Inventec Corporation

Transcription

Annual Report Website: http://mops.twse.com.tw
Stock Code: 2356
Company Website: http://www.inventec.com
Printing Date: May 11, 2016
2015 Annual Report
Notice to readers
This English version annual report is a summary translation of the Chinese version and is not
an official document of the shareholders’ meeting. If there is any discrepancy between the
English version and Chinese version, the Chinese version shall prevail.
1.
Name, Title and Contact Information for Company’s Spokesperson
Name : Yu, Chin-Pao
Title : Vice President
Tel.
: 886(2) 2881-0721
E-mail : iec@inventec.com
Name, Title and Contact Information for Company’s Deputy Spokesperson
Name : Huang, Kuo-Chun
Title : President
2.
Tel.
: 886(2) 2881-0721
E-mail : iec@inventec.com
Address and Telephone Number of Company’s Headquarters, Branches and Plant
Headquarters
Add : No.66, Hougang Street, Shilin District, Taipei City, Taiwan, R.O.C.
Tel : 886(2) 2881-0721
Taoyuan Factory
Add : No.255, Renhe Rd, Sec. 2, Daxi District, Taoyuan City, Taiwan, R.O.C.
Tel : 886(3) 390-0000
Taipei Research and Development Center
Add : No.166, Chengde Rd, Sec. 4, Shilin District, Taipei City, Taiwan, R.O.C.
Tel : 886(2) 2881-0721
Taoyuan Research and Development Center
Add : No.349, Renhe Rd, Sec. 2, Daxi District, Taoyuan City, Taiwan, R.O.C.
Tel : 886(3) 390-0000
Taoyuan Science and Technology Park
Add : No.88, Dazhi Rd, Taoyuan District, Taoyuan City, Taiwan, R.O.C.
Tel : 886(3) 390-0000
3.
Common Share Transfer Agent And Registrar
Name : Registrar & Transfer Agency Department of Taishin International Bank
Add : B1F, No.96, Sec. 1, Jianguo N. Road, Zhongshan District, Taipei City, Taiwan, R.O.C.
Website: http: //www.taishinbank.com.tw
Tel. : 886(2) 2504-8125
4.
Information of the Certified Public Accountants for the Latest Financial Repot
Name of CPA: Chen, Ying-Ju and Yang, Liu-Fong
CPA Firm: KPMG
Add : 68F, No.7, Sec. 5, Xinyi Road, Taipei City, Taiwan, R.O.C.
Website: http: //www.kpmg.com.tw
Tel : 886(2) 8101-6666
5.
Overseas Trade Places for Listed Negotiable Securities
None
6.
Corporate Website
http: //www.inventec.com
Contents
Letter to Shareholders ................................................................................................................. 1
Ⅰ. Company Introduction .......................................................................................................... 3
1.1 Founding Date ............................................................................................................... 3
1.2 Formation History ......................................................................................................... 3
Ⅱ. Corporate Governance Report ............................................................................................ 11
2.1 Organization Structure ................................................................................................. 11
2.2 Board of Directors, Supervisors and Management Team ............................................ 13
2.3 Implementation of Corporate Governance .................................................................. 31
2.4. Information Regarding the Company’s Audit Fee...................................................... 80
2.5 Information Regarding the Replacement of CPA ........................................................ 81
2.6 Audit Independence ..................................................................................................... 81
2.7 Changes in Shares Trading and Pledge of Directors, Supervisors, Managers and
Major Shareholders: ................................................................................................... 82
2.8 The Relations of the Top Ten Shareholders ................................................................. 84
2.9 Ownership of Shares in Affiliated Enterprises ............................................................ 87
Ⅲ. Capital Overview .............................................................................................................. 88
3.1 Capital and Shares ....................................................................................................... 88
3.2 Issuance of Corporate Bond. ....................................................................................... 94
3.3 Issuance of Preferred Shares ....................................................................................... 94
3.4 Issuance of Global Depository Receipts...................................................................... 94
3.5 Issuance of Employee Stock Option............................................................................ 94
3.6 Issuance of Restricted Employee Shares. .................................................................... 94
3.7 Status of New Shares Issuance in connection with Mergers and Acquisitions. .......... 94
3.8 Financing Plans and Implementation .......................................................................... 94
Ⅳ. Operational Highlights ..................................................................................................... 95
4.1 Business Activities....................................................................................................... 95
4.2 Overview of the Market, Production, and Marketing................................................ 104
4.3 Human Resources ...................................................................................................... 111
4.4 Information on Environmental Protection Costs ....................................................... 112
4.5 Labor Relations ......................................................................................................... 114
4.6 Important Contracts ................................................................................................... 121
Ⅴ. Financial Information .................................................................................................... 123
5.1 Five-Year Financial Summary ................................................................................... 123
5.2 Five-Year Consolidated Financial Analysis–Consolidated ..................................... 128
5.3 Supervisors’ Report or Audit Committee’s Review Report in the Most Recent
Year ........................................................................................................................... 136
5.4 Consolidated Financial Statements with Subsidiaries Audited by CPA .................... 136
5.5 The Effect on Company or its Affiliates have Experienced Financial Difficulties ... 136
VI. Review of Financial Conditions, Operating Results, and Risk Management ........... 137
6.1 Analysis of Financial Status ...................................................................................... 137
6.2 Analysis of Operation Results ................................................................................... 139
6.3 Cash flow Analysis .................................................................................................... 143
6.4 The Impact of Significant Capital Expenditure in Recent Years on Financial
Business .................................................................................................................... 144
6.5 Reinvestment Policy in Recent Years, the Main Reason for Profit Earning or Loss,
Improvement Plan, and Analysis on the Investment Plan in the Coming Year ........ 145
6.6 Analysis and Assessment of Risk Items .................................................................... 146
6.7 Other Important Matters ............................................................................................ 157
VII. Special Disclosure ......................................................................................................... 158
7.1 Summary of Affiliated Companies ............................................................................ 158
7.2 Private Placement Securities in the Most Recent Years ............................................ 176
7.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most
Recent Years ............................................................................................................. 176
7.4 The Matters Listed in Article 36, Paragraph 3, Subparagraph 2 of the Securities
and Exchange Act, which might Materially affect Shareholders' Equity or the
Price of the Company's Securities ............................................................................ 176
7.5 Other Matters that Require Additional Description................................................... 176
AppendixⅠ: Consolidated Financial Statements with Subsidiaries Audited by CPA of
2015 ................................................................................................................. 177
Letter to Shareholders
Thank you for attending Inventec’s annual shareholders’ meeting, the operation performance of
2015 is summarized below: with regard to revenue and profit making, the individual revenue and
consolidated revenue of the Company reached approximately NTD289.3 billion and NTD395.4
billion, respectively. The product portfolio is mainly computer products; compared to 2014 (in 2014,
individual revenue and consolidated revenue were approximately NTD330.7 billion and NTD435.5
billion, respectively), the individual revenue has decreased by 12.5%, while the consolidated
revenue decreased by 9.2%. Regarding product category, due to the continuous downturn of
notebook computer market, the popularity degree of the new operation platform was not as
expected, the annual revenue decreased by 25.28%; driven by the continuous fermentation of cloud
computing market issues, the revenue performance in server products has been relatively stable,
with the annual revenue in 2015 increasing by 24.05%. With regard to wireless devices and mobile
communication products, thanks to customer product hot sales and the expansion of production
capacity, the operation income contributed approximately NTD46.9 billion of revenue, and the
annual revenue performance increased by 0.29%. As for solar energy products, the overall revenue
contribution of the Group’s solar energy products was approximately NTD12.9 billion, an increase
of 14.79% year-on-year.
In regard to profit making, the annual net profit attributable to parent company shareholders reached
approximately NTD5.5 billion, with earnings per share of NTD1.55, a reduction of approximately
NTD1.5 billion from the previous year, profit making decreased by 21.6%, the main reason is that
the notebook computer market is facing slow-moving growth and price competition. Nevertheless,
the server and mobile communication product markets are continuing to experience stable growth;
furthermore, with regard to reinvestment business, under the supply chain vertical integration and
organizational merger, the Company hopes to improve its business turnover and profit making
capacity to bring positive benefit to the Group’s performance.
This year’s business plan summary and future development strategies:
Due to the continuous downturn of the global economy in 2016, the shipment volume of traditional
notebook computers continues to be impacted by the stagnated growth in the change of ultimate
consumer habits; faced with the challenges of the information industry operating environment,
Inventec will adhere to innovative thinking, adjust its operating strategy, and actively face future
challenges to seek new kinetic energy for operation growth. With regard to personal computer
products, Inventec will continuously coordinate with the demand of major international
manufacturers and develop light, thin, and portable products to meet market trends and consumer
demands; regarding enterprise solutions (including servers, storage, and LAN switches), Inventec
will continue to focus on the hardware leading foundation of network integration, storage,
computation modules, etc. and adhere to main trends in cloud application, integrate software and
hardware development capability, and actively develop customers to continuously expand its
1
leading position in the server-related product market; furthermore, with regard to wireless devices
and smart mobile products, we will gradually improve the proportion of automated processes in
order to reduce production costs, as well as coordinate with advanced technological solutions to
provide end customers with smart home and wireless intelligent end products; as for the solar
energy industry, through vertical integration of Inventec Solar Energy Corporation and Inventec
Energy Corporation, we will continue to cut costs in the hopes of gradually improving operation
efficiency to expand market competitiveness; in order to capture the opportunity of the handheld
wireless devices for industrial usage market, Inventec Corporation and Advantech Co., Ltd. form a
strategic alliance to establish a joint venture company, we hope to further provide a complete
solution to the customer and become the pioneer of industrial smart mobile devices through
combining the advantages of both parties in the aspect of research and development, manufacturing
and brand; finally, regarding research and development innovation, in 2015, the product research
and development costs of the Group reached NTD8.8 billion; in the future, we will continue to work
hard at product innovation, automated processes, etc. in order to maintain core competitiveness.
When pursuing an enterprise’s sustainable operation and creating enterprise value, Inventec also
fulfills its corporate citizenship responsibility. Through Inventec Group Charity Foundation, it has
gathered the Group’s caring volunteers to actively promote relevant volunteer businesses such as
social care, emergency relief, environmental protection, culture promotion, etc. over the long term
in order to practice the social service philosophy of Inventec Group, namely environmental
protection, culture, poverty relief, and community. In the past year, whether in the Formosa dust
explosion incident or Taiwan earthquake, you can always witness the social responsibility spirit of
Inventec Group in treating others as ourselves and loving others as ourselves and assisting disaster
stricken populations to live through hard times.
Looking toward 2016, Inventec will continue to adhere to the operation philosophy of “Innovation,
Quality, Open mind and Execution”, in addition to caring for its existing customers, Inventec will
continuously improve its management performance to consolidate its long-term competitive
advantage through product diversification, strategic investment, human resource inventory, and
organization optimization in order to expand the Group’s operation scale and its growth space in
profit making. This is the everlasting commitment of the Inventec management team to its
shareholders and investors. Again, thanks to every shareholder for their support of and guidance to
Inventec.
Best regards,
Chairman: Lee, Tsu-Chin
President: Huang, Kuo-Chun
2
Ⅰ. Company Introduction
1.1 Founding Date : June 9, 1975
1.2 Formation History
1975
．Inventec corporation was incorporated with a paid-in capital of NT$1 million.
1987
．Won the "PIP Optimal Growth Partner Award" issued by the world’s largest department store
chain, SEARS.
．Ranked No. 18 of the national export excellent manufacturers and won the Import and Export
Excellent Manufacturer Award issued by the Minister of the Ministry of Economic Affairs.
1988
．Started implementing upgrades of product structure and set up an overseas production base
plan.
．Won the "PIP Optimal Growth Partner Award" issued by SEARS again and won "Best
Cooperation Company Award" issued by Royal Dutch Philips Electronics Ltd.
．The Company’s application for being a public company was approved.
1989
．Began to produce notebook laptop computer and word processor products.
．Established Inventec Besta Co., Ltd.
1990
．Established Inventec Electronics (M) SDN. BHD.
．Started production of phone fax machines.
1991
．Won "Best Cooperation Company Award" issued by Zenith.
．Established the joint venture TIM Electronics (Malaysia) Co., Ltd. in Malaysia with Toshiba
Co. to produce communication products.
．Won "Excellent Manufacturer Award" issued by Texas Instruments.
．Invested in Inventec Electronics (Shanghai) Co., Ltd. through its investment in Inventec
Corporation (Hong Kong) Co., Ltd..
1992
．Granted ISO 9001 Quality Certification by BCIO and the BSI.
3
1993
．Among word processor products, the plug-in type language learning dictionary CD61 won
"Outstanding Boutique Award" in the national product image awards issued by the Ministry
of Economic Affairs.
．Won " Best Cooperation Company Award " issued by Texas Instruments again.
．Invested in Inventec Corporation (Hong Kong) Co., Ltd. for further investment in Inventec
Electronics (Tianjin) Co., Ltd., Inventec Electronics (Beijing) Co., Ltd., Inventec Electronics
(Nanking) Co., Ltd. and Inventec Electronics (Xi’an) Co., Ltd..
．Started production of PDAs.
1994
．Among word processor products, the reading electronic dictionary CD37 won the "Taiwan
Boutique Mark". Meanwhile, the plug-in type reading electronic dictionary CD65 and
e-books transcription machine won the "National Product Image Award" issued by the
Ministry of Economic Affairs.
．Inventec (Shanghai) Electronics Co.Ltd. earned ISO9001 certification.
．Won the "Quality Control Group Award" issued by the Chinese Society for Quality.
1995
．Won the "National Quality Award", which symbolizes the highest honor in national quality
operation and management.
．Started production of Pentium series multi-media notebooks.
．Established Donglan Factory in Shanghai.
．Inventec Electronics (Tianjin) Co., Ltd., Inventec Electronics (Beijing) Co., Ltd., Inventec
Electronics (Nanking) Co., Ltd., and Inventec Electronics (Xi’an) Co., Ltd. grated ISO 9001
Quality Certification.
．Established Hou Gang Factory to manufacture electronic dictionaries.
．Established Linkou Factory to manufacture and assemble computer peripherals.
1996
．Established Taipei Second Factory to manufacture PDA and graphic calculator.
．Established Jingting Factory in Shanghai.
．Inventec corporation officially listed.
．Achieved ISO 14001 Certification for Environmental Management System by SGS.
．Won " Best Cooperation Company Award " issued by Texas Instruments again.
1997
．Established subsidiaries in the United States, Scotland, and Singapore.
．Ranked No. 3 among enterprise operation performances rated by the China Credit Information
Service.
4
． Ranked first in Taiwan’s enterprise operation performance ranking list rated by
Commonwealth Magazine.
．Established Taipei Third Factory to manufacture notebook.
1998
．Taipei Second Factory and Third Factory earned ISO9002 quality system international
certification from the Bureau of Commodity Inspection and Quarantine (BCIQ) and the
British Standards Institution (BSI).
．Taipei Second Factory achieved ISO 14001 Certification by SGS.
．Established Taoyuan Factory for R&D and manufacture of high-end desktop and server.
1999
．Taipei Third Factory achieved ISO 14001 Certification by SGS.
．Taipei Third Factory achieved the whole country promotes the labor safe hygiene good prize
by Council of Labor Affairs, Executive Yuan.
．Taipei Second Factory achieved TI SEA Awards by Texas Instruments.
．Inventec Besta Co., Ltd changed Chinese company name.
．Established Inventec Micro-Electronics Corp. for calculators.
．Established Inventec Online Corp. for software development.
．Established Inventec Multimedia and Telecom Corp. for multimedia and communications
products.
2000
．Established Inventec Appliances Corp for the manufacture and sales of information appliances,
WAP phone, science plotter.
． Invested in Inventec (Cayman) Corp. for further investment in Inventec Corporation
(Shanghai) Co., Ltd..
．Elected to be the 1999 national good personalities and good deeds group representative of the
Republic of China.
．The Company was responsible for manufacturing more than four million Compaq Computer
Corporation commercial notebook computers.
．Taipei First factory won the “Industrial Excellence Award” issued by the Ministry of
Economic Affairs.
2001
．Invested in Inventec Tomorrow Studio Corporation for editorial tasks of book and electronic
publication and sales.
．Won the Gold Award from the National Invention Award Corporate Group, which affirmed the
outstanding achievement of the Company with regard to emphasizing intellectual property
rights and research and development from product technology to prospective technology.
5
．Won the 9th Ministry of Economic Affairs Industrial Technology Development Award Excellence Award, manifesting its emphasis on R&D achievement and remarkable effects
with incentive measures.
．Won the “Enterprise Gold Trade Award” issued by the Executive Yuan again.
．The Company was responsible for manufacturing more than five million Compaq Computer
Corporation commercial notebook computers.
．The notebook computers manufactured by the Company won the “Best Buy Award” issued by
"PC World" from mainland China.
2002
．Inventec Online Corp. and Inventec Appliances Corp. merged to integrate resources. Inventec
Appliances Corp. is the surviving company after the merger.
．The Company was responsible for manufacturing more than six million Hewlett-Packard
Company commercial notebook computers.
2003
．The Company sold its investment in Inventec Appliance (Shanghai) Co., Ltd. to Inventec
Appliances Corp..
．Invested in Inventec (Cayman) Corp. which invested in Inventec (Pudong) Corp. Inventec
(Pudong) Corp. engages in parts assembling.
2004
．Invested in Inventec Enterprise System Corp. for computer design, research and manufacture.
．Invested in Inventec (Czech) S.R.O. was engaged in parts assembling.
．Invested in Inventec (Cayman) Corp. which invested in Inventec (Pudong) Technology Corp.
and Inventec (Shanghai) Service Co., Ltd. engages in parts assembling.
．The Company reduced shareholding in Inventec Tomorrow Studio Corp. and accounted for
under the cost method.
．The Company sold its investment in Inventec Electronics (Nanking) Co., Ltd. to Inventec
Appliances Corp..
2005
．Invested in Inventec (Cayman) Corp. for further investment in Inventec Hi-Tech Co., Ltd.
whose major line of business is wireless phone production.
．Invested in Inventec Corporation Korea Branch which engages ib developing wireless phone
software.
．Inventec Appliances Corp. officially listed.
6
2006
．Established Hong Kong branch for wireless terminal production business.
．Invested in Inventec Holding (North America) Co., Ltd. for further investment in IEC
Technologies. S. de R.L. de C.V. in Mexico, which engages in server products and computer
parts assembling.
．Invested in Inventec Corporation (Singapore) Ltd. which finished business and liquidation.
2007
．Due to the business development purpose, purchased a R & D building at Shihlin.
．Invested in Inventec (Cayman) Corp. for further investment in Inventec Huan Hsin (Zhejiang)
Technology Co., Ltd..
．Inventec Besta Co., Ltd officially listed.
2008
．Invested in Win Semiconductors Corp..
．Reinvested in Inventec Huan Hsin (Zhejiang) Technology Co., Ltd..
．Exceeded 16 million units shipments of the Pudong Park notebook.
．Annual Sales exceeded 10 billion U.S. dollars.
2009
．Invested in Kohjinsha Co., Ltd..
．Purchased the R&D building at Taoyuan.
．Dr. Eye family (Dr. Eye 8.1 version, mobile dictionary for PPC, translation by USB drive
version) won three 2009 17th Taiwan Boutique Award information software awards.
．Won the “Corporate Social Responsibility Award” issued by Global Views Magazine.
．Established Inventec Investment Co., Ltd. for investment business.
．Established Inventec Technology (Singapore) Pte. Ltd in Singapore for server business.
．Established Inventec Tooling and Mold Co., Ltd for mold business.
．Merged 100% owned subsidiary, Inventec Enterprise System Corp..
．Inventec Investment Co., Ltd. invested Huga Optotech Inc..
．Established R&D Centers in Palo Alto and Houston.
．Invested in Inventec (Cayman) Corp. for further investment in Inventec (ChongQing)
Corporation.
．Invested in Inventec (Cayman) Corp. for further investment in Inventec (ChongQing) Service
Co., Ltd..
．Awarded a “Carbon Reduction Model Enterprise” by the Industrial Development Bureau,
Ministry of Economic Affairs.
7
2010
．Through Inventec (Cayman) Corp., established the joint venture Onkyo-Inventa (Hong Kong)
Co., Ltd. in Hong Kong with Onkyo Corporation.
．Through Inventec (Cayman) Corp., established the joint venture TPV-Inventa Holding Ltd.
with Admiral Overseas Corporation, and through the joint venture company, invested in
TPV-Inventa Technology (Fujian) Ltd., and TPV-Inventa Technology Co., Ltd. in Taipei.
．Reinvested in Inventec Huan Hsin (Zhejiang) Technology Co., Ltd.which became wholly
owned subsidiary of Inventec Corporation.
．Reinvested in Inventec Investment Co., Ltd. for further investment in Huga Optotech Inc..
．Kohjinsha Co., Ltd. changed company name to Inventec Development Japan Corporation,
moved to a new location, and reduced the capital.
．Invested in Arima Communications Corp..
．Established Inventec Solar Energy Corp..
．Achieved National Invention and Creation Silver Medal Awards.
．Grated ISO 14064-1 Certification.
2011
．Invested in Kinmac Solar Corp..
．Invested in E-TON Solar Tech. Co., Ltd..
．Invested in New E Materials Co., Ltd..
．Inventec Technology (Singapore) Pte.Ltd closed down.
．Inventec Appliances Corp. became wholly owned subsidiary of Inventec Corporation.
2012
．Onkyo-Inventa (Hong Kong) Co., Limited, and Onkyo-Inventa Technologies (Tianjin) Co.,Ltd.
closed down.
．In 2011, ranked No. 8 in national corporate patent application volume, No. 6 in invention
patent application volume, No. 7 in patent certification acquisition volume, and No. 5 in
invention patent certification acquisition volume.
．The Company was awarded“PPS Alignment Supplier of the Year” by HP.
．The Company was awarded“EG Service Supplier of the Year” by HP.
．Won the “Energy Saving and Carbon Reduction Action Mark - Excellence Award”, issued by
the Environmental Protection Administration, Executive Yuan.
8
2013
．In 2012, ranked No. 7 in national corporate patent application volume, No. 6 in invention
patent application volume, and No. 7 in invention patent certification acquisition volume.
．Reinvested in E-TON Solar Tech. Co., Ltd..
．Achieved the Best Partner Awards by Toshiba.
． Won 2013 Ministry of Economic Affairs Industrial Innovation Achievement Praise
-product/system/service innovation awards.
．Established the China Region of operation headquarters of enterprises in Mainland China.
．Taoyuan Science and Technology Park won the “Energy Saving and Carbon Reduction Action
Mark-Excellence Award”, issued by the Environmental Protection Administration, Executive
Yuan.
．Invested in Inventec Energy Corporation.
．Inventec (Cayman) Corp. carried out capital reduction to withdraw paid-in capital due to the
close down of Onkyo-Inventa Technologies (Tianjin) Co.,Ltd., a reinvested business in
mainland China.
．Invested in Inventec Technology (Chongqing) Corp. Ltd. through its investment in IEC
(Cayman) Corporation.
．Set up Inventec Energy Corporation for Hsinchu Plant and expanded the solar photovoltaic
module, with an annual production capacity of 150 MW.
．The capital of E-TON Solar Tech. Co., Ltd. increased NT$3,000,000,000 by cash, and the
paid-in capital of E-TON Solar Tech. Co., Ltd. was NT$7,794,498,000.
2014
．Named a U.S. "2013 Number of Patent Certification" global top 500 enterprise.
．Acquired "ISO-50001 International Energy Management System" certification for the first
time.
．Won Taiwan 2013 patent application and notice of certification as a top ten enterprise.
．Invested in SKSpruce Holding Limited.
．Reinvested in Inventec Solar Energy Corp..
．The Company won the 2014 Commonwealth Magazine World Corporate Citizenship Award.
．The Company won the 23rd ROC Corporate Environmental Protection Award issued by the
Environmental Protection Administration, Executive Yuan.
．The Company won the “2014 Taiwan Corporate Sustainability Award - Gold Award” issued
by the Taiwan Institute for Sustainable Energy.
．Inventec Appliances Corp. won Taiwan 2013 patent application and notice of certification as a
top 100 enterprise.
． Inventec Appliances Corp. subsidiary, Inventec Appliances (Nanjing) Corp.in Nanjing
expanded second phase plant and purchased machines and equipment to expand production
capacity.
9
2015
．Established Inventec Manufacturing (India) Private Limited.
．Invested in Inventec Asset-Management (Shanghai) Corporation through its investment in
Inventec (Shanghai) Corp..
．Reinvested in Chongqing YuYa Cloud Service Co., Ltd. through Inventec (Chongqing) Corp..
．Participated in TPV-Inventa Holding Ltd. cash capital increase through Inventec (Cayman)
Corp..
．47.68% common stock equity of Inventec Energy Corporation held by the Company was sold
to Inventec Solar Energy Corporation.
．Purchased the plant building in Taoyuan Science and Technology Park.
．Won the 2015 Commonwealth Magazine World Corporate Citizenship Award.
．Won the 24th ROC Corporate Environmental Protection Award issued by the Environmental
Protection Administration, Executive Yuan.
．Won the “2015 Taiwan Corporate Sustainability Award - Silver Award” issued by the Taiwan
Institute for Sustainable Energy.
．Won Taiwan 2015 patent application and notice of certification as a top ten enterprise.
2016
．The Company and Advantech Co., Ltd. jointly established AIMobile Co., Ltd..
10
Ⅱ. Corporate Governance Report
2.1 Organization Structure
Board of shareholders
Supervisor
Board of Directors
Remuneration Committee
Audit Center
Social Responsibility Group
President
Chief Operating Officer
Safety & Health Center
Business Unit
Company Unit
Factory
Business Center
Enterprise Business Group
Finance Center
China
Strategy Center
Personal Solution Group
Legal & Intellectual Property
Center
Pudong Factory
Chongqing Factory
Cloud Information Services
Information Technology
Center
Mexico Factory
Talent Center
Czech Factory
Environmental Management
Center
India Factory
11
Department Functions
Major Department
Audit Center
Major Business Activities
Overall planning businesses such as internal control system, internal audits,
self-assessment, etc. of the company.
Social Responsibility
Group
Plan and execute corporate social responsibility related matters.
Enterprise Business
Group
Planning and management of enterprise business computer design,
development, manufacturing, production, marketing, after-sales service, etc.
Personal Solution
Group
Planning and management of portable computer design, development,
manufacturing, production, marketing, after-sales service, etc.
Cloud Information
Services
Cloud solution research and development, sales, and service.
Exploitation of big data analytical ability and market application promotion.
Development and sales of Internet important system services.
Data center setting and fully established SaaS and PaaS service promotion.
IoT and industry 4.0 solution construction and sales services.
Finance Center
Overall planning of the financial, accounting, investment, and stock affairs
business of the company.
Legal & Intellectual
Property Center
Overall planning of application protection business related to patent rights,
trademark rights, copyrights, and trade secrets of the company.
Information
Technology Center
Overall planning of the establishment and operation of a network system
structure, product life cycle management system, enterprise resource planning
system, manufacturing execution system, quality inspection management
system, supply chain management system, form management system, etc. of
the company.
Development and sales of enterprise solutions, enterprise system integration
and consulting services, office system import and process automation services,
and development and sales of green energy solutions.
Talent Center
Overall planning of the company’s human resources related business.
Environmental
Management Center
Overall planning of the company’s related management business and the
integrated planning and supervision of environment and quality.
Responsible for design and development, manufacturing, after-sales services,
etc. of portable computers, wireless communication products, and corporate
computers.
Pudong Factory
Chongqing Factory
Responsible for design and development, manufacturing, after-sales services,
etc. of portable computers, wireless communication products, and corporate
computers.
Mexico Factory
Responsible for production, testing, troubleshooting, after-sales services, etc.
of corporate servers and storage systems.
Czech Factory
Responsible for production, testing, troubleshooting, after-sales services, etc.
of corporate servers and storage systems.
India Factory
Responsible for production and manufacturing, testing, troubleshooting,
after-sales services, etc. of mobile phones, plates, portable computers, wireless
communication products, corporate computers, corporate servers, and storage
systems.
Strategy Center
Overall planning and integration of enterprise operation strategies.
12
2.2 Board of Directors, Supervisors and Management Team
2.2.1 Board of Directors and Supervisors
2.2.1.1 Introduction of Board of Directors and Supervisors
Nationality
Title
or
Registered
Name
Date
Elected
Term Date First
(Years) Elected
Address
Director
Director
Director
Shareholding
when Elected
Shares
%
Current
Shareholding
Shares
%
Lee,
Tsu-Chin
2014.06.12
3
1980.06.08 115,833,835 3.23% 115,833,835 3.23%
R.O.C
Yeh, Kuo-I
2014.06.12
3
1975.06.09 254,361,330 7.09% 254,361,330 7.09%
R.O.C
Wen,
Shih-Chih
Chairman R.O.C
Director
2016.04.30
R.O.C
Chang,
Ching-Sung
R.O.C
Huang,
Kuo-Chun
2014.06.12
2014.06.12
2014.06.12
3
3
3
Spouse & Minor
Shareholding
Shares
－
2014.06.12
788,644 0.02%
1,461,985 0.04%
788,644 0.02%
－
99,314,117 2.77%
2004.05.27 35,685,590 0.99% 35,685,590 0.99%
2014.06.12
%
37,399 0.00%
6,743,434 0.19%
1,461,985 0.04%
9,327 0.00%
13
Shareholding
by Nominee
Arrangement
Shares
Experience Education
Selected
Current
Positions
Executives, Directors or
Supervisors who are spouses or
within two degrees of kinship
Title
Name
Relationship
Note 1
None
None
None
Wang,
Ping-Hui
Within
two
degrees
of kinship
%
－
－
Bachelor of Economics,
Tunghai University
Chairman, Inventec
Corporation
－
－
University of San Francisco
Chairman, Inventec
Corporation
Note 2
Supervisor
－
Xihu Vocational High School
of Industry and Commerce
Senior Vice President,
Note 3
Represent- Yang,
ative of
ChiungSupervisor
Nan
－
Master of Electric
Engineering, National Taiwan
University
Chairman, Inventec
Appliances Corporation
Note 4
None
None
None
－
Bachelor of Electric
Engineering, National
Cheng-Kung University
Qume Electronics, Taiwan
Note 5
None
None
None
－
－
－
Spouse
Nationality
Title
or
Registered
Name
Date
Elected
Term Date First
(Years) Elected
Address
Independent
R.O.C
Director
Independent
R.O.C
Director
Supervisor
Supervisor
R.O.C
Shareholding
when Elected
Shares
Chang,
Chang-Pang
Chen,
Ruey-Long
Cheng,
Hsien-Ho
2014.06.12
2014.06.12
2014.06.12
3
3
3
2014.06.12
2014.06.12
2002.05.30
－
－
%
－
－
1,553,664 0.04%
Current
Shareholding
Shares
－
－
%
－
－
1,443,664 0.04%
Spouse & Minor
Shareholding
Shares
－
－
%
－
－
655,923 0.02%
R.O.C
Wang,
Ping-Hui
2014.06.12
3
1990.04.07 19,317,657 0.54% 19,317,657 0.54% 18,200,345 0.51%
R.O.C
Shyh Shiunn
Investment
Corp.
2014.06.12
3
2011.06.09 139,416,690 3.89% 139,416,690 3.89%
R.O.C
Representative,
Yang,
2014.06.12
Chiung-Nan
3
－
－
Shareholding
by Nominee
Arrangement
Shares
2014.06.12
37,399 0.00% 35,685,590 0.99%
14
Selected
Current
Positions
%
Title
Name
Relationship
－
Master of Laws, National
Cheng-Chi University
Chairman, Fuhwa Financial
Holding Co., Ltd.
Deputy Minister, Ministry of
Economic Affairs
Deputy Secretary General,
Executive Yuan
Vice Minister, Ministry of
Finance
Chairman, Securities and
Exchange Commission,
Ministry of Finance
Note 6
None
None
None
－
Bachelor of Economics,
National Chung-Hsing
University
Chairman, Institute for
Information Industry
Minister, Ministry of
Economic Affairs
Note 7
None
None
None
－
Bachelor of Accounting,
National Cheng-Chi University
Senior Vice President,
Note 8
None
None
None
－
－
Tatung High School
Chairman, Snow Peak
Enterprise Co., Ltd.
－
－
－
－
－
－
－
Supervisor
37,399 0.00%
－
Nan Ying Vocation High
School
Accountant, Taipei Veterans
General Hospital
None
Director
Yeh,
Kuo-I
Within
two
degrees
of kinship
None
None
None
None
Supervisor,
Tomorrow
Technology
Corporation
Director
Wen,
Spouse
Shih-Chih
Note 1: Chairman of Inventec Investments Co., Ltd.；Director of Inventec Corporation (Hong Kong) Ltd., Inventec (Cayman) Corp., IEC (Cayman) Corporation,
Inventec Holding (North America) Corp., Inventec Electronics(USA) Corp., Inventec Manufacturing (North America) Corp., Inventec Configuration (North
America) Corp., Inventec Distribution(North America) Corp., IEC Technologies,S.de R.L.de C.V., Inventec Appliances Corp., and Inventec Group Charity
Foundation；Chief executive officer of Inventec Development Japan Corporation；President of Cloud Computing Association in Taiwan.
Note 2: Director of Inventec Corporation (Hong Kong) Ltd., W.K Technology Fund Ⅷ Ltd., PK Venture Capital Corp., PK Ⅱ Venture Capital Corp., Kuo Hsieh
Investment Co. Ltd., Fu Tai Investment Co. Ltd., WK Technology Fund., WK Technology Fund IV, W.K Technology Fund Ⅴ Ltd., W.K Technology Fund Ⅵ
Ltd., and Royal Base Corporation；Supervisor of W.K Technology Fund Ⅶ Ltd.；Chairman of Inventec Group Charity Foundation.
Note 3: Director of Inventec Huan Hsin (Zhejiang) Technology Co., Ltd., and Inventec Appliances Corp.；Chairman of Shyh Shiunn Investment Corp.
Note 4: Chairman of Inventec Appliances Corp., Inventec Electronics (Shanghai) Co. Ltd., Inventec Appliances (Pudong) Corp., Inventec (Nanjing) Electronics Co. Ltd.,
Inventec Appliances (Nanjing) Corp., Inventec Appliances (Nanjing) System Corp., Inventec Appliances (Xi'An) Corporation, Inventec Appliances (Nanchang)
Co., Ltd., and Inventec Appliances (Shang Hai) Co., Ltd.；Director of Inventec Appliances (Cayman) Holding Corp., Inventec Appliances (USA) Distribution
Corp., Inventec Appliances USA Inc. and Inventec Group Charity Foundation.
Note 5: Chairman of Inventec Huan Hsin (Zhejiang) Technology Co., Ltd., TPV-Inventa Holding Ltd., TPV-Inventa Technology Co., Ltd., and TPV-Inventa Technology
(Fujian) Ltd. ; President of Inventec Corp.；Director of Inventec Investments Co., Ltd., Inventec Holding (North America) Corp., Inventec Electronics (USA)
Corp., Inventec Manufacturing (North America) Corp., Inventec Configuration (North America) Corp., Inventec Distribution (North America) Corp., and IEC
Technologies,S.de R.L.de C.V.
Note 6: Chief Executive Officer of Lien Chan Foundation for Peace and Development；Independent Director of Formosa Petrochemical Corp., Silitech Technology
Corporation, Powerchip Technology Corporation；Director of Capital Securities Corp., Maxigen Biotech Inc., Global Financial Services, Global Investment
Holdings, Zi-Yu Investment Co., Ltd., and Inventec Group Charity Foundation；Supervisor of Jintex Corporation Ltd.
Note 7: Chairman of Sinocon Industrial Standards Foundation, and Powerchip Technology Corporation；Independent Director of Formosa Chemicals & Fibre
Corporation and China Petrochemical Development Corporation；Director of Teknowledge Development Corporation, Bank of Panhsin, HannStar Board Corp.,
Asia Cement Corporation, PowerGate Optical Inc., Gintech Energy Corporation, and Inventec Group Charity Foundation.
Note 8: Supervisor of Inventec Investments Co., Ltd., Inventec Solar Engergy Corporation, E-TON Solar Tech. Co., Ltd., Inventec Energy Corporation, New E Materials
Co., Ltd., and Inventec Appliances Corp.
15
2.2.1.2 The institutional shareholders
04/30/2016
Name
shareholders
Shyh Shiunn Investment Corp.
Wen, Shih-Chih (35.45%)、Wen, Shih-Yi (32.27%)、Huang, Ye-Ming (9.96%)
16
2.2.1.3 Professional Qualifications and Independence Analysis of the Board
04/30/2016
Met one of the following professional qualification requirements
with at least five years work experience
Criteria
Name
Independence（Note1）
An instructor of
A judge,public
higher position in a
Have work
prosecutor, attorney,
department of
experience in the
CPA, or other
commerce,law,
areas of
professional or technical
finance, accounting,
commerce,law,
specialist who has
or other academic
finance,
passed a national
department related to
accounting, or
examination and bee
the business needs of
otherwise
awarded a certificate in
the company in a
necessary for the
a profession necessary
public or private
business of the
for the business of the
junior college, or
company
company
university
Number of other
public companies in
which the individual
is concurrently
〈1〉〈2〉〈3〉〈4〉〈5〉〈6〉〈7〉〈8〉〈9〉〈10〉 serving as an
independent director
Lee, Tsu-Chin
-
-

