hong Ji
SUYIN Optronics Co., Ltd. (“SUYIN
Optronics”)
Hong Jin
SUYIN Optronics
Arcadyan
GeoThings Inc.
AirHop Communication Inc.
Adant Technologies Inc.
IOT EYE, Inc.
TIEF Fund, L.P
Hitron Technologies Inc.
RichWare Technology Corp.
Wistron NeWeb Corp.
Total
The parent
company
Financial assets at fair value
through other
comprehensive
income-non-current
-
-
-
-
-
-
-
-
-
-
-
-
〃
〃
〃
Financial assets at fair value
through other
comprehensive
income-non-current
Financial assets at fair value
through other
comprehensive
income-non-current
Financial assets at fair value
through profit or loss-non
current
〃
〃
〃
〃
Financial assets at fair value
through profit or
loss-current
〃
〃
66,968
4,040,431
31,648
552,259 1%
552,259
23,172
234,042 2%
234,042
54,000
817,020 5%
817,020
5,677
107,289 1%
107,289
5,251
325,560 1%
325,560
4,897
119,589 3%
119,589
76,178
2,231,937
76,178
18,369
320,545 -
320,545
2,140
2,000
34,921 8%
40,740 3%
2,277
398,483
34,921
40,740
2,277
380
182 1%
182
332
160 1%
160
200
1,152
349
60
-
-
-
-
9%
7%
6%
6%
-
45,645 7%
543
10,426 -
110
100
5,115 -
7,990 -
69,176
-
-
-
-
(Note 1)
〃
〃
〃
45,645
10,426
5,115
7,990
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
90
Name of
holder
Mactech
Category and
name of
security
Taichung International Golf Country
Club
Relationship
with security
issuer
-
HHB
CPO
CET
CIC
CEC
CPC
CEQ
HWALLAR OPTRONICS (Fuzhou)
CO., LTD.
Structured deposits–SPD Bank Yield
Plus Structured Deposit
Structured deposits–Bank of
Communications Yun Tong Cai Fu.
Structured Deposit.
Total
Structured deposits–Bank of
Communications Yun Tong Cai Fu,
Structured Deposit.
Structured deposits–Agricultural Bank
of China "HuiLiFeng" customization
RMB Structured Deposit
Structured deposits–The RMB "Open
On Schedule "Financial Product
Total
Structured deposits–SPD Bank Yield
Plus Structured Deposit
Structured deposits–Bank of
Communications Yun Tong Cai Fu.
Structured Deposit.
Structured deposits–The RMB "Open
On Schedule "Financial Product
Structured deposits–SPD Bank Yield
Plus Structured Deposit
Total
Structured deposits–Industrial Bank
Structured Deposit
Structured deposits–Bank of
Communications Yun Tong Cai Fu.
Structured Deposit.
Total
-
-
-
-
-
-
-
-
-
-
-
-
Account
name
Financial assets at fair value
through other
comprehensive
income-non-current
Financial assets at fair value
through profit or loss-non
current
Financial assets at fair value
through profit or
loss-current
〃
Financial assets at fair value
through profit or
loss-current
〃
〃
Financial assets at fair value
through profit or
loss-current
Financial assets at fair value
through profit or
loss-current
Financial assets at fair value
through profit or
loss-current
〃
Financial assets at fair value
through profit or
loss-current
〃
Shares/Unit
s
(thousands)
-
Ending balance
Carrying
value
Holding
percentage
(%)
Fair value
Note
7,980 -
7,980 (Note 1)
-
-
-
-
-
-
-
-
-
-
-
-
-
19%
-
〃
480,285 -
480,285
448,948 -
448,948
929,233
225,651 -
225,651
676,881 -
676,881
451,154 -
451,154
1,353,686
179,699
179,699
576,466 -
576,466
226,281 -
226,281
179,963 -
179,963
406,244
259,705
259,705
260,029
260,029
519,734
Note 1: The carrying value is the remaining amount after deducting accumulated impairment.
(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of
NT$300 million or 20% of the capital stock:
Beginning Balance
Purchases
Sales
Others
Ending Balance
(In Thousands of New Taiwan Dollars/CNY)
Name of
company
The
Company
BSH
Category
and name
of security
Chipbond
LC Future Center
(Hong Kong) Ltd.
Name of
counter-party
-
Hefei Zhi Ju
Sheng Bao Equity
Investment Co.,
Ltd.
Account
name
Financial
assets at
fair value
through
profit or
loss-curre
nt
Investmen
ts
accounted
for using
equity
method
Relationship
with the
company
-
Shares/ Units
(thousands)
Amount
13,542
763,771
Shares/ Units
(thousands)
-
Amount
-
Shares/ Units
(thousands)
8,949
Price
574,528
Cost
574,528
Gain (loss) on
disposal
-
Shares/ Units
(thousands) Amount
Shares/ Units
(thousands)
Amount
-
95,525
(Note 1)
4,593
284,768
-
147,000 4,742,832
-
-
147,000 7,384,102
(Note 3)
4,873,017
2,511,085
-
130,185
(Note 2)
-
-
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
91
Beginning Balance
Purchases
Sales
Others
Ending Balance
Name of
counter-party
Bank of China
Relationship
with the
company
Shares/ Units
(thousands)
-
Amount
-
Shares/ Units
(thousands)
-
Shares/ Units
(thousands)
-
Amount
543,072
(RMB$
119,000)
Price
325,989
(RMB$
69,448)
Cost
318,780
(RMB$
69,000)
7,209
(RMB$448)
(Note 2)
Gain (loss) on
disposal
Shares/ Units
(thousands) Amount
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
508,363
(RMB$
110,000)
699,581
(RMB$
153,000)
838,610
(RMB$
188,000)
702,920
(RMB$
158,000)
523,488
(RMB$
112,000)
953,248
(RMB$
214,000)
890,886
(RMB$
200,000)
578,442
(RMB$
130,000)
328,275
(RMB$
70,264)
328,930
(RMB$
70,000)
(655)
(RMB264)
(Note 2)
715,328
(RMB$
154,881)
706,643
(RMB$
153,000)
8,686
(RMB$1,881)
(Note 2)
276,248
(RMB$
60,595)
273,535
(RMB$
60,000)
2,713
(RMB$595)
(Note 2)
462,760
(RMB$
101,111)
443,503
(RMB$
100,000)
19,256
(RMB$1,111)
(Note 2)
528,448
(RMB$
113,061)
523,488
(RMB$
112,000)
4,960
(RMB$1,061)
(Note 2)
492,965
(RMB$
108,132)
474,652
(RMB$
107,000)
18,314
(RMB$
1,132)
460,437
(RMB$
100,997)
443,600
(RMB$
100,000)
16,838
(RMB$
997)
367,162
(RMB$
80,537)
354,807
(RMB$
80,000)
16,308
(RMB$
537)
-
-
-
-
-
-
-
-
-
1,989
(RMB$444)
(Note 1)
530
(RMB$118)
(Note 1)
-
3,958
(RMB$885)
(Note 1)
610
(RMB$137)
(Note 1)
-
1,689
(RMB$378)
(Note 1)
1,662
(RMB$371)
(Note 1)
2,016
(RMB$460)
(Note 1)
Shares/ Units
(thousands)
-
Amount
226,281
(RMB$
50,444)
-
-
-
-
-
-
-
-
179,963
(RMB$
40,118)
-
576,466
(RMB$
128,885)
260,029
(RMB$
58,137)
-
480,285
(RMB$
107,378)
448,948
(RMB$
100,371)
225,651
(RMB$
50,460)
Name of
company
CPC
CPC
CEC
CEC
CEQ
CPO
CPO
CPO
CET
Category
and name
of security
Structured
deposits–The
RMB "Open On
Schedule
"Financial
Product
Structured
deposits–SPD
Bank Yield Plus
Structured
Deposit
Structured
deposits–
Win-win Interest
Rate Structure
RMB Structural
Deposits.
Structured
deposits-Bank of
Communications
Yun Tong Cai
Fu. Structured
Deposit
Structured
deposits-Bank of
Communications
Yun Tong Cai
Fu. Structured
Deposit
Structured
deposits–
Agricultural Bank
of China "Golden
Key. Ben Li
Feng" RMB
finance products
Structured
deposits–SPD
Bank Yield Plus
Structured
Deposit
Structured
deposits–Bank of
Communications
Yun Tong Cai
Fu. Structured
Deposit.
Structured
deposits–Bank of
Communications
Yun Tong Cai
Fu. Structured
Deposit.