-
-
-







-
Yeh, Kuo-I
-
-

-
-
-
-

-




-
Wen, Shih-Chih
-
-

-
-
-

-





-
Chang, Ching-Sung
-
-

-
-








-
Huang, Kuo-Chun
-
-

-
-








-
Chang, Chang-Pang













3
Chen, Ruey-Long
-
-











2
Cheng, Hsien-Ho
-
-


-








-
Wang, Ping-Hui
-
-



-
-






-
Representative, Yang, Chiung-Nan
-
-




-



-

-
-
17
Note1: The independece criteria to indicate whether the directors or supervisors had met any of the conditions during the 2 years prior to being elected
or during the term of office
（1）Not
an employee of the company or its affiliates
（2）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）A
natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person
under others' names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranking in
the top 10 in holdings.
（4）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）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 in the top five in holdings.
（6）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）A
professional individual who, or 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, provided that this restriction does not apply to any member of the remuneration committee who exercises
powers pursuant to Article 7 of the Regulations Governing the Establishment and Exercise of Powers of Remuneration Committees of
Companies Whose Stock is Listed on the TWSE or Traded on the TPEx.
（8）Not
having a marital relationship, or a relative within the second degree of kinship to any other director of the company.
（9）Not
been a person of any conditions defined in Article 30 of the Company Act.
（10）
18
2.2.2 Introduction of the Management Team
Title
President
Nationality
R.O.C
Executive
Vice President
R.O.C
Senior Vice
President
R.O.C
Name
On-board
Date
2016.04.30
Current
Shareholding
Spouse & Minor
Shareholding
Shares
Shares
%
By Nominee
Arrangement
Shares
Selected Current
Positions
%
Title
Name
Relationship
Note 1
None
None
None
Note 2
None
None
None
Note 3
None
None
None
None
None
None
B.S. in Electrical Engineering, National
Huang
Kuo-Chun
2013.06.13 1,461,985 0.04%
Wu,
Yung-Tsai
2006.03.01
Chang,
Hui
2004.09.01
9,327 0.00%
－
－ Cheng Kung University
QUME Electronics, Taiwan
M.B.A. in Management, National Taiwan
482,731 0.01%
12,864 0.00%
－
－ University of Science and Technology
Linco Precision
M.B.A. in Global Management,
687,059 0.02% 306,721 0.01%
－
－ Thunderbird School of Global
Management
R.O.C
Yang,
Hsin-Hua
Senior Vice
President
R.O.C
Tsai,
Chih-An
2009.03.24
746,101 0.02%
Senior Vice
President
R.O.C
Wen,
Chi-Wai
2010.01.22
622,556 0.02%
Senior Vice
President
R.O.C
Lin,
Chin-Wen
2010.01.22
Senior Vice
President
%
Shareholding
2006.03.01
227,928 0.01%
77,589 0.00%
13,208 0.00%
－
M.S. in Science and Technology, Keio
University
Director of E-TON
Solar Tech.Co., Ltd,
and Inventec
Development Japan
Corporation
－
－
B.S. in Industrial Engineering and
Enterprise Information, Tunghai
University
Digital Equipment Corporation
Representative of
Inventec (Czech) s.r.o
None
None
None
－
－ Catholic University
None
None
None
None
None
None
None
None
－
B.S. in Electrical Engineering, Fu Jen
－
－
Microtek International Inc
Ph.D. in Industrial Engineering, Purdue
85,278 0.00%
－
－
－
－ University
The Boeing Company
19
Title
Nationality
Current
Shareholding
Spouse & Minor
Shareholding
Shares
Shares
%
%
Shareholding
By Nominee
Arrangement
Shares
Relationship
None
None
None
None
None
None
None
None
None
None
None
None
－
B.B.A. in Business Administration,
Senshu University
M.B.A. in Business Administration,
Taiwan National University
Alpha Networks
None
None
None
None
－
－
B.B.A. in Accounting, National Cheng
Kung University
M.B.A. in Executive Master of Business
Administration, National Cheng-Chi
University
Note 4
None
None
None
－
－
M.B.A., Missouri State University
Digital Equipment Corporation
None
None
None
None
－
－ Taipei University of Technology
None
None
None
None
None
None
None
None
Ph. D. in Electrical Engineering,
R.O.C
Chang,
Nai-Wen
2004.12.01
R.O.C
Hong,
2006.03.01 382,010 0.01% 14,986 0.00% －
Kuo-Ching
Vice
President
Vice
President
R.O.C
Chang
Yiu-Lang
%
Name
2013.07.30
R.O.C
Selected Current
Positions
Title
Chen,
Yea-Ping
Senior Vice
President
Vice
President
Name
On-board
Date
120,000 0.00%
20,000 0.00%
－
－ University of Wisconsin-Madison
Philips Semiconductors
2007.05.01
28,857 0.00%
－
－
Vice
President
R.O.C
Yu,
Chin-Pao
2009.01.20
Vice
President
R.O.C
Chien,
Kuei-Fen
2010.01.22
25,068 0.00%
Vice
President
R.O.C
Lou,
Jin-Pang
2010.02.23
44,613 0.00%
Vice
President
R.O.C
Yi,
Fu-Ming
2010.12.28
－
－
－
－
707,576 0.02% 175,105 0.00%
－
－
－
－
－
LL.M. in Law, University of Minnesota
VIA Technologies Inc.
M.B.A. in Executive Master of Business
－ Administration, National Cheng-Chi
University
B.S. in Electrical Engineering, National
573 0.00%
Quanta Computer lnc.
65,637 0.00%
－
－
－
－
20
B.S. in Electrical Engineering, Tatung
University
Title
Vice
President
Nationality
R.O.C
Name
Tsai,
Yuh-Chen
On-board
Date
Shareholding
Current
Shareholding
Spouse & Minor
Shareholding
Shares
%
Shares
%
Shares
－
－
－
－
－
By Nominee
Arrangement
Selected Current
Positions
%
Title
Name
Relationship
None
None
None
None
None
None
None
None
M.S. in Engineering and Computer
2010.12.28
－ Science, Syracuse University
Arima Computer Corp.
R.O.C
Hsu,
Ching-Wu
2012.01.16
88,508 0.00%
－
－
－
－
M.B.A in Finance and Business
Administration, National Taiwan
University of Science and Technology
Sanyo Electric Corp., Ltd.
Vice
President
R.O.C
Ting,
Chin-Yun
2012.05.29
96,520 0.00%
－
－
－
－
Hofstra University Master of Science
First International Computer
None
None
None
None
Vice
President
R.O.C
Chou,
Shao-Hsin
2013.07.30
592,615 0.02%
－
－
－
－
B.S. in Computer Science and Information
Engineering, Tamkang University
None
None
None
None
Vice
President
R.O.C
Tsung,
Yu-Lin
2013.07.30
－
－
Ph.D. in Computer Science, National
Chiao Tung University
Institute for Information Industry
Yuan Chi Computer Corp.
Director and President
of Chongqing Rongjie
Cloud Service Co.,
Ltd.
None
None
None
Senior
Director of
Talent Center
R.O.C
Yu,
Win-Chee
2011.10.01
－
－
M.S. in Communications Engineering,
National Chiao Tung University
None
None
None
None
Director of
Finance
Center
R.O.C
Liang,
Wen-Jan
2008.08.01
－
－ University
None
None
None
None
Director of
Talent Center
R.O.C
Lin,
Shih-Pin
2015.03.30
None
None
None
None
Director of
Finance
Center
R.O.C
Hsiao,
I-Ying
2015.04.01
None
None
None
None
Vice
President
－
－
－
－
573,636 0.02% 156,922 0.00%
B.B.A. in Economics, National Taiwan
－
－
－
－
OCBC Bank
M.S. in Manufacturing Engineering,
28,000 0.00%
－
－
－
－ Boston University
Radiant Opto-Electronics Corporation
M.B.A., Baruch College, City University
996 0.00%
676 0.00%
－
－ of New York
CTBC bank
21
Note 1:
Chairman of Inventec Huan Hsin (Zhejiang) Technology Co., Ltd., TPV-Inventa Holding Ltd., TPV-Inventa Technology Co., Ltd.,
TPV-Inventa Technology (Fujian) Ltd.；Director of Inventec Corporation, Inventec Investments Co., Ltd., Inventec Holding (North
America) Corp., Inventec Electronics(USA) Corp., Inventec Manufacturing(North America) Corp., Inventec Configuration(North America)
Corp., Inventec Distribution(North America) Corp., IEC Technologies,S.de R.L.de C.V..
Note 2:
Chairman of Inventec Technology (Chongqing) Corp., Inventec (Pudong) Corp., Inventec Hi-Tech Corp., Inventec (Pudong) Technology
Corp., Inventec (Shanghai) Corp., Inventec (Shanghai) Service Co., Ltd., Inventec (Chongqing) Corp., Inventec (Chongqing) Service Co.,
Ltd., Inventec (Beijing) Electronics Technology Co., Ltd., Inventec (Tianjin) Electronics Co., Ltd., and Inventec Asset-Management
(Shanghai) Corporation；President of Inventec (Shanghai) Corp., and Inventec (Shanghai) Service Co., Ltd. ; Director of Inventec Huan
Hsin (Zhejiang) Technology Co., Ltd., TPV-Inventa Holding Ltd., Inventec Appliances Corp., Inventec Besta Co., Ltd., Inventec Holding
(North America) Corp., Inventec Electronics(USA) Corp., Inventec Manufacturing (North America) Corp., Inventec Configuration(North
America) Corp., Inventec Distribution (North America) Corp and E28 Limited ; Representative of Inventec Manufacturing (India) Private
Limited.
Note 3:
Dircetor of TPV-Inventa Holding Ltd., TPV-Inventa Technology Co., Ltd., TPV-Inventa Technology (Fujian) Ltd.；Representative of
Inventec Manufacturing (India) Private Limited.
Note 4:
Director and President of Inventec Investments Co., Ltd.；Director of E-TON Solar Tech. Co., Ltd., Inventec Solar Engergy Corporation,
Arima Communications Corp., Global Strategic Investments Fund and TPV- Inventa Holding Ltd.；Supervisor of TPV- Inventa
Technology Ltd., Inventec Besta Co., Ltd., and TPV-Inventa Technology (Fujian) Ltd.；Chief Executive Officer of Inventec Group Charity
Foundation；Supervisor of Inventec Development Japan Corporation.
22
2.2.3 Remuneration of Directors, Supervisors, the President, and Vice President
2.2.3.1 Remuneration of Directors
Unit: NT$ Thousands
Compensation
(A)
Title
Bonus
(C)
Allowance
(D)
Ratio of
total to net
income
Salary and
allowance
(E)
Severance
pay
(F)
Exercisable
employee
stock option
(H)
Employees bonus
(G)
Name
stock
7,000
-
7,000
-
-
-
-
-
Companies in the
financial report
cash
769
Ratio of total
to net income
The company
stock
340
Companies in the
financial report
cash
26,140
The company
Companies in the
financial report
17,600
Companies in the
financial report
The company
1.82%
Number
of
restricted
employee
shares
(I)
The company
Companies in the
financial report
Compani
es in the
financial
report
The company
The
company
Companies in the
financial report
The company
Companies in the
financial report
The comp-any
Companies in the
financial report
The company
Companies in the
financial report
The company
Companies in the
financial report
The company
Chairman
Retirement
Pension
(B)
Relevant remuneration received by directors who are also employees
Compensation paid to directors from an
invested company other than the company's
subsidiary
Remuneration
Lee,
Tsu-Chin
Director
Yeh, Kuo-I
Director
Wen,
Shih-Chih
Director
Chang,
Ching-Sung 15,480
Director
Huang,
Kuo-Chun
15,480 284 284
83,519
83,519 1,720
1,950 1.82%
Independent Chang,
Director
Chang-Pang
Independent Chen,
Director
Ruey-Long
23
2.26% 2.43%
-
Name
Total of (A+B+C+D)
Bracket
The Company
Total of (A+B+C+D+E+F+G)
Companies in the
financial report
The Company
Companies in the
financial report
Below NT$ 2,000,000
NT$2,000,000(Included) ~
$5,000,000(Excluded)
Chang, Chang-Pang,
Chen, Ruey-Long
Chang, Chang-Pang,
Chen, Ruey-Long
Chang, Chang-Pang,
Chen, Ruey-Long
Chang, Chang-Pang,
Chen, Ruey-Long
$15,000,000(Excluded)
Wen, Shih-Chih,
Huang, Kuo-Chun
Wen, Shih-Chih,
Huang, Kuo-Chun
Wen, Shih-Chih,
Huang, Kuo-Chun
Wen, Shih-Chih,
Huang, Kuo-Chun
$30,000,000(Excluded)
Lee, Tsu-Chin,
Yeh, Kuo-I,
Chang, Ching-Sung
Lee, Tsu-Chin,
Yeh, Kuo-I,
Chang, Ching-Sung
Lee, Tsu-Chin,
Yeh, Kuo-I,
Chang, Ching-Sung
Lee, Tsu-Chin,
Yeh, Kuo-I,
Chang, Ching-Sung
$10,000,000(Excluded)
$50,000,000(Excluded)
$100,000,000(Excluded)
Over NT$100,000,000
Total
7
7
24
7
7
2.2.3.2 Remuneration of the Supervisors
Unit: NT$ Thousands
Remuneration
Title
Name
Supervisor
Cheng, Hsien-Ho
Supervisor
Wang, Ping-Hui
Supervisor
Shyh Shiunn
Investment Corp.
Representative,
Yang,Chiung-Nan
Compensation (A)
Bonus (B)
Ratio of total
to net income
Allowance (C)
The
Company
Companies in the
financial report
The
Company
Companies in the
financial report
The
Company
Companies in the
financial report
The
Company
5,160
5,160
14,739
14,739
780
1,062
0.37%
0.38%
-
Name
Total of (A+B+C)
Bracket
The company
Below NT$ 2,000,000
NT$2,000,000(Included) ~ $5,000,000(Excluded)
Over NT$100,000,000
Total
Companies in the
financial report
Compensation paid
to directors from
an invested
company other
than the company's
subsidiary
Companies in the financial report
Wang, Ping-Hui, Shyh Shiunn Investment Corp.
Wang, Ping-Hui, Shyh Shiunn Investment Corp.
Cheng, Hsien-Ho
Cheng, Hsien-Ho
3
25
3
2.2.3.3 Remunerations paid to the management team
Unit: NT$ Thousands
Compensation
(A)
Bonus
(C)
Employees bonus
(D)
The company
Companies in the
financial report
3.76% 3.85% -
Number of
restricted Compensati
employee on paid to
shares
directors
Companies in the
financial report
-
Exercisable
employee
stock option
The company
46,100
Companies in the
financial report
-
The company
26
stock
Tsung, Yu-Lin
cash
Lou, Jin-Pang
Yi, Fu-Ming
Tsai, Yuh-Chen
Hsu, Ching-Wu
Ting, Chin-Yun
Chou, Shao-Hsin
stock
cash
Huang, Kuo-Chun
Wu, Yung-Tsai
Chang, Hui
Yang, Hsin-Hua
Tsai, Chih-An
Wen, Chi-Wai
Lin, Chin-Wen
Chen, Yea-Ping
Chang, Nai-Wen
Hong, Kuo-Ching
58,080 62,601 3,485 3,485 101,800 102,219 46,100
Chang Yiu-Lang
Yu, Chin-Pao
Chien, Kuei-Fen
Ratio of total
to net income
Compani
es in the
financial
report
The
company
Companies in the
financial report
The company
Vice President
Companies in the
financial report
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
The company
Executive Vice President
Senior Vice President
Companies in the
financial report
President
Name
The company
Title
Retirement
Pension (B)
-
-
-
from an
invested
company
other than
the
company's
subsidiary
130
Bracket
Name
The Company
Below NT$ 2,000,000
$5,000,000(Excluded)
Hsu, Ching-Wu, Tsung, Yu-Lin
Hsu, Ching-Wu, Tsung, Yu-Lin
$10,000,000(Excluded)
Lin, Chin-Wen, Chen, Yea-Ping , Hong, Kuo-Ching,
Yu, Chin-Pao, Chang, Nai-Wen, Ting, Chin-Yun,
Chien, Kuei-Fen, Chang, Yiu-Lang, Tsai, Yuh-Chen,
Chou, Shao-Hsin
Lin, Chin-Wen, Chen, Yea-Ping , Hong, Kuo-Ching,
Yu, Chin-Pao, Chang, Nai-Wen, Ting, Chin-Yun,
Chien, Kuei-Fen, Chang, Yiu-Lang, Tsai, Yuh-Chen,
Chou, Shao-Hsin
$15,000,000(Excluded)
Yang, Hsin-Hua, Yi, Fu-Ming, Lou, Jin-Pang
Yang, Hsin-Hua, Yi, Fu-Ming, Lou, Jin-Pang
$30,000,000(Excluded)
Huang, Kuo-Chun, Wu, Yung-Tsai, Chang, Hui,
Tsai, Chih-An, Wen, Chi-Wai
Huang, Kuo-Chun, Wu, Yung-Tsai, Chang, Hui,
Tsai, Chih-An, Wen, Chi-Wai
$50,000,000(Excluded)
$100,000,000(Excluded)
Over NT$100,000,000
Total
20
20
27
2.2.3.4 Employee Profit Sharing Granted to Management Team
Title
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Senior Director of Talent Center
Director of Finance Center
Director of Talent Center
Name
Stock
Huang, Kuo-Chun
Wu, Yung-Tsai
Chang, Hui
Yang, Hsin-Hua
Tsai, Chih-An
Wen, Chi-Wai
Lin, Chin-Wen
Chen, Yea-Ping
Chang, Nai-Wen
Hong, Kuo-Ching
Chang, Yiu-Lang
Yu, Chin-Pao
Chien, Kuei-Fen
Lou, Jin-Pang
Yi, Fu-Ming
Tsai, Yuh-Chen
Hsu, Ching-Wu
Ting, Chin-Yun
Chou, Shao-Hsin
Tsung, Yu-Lin
Yu, Win-Chee
Liang, Wen-Jan
Lin, Shih-Pin
Hsiao, I-Ying
-
28
Cash
49,100
Total
Unit: NT$ Thousands
Ratio of Total
Amount to Net
Income
49,100
0.88%
2.2.3.5 Compare and state the ratio of total remuneration paid to the Company’s Directors, Supervisors, President and Vice Presidents by
the company and the companies in the consolidated financial statements to net income in the past two years.
Unit: NT$ Thousands
The Company
Item
Remuneration of Directors
Ratio of total to net income
Remuneration of the supervisors
Remuneration of the President and Vice President
Net income
2014
2015
124,569
1.76%
24,924
0.35%
244,345
3.44%
7,097,815
101,003
1.82%
20,679
0.37%
209,465
3.76%
5,563,633
2014
125,243
1.76%
25,207
0.36%
255,396
3.60%
7,097,815
2015
101,233
1.82%
20,961
0.38%
214,405
3.85%
5,563,633
2.2.3.6 Policy, standards, and combination of remuneration payment to directors, supervisors, President, and Vice President, the remuneration
determination procedure, and the relationship between operation performance and future risk
(1). Remuneration payment methods to directors and supervisors of the Company are stipulated below:
On December 29, 2015, the Board of Directors of the Company passed a resolution amending the Articles of Incorporation ; it
still needs to be passed as a resolution of the 2016 general meeting before being officially issued. According to the amended
Articles of Incorporation of the Company, if the Company has annual profits, no less than 3% of them shall be allocated as
employee remuneration, and no more than 3% as director and supervisor remuneration. However, when the Company
experiences accumulated losses, it shall reserve the compensation amount in advance. The employee remuneration may be
issued in cash or stock; the issuing object may include employees subordinated to the company that conform to certain
conditions; and the conditions and methods thereof will be stipulated by the Board of Directors.
The remuneration payment depends on the participation degree and contribution value of each director and supervisor and also
refers to normal industry standards; it will be decided by the Board of Directors after being reviewed by the Remuneration
29
Committee and shall not exceed the upper limit stipulated in the Company’s Articles of Association. Directors of the Company
carry out the duties of other company directors or supervisors stated in the consolidated statement on behalf of the Company;
supervisors of the Company concurrently assume the duty of other company supervisors stated in the consolidated statement
and thus receive a traffic allowance. Apart from that, they do not receive any remuneration from reinvestment business beyond
the Company.
(2). The relevant measures related to remuneration payment to the President and Vice President are stipulated below:
The remuneration payment to the President and Vice President is reviewed by the Remuneration Committee and proposed to
the Board of Directors for resolution before making a decision. Regarding the performance assessment and remuneration of
the manager, apart from referring to normal industry standards and considering the personal time engaged, the responsibility
assumed, achievement of personal targets, performance in assuming other duties, and the remuneration paid by the company to
employees of the same position, the Remuneration Committee of the Company also takes the achievement of short-term and
long-term business targets of the Company, related rationality of company operation performance and future risks, etc. as its
basis.
30
2.3 Implementation of Corporate Governance
2.3.1 Board of Directors
A total of 13 (A) meetings of the Board of Directors were held in 2015, the average attendance rate is 94%. Directors’ attendance status is as follows:
Title
Name
Attendance in
Person (B)
By Proxy
Attendance Rate (%)
B/A
Chairman
Lee, Tsu-Chin
13
0
100%
Director
Yeh, Kuo-I
13
0
100%
Director
Wen, Shih-Chih
13
0
100%
Director
Chang, Ching-Sung
13
0
100%
Director
Huang, Kuo-Chun
12
1
92%
Independent Director
Chang, Chang-Pang
12
1
92%
Chen, Ruey-Long
10
3
77%
Remarks
Other matters that should be recorded:
I. For the matters specified in Point 3 of Article 14 of the Securities Exchange Act, and other resolutions of the Board of Directors in which
an independent director opposes or reserves opinion and with record or written statement, the date of the Board of Directors, stage,
proposal content, opinions of all independent directors, and the Company's handling of independent directors' opinion shall be specified:
Not available.
II. For the director's avoidance of proposal with a conflict of interest, the name of the director, proposal content, reason for conflict of
interest, and participation in voting shall be specified: Not available.
III.Objective of strengthening the function of the Board of Directors in the current year and recent years (e.g. set up an Audit Committee,
improve information transparency, etc.) and execution assessment: The Company adopted the system for nominating candidates in 2014
to elect the 14th session of directors and supervisors, electing seven directors (including two independent directors) and three supervisors;
the term of office is three years (from June 12, 2014 to June 11, 2017) in order to strengthen the independence and diversity of the Board
of Directors. If a member of the Board of Directors receives further continuous education during the term of office, the Company will buy
31
liability insurance for the business scope executed by all directors and supervisors. The Board of Directors is responsible to the
Shareholders' Meeting and exercise its function and power according to relevant laws and decrees, the Company’s Articles of Association,
and resolutions of Shareholders' Meetings. Members of the Board of Directors adhere to the attitude of loyalty, prudence, and fulfilling
manager's responsibility, take company interests as their premise, assess company operation strategies, risk management, annual budget,
and business performance, and supervise significant matters, such as major capital expenditure, investment disposal, etc. Board of
Directors meetings shall be convened at least once every quarter, and important resolutions shall be published immediately on the
company website for inquiry. The operation of the Board of Directors is subject to the "Rules for Board of Directors’ Discussion" and
follows the "Corporate Governance Best Practice Principles", "Code of Integrity Operation", "Code of Corporate Social Responsibility",
and execution objectives. Through the discussion of corporate governance issues, the Board of Directors communicates with an external
certified accountant to regularly review the corporate governance strategy every quarter; the support and persistence of the Board of
Directors to the "Inventec Internal Audit Penalty Point Provisions" has become important guidance and the best guarantee for the
Company to implement corporate governance and preventive (risk control) internal control system. The Company has established two
independent directors, who are concurrent members of the Remuneration Committee, and one of them is the convener of the
Remuneration Committee. On December 29, 2015, the Board of Directors passed a resolution to amend the Articles of Association as
follows: 1. In 2015, Shareholders' Meeting will amend the Articles of Association so that the number of independent directors shall be at
least two and no less than one fifth of the total number of directors. 2. The reelection of the Shareholders' Meeting will be conducted in
2017, and all independent directors (no less than three independent directors) will take posts as members of the Audit Committee. The
setup of the Audit Committee further strengthens the operation of the Board of Directors. Independent directors possess professional
knowledge, their stock holding and part-time job are restricted, and they shall maintain independence with the scope of business execution
and shall not have direct or indirect conflict of interests with the Company. To be more capable of exerting the maximum function and
increase the transparency of the Company’s financial statements, it can guarantee shareholders' rights and interests and improve company
value to achieve the objective of sustainable operation. In order to improve information transparency, in addition to disclosing significant
resolution matters of the Board of Directors on the company website, the Company has also set up the interested party zone to achieve the
purpose of full communication with investors and timeliness of public information disclosure through the website and an implemented
spokesman system. In the securities and futures market, the Development Foundation's eleventh and twelfth listed company information
disclosure evaluation is Class A. In 2016, according to the "Corporate Governance Center" of the Taiwan Stock Exchange Corporation,
the second corporate governance evaluation system, the evaluation result lists the Company as a top five percent company.
2.3.2 Audit Committee：NA
32
2.3.3 The Supervisors
A total of 13 (A) meetings of the Board of Directors were held in 2015, the average attendance rate is 100%. Supervisors’ attendance status is as
follows :
Title
Name
Attendance in person (B)
Attendance rate (%) B/A
Supervisor
Cheng, Hsien-Ho
13
100%
Supervisor
Wang, Ping-Hui
13
100%
Supervisor
Representative, Yang, Chiung-Nan
13
100%
Other matters that should be recorded:
I. Supervisor composition and responsibility:
(I) The Company designates three supervisors with three-year terms of office; supervisors shall have integrity, dependability, fair judgment,
professional knowledge, capability of reading financial statements, etc.
(II) Responsibilities of the Company’s supervisors are as follows:
1. Investigate and supervise the business situation and financial condition of the company at all times in order to reduce the financial
crisis and operation risk of the Company and maintain the rights and interests of the Company and its shareholders.
2. Be familiar with relevant laws and regulations, understand the rights and obligations and responsibilities of the company directors, as
well as the responsibility division and operation content of each department, and attend the Board of Directors meetings to supervise
its operation and express opinions in a timely manner in order to master or find out abnormal conditions in advance.
3. Check all kinds of forms, lists, and data documents and issue reports.
4. Other responsibilities granted pursuant to laws and decrees or regulations.
(III) Communication circumstances (e.g. communication channels, methods, etc.) between the supervisor and company employees and
shareholders:
33
1. The Company has set up an employee opinion exchange zone, shareholder and interested party zone, and supervisor
intercommunication channel; through employee opinion investigation and the employee complaint system, the possible
disadvantages of the Company can be found and resolved in a timely manner through information delivery.
2. The supervisor shall actively participate in study and continuously attend further education courses in order to strengthen
professional quality and understand the trends of the latest laws and decrees; through the construction of internal and external
website information of the Company, the supervisor can fully achieve the communication purpose with internal employees and
external interested parties.
(IV) Communication circumstance (e.g. communication matters, methods, results, etc. regarding financial and business situations of the
Company) between the supervisor and the internal audit supervisor and accountant:
1. Pursuant to Article 15 of the "Guidelines for Public Companies to Establish Internal Control Systems", the internal audit supervisor
shall submit the audit report and tracking report to each supervisor for review before the end of the next month after completion of
the audit project, and the supervisor shall report the lookup result to the Board of Directors in the current month. Regarding the
instruction of the supervisor during review, the Audit Center will carry out subsequent improvement and tracking operations, and
after completion of improvement and tracking, it shall be reported to the supervisor and proposed to the Board of Directors.
2. When the supervisor establishes an audit project according to the instruction on important issues of the internal control system of
the Company, the Audit Center shall immediately establish an audit project team (or subsidiary supervision) to carry out
examination operations. Upon completion of the audit (or subsidiary supervision) project, it shall report the project audit result to
the supervisor and propose it to the Board of Directors.
3. The Audit Center will also regularly report audit business to each supervisor.
4. The supervisor shall keep in touch with the accountant at all times and communicate the important financial and business situations
of the Company by discussing corporate governance issues every quarter.
II. If the supervisor states an opinion when attending the Board of Directors meeting, the date of the Board of Directors meeting, stage,
proposal content, Board of Directors resolution result, and the company's handling of opinions stated by the supervisor shall be specified:
Not available.
34
2.3.4 Corporate Governance Implementation Status and Deviations from “Corporate Governance Best-Practice Principles for
TWSE/GTSM Listed Companies”
Item
1. If the Company established and
disclosed Corporate Governance
Principles in accordance with
Corporate Governance Best-Practice
Principles for TWSE/GTSM Listed
Companies?
Implementation Status
Y

N
Summary
The Company has formulated the "Inventec Corporation Corporate Governance Best
Practice Principles" pursuant to the "Listed Company Corporate Governance Best
Practice Principles"; the first amendment was passed by the Board of Directors on
January 27, 2015 and was disclosed on the company website and mops.twse.com.tw.
In order to establish good corporate governance and risk control, the Company takes
creating shareholder value and integrity operations as its objective and formulates
relevant corporate governance rules under the premise of complying with the basic
requirements of laws and ethical standards. In order to guarantee shareholder
equality, the Company has formulated the Code of Integrity Operation, Codes of
Ethical Conduct, Global Employee Code of Conduct Management Measures, and
Procedures for Handling Material Inside Information in order to regulate information
confidentiality and prevent insider trading and conflicts of interest, which will impact
the rights and interests of the Company. Furthermore, the Company provides
complaint channels and procedures to strengthen the enterprise’s attention to the
rights and interests of interested parties. Through the internal and external company
website, e-mail, and contract, the Company carries out educational propaganda on
corporate governance laws and decrees, so that company directors, supervisors,
managers, and employees can fully understand and abide by laws and codes of
conduct related to the businesses engaged by them.
Listed subsidiaries of the Company Group have not yet formulated such regulations,
but they all abide by relevant regulations.
35
Non-implementation
and its reason(s)
No difference.
Item
Y
2. Shareholding Structure & Shareholders’
Rights
(1) If the Company established internal 
procedures to handle shareholder
suggestions, proposals, complaints
and litigation and execute
accordingly?
N
Summary
Non-implementation
and its reason(s)
(1) Pursuant to internal stock affairs operation procedure, the Company assigns stock
affairs and relevant responsible units to be responsible for handling shareholder
suggestions, doubts, disputes, litigation, etc. and implement them according to
procedures; the Company otherwise appoints a professional stock affairs agency
as the window for serving shareholders.
No difference.
(2) If the Company maintained of a list
of major shareholders and a list of
ultimate owners of these major
shareholders?

(2) In case of change of stock rights held by an insider (director, supervisor, manager,
and shareholder holding more than 10% of the total stock), the Company will
declare such at mops.twse.com.tw on a monthly basis, so that the stock affairs
unit can instantly and effectively master major shareholders and the final
controller list of the major shareholders.
No difference.
(3) If risk management mechanism and
“firewall” between the Company
and its affiliates are in place?

(3) The internal control of the Company covers risk management and operation
activity of the operation level and has formulated the "Subsidiary Management
Measures" to supervise operation management and financial and business
information of the subsidiary in order to implement the risk control mechanism to
the subsidiary. The Company has also formulated written specifications for
financial business related operations between and among affiliated enterprises; all
business contacts shall be handled according to the operation specifications in
order to completely eradicate non-routine transactions.
No difference.
(4) If the Company established internal
policies that forbid insiders from
trading based on non-disclosed
information?

(4) The Company has formulated the "Codes of Ethical Conduct" and "Insider
Trading Prevention Management Operation Procedure", among others, to prohibit
company insiders from utilizing information undisclosed to the market to transact
negotiable securities; internal educational training and literature are carried out
regularly.
No difference.
36
Item
3.Structure of Board of Directors and its
responsibility
(1) Does the Board of Directors set and
implement a diversification policy?
Y
N
Summary
Non-implementation
and its reason(s)

(1) Pursuant to Article 20 of the "Inventec Corporation Corporate Governance Best
Practice Principles", the Company has formulated diversified policies for
members of the Board of Directors and implements them. Basic conditions and
value, as well as gender, age, nationality, culture, etc., shall be considered, and
they shall possess professional knowledge and skills, especially the knowledge,
skills and quality required to perform their duty, including operation judgment,
accounting and financial analysis, crisis management, leadership and
decision-making ability, and industry knowledge and international market view.
The Company designates seven directors (including two independent directors)
and three supervisors.
No difference.

(2) All resolutions of the Company shall be passed by the Board of Directors. There
are three members of the Remuneration Committee, who will be appointed
through resolution of the Board of Directors. The Company appoints two
independent directors, who are concurrent members of the Remuneration
Committee, and one of them is the convener of the Remuneration Committee. In
2016, the Shareholders' Meeting will amend the Articles of Association so that
the number of independent directors shall be at least two and no less than one
fifth of the total number of directors; the reelection of the Shareholders' Meeting
will be conducted in 2017, and all independent directors (no less than three
independent directors) will take posts as members of the Audit Committee. The
Company sets up the "Social Responsibility Group", which will be dedicated to
promoting corporate social responsibility related affairs.
No difference.
(3) If the Company established methods 
and procedures to assess the
(3) Pursuant to Point 1 of Article 28 of the "Inventec Corporation Corporate
Governance Best Practice Principles", the Company regularly carries out
No difference.
(2) If the Company established any
other functional committee in
addition to Compensation
Committee,Audit Committee as
required by law?
37
Item
Y
performance of the Board and
conduct assessment on annual basis?
N
Summary
Non-implementation
and its reason(s)
performance assessment every year through the Remuneration Committee in
order to improve the function of the Board of Directors. In 2015, the Board of
Directors convened a total of 13 meetings, with one at least every month, to
decide on proposals and operation policies, in which they continuously
supervised the execution effect of the operation team and appointed and
dismissed managers, fulfilling the responsibility of the Board of Directors.
(4) If the Company assess the
independence of CPA periodically?

4. If the Company established
communication channel with
stakeholders and disclosed key
corporate social responsibility issues
frequently enquired by stakeholders on
the designated area of the corporate
website?

(4) Every year, the Company lets the Board of Directors decide to appoint an
accountant and regularly examines the accountant’s independence and evaluates
whether there is circumstance of violating No. 10 of the Code of Ethics bulletin
or the occurrence of circumstances stipulated in Article 47 of the Accounting Act.
It further confirms that the accountant has no other financial interests and
business relationship with the Company other than the costs of certifying and
finance and taxation cases, and checks whether the accountant is a director,
supervisor, manager, or shareholder of the Company or gets payments from the
Company, confirming that the accountant is not an interested party. The
appointment of an accountant and fee review can only be conducted after the
Company has confirmed its independence through the examination of the
accountant independence assessment result..
The Company has established a spokesman system, dedicated to handling relevant
matters, and the company website has created an interested party zone to maintain
communication channels with interested parties at any time through information
delivery by telephone, fax, e-mail, etc., for important corporate social responsibility
issues that concern interested parties and their feedback. The Company will also
properly handle matters to respect and maintain its due rights and interests.
38
No difference.
No difference.
Item
Y
N
Summary
Non-implementation
and its reason(s)
.
The Company has appointed the stock affairs agency department of "Taishin
International Bank Co., Ltd." to be responsible for serving shareholders and handling
affairs of the Shareholders' Meetings.
No difference.

(1) Through the company website (http://www.inventec.com), the Company updates
and discloses financial business and corporate governance information regularly
and for special matters. Furthermore, the Company utilizes Shareholders'
Meetings and Investor Conferences to describe the governance situation of the
Company to investors.
No difference.
(2) If the Company adopted any other

information disclosure channels
(e.g., maintaining an
English-language website,
appointing designated personnel to
handle information collection and
disclosure, appointing
spokespersons, webcasting investors
conference, etc)?
(2) The Company has set up Chinese and English websites and assigned dedicated
personnel to be responsible for the collection and disclosure of company
information; it has also set up a spokesman and agency spokesman system; when
convening an Investor Conference, the Company will also place the process
materials on the company website for investor's to look up and input them at
mops.twse.com.tw as required.
No difference.

1. Employee rights and interests: Pursuant to government laws and decrees and
personnel management measures of the Company, the Company provides all kinds
of basic due labor conditions, including a working hour mechanism and thorough
ask for leave system, as well as provides a stable and safe work environment, and
in addition to basic welfares, such as labor insurance, health insurance, pension
allocation, etc., employees can also enjoy regular health examinations, group
No difference
5. If the Company engaged professional
transfer agent to host annual general
shareholders’ meeting?
6. Information Disclosure
(1) If the Company set up a corporate
website to disclose information
regarding the Company’s finance,
business and corporate governance?
7. If the Company had other important
information to facilitate better
understanding of the Company’s
corporate governance practices
(including but not limited to
employee rights, employee wellness,
39
Item
investor relations, supplier relations,
rights of stakeholders, directors’and
supervisors’ training records, the
implementation of risk management
policies and risk evaluation measures,
the implementation of customer
relations policies, and purchasing
insurance for directors and
supervisors)?
Y
N
Summary
insurance, and thorough employee retirement measures.
2. Employee care: The Company has established the Occupational Safety and Health
Committee pursuant to laws to discuss safety and health related regulations. In
order to ensure employee safety and health, the Company has formulated the
"Occupational Safety and Health Policy", regularly holds all kinds of keynote
lectures and courses, provides physician consultation, opens diversified channel for
employee to express opinions and consultation, and creates good participation
sense and smooth two-way communication channel.
3. Investor relations: The Company takes guaranteeing shareholders' rights and
interests as its main objective, treats all shareholders equally, and instantly
announces relevant significant company information, such as finance, business,
change of insiders' stock holdings, etc. at "mops.twse.com.tw" pursuant to relevant
regulations.
4. Supplier relations: In addition to formulating "Codes of Ethical Conduct" and the
"Global Employee Code of Conduct Management Measures", the Company has
also formulated "New Manufacturer Assessment Management Measures" to
require new manufacturers to have good business reputation and conform to the
ethical requirements of the Company. In its "Purchase Contract", it shall explicitly
stipulate that suppliers shall abide by a special guarantee clause, and the payment
of commission, proportion commission, brokerage fees, tail end fees, or other
beneficial behaviors are prohibited. In 2015, the Company continuously held
Inventec Group GP and CSR supplier workshops, providing communication
channels to suppliers through explanation sessions and questionnaires, hoping to
set an example that will lead more supplier partners to jointly improve their
environmental protection awareness in order to fulfill our corporate social
40
Non-implementation
and its reason(s)
Item
Y
N
Summary
Non-implementation
and its reason(s)
responsibility.
5. Rights of interested parties: Operate pursuant to Articles 51-54 of the "Inventec
Corporation Corporate Governance Best Practice Principles" and set up an
interested party zone.
6. Execution circumstances of the risk management policy and risk measurement
standards: Through an external audit unit and execution of the internal control
system, the Company has properly identified, assessed, and reduced all kinds of
operation risks. In addition to controlling daily operation procedures, the Company
has established a crisis response team in a timely manner to supervise the
execution of risk control at any time in order to reduce adverse impacts on the
Company.
7. Execution circumstance of customer policy: The Company has formulated an
appropriate customer policy and operation target and adjusts its operation strategy
in a timely manner to achieve the target.
8. Circumstances of buying liability insurance for directors and supervisors: The
Company has bought relevant liability insurance for its directors and supervisors.
9. Situation of director and supervisor's attendance in Board of Directors meetings:
Board of Directors meetings are regularly convened, and directors and
supervisors actively attend; the Company reports the attendance situation of
directors and supervisors online in a timely manner.
8. If the Company implemented a
self-evaluation on corporate
governance or authorized any other
professional organization to conduct

Except for participating in securities and futures market development foundation
information disclosure assessment, the Company has not appointed other professional
institutions to issue a corporate governance assessment report, but it independently
evaluates its compliance with corporate governance every year and makes
41
No difference
Item
Y
such evaluation (if yes, please state if
the Board of Directors provided any
comment and what was the evaluation
result along with its major deficiencies,
suggestions and improvement plan)?
N
Non-implementation
and its reason(s)
Summary
step-by-step improvements. In 2016, according to the "Corporate Governance
Center" of the Taiwan Stock Exchange Corporation, the second corporate governance
evaluation system, the evaluation result lists the Company as a top five percent
company.
9. Continuing Professional Education (CPE) Hours for Directors and Supervisors in 2015
Title
Chairman
Director
Name
Lee,
Tsu-Chin
Yeh, Kuo-I
Course
Hours
Institute
Combination of building and land taxation introduction and impact
1.5
Taiwan Corporate Governance Association
Discuss enterprise risk management and corporate governance from
procurement practice
1.5
The impact of report examination by new accountants on readers of
financial statements
1.5
Introduction of the Cross-Strait Tax Treaty
1.5
1.5
1.5
1.5
1.5
42
Title
Director
Director
Director
Name
Wen,
Shih-Chih
Chang,
Ching-Sung
Huang,
Kuo-Chun
Independent Chang,
Director
Chang-Pang
Course
Hours
Institute
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
43
Title
Name
Independent Chen,
Director
Ruey-Long
Supervisor
Supervisor
Wang,
Ping-Hui
Cheng,
Hsien-Ho
Shyh Shiunn
Investment Corp.
Supervisor
Representative,
Yang,
Chiung-Nan
Course
Hours
Institute
1.5
How to properly protect business secrets, prevent fraud, and
strengthen corporate governance
3.0
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
1.5
44
10. Continuing Professional Education (CPE) Hours for Managers in 2015
Title
President
Vice President
Name
Huang,
Kuo-Chun
Yu,
Chin-Pao
Course
Hours
Institute
1.5
Discuss enterprise risk management and corporate governance
from procurement practice
1.5
1.5
1.5
The impact of a public company's revision of the Guidelines for
Public Companies to Establish an Internal Control System on
enterprise corporate governance and the response
3.0
Accounting Research and Development Foundation1
Enterprise secret leakage case analysis and studies on legal
responsibility of the newly amended Trade Secret Act
3.0
Accounting Research and Development Foundation1n
Understand the meaning of trust and legal responsibility of
fraud/perfidy from the judicial point of view and relevant case
analysis
3.0.
No. 15 of the International Financial Reporting Standards:
customer contract income analysis
3.0
Hsu,
Ching-Wu
Important accounting subject auditing practice workshop
6.0
Securities and Futures Institute
Vice President
Workshop to discuss fraud risk from circulation control operation
6.0
Securities and Futures Institute
Director of
Finance Center
Liang,
Wen-Jan
"Advanced India Character Guidance" seminar
3.5
KPMG Accounting Firm
2015 Corporate Governance Assessment Symposium
3.5
Taiwan Stock Exchange Corporation
Director of
Finance Center
Hsiao,
I-Ying
2015 global economic outlook and foreign currency market
analysis seminar
3.5
Cathay United Bank Co., Ltd.
"Advanced India Character Guidance" seminar
3.5
KPMG Accounting Firm
45
11. Certificate of License
Title
Persons
Taiwan CPA
4
CIA
4
Taiwan CIA
5
CCSA
1
Public company accounting supervisor with professional certification
1
Stock Affair Specialist
2
Enterprise Internal Control Basic Ability
5
Note: Unless otherwise described, the listed subsidiaries of the Company Group comply with relevant regulations upon corporate governance operation.
46
2.3.5 Status of Compensation Committee
2.3.5.1 Compensation Committee
Met one of the following professional qualification requirements
with at least five years work experience
Criteria
Title
(Note1)
Name
An instructor of higher
A judge,public prosecutor,
position in a department of
attorney, CPA, or other
commerce,law, finance,
professional or technical
accounting, or other
specialist who has passed a
academic department related
national examination and bee
to the business needs of the
awarded a certificate in a
company in a public or
profession necessary for the
private junior college, or
business of the company
university
Have work
experience in the
areas of
commerce,law,
finance, accounting,
or otherwise
necessary for the
business of the
company
Independence（Note2）
1
2
3
4
5
6
7
8
Number of
other public
companies in
Note3
which the
individual is
concurrently
serving as an
Compensation
Committee
member
Independent
Director
Chang, Chang-Pang



       
3
Y
Independent
Director
Chen, Ruey-Long
-
-

       
4
Y
Other
Chuang, Chau-Sui
-
-

       
0
-
Note1：Title: Ddirector, Independent Director, and other。
Note2：During the 2 years before being appointed or during the term of office, a remuneration committee member shall have been or be any of the following:
（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 who holds shares, together with those held by the person's spouse, minor children, or held by the person under any
other's name, in an aggregate amount of 1 percent or more of the total number of issued shares of the company or ranking in the top 10 in
shareholding.
47
（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 that directly holds 5 percent or more of the total number of issued shares of the
company or ranks in the top 5 in shareholding.
（6） Not a director, supervisor, managerial officer, or shareholder holding 5 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, or an owner, partner, director, supervisor, or managerial officer of a sole proprietorship, partnership, company, or
institution that, provides commercial, legal, financial, or accounting services or consultation to the company or to any affiliate of the company, or a
spouse thereof.
（8） Not been a person of any conditions defined in Article 30 of the Company Act.
Note3：If title is Director, please describe in accordance with the Article 6 item 5 of “Regulations Governing the Appointment and Exercise of Powers by the
Remuneration Committee of a Company whose stock is listed on the Stock Exchange or Traded Over the Counter”.
48
2.3.5.2 The state of The Compensation Committee's implementation
A. The Compensation Committee comprised of 3 members.
B. Tenure of the second session of Compensation committee is from 24th June, 2014 to 11th June, 2017. A total of 3 (A) meetings of the Compensation
Committee were held in 2015, the average attendance rate is 89%, the status of attendance is as follows:
Title
Name
Attendance in Person
(B)
By Proxy
Attendance Rate (%)
B/A
Remarks
Chairman
Chang, Chang-Pang
2
1
67%
Member
Chen, Ruey-Long
3
0
100%
Member
Chuang, Chau-Sui
3
0
100%
Other information to be disclosed:
1. If Board of Directors did not adopt or revise the proposal made by the Compensation Committee, please specify the date, session, agendas and
resolutions of the Board of Directors meeting and how the Company handled the proposal made by the Compensation Committee ( If amount
of the compensation approved by the Board of Directors is higher than that proposed by the Compensation Committee, please specify the
reasons and differences in proposals.): None.
2. If any members of the Compensation Committee were against or reserved their opinions towards the resolutions, please specify the date,
session, agendas, opinions of all members and how the opinions were handled: None.
49
2.3.6 Implementation of Corporate Social Responsibility
Item
Y
1. Exercising Corporate Governance
(1) If the Company established

corporate social responsibility
(“CSR”) policy or system and
reviewed its implementation and
effectiveness?
N
Summary
Non-implement
-ation and its
reason(s)
(1) The Company has formulated corporate social responsibility policies pursuant to the "Inventec
Corporation Code of Corporate Social Responsibility", believes in "corporate governance"
internally, practices "corporate citizenship" externally, and promotes relevant works and
activities through the Board of Directors operation, internal control system, and four directions
of "environmental protection, culture, poverty relief, and community".
Listed subsidiaries of the Company Group have not yet formulated such regulations, but they all
abide by relevant regulations.
No difference
(2) If the Company conducted CSR
related trainings?

(2) The Company regularly holds educational training on corporate social responsibility, including
promoting the inclusion of corporate social responsibility into operation activities and the
development direction of the company and approves specific promotion plans for corporate
social responsibility.
No difference
(3) If the Company set up a unit
exclusively or concurrently to
execute CSR policies and if the
Board appointed member(s) of
management team to supervise
and report its implementation
status to the Board?

(3) The enterprise level of "corporate social responsibility" of the Company is the Chairman of the
Board of Directors, and the "Social Responsibility Group" is established under the Chairman to
be dedicated to promoting corporate social responsibility related affairs and regularly report to
the Board of Directors.
Listed subsidiaries of the Company Group have not established a dedicated (part-time) unit to
promote corporate social responsibility, but they ask relevant units to cooperate in the
proceedings.
No difference
(4) If the Company adopted

appropriate remuneration
policies, integrated employee
performance appraisal with CSR
(4) The Company has established a Remuneration Committee to assist the Board of Directors in
implementing and evaluating the overall remuneration and welfare policy of the company and
the remuneration of directors, supervisors, and managers. The Company has formulated a
reasonable remuneration policy and takes the "Global Employee Code of Conduct Management
No difference
50
Item
Y
policies, and established a clear
and effective incentive and
discipline system？
Summary
Measures" as the basis regarding the conduct of all employees; those who violate relevant
regulations will be punished according to the relevant rewards and punishment provisions in the
"Personnel Management Measures", allowing employees' salary to jointly grow with company
operations in order to fulfill our corporate social responsibility.
2.Fostering a Sustainable Environment
(1) If the Company endeavored to

utilize resources more efficiently
and utilized renewable materials
which have a lower impact on
the environment?
proper environment
management system based on
the characteristics of the
industry where the Company
N
Non-implement
-ation and its
reason(s)

(1) In order to save the resources needed in product production, at the stage of design and
development, to maintain product function and quality, the Company has reduced the
components and consumable materials needed to be used in product production through the
design of common use and reduction of materials and recycling, reusing, etc. Green design is
the design for the environment, and its connotation is to integrate the consideration of
environment, safety, etc. into the stage of product development and design through a systematic
approach, then include it in the product life cycle, import the concept of green design into the
manufacturing process, utilize the selection of raw materials and product easy dismantling
design, reduce product environmental impact, and maintain product price, efficiency, and
quality at the same time. The green design strategies of Inventec are divided into the following
eight points: 1. Spare no effort to seek approaches to reduce environmental impact; 2. Lessen
the total energy consumption in the product life cycle; 3. Mitigate the burden on the land; 4.
Design for clean production and use; 5. Design for durability; 6. Design for best function; 7.
Design for reuse, recovery, and recycling; 8. Avoid using raw materials with toxic substances in
the product.
No difference
(2) In recent years, the Company has gradually established a thorough environmental sustainability
management system and has passed the external validation and verification conducted by
independent third party validation units; the four major environmental sustainability
management systems of the Company include ISO 14001 Environmental Management System,
IECQ QC 080000 Hazardous Substance Process Management System, ISO 14064 Greenhouse
No difference
51
Item
Y
belongs to?
(3) If the Company monitored the

impact of climate change on the
Company’s business operations,
checked greenhouse gas
inventory and established
corporate strategies on energy
conservation and reduction on
carbon and greenhouse gas
emission?
N
Summary
Non-implement
-ation and its
reason(s)
Gas Management System, and ISO 50001 Energy Management System. They are the
communication basis and mechanism of interested parties, such as a complaint and feedback
system of product quality, environmental issue, energy, etc. For complaints related to
environmental issues, interested parties can complain through the official website of Inventec.
(3) In response to the issue of global energy depletion and climate change and to fulfill our
responsibility of corporate citizenship, the Company has set medium and long-term reduction
goals, namely "Take 2010 as the benchmark, reduce greenhouse gas emissions by 10% by
2020", in the hope of making certain contributions to the green economy and climate change
mitigation. The "Inventec Group 2015 Greenhouse Gas Inventory Report" has been disclosed
on the company website. The Company has imported a greenhouse gas inventory system since
2008, and so far, it has completed nine years (from 2007 to 2015) of greenhouse gas inventory
operations. Meanwhile, in order to optimize inventory operations, in 2011, the Inventec GHG
Portal was set up, allowing all inventory operations and the verification of third party
certification units to be completed on the platform, thus effectively improving inventory quality
and efficiency, and reducing unnecessary manual operation time and manual mistakes in order
to achieve the effect of energy saving and carbon reduction. In 2015, the total greenhouse gas
emissions of Inventec and Inventec Appliances Corp.’ major plants was 270,564.911 tonnes of
carbon dioxide; the main emission originated from purchasing electricity externally, accounting
for 93.58% of total emissions, an increase of 8,288.13 tonnes of carbon dioxide compared to the
262,276.781 tonnes of emissions in 2014. The main reason for increase was the expansion of
production capacity in Chongqing Plant of Inventec and Nanjing Plant of Inventec Appliances
Corp.. Regarding environmental sustainability, the Company strives to break through the
current situation and simultaneously reduce long-term operation costs. Since 2012, the
Company set up a solar energy power generation cleaning device in Pudong Plant, which started
operation in 2013, and the solar energy power generation available is 3.2 million degrees of
electricity every year, accounting for approximately 1.54% of the total power consumption in
52
No difference
Item
Y
N
Summary
Non-implement
-ation and its
reason(s)
nine of Inventec’s major plants. Saving energy and improving equipment energy efficiency have
always been the major directions of the Company. Over the years, the Company has been
devoted to energy saving, carbon reduction, and green energy environmental protection and has
finally achieved the phased goal in green building in March 2016, showing our determination to
attach importance to green energy environmental protection and caring for the earth.
3.Preserving Public Welfare
(1) If the Company followed
relevant labor laws, and
internationally recognized
human rights principal, and
established appropriate
management policies and
procedures?
(2）If the Company established
grievance channel for
employees and handled
complaints appropriately?

(1) Pursuant to relevant labor laws and regulations and by referring to internationally recognized
basic labor human rights principles, the Company has established relevant work specifications
and announced them so that the employees can understand in order to ensure the rights and
interests of employees. Furthermore, the Company has formulated the "Global Employee Code
of Conduct Management Measures" for each plant, which stipulate the basic code of conduct for
the labor and capital on the basis of fairness and impartiality. As an employee of the Company,
when facing all kinds of work behaviors and ethical and legal problems, we shall aim to create
shareholder and employee value and ensuring social responsibility. Therefore, under the
precondition of following the basic requirements of laws and ethical standards of each country
or district, we shall comply with all kinds of internal control systems of the company.
No difference

(2) The "Global Employee Code of Conduct Management Measures" and "Employee Complaints
and External Reporting Management Specifications" of the Company have been explicitly
stipulated to encourage the report of any illegal conducts or behaviors that violate ethical
standards, and their punishment measures. Anyone who violates relevant regulation shall be
punished pursuant to the relevant reward and punishment provisions in the "Global Employee
Code of Conduct Management Measures" and "Personnel Management Measures".
Furthermore, each plant has set up an "Employee Complaint System" to guarantee a fair
arbitration mechanism when employees suffer from human rights related infringements. In the
plants in mainland China, a grassroots employee care group has been especially set up to handle
No difference
53
Item
Y
N
Summary
Non-implement
-ation and its
reason(s)
employee complaints and understand the employee's voice through employee interviews, etc.

(3) In order to improve safety, health, and environment management performance, the Company
has established a professional and effective safety, health, environment, and energy
management system, and plans the safety, health, and environment management plan pursuant
to relevant laws every year, including occupational disaster prevention in its implementation.
Emergency response drills are carried out for different issues, such as fire, flood, earthquake,
etc. Risk management strategies are discussed and formulated, and all kinds of international
information are promptly mastered. In the spirit of sustainable improvement of the safety,
health, environment, and energy management system, and with systematized practice and
performance, the Company adopts continuous cycling mechanisms from planning, execution,
and examination to correction, exerts independent protection and control functions, and reduce
potential risks to safety, health, environment, and energy in order to reduce operation risks.
Regarding health promotion, new employees are required to provide a physical examination
report pursuant to law before reporting for duty; for in-service employees, better than what is
required by relevant laws and decrees, the Company regularly carries out all employees’
health examination every year and implements health management operations. It also regularly
cooperates with medical and health institutions to hold all kinds of health lectures and
consultations.
No difference
(4) If the Company established a

periodical communication
mechanism to employees and
notified employees of significant
changes that may impact the
Company’s operation in a proper
manner?
(4) Through all the mechanisms described below, the Company provides channels for significant
company information delivery, real-time employee responses, and regular communication.
(A) Internal website and announcement delivery: For company operation information,
management policies, change of personnel organization, or other relevant significant
messages, employees will be notified instantly through internal website or written and
electronic announcement.
(B) Two-way talks between grassroots employees and senior supervisors: quarterly meetings
No difference
(3) If the Company provided safe
and healthy working
envirnonment to employees
and conducted relevant training
on safety and health
management to employees
periodically?
54
Item
Y
N
Summary
(C)
(D)
(E)
(F)
(G)
(5) If the Company provided career
planning, relevant training and
skill development for
employees?

Non-implement
-ation and its
reason(s)
and all kinds of symposium held occasionally.
Management policy and business process communication: communication meetings for
employee representatives from each department will be held regularly every month.
Cross-department communication and labor and capital communication: internal portal
platform has set up the multi-functional "Employee Opinion Exchange Area".
Instant response problem and information consultation: each unit has established a service
consultation window and service hot line.
Employee welfare policy and welfare promotion: employee welfare committee monthly
meetings and special meetings.
Grassroots employee care group: handle employee complaints and understand the
employee's voice through employee interviews, etc.
(5) By taking corporate operation objectives and development strategies as a training blueprint and
being oriented according to actual employee demands, the Company has developed an effective
career skills development training plan.
(A) Talent asset appreciation: Encourage employees to take in-service training in English,
Japanese, and patent courses in order to be in line with international norms.
(B) Corporate culture communication: After reporting for duty, new employees will receive
new employee training to become familiar with internal personnel regulation systems,
corporate culture, work environment, etc. All kinds of employee assemblies and
communication meetings will be held regularly, in which the senior supervisor will directly
deliver company operation philosophy and operation direction and describe the strategic
policy of each department.
(C) Supervisor cultivation plan: Basic supervisor training, advanced supervisor training, and
custom senior management courses will be regularly held in order to improve overall
management capability.
(D) Professional competency development: According to all kinds of demands to develop
55
No difference
Item
Y
N
Summary
Non-implement
-ation and its
reason(s)
professional skills and with the Technical Committee, designedly carry out professional
skill training courses.
(E) Condense team consensus: Carry out all kinds of team building and encouragement courses
and strategic operation meetings based on the demand and build high identification for
both the team and the company.
consumer protection measures
with regard to the process of
research and development,
procurement, production,
operations and services and its
grievance channels?

(6) The Company provides customers with a comprehensive and thorough customer relations
management service mechanism, from order receiving to the stage of product development and
to the stage of mass production. After product delivery, we track the product condition to the
customer end and actively care about all feedback from the customer. Through the customer
complaint management system and with a complete customer complaint standard operation
procedure, the Company prepares reason analysis, correction and prevention solutions in project
review, and confirms effectiveness in order to give feedback on problem solving to customers
and understand real customer demands to achieve the highest customer satisfaction.
Furthermore, by periodically holding customer business review meetings, the Company can
discuss relevant issues, such as technology research and development, product delivery, product
quality, after-sales service, quotation cost, energy saving and carbon reduction, green products,
corporate social responsibility, etc., in response to the issues that concern customers. In order to
solve the problems reflected by customers, the customer service and quality assurance
departments have established a 24-hour customer service hot line and customer service website
and provide instant services and response mechanisms through a stationed service mechanism at
OEM/ODM customer end.
No difference
(7) If the Company followed
relevant laws and regulations
and international guidelines on
marketing and labeling of

(7) In response to environmental protection legal issues of each country throughout the world and
provide customers with better environmental protection service, the Company will assist
customers in acquiring product green mark certification, including such certification
mechanisms as Taiwan Green Mark, China Green Mark (SEPA), China Energy Saving Mark
No difference
56
Item
Y
products and services?
N
Summary
Non-implement
-ation and its
reason(s)
(CECP), China Energy Saving Label (CEL), Energy Star, American Green Procurement
Assessment Guideline (EPEAT), etc., in order to provide global customers more
environmentally friendly products and services.