Account
name
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Shanghai Pudong
Development
-
Bank
China CITTIC
-
Bank
Bank of
Communications
Bank of
Communications
Agricultural Bank
of China
-
Shanghai Pudong
Development
Bank
Bank of
Communications
Bank of
Communications
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
92
Beginning Balance
Purchases
Sales
Others
Ending Balance
Name of
company
CET
CET
CET
CIC
Name of
counter-party
Shanghai Pudong
Development
Relationship
with the
company
-
Shares/ Units
(thousands)
-
Category
and name
of security
Structured
deposits–SPD
Bank Yield Plus
Structured
Deposit
Account
name
Financial
assets at
fair value
through
profit or
loss-curre
nt
Bank
Amount
-
Shares/ Units
(thousands)
-
Shares/ Units
(thousands)
-
Amount
310,456
(RMB$
70,000)
Price
323,446
(RMB$
70,948)
Cost
310,456
(RMB$
70,000)
Agricultural Bank
of China
Structured
deposits-Agricult
ural Bank of
China
"HuiLiFeng"
customization
RMB structured
Financial
assets at
fair value
through
profit or
loss-curre
nt
deposit
Bank of China
Structured
deposits-The
RMB "Open on
schedule"
Financial Product
Structured
deposits-SPD
Bank Yield Plus
Structured
Deposit
Financial
assets at
fair value
through
profit or
loss-curre
nt
Financial
assets at
fair value
through
profit or
loss-curre
nt
Shanghai Pudong
Development
Bank
-
-
-
-
-
-
-
-
-
-
-
-
670,906
(RMB$
150,000)
669,025
(RMB$
150,000)
357,794
(RMB$
80,000)
-
-
-
231,780
(RMB$
50,841)
221,754
(RMB$
50,000)
12,199
(RMB$
841)
184,258
(RMB$
40,417)
178,897
(RMB$
40,000)
5,361
(RMB$
417)
Gain (loss) on
disposal
Shares/ Units
(thousands) Amount
16,573
(RMB$
948)
Shares/ Units
(thousands)
-
Amount
-
-
-
-
676,881
(RMB$
151,365)
451,154
(RMB$
10,888)
179,699
(RMB$
40,184)
-
-
-
-
-
5,975
(RMB$|
1,365)
(Note 1)
3,883
(RMB$|
888)
(Note 1)
802
(RMB$|
184)
(Note 1)
Note 1: Others were valuation gains and losses and foreign exchange gains and losses.
Note 2: These were gains and losses on disposal and foreign exchange gains and losses.
Note 3: The related transactions costs were deducted from the selling price.
(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or
20% of the capital stock: None
(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20%
of the capital stock: None
(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of
NT$100 million or 20% of the capital stock:
Transaction details
(In Thousands of New Taiwan Dollars)
Transactions with terms
different from others
Notes/Accounts
receivable (payable)
Company
Name
Counter
party
Nature of
relationship
Purchase/
(Sale)
The
Company
CBN
The Company's
subsidiaries
Sale
Percentag
e of total
purchases/
(sales)
(0.2) %
Amount
(2,138,005)
Payment terms
90 days
CIH and its
subsidiaries
Subsidiaries wholly
owned by the
Company
Purchase
111,112,129
12.4 %
120 days
UCGI
〃
Sale
(238,388)
-
〃
Unit price
Payment Terms
Similar to
non-related
parties
There is no
significant
difference
Similar to
non-related
parties
There is no
significant
difference, and
adjustments will be
made based on
demand for funding
if necessary
Similar to
non-related
parties
There is no
significant
difference
Percentage
of total
notes/
accounts
receivable
(payable) Note
0.4 %
Ending
Balance
739,065
(49,114,165)
(31.6) %
89,586
0.1 %
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
93
Transaction details
Transactions with terms
different from others
Notes/Accounts
receivable (payable)
Percentage
of total
notes/
accounts
receivable
(payable) Note
(0.3) %
Ending
Balance
(504,568)
(758,108)
(0.5) %
99,370
0.1 %
Payment Terms
There is no
significant
difference, and
adjustments will be
made based on
demand for funding
if necessary
〃
Company
Name
The
Company
Counter
party
Just and its
subsidiaries
Nature of
relationship
Subsidiaries wholly
owned by the
Company
Purchase/
(Sale)
Purchase
Percentag
e of total
purchases/
(sales)
Amount
132,833
-
Payment terms
120 days
Unit price
Similar to
non-related
parties
〃
〃
〃
Sale
Sale
BCI and its
subsidiaries
Bizcom
Palcom
Webtek
Purchase
770,924
0.1 %
〃
〃
(121,850)
-
45~180 days
Similar to
non-related
parties
There is no
significant
difference
(114,565)
-
Net 60 days from delivery
〃
〃
23,209
-
%
Subsidiaries wholly
owned by the
Company
Purchase
108,584,993
12.1 % Net 60 days from purchase Markup based
on Webtek's
cost
There is no
significant
difference
(7,073,274)
(4.6) %
Forever
〃
Purchase
66,812,621
7.5 %
〃
Markup based
on Forever's
cost
〃
(20,843,862)
(13.4) %
Sale
(68,265,549)
(63.3) % Net 60 days from delivery According to
Just and its
subsidiaries
Webtek
With the same
ultimate parent
company
Forever
CIH and its
subsidiaries
〃
〃
Sale
(30,470,633)
(28.3) %
〃
Purchase
387,992
4.0 % Net 60 days from purchase
The Company Parent Company
Sale
(132,833)
(0.1) %
120 days
CIH and its
subsidiaries
The Company Parent Company
Sale
(113,457,780)
(77.1) %
〃
〃
Forever
With the same
ultimate parent
company
Just and its
subsidiaries
BCI and its
subsidiaries
CEB
〃
〃
〃
Sale
(29,538,636)
(20.1) % Net 60 days from delivery According to
markup pricing
Sale
(387,992)
(0.3) %
〃
〃
Purchase
30,045,061
27.3 %
120 days
Purchase
(145,211)
(0.1) %
〃
Similar to
non-related
parties
〃
(9,852,148)
(24.1) %
Similar to
non-related
parties
There is no
significant
difference
CBN
BCI and its
subsidiaries
The Company Parent Company
Purchase
2,126,356
57.0 % Net 90 days from delivery
-
The Company
〃
Sale
(783,081)
(2.3) %
120 days
According to
markup pricing
CIH and its
subsidiaries
With the same
ultimate parent
company
Sale
(30,045,061)
(89.3) %
CEB
〃
Sale
(1,892,352)
(5.6) %
〃
〃
〃
〃
There is no
significant
difference
Adjustments will be
made based on
demand for funding
if necessary
〃
There is no
significant
difference
markup pricing
Similar to
non-related
parties
Similar to
non-related
parties
Similar to
non-related
parties
Adjustments will be
made based on
demand for funding
〃
20,177,943
74.6 %
6,472,633
23.9 %
〃
(308,041)
(6.9) %
There is no
significant
difference, and
adjustments will be
made based on
demand for funding
if necessary
There is no
significant
difference, and
adjustments will be
made based on
demand for funding
if necessary
Adjustments will be
made based on
demand for funding
〃
504,568
1.5 %
49,114,165
45.4 %
8,931,246
8.3 %
308,041
0.3 %
45,759
-
(739,183)
(87.0) %
758,108
6.3 %
9,852,148
81.5 %
562,737
4.7 %
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
94
Transaction details
Transactions with terms
different from others
Notes/Accounts
receivable (payable)
Company
Name
Webtek
Counter
party
Nature of
relationship
The Company Parent Company
Purchase/
(Sale)
Sale
Percentag
e of total
purchases/
(sales)
(100.0) % Net 60 days from delivery
Payment terms
Amount
(108,584,993)
Etrade and its
subsidiaries
With the same
ultimate parent
company
Purchase
40,334,951
37.1 % Net 60 days from purchase
〃
Purchase
68,265,549
62.9 %
〃
Percentage
of total
notes/
accounts
receivable
(payable) Note
100.0 %
Ending
Balance
7,073,274
(4,489,304)
(18.2) %
Payment Terms
Adjustments will be
made based on
demand for funding
〃
〃
(20,177,943)
(81.8) %
Unit price
〃
〃
〃
CEB
Just and its
subsidiaries
BCI and its
subsidiaries
CIH and its
subsidiaries
Etrade
and its
subsidiaries
Webtek
With the same
ultimate parent
company
〃
With the same
ultimate parent
company
Purchase
1,903,878
17.3 %
120 days
Purchase
148,236
1.4 %
120 days
Similar to
non-related
parties
There is no
significant
difference
〃
〃
Sale
(40,334,951)
(100.0) % Net 60 days from delivery According to
markup pricing
Adjustments will be
made based on
demand for funding
Forever
The Company Parent Company
Sale
(66,812,621)
(85.6) %
〃
〃
CIH and its
subsidiaries
With the same
ultimate parent
company
Purchase
29,538,636
38.0 % Net 60 days from purchase Similar to
〃
Just and its
subsidiaries
The Company Parent company Purchase
Purchase
30,470,633
39.0 %
〃
241,529
72.8 %
120 days
The Company Parent company Purchase
114,565
100.0 % Net 120 days from delivery
The Company Parent company Purchase
121,850
(78.8) %
45~180 days
UCGI
Palcom
Bizcom
non-related
parties
〃
〃
〃
〃
THAC
TTI
TTI
THAC
CNC
THAC
CNC
THAC
With the same
ultimate parent
company
With the same
ultimate parent
company
〃
〃
Arcadyan Arcadyan
Germany
Arcadyan's
subsidiaries
Arcadyan
USA
Arcadyan
AU
Arcadyan
〃
CNC
〃
AcBel
Polytech
Arcadyan
Germany
Arcadyan
USA
Arcadyan
AU
Arcadyan
Arcadyan
Arcadyan
Arcadyan
CNC
〃
〃
The Company's
subsidiaries
Same Director of
Board as ultimate
parent company
The Company's
subsidiaries
〃
〃
Arcadyan's
subsidiaries
Sale
Sale
Sale
Sale
Sale
Sale
(383,948)
(100.0) % Net 60 days from the end of
the moth of delivery
According to
markup pricing
Purchase
383,948
4.0 %
〃
Purchase
164,591
3.0 % Net 90 days from the ended of
the month of delivery
(164,591)
(1.0) %
〃
(2,457,020)
(11.0) % Net 120 days from delivery
(496,199)
(2.0) % Net 60 days from the end of
the month of delivery
(1,329,743)
(6.0) % Net 45 days from the end of
the month of delivery
-
-
-
-
-
(11,249,751)
(100.0) % Net 45ays from the end of the
month of delivery
According to
markup pricing
Purchase
108,030
1.0 % Net 120 days from the end of
the month of delivery
Purchase
2,457,020
100.0 % Net 120 days from delivery
Purchase
496,199
100.0 % Net 60 days from the end of
the month of delivery
Purchase
1,329,743
100.0 % Net 45 days from the end of
the month of delivery
-
-
-
-
Purchase
11,249,751
35.0 % Net 45ays from the end of the
month of delivery
According to
markup pricing
〃
〃
〃
There is no
significant
difference
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
Note 1: The remaining balance is the net value of commissioned processing and sales of raw material.
(558,273)
(38.2) %
(45,479)
(3.1) %
4,489,304
100.0 %
20,843,862
91.0 %
(8,931,246)
(34.0) %
(6,472,633)
(25.0) %
(89,586)
(84.5) %
(23,209)
(100.0) %
(99,370)
(85.2) %
351,268
100.0 % (Note 1)
(351,268)
(28.0) % 〃
(64,808)
(59.0) % 〃
64,808
2.0 % 〃
805,017
14.0 %
104,031
2.0 %
727,600
13.0 %
3,404,030
98.0 % (Note 1)
(79,455)
(2.0) % (Note 1)
(805,017)
(100.0) %
(104,031)
(100.0) %
(727,600)
(100.0) %
(3,404,030)
(40.0) % (Note 1)
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
95
(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20%
of the capital stock:
(In Thousands of New Taiwan Dollars)
Name of
Nature of
Ending
Turnover
Overdue
company
Counter-party
relationship
balance
rate
Amounts
received in Allowance
subsequent
period
for bad
debts
-
Note
The Company CBN
Just and its
subsidiaries
Forever
〃
Webtek
The Company's
subsidiary
With the same
ultimate parent
company
With the same
ultimate parent
company
Parent company
739,065
1.98
6,472,633
6.32
20,177,943
6.18
504,568
0.27
Parent company
49,111,165
2.25
With the same
ultimate parent
With the same
ultimate parent
Parent company
With the same
ultimate parent
company
With the same
ultimate parent
company
Parent company
8,931,246
4.05
308,041
1.24
758,108
1.65
9,852,148
2.91
562,737
3.31
20,843,862
4.09
Parent company
7,073,274
15.01
Compal Electronic,
Inc.
Compal Electronic,
Inc.
Forever
Just and its
subsidiaries
Compal Electronic,
Inc.
CIH and its
subsidiaries
CEB
Compal Electronic,
Inc.
Compal Electronic,
Inc.
Webtek
With the same
ultimate parent
company
TTI
TTI
Arcadyan AU
Arcadyan USA
Arcadyan Germany Arcadyan's
subsidiary
Arcadyan's
subsidiary
Arcadyan's
subsidiary
Arcadyan's
subsidiary
Arcadyan's
subsidiary
Arcadyan's
subsidiary
The Company's
subsidiary
With the same
ultimate parent
company
With the same
ultimate parent
company
Just and its
subsidiaries
Speedlink
Arcadyan
THAC
4,489,304
7.71
805,017
3.08
104,031
4.32
727,600
3.54
172,161
(Note 5)
351,268
(Note 4)
207,119
(Note 5)
3,404,030
(Note 4)
242,069
(Note 4)
242,069
(Note 4)
0.11
10.14
12.43
2.46
-
-
Amount
-
Action
taken
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,528
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,528 Enhanced
the
collection
434,844
(Note 1)
6,277,163
(Note 1)
20,177,943
(Note 1)
- (Note 1)
30,770,107
(Note 1)
8,050,832
(Note 1)
-
(Note 1)
70,422
(Note 1)
6,788,977
(Note 1)
316,880
(Note 1)
14,413,628
(Note 1)
7,073,274
(Note 1)
4,489,304
(Note 1)
581,083
(Note 2)
11,688
(Note 2)
521,951
(Note 2)
169,496
(Note 2)
351,268
(Note 2)
207,119
(Note 2)
2,311,269
(Note 2)
174,680
(Note 3)
174,680
(Note 3)
CIH and its
subsidiaries
〃
BCI and its
subsidiaries
〃
〃
Forever
Webtek
Etrade and its
subsidiaries
Arcadyan
〃
〃
〃
THAC
TTI
CNC
CBN
Speedlink
Note 1: Balance as of March 15, 2019.
Note 2: Balance as of February 27, 2019.
Note 3: Balance as of March 8, 2019.
Note 4: Other receivables due to processing and sales of raw material.
Note 5: Other receivables due to purchasing on behalf of TTI.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
96
(ix) Trading in derivative instruments: Please refer to notes (6)(b) and (6)(d)
(b)
Information on investees:
The following is the information on investees for the years ended December 31, 2018 (excluding information on
investees in Mainland China):
(In Thousands of New Taiwan Dollars / USD/Shares)
Investor
Company
Investee
Company
Main
Original Investment
Amount
Location
Businesses and Products December 31,
2018
December 31,
2017
Shares
(thousands)
Ending Balance
Percentage
of
Ownership
Carrying
Value
Net income
(losses)
of investee
Share of
profits/losses of
investee
Note
The Company Bizcom
Milpitas, USA
Just
CIH
Panpal
Gempal
Hong Ji
Hong Jin
Auscom
FGH
HSI
CEP
Zhaopal
Yongpal
Kaipal
British Virgin
Islands
British Virgin
Islands
Taipei City
Warranty services and
marketing of LCD TV s
and notebook PCs
Manufacturing, sales and
maintenance of monitors and
LCD TVs, and investment
Sales and manufacturing
of notebook PCs and
investments
Investment
36,369
36,369
100 100%
440,755
8,082
1,480,509
1,480,509
48,010 100%
7,982,139
85,523
1,787,680
1,787,680
53,001 100%
34,939,825
1,081,596
5,171,837
5,171,837
500,000 100%
4,890,099
135,442
(Note 1)
Taipei City
Investment
900,036
900,036
90,000 100%
1,580,854
88,488
Kinpo Group
Taipei City
management
consultant
company (“Kinpo
Group
management”)
Ripal
Tainan City
Consultation, training
services, etc.
Manufacturing of electric
appliance and audiovisual
electric products
3,000
3,000
300 38%
4,538
371
(Note 1)
60,000
60,000
6,000 100%
51,798
20,946
Avalue Technology, Inc. New Taipei City Manufacturing, processing,
559,189
559,189
15,240 22%
595,790
244,100
and import and export
business of industrial
motherboards
Animal medication retail and
wholesale
Investment
Production and sales of PCB
boards
Investment
Taipei City
British Virgin
Islands
Taoyuan City
Taipei City
200,000
200,000
20,000 100%
164,648
(21,756)
34
34
1 100%
3,619,817
-
-
395,388
395,388
10,158 20%
331,092
366,180
1,260
1,260
126 23%
3,174
(203)
Cayman Islands
Investment
489,450
489,450
98 49%
652,532
617,951
Netherlands
Investment
197,463
197,463
6,427 100%
827,329
284,489
202,908
202,908
899 28%
10,371
141
149,547
149,547
3,739 33%
75,267
71,765
Unicore
CEH
Allied Circuit
Maxima Ventures I,
Inc. (“Maxima”)
Lipo Holding Co., Ltd.
(“Lipo”)
CPE
ATK
Hsinchu City
Crownpo Technology Inc.
(“Crownpo”)
Taipei City
Design, research &
development, and selling of
DVD, Combo, CD-RW
Drives
Manufacturing, processing,
and selling resistor chips,
networking chips, diodes,
multilayer ceramic capacitors,
semiconductor devices, and
selling electronic products
Investment
Arcadyan
Hsinchu City
Taipei City
1,000,000
1,000,000
100,000 100%
1,067,825
Taipei City
Investment
295,000
295,000
29,500 100%
Austin, TX USA R&D of notebook PC
101,747
101,747
3,000 100%
328,852
125,912
46,621
20,358
4,757
related products and
components
R&D, manufacturing and
sales of wireless network,
integrated household
electronics, and mobile office
products
Investment
1,325,132
1,325,132
41,305 21%
2,055,316
871,519
2,754,741
2,754,741
89,755 100%
4,545,364
275,557
Investment
1,346,814
1,346,814
42,700 100%
734,227
(35,898)
90,156
90,156
136 100%
15,589
(16,749)
British Virgin
Islands
British Virgin
Islands
Poland
Taipei City
Maintenance and
warranty services of
notebook PCs
Investment
Taipei City
Investment
1,188,500
1,188,500
118,850 100%
Taipei City
Investment
510,500
510,500
51,050 100%
1,358,000
1,358,000
135,800 100%
6,190
5,509
3,110
(183)
(184)
(185)
Lead-Honor
Taoyuan City
Optronics. Co.,
Ltd. (“Lead-Honor”)
Infinno Technology
Corporation
(“Infinno”)
Manufacturing of electric
appliance and audiovisual
electric products
42,000
42,000
2,772 42%
-
-
-
Hsinchu County Manufacturing of electronic
components, wholesale and
retail sale of precision
instruments and electronic
materials
109,837
109,837
5,650 27%
21,553
12
8,082
85,523
1,081,596
97,464
66,445
139
20,942
53,166
(20,162)
74,756
(9,552)
302,796
130,819
39
23,849
45,946
20,358
4,757
189,715
275,557
(35,898)
(21,694)
(183)
(184)
(185)
3
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
Investor
Company
Investee
Company
Main
Original Investment
Amount
Location
Businesses and Products December 31,
2018
December 31,
2017
Shares
(thousands)
Ending Balance
Percentage
of
Ownership
Carrying
Value
97
Net income
(losses)
of investee
Share of
profits/losses of
investee
Note
HengHao
Taipei City
Mactech
Taichung City
BCI
CBN
British Virgin
Islands
Hsinchu County
Rayonnant
Taipei City
CRH
Ascendant Private Equity
Investment Ltd.