(8) The Company strengthens its cooperation with suppliers through mutual understanding to seek
win-win situations. Supplier management carries out various assessments on suppliers
according to customer requirements, laws and regulations, and international trends, including
propaganda, promotion, and audit of the supplier. Regarding new supplier assessment, through
technical skill development and evaluation, subcontractor supply capability evaluation,
purchasing operation system audits, supplier corporate responsibility investigation and
appraisal, on-site examination, HSF assessment, and signing of environmental protection
affidavit, it will guarantee that the requirements and control contents stipulated in relevant
international environmental protection laws and regulations and relevant environmental
protection specifications of the Company are applicable now and in the future.
No difference
(9) If the contracts with major

suppliers stipulated a clause that
allowed the Company to
terminate or rescind the contract
at any time shall the suppliers
violate CSR policies and cause
significant impact to the
environment and society?
(9) With regard to the various assessments of suppliers, in addition to the quality, cost, delivery
time, technical skill, and service that are assessed in the general industry, with the rise of
corporate social responsibility awareness, the Company will also extend the assessment scope to
green products and corporate social responsibility, and the assessment scope will correspond to
the Company's requirements for supplier, including the establishment of management systems
such as ISO 9001, ISO 14001, OHSAS 18001, EICC, etc. Through diversified assessment
consideration, the Company ensures that the cooperating supplier can specifically respond to
important supply chain issues, such as product environmental protection, manufacturing process
environmental protection condition operation requirements, restriction of the use of hazardous
substances, prohibiting child labor, guaranteeing employee rights and interests, workplace
safety, etc. The Company ensures that the supplier does not violate the aforementioned
circumstances through supplier SER auditing. Every year, the Company will perform an on-site
No difference
(8) Prior to engaging commercial
dealings, if the Company
assessed whether the supplier
had track record o negative
impact on the environment and
society?
57
Item
Y
N
Summary
Non-implement
-ation and its
reason(s)
audit on existing suppliers with medium and high risks and ask for improvement; furthermore,
contract contents explicitly stipulate a legal compliance clause, and in case of violation of
relevant important laws and regulations and having an obvious impact on the environment and
society, the contract can be terminated or canceled pursuant to such clause.
4. Enhancing Information Disclosure 
If the Company disclosed CSR
report and other relevant
information on its corporate website
and MOPS?
(1) On the principle of accuracy, openness, and transparency, the Company discloses relevant No difference
company information; through its investor service platform, the Company continuously and
instantly publishes corporate governance operation performance reports and financial
information on the information service disclosure platform and mops.twse.com.tw. All
corporate social responsibility related messages are also posted on the company website to be
read by the public.
5.If the Company established any guideline of corporate social responsibility in accordance with “Corporate Social Responsibility Best-Practice Principles for
TWSE/GTSM-Listed Companies” and please state the implementation status of the guideline and any reasons for non-implementation:
Pursuant to the "Listed Company Corporate Governance Best Practice Principles" and approved by Board of Directors in 2014, the Company has formulated the
"Inventec Corporation Corporate Governance Best Practice Principles"; the first amendment was passed by the Board of Directors on January 27, 2015, and its
operation has had no difference from the rules.
6.Other material information that helps to understand the operation of corporate social responsibility:
(1).Environmental protection:
To the Company, "environmental protection" is a part of its "social responsibility" in our top ten beliefs, namely "environmental protection, culture, poverty
relief, and community". In order to fulfill our corporate citizenship responsibility and practice the "green energy environmental protection" of our five major
policies, the Company has set Inventec's environmental objectives, environmental policies, and environmental projects in order to guide the overall power of
our colleagues to move towards a new vision of green sustainability.
58
Item
Y
N
Summary
Non-implement
-ation and its
reason(s)
(2). Community participation:
Integrate into community life with practical action and the long-term adoption of community parks and designate dedicated personnel for maintenance and
cleaning in order to provide community residents with a comfortable and clean public space.
(3). Social contribution:
In order to care for society, the Company responds to blood and love donation and is enthusiastic about social responsibility. From 2009 to 2015, the Company
has consecutively won the "Excellent Blood Donation Unit Award" issued by the Ministry of the Interior; based on the philosophy of enterprise society, the
Company has been devoted to improving its work environment and has been successful in constructing a good workplace, and has successively won the
affirmation of both the government and civil public credit institutions. In 2012, it won the "Labor Safety Excellent Unit - Enterprise Award" issued by Taipei
City and the "Excellent Breastfeeding Room Award" issued by Taipei City and Taoyuan County government; in 2013, it won the national "Labor Safety and
Health Excellent Unit Award", and "Energy Saving and Carbon Reduction Action Mark" issued by the Environmental Protection Administration, Executive
Yuan; in 2014, it won the "Healthy Workplace Certification - Health Promotion Mark" issued by the National Health Service, Ministry of Health and Welfare,
Executive Yuan, "ROC Enterprise Environmental Protection Award" issued by the Environmental Protection Administration, Executive Yuan, "2014 Taiwan
Corporate Sustainability Award - Gold Award", and Commonwealth Magazine’s 2014 "World Corporate Citizenship Award"; in 2015, it won the "Labor Safety
Excellent Unit Award" issued by the Ministry of Labor, Executive Yuan, "Certificate of Merit for Hazard-Free Working Hour Record", Commonwealth
Magazine’s "World Corporate Citizenship Award", the "National Excellent Occupational Safety and Health Unit Award" issued by the Ministry of Labor,
Executive Yuan, the "Enterprise Environmental Protection Award" issued by the Environmental Protection Administration, Executive Yuan, and the "Taiwan
Corporate Sustainability Report Award" issued by Taiwan Sustainable Energy Foundation, among others.
(4). Social service:
From 8:00 am to 9:00 am from Monday to Friday, the Company will arrange an internal security guard to ease vehicle congestion during office hours and
safeguard community traffic safety on surrounding roads of the Company.
(5). Social benefit:
Inventec encourages employees to actively participate in public benefit activities, such as minority group caring, literary and artistic activity, ecological
education, etc. In 2010, the Inventec Group Charity Foundation was established. Over the years, it has been carrying out heart-warming activities before the
59
Item
Y
N
Summary
Non-implement
-ation and its
reason(s)
Spring Festival and donating to dozens of social welfare charity groups, assisting them to input long-term social welfare occupation. It also evaluates the
fund-raising projects of social benefit charity institutions from all walks of life and selects projects that conform to the establishing purpose of Inventec
Foundation for donation. Since 2012, it has been adopting school children from Huiming Blind School in Taichung City every year, and in the dust explosion
that occurred in Formosa Fun Park in June 2015 and earthquake that occurred in Tainan, Kaohsiung in February 2016, it provided donations to respond to the
disaster relief work of the government. Furthermore, the social responsibility group of the Company also calls on colleagues to fundraise and regularly donates
to social welfare institutions, such as "Hsinchu City Charity Foundation" and "New Life Social Welfare Development Promotion Association", every month.
The Talent Center encourages colleagues to participate in World Vision - Hunger Thirty Experience Camp activity and also actively responds to the Ministry of
Health and Welfare to propagate the purchase of Mid-Autumn festival gift boxes promoted by disability social welfare institutions in order to support disabled
people to acquire the expertise to become independent. With regard to literary and artistic activities, in 2015, the Company donated to the Taipei Philharmonic
Foundation in order to hold the Taipei International Choral Festival activity; with regard to ecological conservation, over the years, the Company has
cooperated with the Wild Bird Society of Taipei to promote the environmental education course plan of Kwan-tu Nature Park. In addition to subsidizing school
children in remote districts for environmental and ecological education courses, it also calls on colleagues to serve as conservation volunteers at the Kwan-tu
wetlands.
(6). Consumer rights and interests:
The Company has provided product liability insurance, and has set up a related product customer service hot line.
(7). Human rights:
The Company has provided public accidental insurance and employee group insurance.
(8). Safety and health:
In addition to complying with the Occupational Safety and Health Act and relevant subordinate legislations and carrying out all kinds of matters as required,
the Company also effectively promotes the Taiwan Occupational Safety and Health Management System (TOSHMS) and International Occupational Health
and Safety Assessment Series (OHSAS 18001), implements all kinds of safety and health business management, and works together with community medical
and health resources to arrange employees to participate in the screening of four cancers (breast cancer, cervical cancer, oral cancer, colorectal cancer), bone
mineral density test, and physical fitness test, and also holds health lectures, etc. So far, the Company has won several awards, including: "Labor Safety
Excellent Unit - Enterprise Award", "Labor Safety and Health Excellent Unit - Five Stars Award", "Hazard-Free Working Hour Record Award", "Excellent
60
Item
Y
N
Summary
Non-implement
-ation and its
reason(s)
Health Workplace - Health Excellence Award", "Taipei City Excellent Breastfeeding Room Certification", "Taoyuan County Excellent Breastfeeding Room
Award", and "Blood Donation Excellent Enterprise Award", etc. Furthermore, the Company actively coordinates with the promotion of all kinds of government
policies, facilitates harmonious labor-capital relationships, and fulfills its corporate social responsibility.
The corporate social responsibility related information of the Company, such as corporate governance implementation, sustainable environment development,
social benefits, etc., are disclosed on the company website and mops.twse.com.tw.
7. Please provide further description for company product or corporate social responsibility report which is certified by relevant organization:
In order to improve the transparency, completeness, and reliability of information disclosure, for the "2015 Inventec Corporate Social Responsibility Report", the
Company designated a third party unit (SGS) to carry out substantial examination and assurance operations on the contents and data in the report according to
GRI G4 version "core option" in order to conform to the GRI G4 core option and AA1000 AS 2008 second type high assurance level.
Listed subsidiaries of the Company Group have not yet acquired relevant certification on corporate social responsibility report, but they all abide by relevant
regulations and have no significant difference.
Note: Unless otherwise described, the listed subsidiaries of the Company Group comply with relevant regulations upon Corporate Social Responsibility.
61
2.3.7 Implementation of Ethical Corporate Management Best Practice Principles
Items
Y N
1. Ethical Corporate Management Policy
(1) If the Company clearly specified

ethical corporate management and
process in its internal policies and
external document? If the Board
of Directors and the management
team committed to enforce such
policies rigorously and
thoroughly?
measures to prevent unethical
conduct and clearly prescribed the
specific ethical management
practice including operational

Summary
Non-implementation
and its reason(s)
(1) The Company attaches importance to its reputation and takes integrity and
sustainable operations as the maximum assets accumulated by company operations.
Among them, the "Codes of Ethical Conduct" and "Code of Integrity Operation" are
the ethical standards of conduct and specifications for integrity operation philosophy
for directors, supervisors, managers, employees, appointees, or those with
substantial control capability of the Company in order to prevent the occurrence of
conflicts of interest and acts without good faith, as well as let interested parties of
the company better understand the above company standards by which they must
abide. The official business discussion of the Board of Directors of the Company
takes good governance system establishment, supervision function improvement,
and management mechanism strengthening as its major purposes. Unless otherwise
prescribed by laws and decrees or regulations, the Board of Directors meetings shall
be conducted pursuant to the "Rules for Board of Directors’ Discussion" of the
Company. Upon convening a Board of Directors meeting, the discussion unit
designated by the Board of Directors shall prepare relevant materials for the Board
of Directors' examination at any time and notify managers from relevant
departments who are not directors to attend according to the contents of the
proposals. When necessary, the Company will also invite accountants and other
professionals to attend meetings.
No difference
(2) The Company has formulated schemes for preventing acts without good faith in the
"Global Employee Code of Conduct Management Measures" and "Employee
Complaints and External Reporting Management Specifications" pursuant to the
"Code of Integrity Operations", including operation procedures, behavioral
guidelines, violation punishments, and a complaint system, and implements them.
No difference
62
Items
Y N
Summary
Non-implementation
and its reason(s)
procedures, guiding principles,
penalties and grievance channels?
(3) If the Company adopted any
preventive measures against
business activities specified in the
second paragraph of Article 7 of
Ethical Corporate Management
Best Practice Principles for
TWSE/GTSE Listed Companies
or in other business activities
within the business scope which
are possibly at a higher risk of
being involved in an unethical
conduct?
2. Implementation of Ethical Corporate
Management
(1) If the Company checked whether
the respective counterparty holds
any record of unethical
misconduct and if the contract
terms required the compliance of
ethical corporate management
policy?

(3) In order to ensure the implementation of integrity operations, all new employees of
the Company must participate in the "Implement Internal Control System" and
relevant legal courses training, and an audit supervisor will report the important poor
external and internal control cases, deficiency analysis, and self-prevention
countermeasures in the Board of Directors meetings. Furthermore, the Company
signs improper benefits banned purchase contract with its suppliers, establishes an
effective accounting system and internal control system, regularly executes internal
auditing and self-assessment operations, and actually checks the company's
compliance in order to prevent the occurrence of acts without good faith.
No difference

(1) In addition to formulating the "Codes of Ethical Conduct" and "Global Employee
Code of Conduct Management Measures", the Company has also formulated "New
Manufacturer Assessment Management Measures" that require new manufacturers
to have good business reputations and conform to the ethical requirements of the
Company. In "Purchase Contracts", it shall explicitly stipulate that the supplier shall
abide by the special guarantee clause, in which the payment of commission,
proportion commission, brokerage fees, tail end fees, or other beneficial behaviors
are prohibited. In case of violation, the Company is entitled to terminate the contract
immediately, and the supplier shall unconditionally cooperate to ask such person that
received benefits for compensation.
No difference
63
Items
Y N
Summary
Non-implementation
and its reason(s)
(2) If the Company set up a unit,
under the direct supervision of the
Board of Directors, to handle the
implementation of ethical
corporate management and
reported to the Board of Directors
periodically?

(2) On November 10, 2015, the Board of Directors of the Company passed the second
amendment of the "Inventec Corporation Code of Integrity Operation", which
explicitly stipulates that the Talent Center is responsible for formulating and
supervising the execution of integrity operation policies and prevention schemes and
regularly report its execution situation to the Board of Directors.
No difference
policy on prevention of conflict of
interests, provided appropriate
reporting channel and executed
rigorously and thoroughly?

(3) The Company has formulated the "Codes of Ethical Conduct", "Global Employee
Code of Conduct Management Measures", and "Employee Complaints and External
Reporting Management Specifications" to standardize the prevention of the
occurrence of conflict of interest circumstances, explicitly stipulating that directors,
supervisors, managers, and all employees must not accept any gift or business
entertaining and prohibiting transactions or business contact between the company
and relatives of colleagues in order to avoid the impact of personal improper
interests on company rights and interests. The Company has formulated a conflict of
interest prevention policy in the "Code of Integrity Operations" and provides proper
channel for directors, supervisors, managers, and other interested parties attending
Board of Directors meetings to actively describe whether they have any potential
conflict of interest with the company, which they shall evade.
No difference
(4) If the Company established an
effective accounting system and
internal control system to
implement ethical corporate
management, and if internal
auditing department or CPA
conducted periodic auditing?

(4) The Company has established an effective accounting system and internal control
system.
(A)Accounting system: In order to implement integrity operations, an effective
accounting system has been established. The accounting system of the Company
was formulated pursuant to relevant laws and decrees and principles, such as the
Securities Exchange Act, Company Act, Business Accounting Act, Securities
Issuer Financial Statement Preparation Standards and International Financial
No difference
64
Items
Y N
Summary
Reporting Standards recognized by the Financial Supervisory Commission,
International Accounting Standards, interpretation and interpretation
announcements, etc., and was designed in accordance with company regulations,
aiming at meeting actual operation requirements.
(B) Internal control system: In order to implement integrity operations, an internal
control system has been established. The internal control system of the Company
is the management process following the "Guidelines for Public Companies to
Establish an Internal Control System" and was designed by a manager, approved
by the Board of Directors, and implemented by the Board of Directors,
managers, and other employees. Its purpose is to facilitate sound company
operation in order to reasonably ensure the achievement of the following
objectives: (1). Operation effect and efficiency. (2). The report is reliable, timely,
and transparent and conforms to relevant regulations. (3) Compliance with
relevant laws and decrees and regulations. Components of the Inventec internal
control system include: control environment, risk assessment, control operation,
information and communication, and supervision operation. The prevention (risk
control) internal control system of Inventec includes: preventive (risk control)
risk assessment, preventive (risk control) internal control, preventive (risk
control) internal audit, and preventive (risk control) self-assessment.
(C) "Inventec Internal Audit Penalty Point Provisions":
(a) Board of Directors' attention and commitment to the internal control system:
The Board of Directors approved the "Inventec Internal Audit Penalty Point
Provisions" to become the important driving force of Inventec to
continuously implement corporate governance, the internal control system,
internal audit, and self-assessment. It is also the best guarantee for the
Company to continuously and effectively implement the internal control
65
Non-implementation
and its reason(s)
Items
Y N
Summary
system. In order to continuously implement corporate governance, the
internal control system, and internal audit operations, the Board of Directors
has been instructed to formulate the "Inventec Internal Audit Penalty Point
Provisions", which was approved in August 2006 for implementation and
combines the internal control system of all units, execution effect of
self-assessment, and personal annual performance appraisal. "Inventec
Internal Audit Penalty Point Provisions" are not only the commitment and
oath of the Board of Directors to pay attention to corporate governance and
implementation of the internal control system, but also exert a rooting and
deepening effect on Inventec's promotion of corporate governance and
implementation of the internal control system.
(b) Do it right the first time: Carry out preventive (risk control) risk assessment
according to the nine major high risk policies (high risk items of Group
level, code of ethics, cost, International Financial Reporting Standards
(IFRS), asset preservation, legal compliance, business (production)
operation, credit investigation, and environmental protection high risk
indicator) in order to draft preventive (risk control) management mechanism
examination main points, check organizational processes, confirm high risk
control points, improve superfluous and repeated processes, and avoid
increasing workload and wasting resources without efficiency. We hope to
be able to determine potential operation risks as early as possible so that we
can take preventive measures, thus achieving the effect of "Prevention is
better than cure, do things right the first time".
(D) Execution and performance of the preventive (risk control) internal control
system:
(a) Corporate governance meeting: The Board of Directors and senior
66
Non-implementation
and its reason(s)
Items
Y N
Summary
supervisors of the Company attach great importance to corporate
governance and internal control system implementation. They not only
convene a Board of Directors meeting every month to review such issues as
corporate governance, operation, internal control system, etc., but also
convene corporate governance meetings every quarter. In addition to routine
examination by an accountant, the Board of Directors also appoints an
accountant to propose suggestions and descriptions on new laws and decrees
regarding the examination part in the corporate governance meeting
convened every quarter, and the Board of Directors complies with laws and
decrees to adjust the practice and regulation of corporate governance and
the internal control system. Meanwhile, the Board of Directors' support and
affirmation of the Audit Center also indicates the attention and
determination of Inventec’s Board of Directors to implementing corporate
governance and its actual performance through putting it into practice.
(b) Integrate and establish an all-in-one preventive (risk control) internal
control system:
Components of Inventec’s internal control system include: control
environment, risk assessment, control operation, information and
communication, and supervision operations. The prevention (risk control)
internal control system of Inventec includes: preventive (risk control) risk
assessment, preventive (risk control) internal control, preventive (risk
control) internal audit, and preventive (risk control) self-assessment.
Considering ethical value, organizational structure, responsibility
assignment, human resources policies, performance measurement, and
rewards and punishment of the Company, the Company integrates the
preventive (risk control) internal control system into ten major internal
control operation cycles and management systems, and has established a
67
Non-implementation
and its reason(s)
Items
Y N
Summary
thorough and effective preventive (risk control) internal control system. The
ten major cycles include: (1) Sales and cash receipts, (2) Purchase and
payment, (3) Production, (4) Salary, (5) Financing, (6) Real estate, plant,
and equipment, (7) Investment, (8) Research and development, (9)
Information, and (10) Other. Management systems include international
standard systems such as ISO 9001 Quality Management System, IECQ QC
080000 Hazardous Substance Process Management System, ISO 14001
Environmental Management System, ISO14064 Greenhouse Gas
Management System, OHSAS18001 Occupational Safety and Health
Management System, TOSHMS Taiwan Occupational Safety and Health
Management System, and ISO 50001 Energy Management System.
Furthermore, for the convenience of colleagues' inquiry and compliance, the
Company has established the "Preventive (Risk Control) Internal Control
System Procedure Document Inquiry System", with which employees can
inquire about internal control procedure documents of the subordinate
department on the internal company website at any time. If an employee
needs to inquire about cross-plant procedure documents, he/she can also
apply to the document control unit. In order to implement internal control
rooting work, the Company also arranges for all new employees to
participate in the new employee educational training course of "Preventive
(Risk Control) Internal Control System Implementation".
(c) Establishment of Inventec Group’s electronic preventive (risk control)
internal control system: The Company has consolidated all domestic and
overseas plants and all subsidiaries and plants to establish all-in-one
preventive (risk control) internal control system. The Inventec parent
company has issued a total of 355 preventive (risk control) internal control
system procedure documents; a total of 35 subsidiaries have issued 1,795
68
Non-implementation
and its reason(s)
Items
Y N
Summary
preventive (risk control) internal control system procedure documents. As of
now, a total of 2,150 procedure documents have been formulated.
For the convenience of colleagues' inquiry and compliance, the Company
has established an internal control system procedure document inquiry
system, with which employees can inquire about operation procedure
documents of the subordinate department on the internal company website
at any time. If an employee needs to inquire about cross-plant procedure
documents, he/she can also apply to the document control unit.
(d) Promotion of educational training on preventive (risk control) internal
control system: In order to implement internal control rooting work, the
Company arranges for all new employees to participate in the educational
training course of "Internal Control System Implementation"; in 2015, seven
new employee educational training sessions were held, and a total of 365
employees participated.
(E) Preventive (risk control) internal audit:
(a) Internal audit lean progress: Since March 2013, in order to improve internal
audit mechanisms, in addition to detection (wrongdoing prevention) audits,
the Company also actively promotes preventive (risk control) audits.
Mechanism and major tasks of detection (wrongdoing prevention) audit:
legal compliance audit, internal control system audit, internal control
execution audit, asset preservation audit, integration self-assessment,
subsidiary supervision, and wrongdoing prevention innovation audit. The
2016 preventive (risk control) audit is subject to nine major high risk
policies: high risk items of Group level, code of ethics, cost, International
Financial Reporting Standards (IFRS), asset preservation, legal compliance,
business (production) operations, credit investigation, and environmental
69
Non-implementation
and its reason(s)
Items
Y N
Summary
protection high risk indicator. The Company drafts preventive (risk control)
management mechanism examination main points in the hopes of being able
to find out potential operation risk as early as possible so that the operation
governance team can take preventive measures in advance and continuously
improve the contribution and value of internal audits to Inventec companies
and Group through this.
(b) Preventive (risk control) high risk audit items: Preventive (risk control)
audits adopt high risk assessment and control and draft preventive (risk
control) high risk audit items according to the modes, such as the essential
items required by the competent authority, audit item risk assessment of the
nine major high risk policies, accounting risk assessment, subsidiary risk
assessment, etc. In March 2013, the audit function was improved from
detection wrongdoing prevention function (auditing 401 items) to
preventive (risk control) function (revised auditing items to 124 items),
focusing on the risk control points of high value and high risk again in
February 2014, at which point the auditing items were changed from 124
items down to 81 items. In July 2014, auditing items were further focused to
39 items. In January 2015, in order to strengthen audit effect and efficiency,
the Company activated remote audits, and auditing items were revised into
43 items. In view of fierce turbulence of the global economy and finance in
2016, the overall operation of the Company may be affected, so credit
investigation has been included into the 2016 high risk audit policy, with
auditing items focused to 36 items, in order to create a higher contribution
value of internal audits to the enterprise.
(c) Preventive (risk control) internal audit plan: In 2015, the internal audit plans
include: company part (Shilin Plant, Taoyuan Plant), subsidiary part (EBG
70
Non-implementation
and its reason(s)
Items
Y N
Summary
group, solar energy group, a total of 23 groups and 11 Inventec Appliances
groups). In addition to the "Annual Audit Plan" approved by the Board of
Directors, the Audit Center also carries out preventive (risk control) internal
audits on each transaction cycle control operation of all plants and
subsidiaries. For significant problems and high risk businesses found in
routine audits, the Audit Center will ask the Board of Directors to establish
an audit project for further investigation to propose an audit report in order
to expand the depth of internal audits and improve the larger comprehensive
effect and contribution of internal audits.
(d) Preventive (risk control) internal audit result: After submitting and
approving the internal audit report and tracking report, they shall be
delivered to each supervisor for review before the end of the following
month after completing audit items. The review and instruction matters
delivered by the supervisor in 2015 will be continuously tracked and
improved by the Audit Center. The Audit Center will propose internal audit
deficiency and improvement suggestions in the 2015 internal audit
operation, and all non-conforming matters found have been improved.
(F).Preventive (risk control) self-assessment:
(a) Establishment of preventive (risk control) self-assessment mode: The
Company has established a risk-oriented self-assessment system, improved
from the previous detection (wrongdoing prevention) self-assessment
system into a preventive (risk control) system and that takes the high risk of
Group level, code of ethics, cost, International Financial Reporting
Standards (IFRS), asset preservation, legal compliance, and business
(production) operation as its risk determination criteria. It thus determines
consecutive duty targets and control points of high and low risk and
71
Non-implementation
and its reason(s)
Items
Y N
Summary
systematically implements self-assessment, thus becoming an important
driving force for each unit of the company to implement responsibility
system self-management.
(b) Preventive (risk control) self-assessment training explanation session: In
order to implement the self-supervision mechanism of the Company and
respond to environmental change in a timely manner, in order to adjust the
design and execution of the internal control system, in December every
year, the Company arranges to go to each plant and subsidiary to carry out
the "Self-assessment Training Explanation Session", ensuring that
supervisors above the department level fully understand the purpose and
practice of self-assessment and are able to actually execute self-assessment.
A total of seven training explanation sessions were held for self-assessment
in 2015, and the total number of supervisors and colleagues participating in
the self-assessment training explanation sessions was 680 people.
(c) Self-assessment results of the Company: In 2015, the Company completed
the parent company part by completing self-assessment on 198 units,
identifying a total of 1,634 unit operation targets and 1,973 risk items
affecting target achievement. Meanwhile, the Company has prepared 3,072
control points to reduce the occurrence of such risks in order to achieve
those targets. For the subsidiary part, the self-assessment work on a total of
314 departments from 33 subsidiaries was completed, identifying a total of
4,487 unit operation targets and 5,874 risk items affecting target
achievement. Meanwhile, the Company has prepared 9,342 control points to
reduce the occurrence of such risks in order to achieve those targets.
(G) The Board of Directors issues the "Inventec Internal Control System Statement":
72
Non-implementation
and its reason(s)
Items
Y N
Summary
Non-implementation
and its reason(s)
The Company implements internal control self-assessment operations once a
year, and then the Audit Center will review the self-assessment report of each
unit and subsidiary. Together with the internal control deficiency and
improvement circumstance of abnormal matters found by the Audit Center, they
will be the major basis for the Chairman, President, and Board of Directors to
assess the effectiveness of the "Internal Control System" and issue the "Internal
Control System Statement". In 2015, the Company has declared said statement
according to the rules of the competent authority.
(5) If the Company organized training 
and awareness programs on ethical
corporate management to internal
and external parties?
3.Implementation of whistleblowing
system

whistleblowing and reward
system? Upon receiving a reported
case, is there a dedicated personnel
handling the reported case?
standard operational procedures
and relevant information
confidentiality policy for

(5) The Company will regularly arrange for directors and supervisors to participate in
external integrity operation related courses every year. Furthermore, through
"Procedures for Handling Material Inside Information" and company website
disclosure, internal on-line educational training will be conducted, and the Company
will propagate integrity operation related specifications to its suppliers.anagement
internal and external parties.
No difference
(1) System management and special personnel for special responsibilities: In order to
solve major violations or misconduct, etc. complained about by employees, the
Company has set up external and internal complaint management. When employees
suffer from improper, illegal, or unreasonable events, they can submit a complaint
according to the complaint system.
No difference
(2) Pursuant to the "Employee Complaints and External Reporting Management
Specification", the Company has established investigation standard operation
procedures and a confidentiality mechanism to accept reporting matters and imposes
punishment by referring to trial principles.
No difference
73
Items
Y N
Summary
Non-implementation
and its reason(s)
investigation of reported cases?

measures for protecting
whistleblowers from inappropriate
disciplinary actions?
4. Information Disclosure
(1) If the Company disclosed ethical
corporate management policy and
its status of implementation via
corporate website or Market
Observation Post System?

(3) In the "Employee Complaints and External Reporting Management Specifications",
the Company has designated a dedicated complaint accepter and complaint and
reporting hotline: Tel.: 2881-0721 ext. 21999 / E-mail:
21999 @inventec.com,
and according to the treatment principle, the Company will protect the reporter from
discriminations, threats, post transfers, and other unfavorable treatments.
No difference
(1) The website of the Company discloses such information as integrity operation, social
responsibility, corporate culture, and operation policy. Furthermore, a dedicated
department has been established to be responsible for collecting and publishing all
kinds of information, and the spokesman system has been established and Investor
Conference convened pursuant to law, describing the company operation results and
business conditions. The meeting video files will be uploaded to the company
website and mops.twse.com.tw for review.
No difference
5. If the Company established any guideline of ethical business conduct in accordance with “Ethical Corporate Management Best Practice Principles for
TWSE/GTSM-Listed Companies”, please state the implementation status of the guideline and any reasons for non-implementation?
In 2014, pursuant to the "Listed Company Code of Integrity Operations", the Company formulated the "Inventec Corporation Code of Integrity Operation",
which was approved by the Board of Directors and submitted to the supervisor to propose at the Shareholders' Meeting; the first and second amendments
were passed by the Board of Directors in 2015, and the operation has no difference from the rules.
6. If any other information that helped to understand the operation of ethical business conduct and its implementation?
(1).Suppliers of the Company need to pass the supplier corporate social responsibility survey appraisal form with the aim that suppliers will fulfill corporate
74
Items
Y N
Summary
Non-implementation
and its reason(s)
social responsibility.
(2).The director conflict of interest system is stipulated in the "Rules for Board of Directors’ Discussion" of the Company in order to ensure that relevant
resolutions have no damage to company rights and interests.
(3).Regarding major operation policies, investment cases, asset acquisition and disposal, bank financing, capital loan to other persons, endorsements, etc. of
the Company, they shall be evaluated and analyzed by the relevant responsible unit and proposed to the Board of Directors for resolution.
(4).Every year, all departments throughout the Company will carry out self-assessment operations, coordinate with the change of organization and
environment in a timely manner, and review the appropriateness of the internal control system and whether colleagues are following the relevant
regulations for business execution in order to ensure effective implementation of the internal control system of the company.
Note: Unless otherwise described, the listed subsidiaries of the Company Group comply with relevant regulations upon Ethical Corporate Management.
2.3.8 Corporate Governance Guideline and Regulations
Please go to the company website (http://www.inventec.com), and click on investor service/corporate governance for inquiry.
2.3.9 Other Important Information Regarding Corporate Governance
The governance unit of the Company will fully communicate and discuss with a certified accountant every quarter regarding financial statement
examination matters and execution circumstances of the internal control system. Pursuant to the "Procedures for Handling Material Inside Information",
the Company has established good internal material information handling and disclosing mechanisms to prevent improper information leakage and also
implements a spokesman system to ensure the consistency and accuracy of information published externally by the Company. By participating in
corporate governance related course training and internal and external company website, e-mail, and contracts, the Company carries out educational
promotion on operation procedures and relevant laws and decrees, so that company directors, supervisors, managers, and employees can fully understand
and comply with relevant procedures.
75
2.3.10 Internal Control System
2.3.10.1 Statement of Internal Control System
Statement of Internal Control System
Feb. 23, 2016
Based on the findings of self-assessment, the company states the following with regard to its internal control system in 2015:
1. The company is fully aware that establishing, operating and maintaining an internal control system are the responsibilities of its Board of Directors and
management. The aim of the internal control system is to provide reasonable assurance to operating effectiveness and efficiency (including profitability,
performance and safeguarding of assets), reliability of financial reporting and compliance of applicable laws and regulations.
2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can only provide reasonable
assurance of accomplishing the aforementioned three objectives. Moreover, the effectiveness of an internal control system may be subject to changes of
environmental or circumstances. Nevertheless, the internal control system of the company contains self-monitoring mechanism and the company takes
corrective actions whenever a deficiency is identified.
3. The company evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing
the Establishment of Internal Control System by Public Companies (herein below, the “Regulations”). The criteria adopted by the Regulations identify
five components of internal control based on the process of management control: (1) control environment, (2) risk assessment, (3) control activities, (4)
information and communication, and (5) monitoring. Each component further contains several items. Please refer to the Regulations for details.
4. The company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.
5. Based on the findings of the evaluation mentioned in the preceding paragraph, the company believes that, as of December 31, 2015, its internal control
system (including its supervision and management of subsidiaries), as well as its internal controls to monitor the achievement of its objectives
concerning operational effectiveness and efficiency, reliability of financial reporting, and compliance with the applicable laws and regulations, were
effective in design and operation, and reasonably assured the achievement of the above-stated objectives.
6. This Statement will be integral part of the company’s Annual Report for the year 2014 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
Law.
7. This Statement has been passed by the Board of Directors in their meeting held on Feb. 23, 2016 with zero of seven attending directors expressing
dissenting opinions, and the remainder all affirming the content of this Statement.
Inventec Corporation.
Chairman：Lee, Tsu-Chin
President：Huang, Kuo-Chun
76
2.3.10.2 If the Company is requested by the SEC to retain CPA’s service for examining internal control system, the Independent Auditor’s Report must be
disclosed: None
2.3.11 The penalties delivered to the Company and the staffs of the Company, or the penalties delivered by the Company to the
staffs for violations of internal control system, the major nonconformity, and the corrective action in the most recent
years and up to the date of the annual report : None.
2.3.12 Major Resolutions of Shareholders’ Meeting and Board Meetings
2.3.12.1 Major Resolutions of Shareholders’ Meeting
Date
2015.06.16
Major Resolutions
Implementation
1. Acknowledge the 2014 Business
Report and Financial Statements.
Approved and acknowledged as proposed by the Board of Directors by voting
2. Acknowledge the 2014 Earnings
Distribution.
Approved and acknowledged as proposed by the Board of Directors by voting. The cash dividend to
shareholders is NT$1.75 per share, and the Ex-dividend record date is 2015/07/22.
3. Discussion of the Amendments to
“Rules of Procedure for
Approved and acknowledged as proposed by the Board of Directors by voting
Shareholders Meetings ”
77
2.3.12.2 Major Resolutions of Board Meetings
Date
2015.01.27
2015.02.25
2015.03.24
2015.04.21
2015.05.11
2015.06.30
2015.07.21
2015.08.11
2015.09.08
2015.09.30
Major resolutions
Approved the proposal of the salary and year-end bonus for managers, employees bonuses and compensation of Directors and Supervisors.
Approved to amend the Corporate Social Responsibility Best Practice Principles.
Approved to amend the Corporate Governance Best Practice Principles.
Approved the internal control statements issued by the Inventec Corporation (Hong Kong) Ltd., Inventec (Cayman) Corp., and Invnetec
Investments Co., Ltd. of the Company.
Approved to establish a subsidiary in India.
Approved to issue the 2014 Internal Control System Statement.
Approved to amend the Codes of Ethical Conduct.
Approved to amend the Rules of Procedure for Shareholders Meetings.
Approved to amend the Ethical Corporate Management Best Practice Principles.
Approved the 2014 financial statements, consolidated financial statements and business report.
Approved the 2015 Shareholders’meeting date, place, and meeting agenda.
Approved the 2014 employee bonuses and compensation of Directors and Supervisors.
Approved the 2014 earnings distribution.
Approved the 2015Q1 consolidated financial report.
Approved Inventec (Chongqing) Corp.to invest Chongqing YuYa Cloud Service Co., Ltd.
Approved the ex-dividend record date.
Approved to donate NT$10 million by Inventec Group Charity Foundation to the special account under New Taipei City Government to
support medical care for the Powder Explosion injured at the Formosa Fun Coast.
Approved the agreement between Inventec (Cayman) Corp. and Top Victory Investment Co., Ltd. to terminate the joint venture agreement of
TPV-Inventa Holding Ltd. and change the board seats.
Approved Inventec (Cayman) Corp. to reinvest TPV-Inventa Holding Ltd..
Approved to increase investment to TPV- Inventa Technology (Fujian) Ltd. via subsidiary TPV- Inventa holding Ltd.by means of Debt for
Equity Swap.
78
Date
2015.10.20
2015.11.10
2015.12.29
2016.02.23
2016.03.22
2016.04.26
Major resolutions
Approved managerial officers to engage in competitive conduct.
Approved the 2016 Internal Audit Plan.
Approved to amend the Ethical Corporate Management Best Practice Principles.
Approved the selling of 47.68% of the common stock equity of Inventec Energy Corporation held by the Company to Inventec Solar Energy
Corporation
Approved to formulate operation procedures for the Company to apply to suspend and resume transactions.
Approved to amend Internal Control Systems.
Approval of the Amendments to Articles of Incorporation.
Approved to hire certified public accountants
Approved the 2016 corporate business plan.
Approved the remuneration of directors, supervisors, and managers and year-end bonus planning scheme of the Company.
Approved to purchase plant building in Taoyuan Science and Technology Park.
Approved to donate NT$7.5 million to Inventec Group Charity Foundation.
Approved to issue the 2015 Internal Control System Statement.
Approved the renaming and revision of the "Director and Supervisor Election Rules" of the Company.
Approved to release the newly added non-competition restriction to the current directors Huang, Kuo-Chun, Chang, Chang-Pang, and Chen,
Ruey-Long.
Approved to subsequently confirm that the Company donates NT$10 million to Tainan City government through " Inventec Group Charity
Foundation " in response to earthquake disaster bailout.
Approved the 2015 employee bonuses and compensation of Directors and Supervisors.
Approved the 2015 financial statements, consolidated financial statements and business report.
Approved the 2016 Shareholders’meeting date, place, and meeting agenda.
The Company and Advantech Co., Ltd. jointly established a joint venture company.
Approved the 2015 earnings distribution.
79
2.3.13 Major Issues of Record or Written Statement Made by Any Director Dissenting to Important Resolutions Passed by
the Board of Directors in 2015 and to the date of the annual report : None.
2.3.14 Resignation or Dismissal of Personnel Involved in the Company : None.
2.4. Information Regarding the Company’s Audit Fee
2.4.1 Range of accountants’ fee
CPA Firm
KPMG
CPA
Chen, Ying-Ru,
Yang, Leou-Fong,
Auditing Period
Remark
2015.01.01~2015.12.31
-
Unit: NT$ Thousands
Items
Amount Bracket
1
Below 2,000 thousand
2
2,000 thousand (included) ~ 4,000 thousand(excluded)
3
4,000 thousand (included) ~6,000 thousand(excluded)
4
6,000 thousand (included) ~ 8,000thousand(excluded)
5
8,000 thousand (included) ~ 10,000thousand(excluded)
6
Over 10,000 thousand (included)
Auditing Fees
Non-Auditing Fees
Total