(“APE”)
CORE
Etrade
Webtek
Forever
UCGI
Palcom
GLB
British Virgin
Islands
British Virgin
Islands
British Virgin
Islands
British Virgin
Islands
British Virgin
Islands
British Virgin
Islands
Taipei City
Taipei City
Manufacturing of PCs,
computer periphery
devices, and electronic
components
Manufacturing of
equipment and lighting,
retailing of equipment
and international trading
Investment
R&D and sales of
cable modem, digital set-up
box, and other communication
products
Manufacturing and sales
of PCs, computer
periphery devices, and
electronic components
Investment
5,329,757
5,329,757
63,815 100%
(118,482)
(737,747)
219,601
219,601
21,756 53%
246,787
76,500
2,636,051
2,636,051
90,820 100%
6,037,985
261,806
284,827
284,827
29,060 43%
782,491
184,370
295,000
295,000
29,500 100%
41,138
(51,684)
377,328
377,328
12,500 100%
107,301
(72,347)
Investment
943,922
943,922
31,253 35%
935,555
111,326
Investment
Investment
4,318,860
4,318,860
147,000 100%
7,625,407
2,604,284
1,532,029
1,532,029
46,900 65%
(298,023)
(225,609)
Selling of mobile phones
3,340
3,340
100 100%
583,463
(101,398)
Selling of mobile phones
1,575
1,575
50 100%
1,488,011
33
Manufacturing and retail sale
of computers and electronic
components
Selling of mobile phones
100,000
100,000
10,000 100%
(376,263)
(139,243)
100,000
100,000
10,000 100%
109,663
1,465
Shennona
Delaware. USA
of medical equipment
Medical care IOT business
14,598
-
2,500 100%
5,438
(24,820)
New Taipei City Manufacturing and wholesale
246,860
246,860
15,000 50%
260,934
46,429
(736,708)
39,053
261,806
87,802
(48,528)
(72,347)
38,655
2,604,284
(124,210)
(101,398)
33
(144,069)
1,465
23,218
(24,820)
4,198,330
Webtek
Etrade
Forever
GIA
British Virgin
Islands
British Virgin
Islands
Panpal
Arcadyan
Hsinchu City
Allied Circuit
Taoyuan City
Others
Gempal
Arcadyan
Hsinchu City
Allied Circuit
Taoyuan City
Others
Investment
763,125
457,875
25,000 35%
82,510,880
(165,051)
(225,609)
(US$25,000)
(US$15,000)
(US$(5,374))
(US$(7,482))
Selling of mobile phones
-
-
-
100%
-
-
Investment
gain(losses)
recognized by
Webtek
Investment
gain(losses)
recognized by
Forever
Telecommunication
equipment and apparatus
manufacturing, electronic
parts and components
manufacturing, restrained
telecom radio frequency
equipments and materials
import and manufacturing
Production and selling of PCB
boards
Telecommunication
equipment and apparatus
manufacturing, electronic
parts and components
manufacturing, restrained
telecom radio frequency
equipments and materials
import and manufacturing
Production and selling of PCB
boards
180,968
180,968
6,827 4%
387,911
871,519 Investment
gain(losses)
recognized by
Panpal
148,263
148,263
2,927 6%
95,407
366,180 〃
203,500
203,500
7,846 4%
588,641
469,719
871,519 Investment
gain(losses)
recognized by
Gempal
53,645
53,645
3,220 6%
104,948
366,180 〃
3,604
Just
CDH (HK)
Hong Kong
Investment
1,913,468
1,913,468
62,298 100%
5,615,616
75,505
(US$62,298)
(US$62,298)
(US$182,830)
(US$2,504)
Investment
283,960
283,960
9,245 100%
220,282
(22,263)
(US$9,245)
(US$9,245)
15,358
15,358
500 100%
(US$500)
(US$500)
(US$7,172)
(US$(738))
897,261
-
〃
(US$29,212)
(US$-)
30,715
30,715
1,000 100%
49,452
(577)
(US$1,610)
(US$(19))
CII
CII
CPI
AEI
MEL
MTL
Smart
British Virgin
Islands
British Virgin
Islands
U.S.A
U.S.A
U.S.A
Sales of monitors, LCD
TVs and related
components.
Sales and maintenance of
LCD TVs
Investment
Investment
British Virgin
Islands
Sales of electronic
products and related
components
(US$1,000)
(US$1,000)
252,907
252,907
(US$8,234)
(US$8,234)
31
(US$1)
(US$1)
31
(US$1)
(US$1)
31
31
-
-
100%
100%
1 100%
Investment
gain(losses)
recognized by Just
〃
Investment
gain(losses)
recognized by CII
〃
258,826
(16,489)
(US$8,427)
(US$(547))
(US$1)
31
-
(US$-)
〃
400
(11)
〃
(US$13)
(US$-)
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
98
Investor
Company
Investee
Company
Main
Original Investment
Amount
Location
Businesses and Products December 31,
2018
December 31,
2017
Shares
(thousands)
Ending Balance
Percentage
of
Ownership
Carrying
Value
Net income
(losses)
of investee
Share of
profits/losses of
investee
Note
ME Land
MTL
CMX
Mexico
Manufacturing, sales and
maintenance of LCD TVs
247,256
247,256
32,903 100%
258,826
(16,489)
(US$8,050)
(US$8,050)
(US$8,427)
(US$(547))
CIH
CIH (HK)
Hong Kong
Investment
2,297,559
2,297,559
74,803 100%
32,986,019
1,062,037
(US$74,803)
(US$74,803)
(US$1,073,938)
(US$35,223)
Investment
gain(losses)
recognized by
MEL and MTL
Investment
gain(losses)
recognized by
CIH
〃
Jenpal
CCM
PFG
FWT
Hong Ji
Arcadyan
British Virgin
Islands
British Virgin
Islands
British Virgin
Islands
British Virgin
Islands
Hsinchu City
Allied Circuit
Taoyuan City
Hong Jin
Arcadyan
Hsinchu City
Arcadyan
Arcadyan Holding
British Virgin
Islands
Arcadyan USA
U.S.A
Arcadyan Germany
Germany
Arcadyan Korea
Korea
Arcadyan do Brasil Ltda Brazil
Zhi-Pal
TTI
Taipei City
Taipei City
AcBel Telecom
Taipei City
Arcadyan UK
UK
Arcadyan AU
Australia
CBN
Hsinchu County
Golden Smart Home
Technology Corp.
Taipei City
Arcadyan Brasil
Brazil
Investment
Investment
Sales of notebook PCs
and related components
Investment
Telecommunication
equipment and apparatus
manufacturing, electronic
parts and components
manufacturing, restrained
telecom radio frequency
equipments and materials
import and manufacturing
Production and selling of PCB
boards
Telecommunication
equipment and apparatus
manufacturing, electronic
parts and components
manufacturing, restrained
telecom radio frequency
equipments and materials
import and manufacturing
Investment
Sales of wireless network
products
Technology support and sales
of wireless network
products
Sales of wireless network
products
Sales of wireless network
products
Investment
R&D and sales of
household digital
products
Investment
Technical support of
wireless network
products
Sales of wireless network
products
Sales of communication and
electronic components
Selling of hardware and
software integration of
high-tech systems
Sales of wireless network
products
225,755
225,755
7,350 100%
105,048
2,521
(US$7,350)
(US$7,350)
156,647
156,647
5,100 51%
(US$5,100)
(US$5,100)
31
31
1 100%
(US$1)
(US$1)
(US$3,420)
(US$84)
56,804
(2,521)
〃
(US$1,849)
(US$(84))
421,800
-
〃
(US$13,733)
(US$-)
457,654
457,654
14,900 100%
457,964
(US$14,900)
(US$14,900)
(US$14,910)
(US$3)
79
〃
203,500
203,500
7,846 4%
469,713
871,519 Investment
gain(losses)
recognized by
Hong Ji
12,274
12,274
1,041 2%
27,977
366,180 〃
112,569
112,569
4,340 2%
239,239
1,240,526
962,291
32,780 100%
1,221,252
871,519 Investment
gain(losses)
recognized by
Hong Jin
59,092 Investment
gain(losses)
recognized by
Arcadyan
23,055
23,055
1 100%
51,226
4,547 〃
1,125
1,125
0.5 100%
64,388
11,439 〃
2,879
2,879
20 100%
7,789
3,116 〃
-
-
-
-%
-
48,000
48,000
34,980 100%
308,726
306,925
25,028 61%
450,366
583,890
-
〃
40,042 〃
45,883 〃
23,000
23,000
4,494 51%
1,988
1,988
50 100%
33,952
2,683
(18,989) 〃
317 〃
1,161
1,161
50 100%
6,200
5,296 〃
11,925
11,925
533 1%
14,460
184,370 〃
15,692
15,692
1,229 16%
-
(30,339) 〃
81,593
81,593
968 100%
14,381
(25,526) 〃
Arcadyan and
Zhi-pal
Arcadyan
Holding
Sinoprime
British Virgin
Islands
Investment
277,971
1,536
9,050 100%
278,800
(US$50)
(US$50)
(US$9,077)
(US$29)
874
Arch Holding
British Virgin
Islands
Investment
338,203
338,203
(US$11,011)
(US$11,011)
35 100%
834,649
52,580
(US$27,174)
(US$1,744)
TTI
Quest
Samoa
Investment
36,858
36,858
1,200 100%
65,774
(US$1,200)
(US$1,200)
TTJC
Japan
Sales of household digital
electronic products
1,341
1,341
-
100%
765
Quest
Exquisite
Samoa
Investment
35,937
35,937
1,170 100%
72,272
(US$1,170)
(US$1,170)
(US$2,353)
(US$861)
Investment
gain(losses)
recognized by
Arcadyan
Holding
〃
25,977 Investment
gain(losses)
recognized by
TTI
(610) 〃
25,958
Investment
gain(losses)
recognized by
Quest
AcBel Telecom
Leading Images
British Virgin
Islands
Investment
1,536
1,536
50 100%
9,931
(US$50)
(US$50)
Great Arch
British Virgin
Islands
Sales of wireless network
products
-
1,536
-
-
-
(US$-)
(US$50)
(18,420) Investment
gain(losses)
recognized by
AcBel Telecom
〃
(6)
Note 2
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
99
Investor
Company
Investee
Company
Main
Original Investment
Amount
Location
Businesses and Products December 31,
2018
December 31,
2017
Shares
(thousands)
Ending Balance
Percentage
of
Ownership
Carrying
Value
Net income
(losses)
of investee
Share of
profits/losses of
investee
Note
Leading Images Astoria GmbH
Germany
Sales of wireless network
products
880
880
25 100%
9,522
(EUR25)
(EUR25)
(US$310)
(US$(2))
(60)
Investment
gain(losses)
recognized by
Leading Images
Zhi-pal
CBN
Hsinchu county
Produces and sales of
communication and
electronic components
36,272
38,032
13,140 20%
356,317
184,370 Investment
gain(losses)
recognized by
Zhi-pal
Investment
921,450
921,450
30,000 100%
455,400
(38,498)
(US$30,000)
(US$30,000)
(US$14,827)
(US$(1,277))
Investment
gain(losses)
recognized by H
SI
〃
(132,974) Investment
gain(losses)
recognized by
Rayonnant
〃
-
(132,974)
Investment
gain(losses)
recognized by
CRH
HSI
IUE
Goal
CVC
IUE
British Virgin
Islands
British Virgin
Islands
Vietnam
Goal
CDM
Vietnam
Investment
390,081
390,081
12,700 100%
306,789
(US$12,700)
(US$12,700)
(US$9,988)
(US$86)
2,600
R&D, manufacturing,
sales, and maintenance of
notebook PCs, computer
monitors, LCD TVs and
electronic components
Construction of and
investment in
infrastructure in Ba-Thien
industrial district of Vietnam
921,450
921,450
30,000 100%
480,087
(38,498)
(US$30,000)
(US$30,000)
(US$15,630)
(US$(1,277))
Investment
gain(losses)
recognized by
IUE
390,081
390,081
12,700 100%
365,367
(US$12,700)
(US$12,700)
(US$11,895)
(US$86)
2,600
Investment
gain(losses)
recognized by
Goal
Rayonnant
APH
British Virgin
Islands
Investment
257,454
257,454
8,651 41%
68,240
Forming Co., Ltd.
Taoyuan City
CRH
APH
HHT
HHA
HHA
HHB
British Virgin
Islands
British Virgin
Islands
British Virgin
Islands
R&D and manufacturing
of electronic materials
Investment
27,300
27,300
1,820 21%
-
383,938
383,938
12,500 59%
107,300
(US$12,500)
(US$12,500)
(US$3,493)
(US$(4,410))
Investment
1,429,235
1,429,235
46,882 100%
251,850
(229,806) Investment
gain(losses)
recognized by
HHT
Investment
1,439,982
1,439,982
46,882 100%
269,419
(229,820)
(US$46,882)
(US$46,882)
(US$8,772)
(US$(7,622))
Investment
gain(losses)
recognized by
HHA
HHB
HengHao Trading Co., Ltd. British Virgin
Islands
Marketing and
international trade
307
307
10 100%
401
(US$10)
(US$10)
(US$13)
(US$2)
CBN
Speedlink
British Virgin
Islands
Import and export
business
1,514
1,514
50 100%
2,015
49
Investment
gain(losses)
recognized by
HHB
267 Investment
gain(losses)
recognized by
CBN
6,842
6,842
20 100%
6,919
(95)
〃
CBNB
Belgium
FGH
Wah Yuen Technology
Holding Ltd. and its
subsidiaries
Mauritius
The import and export
business of broad band
network products and related
components, as well as
technical support and advisory
services
Investment
CORE
BSH
British Virgin
Islands
Investment
2,756,840
2,756,840
95,862 37%
4,615,937
275,379
(US$89,755)
(US$89,755)
(US$150,283)
(US$9,133)
4,515,105
(US$147,000)
4,515,105
(US$147,000)
147,000 100%
7,625,407
2,604,284
(US$248,263)
(US$86,372)
BSH
LCFC (HK)
Hong Kong
Investment and trading
-
4,515,105
(US$147,000)
-
-
-
201,793
(US$6,693)
APH
PEL
British Virgin
Islands
Investment
96,783
96,783
3,151 100%
53,590
(11,161)
(US$3,151)
(US$3,151)
(US$1,745)
(US$(370))
Rayonnant (HK)
Hong Kong
Investment
552,870
552,870
18,000 100%
113,797
(121,813)
Investment
2,482,386
2,482,386
80,820 100%
3,787,256
112,153
(US$80,820)
(US$80,820)
(US$123,303)
(US3,720)
(US$18,000)
(US$18,000)
(US$3,705)
(US$(4,040))
BCI
CMI
PRI
GLB
Rapha
British Virgin
Islands
British Virgin
Islands
New Taipei City
Investment
307,150
307,150
10,000 100%
2,250,729
149,653
(US$10,000)
(US$10,000)
(US$73,278)
(US$4,963)
Detectors and test strip
6,500
6,500
1,275 100%
460
Unicore
Raycore
Taipei
Animal medication retail and
wholesale
25,500
25,500
1,275 51%
22,307
Note 1: The carrying value had been deducted $559, 812 and $321, 435 of the Company’s stock held by Panpal and Gempal, respectively.
Note 2: It was liquidated in April, 2018.
Investment
gain(losses)
recognized by
FGH
Investment
gain(losses)
recognized by
CORE
Investment
gain(losses)
recognized by
BSH
Investment
gain(losses)
recognized by
APH
〃
Investment
gain(losses)
recognized by
BCI
〃
(98) Investment
gain(losses)
recognized by
GLB
(6,024) Investment
gain(losses)
recognized by
Unicore.
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
100
(c)
Information on investment in Mainland China:
(i) The names of investees in Mainland China, the main businesses and products, and other
information:
(In Thousands of New Taiwan Dollars / CNY/USD)
Name of
investee
Main
businesses
and
products
Total amount
of paid-in capital
Method
of
investment
January 1, 2017 Outflow
Inflow
investment
from Taiwan as of
December 31, 2018
(losses)
of the investee
Percentage
of
ownership
Investment
income (losses)
Book
value
Investment flows
Accumulated
outflow of
Net
income
Accumulated
outflow of
investment from
Taiwan as of
CPC
CDT
CET
CSD
BT
CGS
LIZ
Electronics
(Kunshan) Co.,
Ltd.
LIZ
Electronics
(Nantong) Co.,
Ltd.
Zheng Ying
Electronics
(Chongqing)
Co., Ltd.
CIC
CPO
CIT
LCFC (Hefei)
Electronics
Technology
Co., Ltd.
CST
CIN
Manufacturing and sales
of monitors
Manufacturing and sales
of notebook PCs,
mobile phones, and
Digital products
Manufacturing of
notebook PCs
Manufacturing of
notebook PCs
Maintenance and
warranty service of
notebook PCs
Production and
processing
chip-resistors, ceramic
capacitors, diodes, and
other latest electronic
components and related
precision electronic
equipment; selling
self-produced products
Research &
development, and
manufacturing chip
components (chip
resistors, ceramic chip
diode； selling
self-produced products
and providing
after-sales service.