80

Unit: NT$ Thousands
Non-Auditing Fees
CPA Firm
CPA
Auditing
Fees
System
Design
Industrial and
Commercial
Registration
HR
Others
8,600
0
0
0
1,165
Note
2015.01.01~2015.12.31
Non-auditing services
include transfer pricing,
VAT and tax consultant.
Total
Chen, Ying-Ru
KPMG
Auditing Period
1,165
2015.01.01~2015.12.31
Yang, Leou-Fong
2.4.2 The non-audit fee paid to certified CPA, certified Office of CPA and affiliated companies accounts for over 1/4 to
audit fee: None
2.4.3 Alter the CPA Firm and the audit fee in altering year is less than that in the previous year: None
2.4.4 The audit fee is reduced by over 15% compared with the previous year: None
2.5 Information Regarding the Replacement of CPA
Change of CPA in recent two years and thereafter: as of the fourth quarter of 2014, CPAs are changed, from the original Lin, Wan-Wan and Chen,
Ying-Ru into Chen, Ying-Ru and Yang, Leou-Fong, such change is the internal rotation of accounting office, hence it is not applicable.
2.6 Audit Independence
If the chairman, president, and financial or accounting manager of the Company who had worked for the independent auditor or the related party in the
most recent year, the name, title, and the term with the independent auditor or the related party must be disclosed: None.
81
2.7 Changes in Shares Trading and Pledge of Directors, Supervisors, Managers and Major Shareholders:
Unit: Thousand shares
2016/04/30
2015
Title
Chairman
Director
Director
Director
Director
Supervisor
Supervisor
Supervisor
Representative of Shyh Shiunn
Investment Corp.
President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Name
Holding Increase
(Decrease)
Pledged Holding
Increase (Decrease)
Holding Increase
(Decrease)
Pledged Holding
Increase (Decrease)
0
0
0
0
0
0
0
-110
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
Yang, Chiung-Nan
0
0
0
0
Huang, Kuo-Chun
Wu, Yung-Tsai
Chang, Hui
Yang, Hsin-Hua
Tsai, Chih-An
Wen, Chi-Wai
Lin, Chin-Wen
Chen, Yea-Ping
Chang, Nai-Wen
Hong, Kuo-Ching
Chang, Yiu-Lang
Yu, Chin-Pao
Chien, Kuei-Fen
Lou, Jin-Pang
Yi, Fu-Ming
Tsai, Yuh-Chen
0
-100
0
0
0
0
0
0
0
-220
0
0
-10
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
Lee, Tsu-Chin
Yeh, Kuo-I
Wen, Shih-Chih
Chang, Ching-Sung
Huang, Kuo-Chun
Chang, Chang-Pang
Chen, Ruey-Long
Cheng, Hsien-Ho
Wang, Ping-Hui
82
2015
Title
Vice President
Vice President
Vice President
Vice President
Senior Director of Talent Center
Director of Talent Center
Name
2016/04/30
Holding Increase
(Decrease)
Pledged Holding
Increase (Decrease)
Holding Increase
(Decrease)
Pledged Holding
Increase (Decrease)
0
0
0
0
0
0
28
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
Hsu, Ching-Wu
Ting, Chin-Yun
Chou, Shao-Hsin
Tsung, Yu-Lin
Yu, Win-Chee
Liang, Wen-Jan
Lin, Shih-Pin
Hsaio, I-Ying
Note 1: The Company has no shareholder holding more than ten percent of the total stock.
2.7.1 Information of Shares Transferred
Unit: Share
Name
The reason
Date
Trading counterparties
Relation
Shares
Price
Wu, Yung-Tsai
endowment
2015/06/09
Wu, Ya-Chuan
father-child
100,000
22.00
Cheng, Hsien-Ho
endowment
2015/07/08
Lu, Hui-Chun
daughter-in-law
110,000
19.95
Hong, Kuo-Ching
endowment
2015/07/13
Hung, Yu-Chieh
father-child
100,000
21.15
Hong, Kuo-Ching
endowment
2015/11/27
Lin, Pi-Chin
spouse
120,000
18.25
2.7.2 Information of Equity Pledged : None.
83
2.8 The Relations of the Top Ten Shareholders
Unit: Share
Name
Shareholding
Shares
Spouse and Minor
%
Shares
%
Shareholding by
Nominee Arrangement
Shares
%
The R
Name
Yeh, Li-Quan
Yeh, Li-Cheng
Yeh, Kuo-I
254,361,330
7.09%
99,314,117 2.77%
Shyh Shiunn
139,416,690
Investment Corp.
3.89%
-
Shyh Shiunn
Investment Corp.:
Representative,
Wen, Shih-Chih
35,685,590
0.99%
Lai-Chu
Investment Co.,
Ltd.
136,721,634
Lai-Chu
Investment Co.,
Ltd.Representative
Yang, Yuan-Yuan
-
Kuo Hsieh
Investment Co.,
Ltd.
118,152,558
-
-
-
37,399 0.00%
-
-
3.81%
-
-
-
-
-
-
-
-
-
3.29%
-
-
-
-
-
-
84
Kuo Hsieh
Investment Co., Ltd.
Fu Tai Investment
Co., Ltd.
Wang, Fu-Tai
Note
Relations
Relative within the second
degree of kinship
degree of kinship
Director
Director
Spouse
Wen, Shih-Chih
Chairman
Yang, Yuan-Yuan
Chairman
Yeh, Li-Quan
Yeh, Kuo-I
Wang, Fu-Tai
Yeh, Li-Cheng
Chairman
Director
Director
Supervisor
Name
Shareholding
Shares
Kuo Hsieh
Investment Co.,
Ltd..
Representative,
Yeh, Li-Quan
Fu Tai
Investment Co.,
Ltd.
%
Shares
%
Shareholding by
Nominee Arrangement
Shares
%
The R
Name
Yeh, Kuo-I
Yeh, Li-Cheng
63,398,405
116,781,074
Fu Tai Investment
Co., Ltd.
67,412,472
Representative,
Yeh, Li-Cheng
Lee, Tsu-Chin
Spouse and Minor
115,833,835
1.77%
3.26%
2,711,196 0.09%
-
-
-
-
-
-
Wang, Fu-Tai
Fu Tai Investment
Co., Ltd.
Yeh, Li-Cheng
Yeh, Kuo-I
Wang, Fu-Tai
Yeh, Li-Quan
Yeh, Kuo-I
Yeh, Li-Quan
1.88%
3.23%
600,000 0.03%
-
-
-
-
-
-
Wang, Fu-Tai
Kuo Hsieh
Investment Co., Ltd..
Yeh, Li-Quan
Yeh, Li-Cheng
Wang, Fu-Tai
99,314,117
2.77%
254,361,330 7.09%
-
-
85
Kuo Hsieh
Fu Tai Investment
Co., Ltd.
Yeh, Kuo-I
Note
Relations
degree of kinship
degree of kinship
degree of kinship
Supervisor
Chairman
Director
Director
Supervisor
degree of kinship
degree of kinship
degree of kinship
Supervisor
degree of kinship
degree of kinship
Director
Director
Spouse
Name
Shareholding
Shares
Spouse and Minor
%
Shares
%
Shareholding by
Nominee Arrangement
Shares
%
The R
Name
Yeh, Kuo-I
Yeh, Li-Quan
Yeh, Li-Cheng
67,412,472
1.88%
600,000 0.03%
-
-
Wang, Fu-Tai
Kuo Hsieh
Yeh,Kuo-I
Yeh, Li-Cheng
Yeh, Li-Quan
63,398,405
1.77%
2,711,196 0.09%
-
-
Wang, Fu-Tai
Fu Tai Investment
Co., Ltd.
Employees
Provident Fund
Board-Pheim Asset
Management SDN
BHD as external
fund manager-EPF
MSCI
62,612,000
1.75%
-
-
-
-
-
Note
Relations
degree of kinship
degree of kinship
degree of kinship
Supervisor
degree of kinship
degree of kinship
degree of kinship
Supervisor
-
Note 1: The top ten shareholders shall all be listed; for corporate shareholders, the name and representative of the corporate shareholder shall be listed
respectively.
Note 2: The calculation of shareholding ratio means the calculation of shareholding ratio in the name of oneself, spouse, minor children, or other person.
Note 3: For the corporate shareholders and natural person shareholders listed above, any relationship between and among them shall be disclosed.
86
2.9 Ownership of Shares in Affiliated Enterprises
Unit: Thousand shares
Direct/Indirect Ownership by
Directors and Management
Ownership by Inventec
Long-Term Investment
Shares
Inventec Appliances Corporation
%
Shares
%
-
-
536,857
100.00%
33,436
37.53%
Inventec Investment Corporation
108,800
100.00%
Inventec Solar Energy Corporation
108,150
33.45%
63,568
E-Ton Solar Tech. Co., Ltd.
231,521
29.70%
127
0.10%
Inventec Besta Co., Ltd
Inventec Energy Corporation.
%
100.00%
34,540
38.77%
108,800
100.00%
19.66%
171,718
53.11%
48,633
6.24%
280,154
35.94%
62,454
49.26%
62,581
49.36%
-
87
Shares
536,857
1,104
Note: It is the investment of company by adopting the Equity Method.
Total
1.24%
-
Ⅲ. Capital Overview
3.1 Capital and Shares
3.1.1 Capital and Shares
04/30/2016
Authorized Capital
Paid-in Capital
Par
Month/
Value
Shares
Amount
Shares
Amount
Year
(NTD)
(1,000) (NT$1,000) (1,000) (NT$1,000)
1988.11
10
22,060
220,600
22,060
220,600
1989.08
10
66,999
660,000
33,200
332,000
1990.05
10
100,000
1,000,000
76,360
763,600
1991.07
10
100,000
1,000,000
83,996
839,960
1992.06
10
100,795
1,007,952
100,795
1,007,952
1993.07
10
120,954
1,209,542
120,954
1,209,542
1994.06
10
145,145
1,451,451
145,145
1,451,451
1995.06
10
174,174
1,741,741
174,174
1996.06
10
226,426
2,264,263
226,426
1997.05
10
600,000
6,000,000
508,560
1998.05
10
1,000,000
10,000,000
835,407
1998.05
10
1,000,000
10,000,000
855,407
1999.05
10
1,250,000
12,500,000 1,140,000
11,400,000
2000.05
2001.05
2002.06
10
10
10
1,500,000
2,000,000
2,000,000
Remark
Sources of Capital
(NT$10,000)
Capital increase NT 3,000 by
Cash
Capital increase NT 4,080.80 by
Cash
Earnings
Capital Surplus
Earnings
Capital Surplus
Capital increase NT 16,799.20
by Earnings
Capital
Increased by
Assets Other
than Cash
Other
－
November 1, 1988 (77),
No. 09283
－
August 21, 1989 (78),
No. 01724
－
May 30, 1990 (79),
No. 28599
－
July 18, 1991 (80),
No. 01592
June 17, 1992 (81),
No. 01286
－
Earnings
－
July 20, 1993 (82),
No. 30624
Earnings
1,741,741
Earnings
2,264,263
Earnings
－
June 20, 1994 (83),
No. 28255
June 21, 1995 (84),
No. 36512
June 21, 1995 (84),
No. 38703
Earnings
Capital increase NT9,663 by
Eapital Surplus
8,354,069
Earnings
8,554,069
Cash
－
May 06, 1997 (86),
No. 36918
－
May 12, 1998 (87),
No. 41354
－
May 20, 1998 (87),
No. 41353
Earnings
－
May 17, 1999 (88),
No. 46068
15,000,000 1,375,860
Capital Surplus
13,758,600
Earnings
－
May 22, 2000 (89),
No. 43743
20,000,000 1,660,700
Capital Surplus
16,607,000
by Earnings
－
May 18, 2001 (90),
No. 130976
20,000,000 1,835,000
Capital Surplus
18,350,000
by Earnings
－
June 14, 2002 (91),
No. 132472
5,085,604
88
－
－
Authorized Capital
Paid-in Capital
Par
Month/
Value
Shares
Amount
Shares
Amount
Year
(NTD)
(1,000) (NT$1,000) (1,000) (NT$1,000)
Remark
Sources of Capital
(NT$10,000)
Capital
Increased by
Assets Other
than Cash
Other
2003.06
10
2,500,000
25,000,000 2,026,000
20,260,000
Earnings
－
June 18, 2003 (92),
No. 0920127026
2004.06
10
2,500,000
25,000,000 2,137,000
21,370,000
Earnings
－
June 08, 2004 (93),
No. 0930125427
2005.06
10
2,500,000
25,000,000 2,205,700
22,057,000
－
2006.06
10
2,500,000
25,000,000 2,301,000
23,010,000
2007.06
10
2,500,000
25,000,000 2,427,800
24,278,000
2008.06
10
3,000,000
30,000,000 2,561,000
25,610,000
2009.06
10
3,000,000
30,000,000 2,821,426
28,214,260
2010.06
10
3,000,000
30,000,000 2,962,497
29,624,973
Earnings
Earnings
Earnings
Earnings
Earnings
Earnings
2011.08
10
3,500,000
35,000,000 3,468,922
34,689,218
Merging
－
June 24, 2005 (94),
No.0940125418
June 27, 2006 (95),
No. 0950126555
June 25, 2007 (96),
No. 0960031988
June 24, 2008 (97),
No. 0970031477
June 25, 2009 (98),
No. 0980031805
June 25, 2010 (99),
No. 0990032858
August 19, 2011 (100),
No. 1000037640
September 01, 2011
(100), No. 1000041230
2011.10
10
3,500,000
35,000,000 3,466,159
34,661,595
Cancellation of Treasury Stocks
NT2,762
－
2012.06
10
3,650,000
36,500,000 3,587,475
35,874,751
Earnings
－
－
－
－
－
－
－
June 27, 2012 (101),
No.1010028496
Unit : Share ; 04/30/2016
Authorized Capital
Shares category
Registered Common
Shares
Issued shares (Listed)
Non-issued
3,587,475,066
62,524,934
Information for Shelf Registration : None
89
Remarks
Total
3,650,000,000
3.1.2 Composition of Shareholders
04/30/2016
Government Financial
Agencies Institutions
Item
Number of
Shareholders
9
Shareholding
(shares)
42,503,370
Percentage
1.19%
Other
Juridical
Person
69
Domestic
Natural
Persons
Foreign
Institutions &
Natural Persons
130
111,741
57,759,793 637,272,909
1,660,429,513
1.61%
17.76%
798
Total
112,747
1,189,509,481 3,587,475,066
46.28%
33.16%
100.00%
3.1.3 Shareholding Distribution Status
04/30/2016
Class of Shareholding
(Unit : Share)
Number of
Shareholders
Shareholding
(Shares)
Percentage
1~ 999
36,460
11,122,222
0.31%
1,000~ 5,000
48,530
115,247,256
3.21%
5,001~ 10,000
14,278
104,518,766
2.91%
10,001~ 15,000
4,781
58,806,961
1.64%
15,001~ 20,000
2,493
45,222,104
1.26%
20,001~ 30,000
2,296
57,715,606
1.61%
30,001~ 40,000
1,012
35,801,448
1.00%
40,001~ 50,000
601
27,712,355
0.77%
50,001~ 100,000
1,091
76,413,327
2.13%
100,001~ 200,000
490
67,621,912
1.89%
200,001~ 400,000
256
73,255,379
2.04%
400,001~ 600,000
111
55,045,736
1.54%
600,001~ 800,000
55
38,675,640
1.08%
800,001~1,000,000
47
42,401,462
1.18%
1,000,001~999,999,999
246
2,777,914,892
77.43%
112,747
3,587,475,066
100.00%
Total
Preferred share: The Company did not issue any preferred share.
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3.1.4 List of Major Shareholder
04/30/2016
Shareholding
Shareholder's Name
Shares
Percentage
Yeh, Kuo-I
254,361,330
7.09%
139,416,690
3.89%
Lai-Chu Investment Co., Ltd
136,721,634
3.81%
Kuo Hsieh Investment Co., Ltd
118,152,558
3.29%
Fu Tai Investment Co., Ltd
116,781,074
3.26%
Lee, Tsu-Chin
115,833,835
3.23%
Wang, Fu-Tai
99,314,117
2.77%
Yeh, Li-Cheng
67,412,472
1.88%
Yeh, Li-Quan
63,398,405
1.77%
Employees Provident Fund Board- Pheim Asset
Management SDN BHD as external fund manager-EPF
MSCI
62,612,000
1.75%
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3.1.5 Market Price Per Share, Net Value, Earnings & Dividends For Latest Two Years
Unit：NT$；Thousand shares
Year
2014
Item
01/01/2016
~03/31/2016
2015
Highest Market Price
32.35
24.70
26.10
Lowest Market Price
18.55
13.30
20.15
Average Market Price
25.49
20.12
23.22
Net Worth
Per Share
Before Distribution
16.05
15.74
15.99
After Distribution
14.30
Earnings
Per Share
Weighted Average Share Numbers
Market Price
per Share
Dividends
Per Share
Return on
Investment
－
－
3,587,475
3,587,475
3,587,475
Earnings Per Share
1.98
1.55
0.34
Cash Dividends
1.75
－
－
Dividends from
Retained Earnings
－
－
－
Dividends from Capital
Surplus
－
－
－
Accumulated Undistributed Dividends
－
－
－
Stock
Dividend
Price / Earnings Ratio
12.87
Price / Dividend Ratio
14.57
－
－
0.07
－
－
Cash Dividend Yield Rate
12.98
－
Note: Price / Earnings Ratio = Average Market Price / Earnings Per Share
Price / Dividend Ratio = Average Market Price / Cash Dividends Per Share
Cash Dividend Yield Rate = Cash Dividends Per Share / Average Market Price
3.1.6 Corporate dividend policy and implementation condition
1. Corporate dividend policy
The Board of Directors of the Company passed a revision of the Articles of Incorporation on
December 29, 2015. Pursuant to the provisions of the revised Articles of Incorporation, if there is a
surplus in the general annual report of the Company, it shall first be used to pay taxes and offset
accumulated losses, and then 10% will be withdrawn as a statutory surplus reserve, except when the
statutory surplus reserve has accumulatively reached the total paid-up capital of the Company.
Furthermore, the special surplus reserve shall be set or returned according to the operation demand
of the company and pursuant to relevant laws and decrees. If there is still surplus and accumulated
undistributed surplus, a proper amount shall be reserved according to operation demand, and a
dividend of no less than 10% of the surplus in the current year shall be paid. The Board of Directors
shall prepare a surplus distribution proposal and submit it to the Shareholders' Meeting for
acknowledgment. The dividend policy of the Company considers the future fund demand and
long-term financial planning of the Company, as well as shareholders' demand on cash inflow. If
there is a surplus in the annual report, the cash dividend distributed every year shall not be less than
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10% of the total cash and stock dividend distributed in the current year.
2. Dividend distribution situation
The dividend distribution situations of the Company for past five years are summarized in the
following table; the surplus distribution in 2015 is still pending acknowledgment by the 2016
general meeting.
Year
Cash Dividend
Stock Dividend
2011
0.30
0.35
2012
0.80
-
2013
1.60
-
2014
1.75
-
2015
1.40
-
3.1.7 The impact of stock grants proposed by the Shareholders' Meeting at this time
on company business performance and earnings per share
This (2016) Shareholders' Meeting has not proposed any stock grants.
3.1.8 Remuneration of employees, directors, and supervisors
1. Percentage or scope of remuneration of employees, directors, and supervisors as stated in the
Articles of Association
On December 29, 2015, the Board of Directors of the Company passed a resolution amending the
Articles of Incorporation; it still needs to be passed as a resolution of the 2016 general meeting
before being officially issued. According to the amended Articles of Incorporation of the Company,
if the Company experiences overall annual profit, no less than 3% shall be allocated as employee
remuneration and no more than 3% as director and supervisor remuneration. However, when the
Company has accumulated losses, it shall reserve the compensation amount in advance. Employee
remuneration may be issued in cash or stock, the issuing object may include employees
subordinated to the company and conforming to certain conditions, and the conditions and
methods thereof will be stipulated by the Board of Directors.
2. Estimation base of employee, director and supervisor remuneration in this estimation, the number
of shares calculation base for employee remuneration in stock distribution, and accounting
treatment when the actual distribution amount differs from the estimated amount.
(1) Estimation base of employee, director and supervisor remuneration in this estimation:
Pursuant to the amended Articles of Association of the Company, if the Company experiences
overall annual profit, no less than 3% shall be allocated as employee remuneration and no
more than 3% as director and supervisor remuneration. However, when the Company has
accumulated losses, it shall reserve the compensation amount in advance.
(2) The number of shares calculation base for employee remuneration in stock distribution: In this
period, no employee remuneration is in stock distribution.
(3) When the actual distribution amount differs from the estimated amount, the balance thereof
will be listed as cost adjustments in the actual distribution year.
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3. Situation of the Board of Directors' passing remuneration distribution
(1) The amount of employee, director, and supervisor remuneration in cash or stock distribution.
If it differs from the estimated amount in the recognized expense year, the balance, reason,
and handling situation shall be disclosed: the Board of Directors passed a resolution,
determining that the remuneration of employees in 2015 is NTD336,884,470, and the
remuneration of directors and supervisors in 2015 is NTD 98,257,971, which are the same as the
recognized expense amount in 2015.
(2) The proportion of employee remuneration amount in stock distribution in the net profit after
tax in individual financial statements of this period and the total employee remuneration:
None
4. For the actual distribution situation of employee, director, and supervisor remuneration last year
(including distributed shares, amount, and stock price), if it differs from the recognized employee,
director, and supervisor remuneration, the balance, reason, and handling situation shall be
specified.
In 2015, the relevant information on the employee, director, and supervisor remuneration
distributed by the Company from the distributable surplus in 2014 is summarized below:
Employee bonus distribution: NTD447,162,335; director and supervisor remuneration distribution:
NTD127,760,667, and the total distribution amount is greater than NTD574,923,002. It is the
same as the recognized cost amount in 2014.
The distribution situation passed by the Shareholders' Meeting is the same as the proposed
situation passed by the Board of Directors.
3.1.9 Company’s situation regarding buying back Company shares : None.
3.2 Issuance of Corporate Bond : None.
3.3 Issuance of Preferred Shares : None.
3.4 Issuance of Global Depository Receipts : None.
3.5 Issuance of Employee Stock Option : None.
3.6 Issuance of Restricted Employee Shares : None.
3.7 Status of New Shares Issuance in connection with Mergers and
Acquisitions : None.
3.8 Financing Plans and Implementation
3.8.1 Plans：None.
3.8.2 Implementation：None.
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Ⅳ. Operational Highlights
4.1 Business Activities
4.1.1. Business scope
1. Major business contents
The major business items of the Group include the manufacturing and sale of computer
software and hardware products, and solar batteries, as well as the assembly and sale of
communication and digital assistant products, etc.
2. Proportion of consolidated business
Year
Item
2014
IT Product
97.42%
96.74%
2.58%
3.26%
100.00%
100.00%
Solar Product
Total
2015
3. Commodity items and new commodities planned to be developed
A. Computer hardware products: portable notebooks, corporate computers (including servers,
data centers, storage equipment, work stations), etc.
B. Computer software products: including server management software ESMS, application
software, learning tool software, computer peripheral extended products, etc.
C. Cloud application platforms.
D. Consumer electronics products and handheld devices.
E. Solar batteries and module products.
4.1.2 Industry overview
1. The current situation and development of the industry
(1) Notebook computers
In the first half of 2015, some emerging market countries were affected by exchange
depreciation, causing the demand for notebook computers to decline and most brand
manufacturers to experience a general increase in inventory. In the second half, in order
to avoid inventory risk, distributors only actively purchased after the launch of Windows
10 computers, resulting in the sales growth to be obviously higher in the third quarter
than the second quarter. Furthermore, in recent years, with the diversification of mobile
device products, the degree of dependency on notebook computers has reduced, so the
overall sales volume is still lower than that in 2014. According to the statistics of
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TrendForce, a global market research institution, the shipment volume of notebook
computers in 2015 was approximately 164 million computers, a decline of 6.3% from the
previous year.
Looking forward to the development of global notebook computers in 2016, the
consumer market is gradually shrinking. Although the demand for tablet PCs within the
same competitive market has been saturated, is the demand for network computers is still
affected by other mobile devices (such as smart phones, etc.). However, several brand
companies in mainland China are expected to launch notebook computers in the first half
of the year, the launch of the new products is expected to attract consumers and activate
the market. Although the gross profit margin of notebook computers declines annually
due to low-priced competition, the stimulation effect of low-price commodities on market
demand is no longer significant. Therefore, in order to increase sales profit, the branded
companies must increase the shipment proportion of high-end machines. Taiwan is a
technological leader with regard to the design and manufacturing of high-end machines.
Anticipating the importance of improving high-end machines, Taiwan’s industry will also
move towards high-quality development. In consideration of various trends, the market
survey research institution TrendForce estimates that the shipment volume of notebook
computers in 2016 will decline slightly by 3.2% to 159 million computers.
(2) Servers
In recent years, with the rapid development of cloud and mobile applications, the market
scale of servers has been growing continuously. Since mainland China
telecommunication dealers and Internet service providers have massive data processing
and storage demand and the shipment volume of server brand manufacturers in mainland
China are continuously growing, they are expected to catch up with the leading
manufacturers in Europe and the United States in the coming years. However, each brand
manufacturer in Europe and the United States continues to be devoted to the development
of new products. In addition to maintaining the self-manufacturing of high-end and
large-scale server products, brand manufacturers have outsourced medium and low-end
products and relevant components thereof to OEM for manufacturing. With an increase in
challenging brand manufacturers from mainland China, in addition to maintaining
inherent corporate hardware business, brand manufacturers in the United States are also
actively developing cloud computing solutions. According to the statistics of Gartner, an
international research and consultant institution, the shipment volume of global servers in
2015 increased by 9.9%, and the revenue grew by 10.1%. Looking to 2016, Gartner is
optimistic about the continuous and moderate growth of the overall server market.
Continuously driven by the demand for cloud application and data center computing, the
Institute for Information Industry also estimates that the market scale will reach 10.74
million servers, growth of 6.8% compared with 2015. Furthermore, since many large
scale data center markets adopt Whitebox server to construct their information center, the
demand of ODM Direct is growing drastically, compressing the market of brand
manufacturers, and the sales ratio and market share of ODM Direct is expected to
increase continuously.
96
(3) Cloud computing
Recently, mobile communication devices have been becoming more popular by the year,
and the information application market, such as wearable devices, Internet of Things, etc.,