Performing wholesale
and trading business of
electronic components,
semiconductors, special
materials for electronic
components, and spare
parts
Research, manufacture
and sales of
communication devices,
mobile phones,
electronic computer,
smart watch, and
provide related
technology service
Research &
development, and
manufacturing latest
electronic components,
precision cavity mold,
design and
manufacturing for
standard parts for
molds, and selling
self- produced products
Manufacturing of
notebook PCs
Manufacturing and sales
of LCD TVs
Manufacturing of
notebook PCs
Manufacturing and
selling of personal
computers and related
components, and
providing related
maintenance and
after-sales service
International trade and
distribution of
computers and
electronic components
Software and hardware
R&D of computers,
mobile phones and
electronic components
1,136,455
(US$37,000)
614,300
(US$20,000)
(Note 1)
(Note 2)
1,136,455
(US$37,000)
614,300
(US$20,000)
368,580
(US$12,000)
268,363
(RMB$60,000)
30,715
(US$1,000)
8,945
(RMB2,000)
(Note 2)
368,580
(US$12,000)
(Note 2)
(Note 3)
(Note 2)
30,715
(US$1,000)
(Note 2)
(Note 3)
-
-
-
-
-
-
-
-
-
-
-
-
1,136,455
(US$37,000)
614,300
(US$20,000)
(272,595)
(US$(9,041))
(69,038)
(US$(2,290))
368,580
(US$12,000)
-
30,715
(US$1,000)
116,086
(US$3,850)
(201,551)
(RMB(44,210))
(105,760)
(US$(3,508))
-
(14,673)
(RMB(3,218))
100 %
100 %
100 %
100 %
100 %
100 %
(272,595)
(US$(9,041))
(69,038)
(US$(2,290))
2,048,874
(US$66,706)
196,193
(US$6,388)
116,086
(US$3,850)
(201,551)
(RMB(44,210))
(105,760)
(US$(3,508))
4,832,564
(US$157,336)
(252,598)
(RMB(56,475)
(192,357)
(US$(6,263))
(14,673)
(RMB(3,218))
(37,432)
(RMB(8,369))
982,880
(US$32,000)
(Note 1)
409,431
(US$13,330)
-
-
409,431
(US$13,330)
667,227
(US$22,129)
43 %
288,109
(US$9,555)
597,867
(US$19,465)
614,300
(US$20,000)
(Note 1)
45,151
(US$1,470)
-
-
45,151
(US$1,470)
225,064
(US$7,464)
48 %
107,243
(US$3,557)
441,006
(US14,358)
70,562
(RMB15,776)
(Note 2)
(Note 3)
-
-
-
(27,269)
(RMB(5,982))
51 %
(13,907)
(RMB(3,051))
(73,016)
(RMB(16,325))
368,580
(US$12,000)
371,652
(US$12,100)
737,160
(US$24,000)
8,139,475
(US$265,000)
(Note 2)
(Note 1)
(Note 2)
(Note 1)
368,580
(US$12,000)
371,652
(US$12,100)
737,160
(US$24,000)
3,988,343
(US$129,850)
43,001
(US$1,400)
(Note 2)
43,001
(US$1,400)
61,430
(US$2,000)
(Note 2)
61,430
(US$2,000)
-
-
-
-
-
-
-
-
-
-
-
-
368,580
(US$12,000)
371,652
(US$12,100)
737,160
(US$24,000)
3,988,343
(US$129,850)
268,390
(US$8,901)
94,641
(US$3,139)
769,672
(US$25,527)
201,793
(US$6,693)
100 %
100 %
100 %
268,390
(US$8,901)
94,641
(US$3,139)
769,672
(US$25,527)
7,471,213
(US$243,243)
2,796,954
(US$91,061)
20,445,466
(US$665,651)
-
-
-
43,001
(US$1,400)
(3,174)
(US$(105))
100 %
(3,174)
(US$(105))
49,419
(US$1,609)
61,430
(US$2,000)
(29)
(US$(1))
100 %
(29)
(US$(1))
755
(US$25)
Accumu-
lated
remittance of
earnings in
current period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
COMPAL ELECTRONICS, INC.
Notes to Consolidated Financial Statements
Investment flows
Accumulated
outflow of
Net
income
Accumulated
outflow of
investment from
Taiwan as of
Total amount
of paid-in capital
307,150
(US$10,000)
Method
of
investment
(Note 2)
January 1, 2017 Outflow
156,647
(US$5,100)
-
Inflow
-
investment
from Taiwan as of
December 31, 2018
156,647
(US$5,100)
(losses)
of the investee
1,440
(US$48)
Percentage
of
ownership
51 %
Investment
income (losses)
734
(US$24)
Book
value
59,231
(US$1,928)
101
Accumu-
lated
remittance of
earnings in
current period
-
Main
businesses
and
products
Research &
development, and
manufacturing latest
electronic components,
precision cavity mold,
design and
manufacturing for
standard parts for
molds, and selling
self-produced products"
Investment and
consulting services
Manufacturing and sales
of LCD TVs
Outward investment and
consulting services
R&D and
manufacturing of
notebook PCs, tablet
PCs, digital products,
network switches,
wireless AP, and
automobile electronic
products
Corporate management
consulting, financial and
tax consulting,
investment consulting,
and investment
management consulting
services
R&D, manufacturing
and sales of notebook
PCs and related
components. Also
provides related
maintenance and
warranty services
Manufacturing and
selling of magnesium
alloy injection molding
Name of
investee
Sheng Bao
Precision
Electronics
(Taicang) Co.,
Ltd.
CIJ
CDE
CIS
CEC
CMC
CEQ
Compal
Precision
Module
(Jiangsu) Co.,
Ltd.
Changbao
Electronic
Technology
(Chongqing)
Co., Ltd.
Rayonnant
(Taicang)
479,154
(US$15,600)
460,725
(US$15,000)
2,482,386
(US$80,820)
2,457,200
(US$80,000)
(Note 2)
(Note 2)
(Note 1)
(Note 2)
479,154
(US$15,600)
(Note 3)
2,482,386
(US$80,820)
(Note 3)
-
-
-
-
24,572
(US$800)
(Note 2)
(Note 3)
-
307,150
(US$10,000)
(Note 1)
307,150
(US$10,000)
12,593,150
(US$410,000)
(Note 2)
2,537,888
(US$82,627)
Production and
marketing of
magnesium alloy
molding
Manufacturing and sales
of aluminum alloy and
magnesium alloy
products
1,842,900
(US$60,000)
(Note 2)
351,871
(US$11,456)
552,870
(US$18,000)
(Note 2)
383,938
(US$12,500)
CCI Nanjing Manufacturing and
processing of mobile
phones and tablet PCs
Manufacturing and
processing of mobile
phones and tablet PCs
Manufacturing and
processing of mobile
phones and tablet PCs
R&D and
manufacturing of
electronic
communication
equipment
CDCN
CWCN
Hanhelt
Arcadyan
675,730
(US$22,000)
(Note 1)
675,730
(US$22,000)
178,147
(US$5,800)
(Note 1)
1,197,885
(Note 1)
(US$39,000)
61,430
(Note 1)
(US$2,000)
178,147
(US$5,800)
583,585
(US$19,000)
61,430
(US$2,000)
CNC
SVA Arcadyan R&D and sales of
wireless network
products
Manufacturing and
wireless network
products
Manufacturing of
household electronics
products
THAC
HengHao
Production of touch
panels and related
components
HengHao
Optoelectronic
Technology
(Kunshan) Co.,
Ltd. (“Heng
Hao
Kunshan”)
Lucom Display
Technology
(Kunshan)
Limited
(“Lucom”)
Manufacturing of
notebook PCs and
related modules
402,367
(US$13,100)
(Note 1)
382,402
(US$12,450)
(Note 1)
102,895
(US$3,350)
(Notes 1、10)
565,770
(US$18,420)
(Note 7)
338,203
(US$11,011)
(Note 8)
35,322
(US$1,150)
1,228,600
(US$40,000)
(Note 1)
1,222,549
(US$39,803)
460,725
(US$15,000)
(Note 2)
199,617
(US$6,499)
(Note 12)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
479,154
(US$15,600)
-
2,482,386
(US$80,820)
-
-
339,351
(US$11,255)
335,680
(US$11,133)
112,153
(US$3,720)
112,135
(US$3,719)
100 %
100 %
100 %
100 %
339,351
(US$11,255)
335,680
(US$11,133)
112,153
(US$3,720)
112,135
(US$3,719)
952,554
(US$31,013)
923,056
(US$30,052)
3,787,256
(US$123,303)
3,756,356
(US$122,297)
99
(US$3)
100 %
99
(US$3)
24,398
(US$794)
307,150
(US$10,000)
149,653
(US$4,963)
100 %
149,653
(US$4,963)
2,250,729
(US$73,278)
2,537,888
(US$82,627)
791,080
(US$26,237)
37 %
289,693
(US$9,608)
5,684,301
(US$185,066)
351,871
(US$11,456)
110,851
(US$3,676)
37 %
40,594
(US$1,346)
1,019,634
(US$33,197)
383,938
(US$12,500)
(121,811)
(US$(4,040))
100 %
(121,811)
(US$(4,040))
114,396
(US3,724)
675,730
(US$22,000)
(102,215)
(US$(3,390))
178,147
(US$5,800)
754
(US$25)
583,585
(US$19,000)
(210,490)
(US$(6,981))
61,430
(US$2,000)
30
(US$1)
565,770
(US$18,420)
7,175
(US$238)
338,203
(US$11,011)
52,580
(US$1,744)
35,322
(US$1,150)
25,958
(US$861)
100 %
100 %
100 %
100 %
100 %
100 %
100 %
(102,215)
(US$(3,390))
(1,026,526)
(US$(33,421))
754
(US$25)
85,388
(US$2,780)
(210,490)
(US$(6,981))
434,617
(US$14,150)
30
(US$1)
3,133
(US$102)
7,175
(US$238)
126,607
(US$4,122)
52,580
(US$1,744)
834,649
(US$27,174)
25,958
(US$861)
71,750
(US$2,336)
1,222,549
(US$39,803)
(230,717)
(US$(7,652))
100 %
(230,717)
(US$(7,652))
116,874
(US$3,805)
199,617
(US$6,499)
849
(US$28)
100 %
849
(US$28)
134,882
(US$4,391)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
-
-
-
-
-
-
-
-
-
-
-
-
-
(ii) Limitation on investment in Mainland China:
Accumulated Investment in
Mainland China as of
December 31, 2018
16,725,454 (USD 544,537)
(Note 5)
Investment Amounts
Authorized by Investment
Commission of Ministry of
Economic Affairs
23,069,606 (USD 751,086)
Limitation on
investment in
Mainland China by
Investment
Commission of
Ministry of Economic
Affairs
(Note 6)
939,303 (USD 30,581)
939,303 (USD 30,581)
1,439,674 (USD 46,872)
1,439,674 (USD 46,872)
5,439,686
365,077
Names of
Company
The Company
Arcadyan
HengHao
Note 1: Indirectly investment in Mainland China through companies registered in the third region.
Note 2: Indirectly investment in Mainland China through an existing company registered in the third region.
Note 3: Investees held by Kunshan Botai Electronics Co., Ltd. (“BT”), Compal Investment (Jiansu) Co., Ltd. (“CIJ”), Compal Electronic
(Sichuan) Co., Ltd. (“CIS”), and Compal Electronics (China) Co., Ltd. (“CPC”) through their own funds.
Note 4: The investment income (loss) was determined based on the financial report audited by CPA.
Note 5: Including the investment amount of sold or dissolved companies, including Beijing Compower Xuntong Electronic Technology Co., Ltd,
VAP Optoelectronics (NanJing) Corp., Flextronics Technology (Shanghai) Ltd., Lucom and the increased investment amount form merging
with Compal Communication Co., Ltd.
Note 6: As the Company has obtained the certificate of being qualified for operating headquarters, issued by Industrial Development Bureau, MOEA,
the upper limit on investment in mainland China is not applicable.
Note 7: Arcadyan paid US$18,420 thousands and acquired 100% shares of SVA Arcadyan from Accton Asia through Arcadyan Holding in 2010.
Note 8: Arcadyan paid US$8,561 thousands and acquired 100% shares of CNC from Just through Arcadyan Holding in 2007.
Note 9: SVA Arcadyan decreased its capital amounting to US$15,000 thousands to offset accumulated losses in March 2009.
Note 10: Arcadyan’s subsidiary, TTI, obtained the control over THAC with US$1,150 thousands on February 28, 2013 (the date of stock
transferring).
Note 11: The amounts in New Taiwan Dollars were translated at the exchange rates at the balance sheet date or the average exchange rate.
Note 12: The Company had an accumulated investment amounting to US$7,350 thousands in the previous years. In the first half of 2014, HengHao
paid the Company and LG US$3,184 thousands and US$3,315 thousands, respectively, for organization restructure, to obtain 100%
ownership of Lucom.
(iii) Significant transactions:
For the year ended December 31, 2018, the significant inter-company transactions with the
subsidiary in Mainland China, which were eliminated in the preparation of consolidated
financial statements, are disclosed in “Information on significant transactions”.
(14) Segment information:
Please refer to the consolidated financial report of 2018.
103
COMPAL ELECTRONICS, INC.
STATEMENT OF CASH AND CASH EQUIVALENTS
December 31, 2018
(Expressed in thousands of New Taiwan Dollars;
in dollars of Foreign Currency)
Item
Cash on hand
Checking account and
demand deposits
TWD
Description
Foreign currency (US$126,497,482 and others)
Time deposits
TWD(Maturity date: 2019.1.24~2019.2.1)
Foreign currency (US$458,000,000, Maturity date: 2019.1.2~
2019.2.11)
(CNY$27,000,000, Maturity date: 2019.1.7~
2019.5.28)
Cash equivalents:
Bonds purchased
under resale
agreements
Total
TWD(Maturity date: 2019.1.2~2019.1.11)
$
Amount
1,596
77,468
3,895,090
3,972,558
1,421,000
14,067,470
120,744
15,609,214
863,010
$
20,446,378
Note: The exchange rate is 30.715 New Taiwan dollars for 1 US dollar; ; 4.472 New Taiwan dollars for 1 CNY
dollar.
104
COMPAL ELECTRONICS, INC.
STAEMENTS OF NOTES AND ACCOUNTS RECEIVABLE
December 31, 2018
(Expressed in thousands of New Taiwan Dollars)
Item
Description
Sales of non-related-parties
Amount
113,012,264
$
D Company
A Company
E Company
G Company
Others (Note)
〃
〃
〃
〃
20,037,143
19,237,162
13,033,195
27,895,390
193,215,154
(3,718,560)
$
189,496,594
Less: allowance for uncollectible accounts
Notes and accounts receivable, net
Note: The amount of individual client included in others does not exceed 5% of the account balance.
STATEMENTS OF INVENTORIES
Item
Finished goods
Work in progress
Raw materials
Total
Cost
18,779,873
$
Net Realizable
Value
18,792,754
44,008
44,008
32,693,278
32,722,458
$
51,517,159
51,559,220
COMPAL ELECTRONICS, INC.
STATEMENT OF INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
For the year ended December 31, 2018
(Expressed in thousands of New Taiwan Dollars; thousands of shares)
Beginning Balance
Increase (Note 1)
Decrease (Note 2)
Ending Balance (including impairment loss)
105
Share of profit
recognized
Number of
shares
Amount (not including
exchange differences
on transaction of
foreign financial
statements
Exchange differences
on transaction of
foreign financial
statements
Ending Balance
(including exchange
differences on transaction
of foreign statements
Investee Company
Number of shares
Amount (not including
exchange differences on
transaction of foreign
financial statements
Auscom
Panpal
Just
CIH
CEH
Gempal
Hong Ji
Hong Jin
Maxima Ventures l, Inc.
ATK
Allied Circuit
Bizcom
LIPO
Crownpo
Arcadyan
FGH
HSI
Zhaopal
Yongpal
Kaipal
Lead-Honor Optronics Co., Ltd
CBN
Kinpo
Rayonnant Technology
CRH
HengHao
Infinno Technology Corp.
CEP
BCI
APE
CORE
Unicore
Ripal
CPE
Avalue
Etrade
Webtek
Forever
UCGI
Palcom
Mactech
GLB
Shennona Corp.
3,000 $
500,000
48,010
53,001
1
90,000
100,000
29,500
126
899
10,158
100
98
3,739
41,305
89,755
42,700
135,800
118,850
51,050
2,772
29,060
300
29,500
12,500
131,499
5,650
136
90,820
31,253
147,000
20,000
6,000
6,427
15,240
46,900
100
50
10,000
10,000
21,756
15,000
-
Exchange differences on transaction of foreign
financial statements
Less: Treasury shares held by subsidiaries
Unrealized profits or losses
Plus: Deduction of other receivable－related parties
Plus: Credit balance of investment in equity method
Total
$
130,833
5,922,985
8,166,943
34,397,748
3,906,656
1,902,233
1,060,974
325,587
14,513
10,335
312,315
446,597
374,707
53,146
2,001,001
4,651,687
773,126
6,373
5,693
3,295
(3)
738,962
4,399
92,292
177,226
636,151
21,550
41,669
5,595,205
1,013,881
4,790,820
184,810
30,856
708,937
586,333
(292,106)
1,033,727
1,567,212
(232,194)
116,479
226,825
237,716
81,747,494
(3,609,730)
(881,247)
(6,753)
77,249,764
232,194
437,912
77,919,870
-
Number of shares
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,500
Amount
-
436,242
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,779
201
113
36
1,072
103
7,821
308
247,239
2,665
29,558
748,137
Number of
shares
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
67,684
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Amount
-
514,720
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
71,193
36,368
15,589
55,893
24
126,655
52,189
126,447
40,173
247,240
8,281
21,756
-
-
1,316,528
4,757
97,464
85,523
1,081,596
-
66,445
45,946
20,358
(9,552)
39
74,756
8,082
302,796
23,849
189,715
275,557
(35,898)
(183)
(184)
(185)
-
87,802
139
(48,528)
(72,347)
(736,708)
3
(21,694)
261,806
38,655
2,604,284
(20,162)
20,942
130,819
53,166
(124,210)
(101,398)
33
(144,069)
1,465
39,053
23,218
(24,820)
4,198,330
1,624,424
-
2,344
2,374,905
-
-
-
1,316,528
-
-
-
4,198,330
3,000
500,000
48,010
53,001
1
90,000
100,000
29,500
126
899
10,158
100
98
3,739
41,305
89,755
42,700
135,800
118,850
51,050
2,772
29,060
300
29,500
12,500
63,815
5,650
136
90,820
31,253
147,000
20,000
6,000
6,427
15,240
46,900
100
50
10,000
10,000
21,756
15,000
2,500
135,590
5,941,971
8,252,466
35,479,344
3,906,656
1,920,264
1,070,753
330,469
4,961
10,374
331,178
454,679
677,539
76,971
2,065,133
4,927,347
737,228
6,190
5,509
3,110
(3)
782,396
4,538
43,764
104,879
(100,557)
21,553
19,975
5,857,011
926,089
7,395,104
164,648
51,798
839,756
599,634
(169,077)
685,089
1,567,245
(376,263)
109,663
246,787
260,934
4,738
85,377,433
(1,985,306)
(881,247)
(4,409)
82,506,471
(9,678)
(492,060)
(270,327)
(539,519)
(286,839)
(17,975)
(2,928)
(1,617)
(1,787)
(3)
(86)
(13,924)
(25,007)
(1,704)
(9,817)
(381,983)
(3,001)
3
95
(2,626)
2,422
(17,925)
(4,386)
180,974
9,466
230,303
(12,427)
(3,844)
(128,946)
(101,626)
(79,234)
700
(1,985,306)
-
-
-
-
-
-
-
-
-
-
-
125,912
5,449,911
7,982,139
34,939,825
3,619,817
1,902,289
1,067,825
328,852
3,174
10,371
331,092
440,755
652,532
75,267
2,055,316
4,545,364
734,227
6,190
5,509
3,110
782,491
4,538
41,138
107,301
(118,482)
21,553
15,589
6,037,985
935,555
7,625,407
164,648
51,798
827,329
595,790
(298,023)
583,463
1,488,011
(376,263)
109,663
246,787
260,934
5,438
83,392,127
(881,247)
(4,409)
82,506,471
494,744
298,023
83,299,238
-
-
Market Price /
Net Value
125,912
5,443,264
7,982,139
34,926,976
3,617,817
1,901,506
1,067,825
328,852
3,174
10,371
-
621,653 (Note 4)
440,755
653,180
75,267
3,089,577 (Note 3)
4,545,364
762,189
6,190
5,509
3,110
1,333,862 (Note 3)
5,696
41,138
107,301
(118,482)
21,553
15,589
6,037,985
935,605
7,625,407
164,648
51,798
827,329
586,743 (Note 4)
(309,643)
583,463
1,488,011
(376,263)
109,663
281,505
150,545
5,438
Note 1：Increase in current period included purchasing long-term investments, adjusting by using equity method of capital surplus, unrealized gains from financial assets measured at fair value through other comprehensive income, remeasurement of defined benefit plans, and subsidiaries received cash dividends from the parent
company.