has also been developing rapidly. In response to the demand of storing massive digital
data, all manufacturers worldwide have successively joined the cloud computing field,
which has driven all kinds of innovative services. Cloud computing has reshaped the
supply chain of the information communication industry and has triggered a new wave of
industry competition. With a continuous increase of output value in the entire cloud
industry, companies that offer cloud services also continue to increase. In addition to
large-scale Internet and virtual community dealers, many medium and small-scale
companies are providing all kinds of cloud services with development potential. Each
industry utilizes cloud computing and big data analysis to predict consumer behavior and
then formulate management decision and make its information department operate in a
more flexible manner in order to narrow the management span, increase production
efficiency, reduce costs, and improve the overall operation performance. With the
increase of cloud computing efficiency and cost reduction, data collection has become
more effective, and big data analysis more important. According to the global cloud
market analysis report issued by Synergy Research, a market research institution, global
enterprises' expenditure amount in the field of cloud computing in 2015 exceeds 60
billion US dollars, and the expenditure in private cloud and mixed cloud services is
continuously growing at the rate of 45% every year. Furthermore, according to the
estimation of the market research institution IDC, the expenditure of global public cloud
services in 2015 was approximately 70 billion US dollars. By 2019, it is expected to
reach 14.1 billion US dollars, with a compound annual growth rate of 19.4%. Most
software suppliers are expected to transfer to SaaS and PaaS models.
(4) Smart phone/wireless communication devices
According to statistics from the Institute for Information Industry, in 2015, the shipment
volume of global smart phones was approximately 1.531 billion phones, growth of 7.2%
compared with 2014; the single digit growth rate indicates that it has entered market
maturity. Since the market growth has slowed down, the sales volume of smart phones is
expected to reach 1.7 billion phones in 2020, with a compound annual growth rate of
4.0%. When comparing the market trend of each region, in mature markets with high
penetration rates, such as North America and Western Europe, the sales volume in 2016
will be close to that of 2015. Although the expected growth rate is lower than that of
emerging markets with low penetration rates, such as Africa, India, etc., they are still the
major sales areas for high-end mobile phones with high yield. On the other hand, the
Institute for Information Industry estimates that India will drive the huge domestic market
with economic development and will become the second largest smart phone market in
the world by 2019. The popularizing rate of mobile phones will also increase drastically
in Africa due to the general increase of personal income, and the market growth rate there
should not be underestimated.
With the development of the Internet of Things, related application services have
gradually matured, wearable devices will attract various dealers to actively invest in
97
developing relevant products due to such factors as technology improvement, increase of
consumer acceptance, etc. Many traditional industry dealers are carrying out research and
development to add the smart technology design into such products as watches and sports
products. According to the research report of Gartner, an international research and
consultant institution, in 2015, the shipment volume of global wearable devices was
approximately 232 million items. With the stimulation of such factors as the joining of
new manufacturers and the increase of consumer cognition degree, the shipment volume
of global wearable devices is expected to increase to 275 million items in 2016, with an
annual growth rate reaching 18.4%, and the revenue of wearable devices can reach 28.7
billion US dollars, of which 11.5 billion US dollars come from smart watches.
(5) Solar energy
Since 2011, the setup cost, module sales price, and module production cost in the solar
photovoltaic industry have declined drastically, causing global solar battery
manufacturers to gradually consolidate or quit the industry. Since green energy is
currently a major trend of global energy development, with the rapid decline of solar
energy setup costs and the active development of China, the U.S., Japan, and countries in
emerging districts, the global solar photovoltaic demand still sees high growth. In the first
half of 2015, the situation in which supply exceeded demand due to the excessive overall
production capacity expansion in the past few years was still present, but in the second
half of 2015, due to China's increase of installation targets and the increase of market
demand in Europe and the United States, the market supply and demand tend to balance,
and the price of solar batteries has gradually rebounded. According to the research data of
Energy Trend, a research institution, in 2015, the scale of global solar photovoltaic
demand was 53GW, an increase of 20% compared with 2014, the scale of global solar
photovoltaic demand is expected to reach approximately 59GW in 2016, further growth
of 11% compared with 2015. Looking toward 2016, the global solar energy industry will
positively and continuously develop, and the solar photovoltaic products and their
shipment volume in Taiwan are expected to grow alongside them, but we still need to
evaluate the subsidy policy of the government and the impact on the market caused by
dramatic production expansion by manufacturers from mainland China.
98
2. Relevance of upstream, midstream, and downstream of the information hardware industry
Upstream component
manufacturing industry
(1) CPU
(2) ODD
(3) HDD
(4) LCD panel
(5) Battery
(6) Memory
(7) Network device
(8) Keyboard
Midstream semi-finished
products processing industry
Downstream product
distribution industry
Module
and
Distributor
Assembly
(9) Mainboard
(10) Adaptor
(11) Other components
3. All kinds of product development trends and competition situations
Due to fierce market competition, branded manufacturers continue to launch all kinds of
products. In the future, the major advancing direction of notebook computers still mainly
relies on their being lightweight, portable, and convenient. The mainstream notebook
computer also actively integrates notebook computers with touch screens and narrow
borders in order to improve portable convenience. Furthermore, many brand
manufacturers focus on the production of gaming notebooks, including entry-level and
medium and high-end specification products, especially under the development trend of
Augmented Reality (AR) and Virtual Reality (VR), which will improve consumer's
efficiency requirement on notebook computers. Because of the continuous decline in the
price of notebook computer panels, the prices of mainstream 14-inch and 15.6-inch HD
(1,366×768) screens have been close to cost, so manufacturers have started promoting
FHD (1,920×1080) panels to maintain profits. Through the aforementioned improvement
of notebook computer efficiency and performance, the industry hopes to stimulate
consumer's purchase intention in order to increase the sales volume of notebook
computers in 2016. Furthermore, after the Chromebook entered the education market
with a low price, the entry-level notebook has also reduced its sales price under mutual
competition between and among major American manufacturers. With successful
expansion in the education application market, major American search engine
manufacturers have also actively cooperated with local European brand manufacturers to
develop and expand the consumer market; major American computer operation system
manufacturers contend against them by reducing licensing fees. Among competition with
major brands, the product line of low-price notebook computers is expected to expand.
99
(2) Server and cloud computing
The reformation of software technology drives the virtualization of the data center, and
the software-defined data center (SDDC) has also been upgraded along with the new
generation of server specifications. The expansion of DDR4 memory support increases
the memory resources in the server, and the popularization of solid state disk resolves the
bottleneck of data I/O access, increasing the computing capacity of mainstream servers.
The cross-platform cooperation between manufacturers has gradually become universal,
and the server will develop built-in application programs to cross the platforms of
different cloud services. In recent years, cloud computing has been promoting computing
resources to gather at the server end. In addition to driving the output value of server and
data centers, it will also stimulate computing, storage, and network requirements,
including the IC application of memory and storage equipment, among others. Among
green and environmental protection trends, server products with high efficiency will
generate a lot of heat energy in the course of computing; the uninterrupted operation of
server rooms also need thorough cooling systems to reduce the heat. Therefore, most
server products are being developed towards the direction of reducing processor energy
dissipation and reducing the power consumption of cooling systems.
With the rise of the Whitebox server in recent years, relevant dealers have been actively
developing new markets and customers by providing solutions with more value-added
services through end product production bases, including overall server tied products of
storage, software, and service, and assisting local data center hardware equipment or
integration schemes. Future market trends will connect cloud computing with Internet of
Things technology for huge business opportunities. Using the reaction speed of the cloud
system and system upgrades, in addition to reducing costs, it can also create more
value-added cloud services and develop a cloud industry-supported service industry.
(3) Smart phones/wireless communication devices
Since smart phones entered into price competition with low product differentiation, each
manufacturer continues to focus on improving hardware specifications and higher cost
performance. Regarding high-end machines, the launch of the high-end smart phone with
64 bits and 8 core architecture processors has rapidly penetrated into the high-end
machines of each big brand. Furthermore, random access memory is expected to increase
to 4GB, and battery life will also continuously improve, while the fingerprint
identification function will become a universal allocation function as consumers
increasingly emphasize privacy security. According to the estimation of the Institute for
Information Industry, in 2016, the sales volume of smart phones in mature markets such
as North America, Western Europe, etc. will maintain at 180 million items and 160
million items, respectively. Although the growth range is not high, they are still the major
sales locations for high-end machines with high profits; therefore each manufacturer
continues to attach importance to such places.
Recently, with regard to wearable device products, in addition to the continuous
development of watches, bracelets, glasses, head-mounted cameras, etc., relevant product
applications have gradually expanded into many other devices, such as those related to
100
sports and medical treatment. The major purpose is to collect all-around relevant personal
physiological information and carry out analysis using a device that is closer to the
human body. Traditional dealers and new entrepreneurs are actively entering the smart
wear market one after another, creating fierce competition. In order to meet various
consumer demands, product design development is also quite diversified, prompting the
emergence of the competition status of small quantity product diversification. Therefore,
for future development, dealers must possess sales capability, such as good product
design, production support and marketing, etc. to obtain the advantage in such a market.
(4) Solar energy
Types of solar batteries are diversified, and different materials have different
characteristics in their reaction to the solar spectrum. Except for crystalline silicon,
thin-film materials, and III-V and II-VI compound semiconductor materials, organic
composite materials have low costs and are easily produced, and even specific nano
materials have solar energy power generation characteristics. Currently, commercialized
solar batteries include crystalline silicon type, thin-film type and III-V (GaAs) solar
batteries, but the crystalline silicon solar battery is the mainstream in market application.
Of those, three varieties are most common, namely single crystalline silicon,
polycrystalline silicon, and amorphous silicon. Although the energy conversion efficiency
of thin-film type solar batteries is lower than that of a crystalline silicon solar battery,
they do not require crystalline silicon wafers and can grow onto base materials with
different shapes and of different materials, and it has the characteristics of low cost and a
large applicable area; therefore, it still has the opportunity to drastically reduce the cost of
production equipment, which is originally relatively high. Currently, with the
development of centralized solar photovoltaic systems gradually maturing, the
development of a decentralized solar photovoltaic system will become the key point in
the next wave of promotion. Since the decentralized solar power generation cycle is
consistent with the household power consumption cycle, as solar energy power
generation costs continue to decline, the decentralized solar energy system will become
one of the solutions for replacing traditional household energy.
The research and development priority of each major manufacturer is continuously aimed
at products with high quality and high efficiency, including adjusting the manufacturing
process to ensure the total number of single crystalline and polycrystalline solar batteries
conforms to the PID-free requirement (exempt from efficiency attenuation triggered by
electric potential difference). Passivated Emitter and Rear Cell (PERC) processing
technology and material selection can effectively increase the battery's photovoltaic
conversion efficiency. The development of new type solar battery technology can
increase conversion efficiency, improve light attenuation, and reduce the efficiency
temperature coefficient.
101
4.1.3 Overview of technology and research and development
Table of R&D Expenditure Investment by the Group in the Past Two Years
Year
2014
R&D Expenses (Unit: NT$ Thousand)
2015
8,511,964
8,816,932
R&D Expenses to Revenue (%)
1.95
2.23
Growth Rate (%)
4.35
3.58
"Innovation" is the basic spirit of the Group foundation’s operation philosophy; it is the best
medium for shaping our enterprise's differentiation value, as well as our commitment to our
customers and partners. Therefore, we pay special attention to innovation research and
development and patents for invention in order to improve the international competitiveness
and influence of our Group. Over the years, the Group has invested considerable amounts of
expenditure into product research and development, with the R&D expenditure of the Group
in the past two years reaching NTD8.51 billion and NTD8.82 billion, respectively. In the
future, we will continue to invest large amounts of funds. We will be dedicated to the
improvement and expansion of original product line function, understanding the demand of
end consumers through product innovation, and participation in the research and development
design of major international manufacturers in order to strengthen the market concept of
original product design. We will further master, collect, and analyze the after-sales demands
of consumers through a global logistics service structure. Moreover, we will actively
cooperate with major component manufacturers, fully master the core design capability, and
establish cross-domain technology application platforms by integrating software and hardware
with integrative functions. Furthermore, we will integrate wireless communication technology
and establish new platforms for communication products to expand the product lineup.
The Group attaches great importance to cultivating innovation research and development
talents and motivates employees through financial reward and management mechanism;
innovation and patent protection have been fully integrated into the corporate organizational
culture. We have also established the innovation incubation fund; in addition to investing in
the innovation team externally, we also pay attention to encourage internal innovation inside
the Group, accelerating the cultivation of innovative entrepreneurial energy. Since the Group
has been continuously dedicated to independent innovation, as of the end of December 2015,
more than 14,000 patent certificates worldwide had been accumulatively acquired, and more
than 6,000 patents are under application. In Taiwan and China, the total number of invention
and patent certificates and the number of applications have officially ranked in the top ten for
more than eight consecutive years. In the future, we will continue to adhere to the spirit of
innovation and be dedicated to the research and development of core technology to improve
industrial competitiveness.
102
4.1.4 Long-term and short-term business development plans
1. Short-term business development plans
(1) Stick to knitting and strive for innovation improvement, satisfying customer and
market demands in the quickest and most direct way.
(2) Start from the operation philosophy of “Innovation, Quality, Open Mind, and
Execution” to integrate operation technology and management tools to improve
operation performance.
(3) Research and develop demand-oriented products and expand the depth and width of
product research and development level to achieve the target of multiple earning
growth.
(4) Actively carry out global arrangement, properly utilize each local resource
advantage, and construct an optimized global supply chain and operation network.
2. Long-term business development plans
(1) Combine software, hardware, and relevant applications to create relative advantage
to maintain an international foothold. Unlike the traditional manufacturing concept
of focusing on hardware only, emphasize the utilization of soft skills such as
information, simulation, research and development, system integration, services, etc.
and create product features and differentiation to improve added value.
(2) Focus on research and development and core capability management and develop
towards the direction of "Creating high value". Seek cooperative international
opportunities worldwide and cultivate technical talents with global competitiveness
to accelerate the improvement of our technical level and implement innovative
concepts.
(3) Continuously promote the five major development areas of "Rapid Innovation",
"Sustainable Energy", "Cloud Solutions", "Mobile Lifestyle", and "Emerging
Markets". Utilize vertical labor division, improve efficiency, provide customers with
timely and complete services, carry out supply chain integrating management, and
construct the production organization of an economic scale in order to strengthen
long-term competitive advantages.
(4) Continue diversified cultivation, based on a solid foundation of professional
notebook computer OEM, enter the fields of cloud computing, mobile computing,
wireless communication, network applications, smart family, application software,
green energy environmental protection, etc., expand corporate operation scale, and
overall arrange Internet of Things technology to become the top Internet enterprise.
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4.2 Overview of the market, production, and marketing
4.2.1 Market analysis
1. Sales territory of major products
Major product department
Name
Major sales territory
Computer product
Notebook computers, servers, and
other electronic information products
North America,
Europe, Asia
2. Market share, supply and demand situation, and growth in the future market
The rise of the notebook computer OEM supply chain in mainland China has caused the
order quantity to decline in some Taiwan OEM dealers. According to the statistics of the
Institute for Information Industry, in 2015, the global market share of Taiwan’s
notebook computers dropped by 1.1%; however, Taiwan notebook computer OEM
manufacturers possess global logistics capability, rapid response, and economic scale,
so major brand manufacturers from the U.S., Japan, and Taiwan continue to appoint
Taiwan OEM dealers for design and manufacturing, and Taiwan’s global market share is
approximately 83.8%, maintaining a leading position.
The development of Taiwan’s notebook computer industry is closely connected to
global industry development and is deeply influenced by customers' outsourcing
strategy. Looking toward 2016, as each major brand starts to attach importance to
product line and emphasizes high efficiency and specification improvements, the design
and manufacturing technology of Taiwan will continue to lead worldwide and have a
definite advantage regarding medium and high-end notebook computer OEM. The
Group still maintains the concept of continuous innovation, with competitive
advantages such as excellent global logistics service capability, the most flexible order
receiving production mode, and a localized and customized production mode. Therefore,
it has become the leading manufacturer in global notebook computer manufacturing.
Growth space for commercial notebook computers is still expected in the future; hence
the Group will continue to focus on the development of commercial notebook
computers while developing thinner and differentiated products.
(2) Servers
According to statistics from the Institute for Information Industry, in 2015, the
shipment volume of Taiwan’s server related products accounted for 81.5% of the
global market. Most American and Japanese brand dealers make orders to Taiwanese
OEM plants since they have no assembly plants; on the other hand, most Chinese
brand dealers own their own assembly plants and generally purchase main boards from
Taiwan OEM plants for independent assembly. With the rapid development of cloud
computing and mobile devices, the network has been able to be constructed onto a
universal type x86 server platform, and the server market has been growing rapidly in
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the past three years. Together with the expansion of public cloud services and fierce
bidding degrees, the rise of large data center demands is also driving the demand of the
White box server, which will help Taiwan’s server dealers to obtain more orders.
Looking toward 2016, since the proportion of self-manufacturing of mainland China
manufacturers is increasing and major American brands have slightly scattered orders,
which is estimated to slightly reduce the global shipment share of Taiwan. The Group
has been thoroughly cultivating the server industry and continuously improving its
competitive advantage. Meanwhile, in response to the increase of computing demands,
the growth momentum of server demands is still good; therefore, our continuous
assessment goes beyond the strongholds in the existing North American and European
regions, and we will actively expand markets in emerging regions, amplifying server
end product assembly plants and continuously developing all kinds of server
businesses.
(3) Cloud computing
In recent years, the Group has been actively developing cloud services in the hopes of
creating a flexible cloud knowledge application environment by combining the SaaS
service provided by partners in order to provide customer solutions for software,
hardware, and service. To meet customer demands, customers can choose a cloud
service platform or enterprise cloud all-in-one scheme and switch between these two
schemes at different stages according to their business growth and demand. Starting
from 2015, with innovation incubation projects and mini venture investments, we have
been emphasizing three major aspects, namely Internet of Things, big data, and the
cloud, in order to facilitate business development. Meanwhile, we exploit global
supply chain systems, in addition to the existing cloud equipment production base on
the US-Mexico border and in the Czech Republic. In the future, we will also consider
establishing research and development and production bases in other areas to improve