Note 2：Decrease in current period included cash dividends distributed from long-term investments for using equity method, adjustment by equity method of capital surplus and retained earnings, remeasurement of defined benefit plans, and unrealized loss from financial assets measured at fair value through other comprehensive income.
Note 3：The unit price is calculated by the closing price of the Taiwan Stock Exchange as of December 28, 2018.
Note 4：The unit price is calculated by the closing price of Gre Tai Securities Market as of December 28, 2018.
COMPAL ELECTRONICS, INC.
STATEMENT OF CHANGES IN FINANCIAL ASSETS MEASURED AT FAI
For the year ended December 31, 2018
(Expressed in thousands of New Taiwan Dollars)
106
Investee Company
Kinpo
Cal-Comp Electronics
(Thailand) Public Co., Ltd.
Innolux
Taiwan Star
Others
Total
Beginning Balance
Adjusted Balance
Increase (Note 1)
Decrease (Note 2)
Ending Balance
Number of
Shares
-
Amount
-
$
Number of
Shares
124,044
Amount
1,308,662
Number of
Shares
-
Amount
-
Number of
Shares
-
Amount
Number of
Shares
Amount
55,820
124,044
1,252,842
Collaterals
or Pledged
Assets
None
-
-
-
-
-
-
-
-
-
$
239,631
654,192
134,877
1,672,479
98,046
980,465
-
404,577
5,020,375
-
-
-
-
-
-
-
153,343
153,343
-
254,008
239,631
400,184
None
25,650
610,789
109,227
1,061,690
None
-
-
246,097
98,046
734,368
None
275,086
-
282,834
None
1,441,800
3,731,918
Note1: Increase included purchasing financial assets at fair value through other comprehensive income and unrealized gains on financial instruments at fair value through other
comprehensive income
Note 2: Decrease included sale of financial assets at fair value through other comprehensive income, unrealized loss on financial instruments at fair value through other comprehensive
income, deferred tax for unrealized loss and proceeds of capital reduction of investments.
107
COMPAL ELECTRONICS, INC.
STATEMENT OF PROPERTY, PLANT AND
EQUIPMENT
For the year ended December 31, 2018
(Expressed in thousands of New Taiwan Dollars)
Please refer to Note (6)(i).
STATEMENT OF SHORT-TERM BORROWINGS
December 31, 2018
(Expressed in thousands of New Taiwan Dollars)
Creditor
Sumitomo Mitsui Banking
Corporation
The Shanghai Commercial
& Savings Bank
Land Bank of Taiwan
CTBC Bank Co., Ltd.
Bank SinoPac
Mega International
Commercial Bank Co.,
Ltd.
Credit Agricole Corporate
& Investment Bank
Citibank Taiwan, Ltd.
DBS Bank Limited
Cathay United Bank
KGI Bank
Hua Nan Commercial
Bank
HSBC Bank (Taiwan)
Limited
Agricultural Bank of
Taiwan
Bank of China Limited
The Bank of
Tokyo-Mitsubishi UFJ
Description
Credit Loans
Contract
Period
2018.12~2019.01
Interest Rate
Note
Loan
Commitments
$
7,525,175
Collaterals or
Pledged Assets
None
Ending
balance
2,272,910
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
2018.12~2019.02
2018.12~2019.01
2018.12~2019.01
2018.12~2019.01
2018.12~2019.02
2018.12~2019.01
2018.12~2019.03
2018.12~2019.01
2018.12~2019.02
2018.12~2019.01
2018.12~2019.01
2018.12~2019.01
2017.12~2018.01
2018.12~2019.01
2018.12~2019.02
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
2,150,050
None
1,658,610
4,500,000
2,500,000
700,000
1,000,000
None
None
None
None
4,300,100
2,457,200
645,015
921,450
7,678,750
None
7,678,750
9,060,925
2,150,050
4,607,250
2,800,000
4,000,000
None
None
None
None
None
7,371,600
2,150,050
4,545,820
1,228,600
3,808,660
6,143,000
None
4,300,100
1,400,000
None
1,366,817
6,143,000
4,607,250
None
None
2,450,000
4,150,000
$
66,965,450
51,305,682
Note: The range of interest rates of aforementioned loans were 0.72%~3.56%.
COMPAL ELECTRONICS, INC.
STATEMENT OF NOTES AND ACCOUNTS
PAYABLE
December 31, 2018
(Expressed in thousands of New Taiwan Dollars)
108
Amount
$
27,527,918
11,336,333
7,701,129
7,594,339
7,572,981
7,495,748
7,822,368
$
77,050,816
Suppliers
E Company
J Company
B Company
A Company
H Company
I Company
Others (Note)
Total
Note: The amount of individual vendor included in others does not exceed 5% of the account balance.
109
COMPAL ELECTRONICS, INC.
STATEMENT OF LONG-TERM BORROWINGS
December 31, 2018
(Expressed in thousands of New Taiwan Dollars)
Amount
Loan
Commitments
$
5,068,000
Loan within
1 year
4,700,000
Loan more
than 1 year
-
Contract
Period
2117.05~2019.05
Interest
Rate
Note
Amount
4,700,000
Collaterals or
Pledged Assets
None
Creditor
Bank of America
O-Bank (Originally named
Industrial Bank of Taiwan)
1,000,000
250,000
-
2018.07~2021.07
CTBC Bank Co., Ltd.
2,000,000
-
2,000,000 2018.09~2021.09
Taipei Fubon Commercial
2,000,000
1,800,000
-
-
2016.09~2019.07
2016.08~2019.08
2,500,000
1,871,250
3,300,000
2,425,000
875,000 2016.03~2020.03
Bank Co., Ltd.
E. Sun Bank
Bank SinoPac
The Shanghai Commercial &
2,300,000
-
2,300,000 2016.06~2020.06
Savings Bank
Bank of Taiwan
3,000,000
1,100,000
825,000 2016.09~2020.09
Mega International
Commercial Bank
1,000,000
Far Eastern International
300,000
Bank
Standard Chartered Bank
1,200,000
-
-
-
600,000 2016.11~2020.11
300,000 2018.09~2021.06
1,000,000 2018.05~2020.05
Mizuho Bank, Ltd.
6,143,000
5,350,000
-
2018.05~2020.05
Chang Hwa Bank
3,000,000
-
3,000,000 2016.12~2020.12
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
250,000
None
2,000,000
None
1,800,000
None
1,871,250
None
3,300,000
None
2,300,000
None
1,925,000
None
600,000
None
300,000
None
1,000,000
None
5,350,000
None
3,000,000
None
$
32,811,000
17,496,250
10,900,000
28,396,250
Note: The range of interest rates of aforementioned loans were 0.79%~1.22%.
110
COMPAL ELECTRONICS, INC.
STATEMENT OF OTHER PAYABLES
December 31, 2018
(Expressed in thousands of New Taiwan Dollars)
Item
Payroll payables and year-end
bonuses payable
Technical service fee payables
Others (Note)
Total
Description
Payroll for December 2018, estimated year-end bonuses
for 2018, and employees and directors' compensations
Amount
$
3,347,970
Export expense payables and others
628,443
4,416,098
$
8,392,511
Note: The amount of each item in others does not exceed 5% of the account balance.
STATEMENT OF NET SALES REVENUE
For the year ended December 31, 2018
(Expressed in thousands of New Taiwan Dollars)
Quantity
Note
Item
Sales revenue:
5C electronic products
Others
Less: Sales return
Sales allowance
Net sales
Other operating revenue:
Service and processing revenue
Net sales revenue
Note: Due to multi-categories, it’s hard to be classified in categories.
Amount
$
912,010,341
445,649
(964,375)
(844,404)
910,647,211
402,911
$
911,050,122
COMPAL ELECTRONICS, INC.
STATEMENT OF COSTS OF SALES
For the year ended December 31, 2018
(Expressed in thousands of New Taiwan Dollars)
Item
Raw materials
Raw materials, beginning of the year
Plus: Purchases
Less: Raw materials, end of the year
Transferred to operating expense
Cost of material sold
Scraps
Raw materials used
Direct labor
Manufacturing expenses
Total Manufacturing costs
Plus: Work-in-process, beginning of the year
Less: Work-in-process, end of the year
Scraps
Cost of finished goods
Plus: Finished goods, beginning of the year
Purchases
Others
Less: Finished goods, end of the year
Transferred to operating expense
Costs of sales of finished goods and processing costs
Maintenance costs
Cost of material sold
Allowance for obsolescence loss and inventory valuation
Scrap loss of raw materials and finished goods
Cost of sales
111
Amount
32,475,740
631,780,550
(33,941,015)
(11,672)
(6,686,188)
(355,714)
623,261,701
180,145
480,549
623,922,395
45,980
(44,008)
(1,221)
623,923,146
11,576,936
262,790,021
198,982
(18,817,650)
(860,330)
878,811,105
3,145,607
6,686,188
171,790
356,935
889,171,625
$
$
111
COMPAL ELECTRONICS, INC.
STATEMENT OF OPERATING EXPENSES
For the year ended December 31, 2018
(Expressed in thousands of New Taiwan Dollars)
Research and
Selling
Administrative
development
expenses
expenses
expenses
1,491,605
6,456,407
$
329,052
180,338
260,045
-
2,063,750
322,996
1,716
-
-
-
3,449
425
893,877
-
-
833,518
1,221
749
2,104,987
9,396,882
Item
Payroll expenses
Export expenses
Royalty expenses
Research expenses
Shipping expenses
Sample expenses
Others (Note)
Total
Note: The amount of each item in others does not exceed 5% of the account balance.
$
3,157,897
2,389,356