company competitiveness. Furthermore, considering the "IOE removing" business
opportunity in the China cloud market, the Group has taken the leader as hardware
manufacturer, leading Taiwan network service providers and software integration
dealers to go to mainland China to seek cloud business opportunities together. In 2017,
the Group is expected to set five data centers in North China, East China, South China,
and Taiwan, focusing on the mixed cloud market of small and medium-sized
enterprises in both Taiwan and mainland China.
(4) Smart phones/wireless communication devices
Since most Chinese consumers have already switched from using feature phones to
using smart phones, the growth range of the global smart phone shipment volume will
gradually slow down. The research institution Institute for Information Industry
expects India to become the second largest market in the world in the future. Each
dealer has been actively arranging production plants in regions with a lower
penetration rate such, as India and Africa, or cooperating with local manufacturers in
order to exploit their consumer markets. Furthermore, according to the data of the
market research institution TrendForce, in 2015, the total shipment of China brands
was close to the total shipment of top two mobile phone brands globally; in the future,
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the sales market of international big plants will be compressed due to the rise of
Chinese brands. The Group is dedicated to continuously strengthening design, testing,
and manufacturing capability through customer value innovation and actively
integrating the design OEM process; with the gradual maturity of company research
and development strength, test technology, and product design capability, we can take
our place in the field of smart phone manufacturing.
Since 2013, wearable devices have been developed into all kinds of styles and are
considered the main development commodities after computers and smart phones.
Each major brand plant has been devoted to designing wearable devices independent
of smart phones, as well as actively combining data collected from wearable devices
and providing users with information and suggestions to improve their added value.
With such advantages as existing smart phone designs and manufacturing, the Group
expects to first invest in research and development of wearable devices. Currently,
such application commodities as wearable devices and smart family also have market
competitiveness and are expected to bring more business opportunities to the Group in
the future.
(5) Solar energy
Reviewing the global solar energy industry in 2015, after the anti-dumping
investigation in Taiwan initiated by the U.S. Department of Commerce in 2014, the
average sales price of solar batteries declined to its lowest point in the middle of 2015
from a market price of more than 0.40 US dollars per watt in the beginning of 2014,
the lowest in the history of solar energy. However, throughout the entire year of 2015,
due to the strong domestic demand in mainland China and emerging markets such as
India and countries in Central and South America being devoted to developing solar
energy industries, this drove the recovery of prosperity, and the great decline in
quantity and price in the first half of the year turned into price stabilization and gradual
rise in the second half of the year.
Looking toward 2016, in the first half of the year, such wave of upsurge will continue,
but in the second half of the year, we still need to observe the impact of newly
increased production capacity on the supply and demand balance. According to the
estimation of the Institute for Information Industry, in 2016, mainland China will still
be the largest market for solar energy, with installation quantity accounting for 28.2%
globally, followed by the U.S., expected to account for 16.7%, and then Japan and
Europe, accounting for approximately 15.9% and 14.5%, respectively. The solar
energy demand in emerging markets is also increasing rapidly, with the solar energy
demand growing continuously in such regions as Southeast Asia, Africa, Central and
South America, Middle-South Asia, etc. However, the policy variability in such
markets is great and relatively unstable, so subsequent developments still need to be
observed. The Group has been actively optimizing product innovation and
manufacturing processes in order to develop high quality and high efficiency products
through professionalism and differentiation.
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3. Competition niche, favorable and unfavorable factors in development prospects, and solutions
(1) Favorable factors
A. Product advantages continue to improve and drive the growth of market demand
Since the functions of notebook computers are continuously improving, and the weight
and modeling are becoming thinner and thinner, as well as the collocation of touch
control and continuous development of all kinds of digital mobile video multimedia
technologies, it has made the product line more extensive through innovation to meet
the demands of each consumer group.
B. Cloud computing is the mainstream in future development
The cloud computing industry and big data are both growing rapidly. In the future, the
cloud application business opportunities are infinite. The Group has been the industry
leader in the aspect of server OEM; through existing hardware technology and
application software development, we can take our place in the cloud computing
industry.
C. Construct an all-around system product line
Based on the good foundation of an existing all-around product line, in addition to
continuing to consolidate the notebook computer and server product fields, the Group
is also gradually expanding to relevant fields such as peripheral software products,
electronic information products, etc. with higher added value. Furthermore, in the solar
energy photovoltaic industry, through vertical integration and Group resources sharing,
the Group can take its place in the field of solar battery and module products.
D. Establishment of a global logistics supply chain system
In addition to strengthening the status of global manufacturing, research and
development, and the logistics center, the Group is also actively utilizing production
advantages and research and development factors in the Greater China economic circle
in order to construct a real time co-working platform with high efficiency and a market
feedback mechanism, and together with the setup of a research and development
innovation center, we will enhance technology and product design innovation
capability.
(2) Unfavorable factors
A. Since manufacturers in our country cannot sufficiently supply some important key
components, and we still rely on supply from overseas manufacturers, controlling both
material sources and price is not easy; for example, a significant natural disaster can
easily cause a supply chain disruption crisis.
Solution: The Company has long-term cooperative and strategic ally relationships with
major suppliers and has established multiple supply sources for important components
to ensure sufficient component supply; we also seek all kinds of approaches to
integrate the supply chain and reduce the impact.
B. The prices of important components have dropped rapidly, causing low price
computers to quickly extend, and supply manufacturers and brand manufacturers are
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dominating the formulation of industry standards and mastering the distribution
channels, thus compressing the profits of downstream manufacturers.
Solution: In addition to being dedicated to the development of high added value
products and all-around products, we also actively improve operation efficiency in
such aspects as production, marketing, logistics, etc. to reduce operation costs and
improve overall operation efficiency through constructing Enterprise Resource
Planning (ERP), Supply Chain Management (SCM), and six sigma improvement
strategy.
C. Industrial technology is rapidly changing and constantly updating the environment of
shortening product life cycle and meager profits, causing fierce industry competition.
Solution: The Group will formulate a relevant operation risk management mechanism
to consider various operation strategies as relevant solutions; in addition to
coordinating with customers for the research and development of relevant demanded
commodities, we are also dedicated to patent and intellectual property innovation in
order to strengthen Group resource integration and expand emerging business
investments and arrangements to respond to changes in the market.
D. Our business is mainly export sales, so the change of exchange rate will significantly
impact company revenue and profit-making.
Solution: Most of the important components of the Company are purchased and
imported overseas and priced with foreign currency, and the sales are mostly priced
with foreign currency, which can naturally offset the impact of change of exchange
rate on revenue and cost. Furthermore, taking currency hedging measures can help us
reasonably avoid exchange rate risk.
4.2.2 Important uses and production processes of major products
1. Important uses of major product
Product
name
Product type
Important use
Computer
products
Notebook computers,
servers, and other
electronic information
products
Notebook computers are used for the storage,
computing, and analysis of digital and character data,
data transfer and receiving, etc. Through a server host
machine, several computers can execute the function of
computing, transfer, and data storage at the same time.
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2.Production process
Automatic assembly
Automatic assembly
SMT operation
SMT operation
Semi-finished product assembly
Semi-finished product assembly
LCM semi-finished product assembly
LCM semi-finished product assembly
Test
SA operation
SA operation
test
Welding repair and troubleshooting
Process inspection
Welding repair and troubleshooting
Process inspection
Test
Test
Finished product assembly
Finished product
assembly
Packing
Image
Image
DLDL
Packing
Outfit assembly
Outfit assembly
Test
shipment
Outgoing quality control
Process
Processinspection
inspection
Outgoing quality
control
Visual inspection
inspection
onVisual
appearance
Finished
product
Finished product
storage
on appearance
Test
Finished product
shipmentFinished product
storage
4.2.3 Major raw materials' supply condition
The major raw materials of the Group include central processing units, liquid crystal
displays, hard disks, etc. For the stability with regard to the quality of raw materials
suppliers, both delivery accuracy and quality specifications are factors in choosing
suppliers. The Group maintains a good cooperative relationship with its suppliers while
adopting a decentralized procurement process. We not only aim to strengthen the collection
and analysis of market conditions, but also strive for timely material supply to ensure
reasonable costs and sufficient material supply.
Key Material Suppliers
Item
Suppliers
CPU
PANEL
HDD
INTEL
AUO
SEAGATE
AMD
LG
HGST
MARVELL
INX
TOSHIBA
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4.2.4 Major Accounts in the Past Two Years
A. Major Suppliers
Unit: NT$ Thousand
2014
2015
As of end of Q1, 2016
Percentage of total
Net Purchases
Relationship with
the issuer
Company
Percentage of total
Net Purchases
Relationship with
the issuer
Company
Percentage of total
Net Purchases
Relationship with
the issuer
1
A
161,206,331
44
Nil
A
165,344,764
50
Nil
A
39,992,440
46
Nil
2
B
50,202,590
14
Nil
B
8,366,803
3
Nil
B
383,747
0
Nil
Others
150,976,983
42
-
Others
154,311,850
47
-
Others
46,778,658
54
-
-
Total Net
Purchases
-
Total Net
Purchases
87,154,845 100
-
Item Company
3
Amount
Total Net
Purchases 362,385,904 100
Amount
328,023,417 100
Amount
B. Major Clients
Unit: NT$ Thousand
2014
2015
As of end of Q1, 2016
Percentage of
total Net Sales
Relationship
with the issuer
Company
Percentage of
total Net Sales
Relationship
with the issuer
Company
Percentage of
total Net Sales
Relationship
with the issuer
1
C
223,243,940
51
Nil
C
239,147,943
61
Nil
C
57,504,245
60
Nil
2
D
73,012,045
17
Nil
D
12,969,145
3
Nil
D
667,545
1
Nil
3
Others
139,343,983
32
-
Others
143,353,133
36
-
Others
37,191,801
39
-
435,599,968 100
-
Total Net
Sales
395,470,221
100
-
Total Net
Sales
95,363,591 100
-
Item Company
Total Net
Sales
Amount
Amount
Amount
4.2.5 Production Value in the Most Recent Years
Quantity & Value
Major Product
Unit: 1,000 pcs, NT$ Thousand
2015
2014
Capacity
Quantity
Value
Capacity
Quantity
Value
IT Product
414,445
314,888
353,989,199
522,641
350,125
311,481,323
Solar Product
211,432
196,959
12,201,048
282,540
268,699
12,832,227
Total
625,877
511,847
366,190,247
805,181
618,824
324,313,550
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4.2.6 Sales Value in the Most Recent Years
Unit: 1,000 pcs, NT$ Thousand
Quantity &
Value
Domestic
Major
Quantity
Value
Product
IT Product
Solar Product
2015
Export
Quantity
Domestic
Value
Quantity
Export
Value
Quantity
Value
17
25,064,790
311,860
399,294,489
13
21,986,826 354,234
360,580,881
8,046
2,514,229
165,333
8,725,474
16,849
1,673,578 250,292
11,228,698
-
-
-
986
-
8,063
27,579,019
477,193
408,020,949
16,862
Others
Total
2014
-
-
238
23,660,404 604,526
371,809,817
4.3 Human Resources
Year
2014
Up to
Mar. 31, 2016
2015
Direct Labor
36,128
35,702
34,107
Indirect Labor
12,928
13,416
13,041
Total
49,056
49,118
47,148
Average Age
25.93
27.25
27.56
Average Seniority
2.47
2.61
2.84
PhD Degree
0.10%
0.12%
0.12%
Master Degree
3.06%
3.79%
3.83%
College
24.72%
26.50%
26.96%
70.67%
69.59%
69.09%
Employee
Number
Education
Distribution
%
High School
(and below)
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4.4 Information on Environmental Protection Costs
4.4.1 The total amount of loss (including compensation) and punishment suffered
from polluting the environment
In recent years and as of the date of publication, the Company has not suffered loss or
punishment due to polluting the environment.
4.4.2 Future solutions (including improvement measures) and possible expenditures
In view of global green movements and the new wave of Internet technology innovation,
Inventec actively promotes the "Green energy environmental protection" strategy, mastering
the low carbon trend and developing towards a green economy. In addition to formulating the
social responsibility policy of "environmental protection, culture, poverty relief, and
community" as the foundation for promotion, Inventec has also set "Green product", "Green
production", and "Green life" as environment and quality objectives in order to meet the
expectations of each interested party. Inventec has been continuously adhering to the
environment and quality policies and sustainable projects formulated, as well as implementing
a series of plans. In 2015, the cost of relevant environmental protection expenditures of
Inventec was approximately NTD118.5 million, which mainly included waste disposal,
maintenance of pollution control equipment, environment detection, ecological afforestation,
green management system validation, product environmental protection mark certification,
environmental education, energy saving and carbon reduction projects, environmental
preservation activities, occupational health, and green supply chain management, among
others.
In order to comply with corporate sustainable development and social responsibility, Inventec
is constantly optimizing the existing comprehensive green management system. It takes the
circulation of PDCA (Plan, Do, Check, Action) in the ISO 9001 quality management system
as the basis to gradually optimize all kinds of green management systems, such as ISO14001
environmental management system, IECQ QC 080000 hazardous substance process
management system, ISO 14064-1 greenhouse gas management system, ISO 50001 energy
management system, TOSHMS, OHSAS 18001, and other safety, health, environment, and
energy management systems.
In response to the demands of the government, customers, and international investment
institutions on low carbon economies, Inventec has actively arranged the green energy
industry and continuously pursues the reduction of the impact of products on the environment
through green research and development, implementing green plants, enhancing energy
saving and water saving, reducing production energy consumption, disclosing environmental
information, etc. Regarding environmental sustainability, Inventec strives to break through the
current situation while reducing long-term operation cost. Since 2012, Inventec has set up a
solar energy power generation cleaning device in its Pudong Plant, which began operation in
2013. The solar energy power generation made available is 3.2 million degrees of electricity
every year, which accounted for approximately 1.54% of the total power consumption in nine
of Inventec’s major plants.
Saving energy and improving equipment energy efficiency have always been major directions
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of Inventec. Over the years, Inventec has been devoted to energy saving and carbon reduction
and green energy environmental protection and finally achieved the phased goal in green
building in March 2016, showing our determination to attach importance to green energy
environmental protection and caring for the earth.
In response to the issue of global energy depletion and climate change and to fulfill our
responsibility as corporate citizens, Inventec has set medium and long-term reduction goals,
namely "Take 2010 as the benchmark, reduce greenhouse gas emissions by 10% by 2020", in
the hope of making certain contributions to the green economy and mitigating climate change.
The "Inventec Group 2015 Greenhouse Gas Inventory Report" has been disclosed on the
company website. Inventec has imported a greenhouse gas inventory system since 2008, and
so far, it has completed nine years (from 2007 to 2015) of greenhouse gas inventory
operations. Meanwhile, in order to optimize inventory operation, in 2011, Inventec’s GHG
Portal was set up, which allows all inventory operations and the verification of third party
certification units to be completed in the platform, effectively improving inventory quality
and efficiency, and reducing unnecessary manual operation time and manual mistakes in order
to achieve the effect of energy saving and carbon reduction. In 2015, the total greenhouse gas
emissions of Inventec and Inventec Appliances Corp.’ major plants was 270,564.911 tonnes of
carbon dioxide; the main emission originated from purchasing electricity externally,
accounting for 93.58% of total emissions, an increase of 8,288.13 tonnes of carbon dioxide
compared to the 262,276.781 tonnes of emissions in 2014. The main reason for increase was
the expansion of production capacity in Chongqing Plant of Inventec and Nanjing Plant of
Inventec Appliances Corp..
In order to spread Inventec's green enterprise influence, Inventec actively promotes the green
supply chain and holds Taiwan and mainland China supplier environmental protection
conferences through all kinds of assistance and integration with suppliers in order to
propagate the requirements related to conflict minerals, carbon marks, biodiversity etc. to its
cooperating supply partners, with the hope of making certain contributions to mitigate global
warming.
Inventec has been devoted to environmental and ecological protection for a long time. In
response to the implementation of the "Environmental Education Act", in addition to
amending the company "Code of Corporate Social Responsibility", constructing an
environmental education workplace, and implementing educational training on environmental
management, Inventec also adopts community parks, holds community environmental
protection lectures, and participates in the preservation of the important national wetland
"Kwan-tu Nature Park". Since 2012, Inventec and Inventec Group Charity Foundation has
adopted the important national wetland "Kwan-tu Nature Park" with the five-year plan of
"Love ‧ Happiness - Let us care for the ecological environment on earth together". Through
the company environmental protection volunteers' participation in wetland maintenance, we
hope to enable more citizens and children to understand the function and importance of
wetlands and properly care for such precious land in order to maintain biodiversity. With
regard to ecological education, in order to let children from the community’s disadvantaged
families learn about wetlands, Inventec has continuously cooperated with Kwan-tu Nature
Park to hold the "Aquatic Family Nature Exploration Experience Course" to promote
ecological conservation, which allows children with a lack of resources to cultivate proper
113
concepts and actions to protect Taiwan’s wetlands. In 2015, a total of eight courses were held,
benefitting 240 school children.
4.5 Labor Relations
Attaching importance to and maintaining harmonious labor-capital relationships has always
been one of the important foundations of the company’s operation and management; measures
that promote labor-capital relationships are summarized below:
4.5.1 Welfare measure and retirement system
Provide a stable working environment with development space, make talents stable, and
continue to create value! Based on government laws and decrees, the Company provides all
kinds of proper basic labor conditions to employees, including two-day weekends, a flexible
working hours mechanism, and a thorough ask for leave system. We also periodically hold
soft incentive lectures so that employees can obtain a balance between life and work. With
regard to safety and health and job security, in addition to basic welfares, such as labor
insurance, health insurance, pension allocation etc., every employee enjoys regular health
examinations and is insured with complete group insurance. Pursuant to the standards of the
"Labor Pension Act", we have also formulated thorough employee retirement programs and
actually implement them pursuant to the relevant laws and decrees. The old system part: we
regularly allocate reserves for labor retirement and deposit them into a special account in the
Bank of Taiwan, and the Labor Pension Supervision Committee is responsible for managing
and utilizing the reserve for retirement; the new system part: for employees choosing the new
system, every month, the Company will allocate 6% of pension to the employee's personal
special account in the Bureau of Labor Insurance, Council of Labor Affairs, liberating
employees from any worry at work. Furthermore, we have created performance-oriented
promotion, dividends, and all kinds of reward mechanisms to achieve the objective of
retaining talents and profit-sharing.
4.5.2 Work environment and employee personal safety protection measures
Within the Company, the Industrial Safety and Health Office is responsible for planning all
kinds of safety, health, and environment management matters and supervising relevant
departments in implementing and executing all kinds of safety, health, and environment
affairs. Furthermore, the Company has created an Occupational Safety and Health Committee
pursuant to law, which works on such matters as safety and health related regulations, an
occupational safety and health management system, an educational training implementation
plan, preventing hazardous equipment or raw materials, operating environmental monitoring
and improvements, occupational health management, health promotion, health protection, etc.,
which will be planned, promoted and propagated by a dedicated work, safety, and health unit
in each department for implementing and executing relevant matters. Furthermore, in order to
ensure employee safety and health, we have formulated the "Occupational Safety and Health
Policy" to focus on occupational safety and health related matters, actively carry out
occupational safety and health education, prevent the occurrence of occupational disasters,
promote a healthy workplace, facilitate employee health, and establish good communication
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and consulting channel to effectively carry out continuous improvement in order to reduce the
risk of all kinds of hazards and let all employees work peacefully in a safe professional
environment.
Regarding safety, health, and environmental management, the Company has acquired all kinds
of certifications in safety, health, and environment energy systems, including "TOSHMS
Taiwan Occupational Safety and Health Management System", "OHSAS-18001 International
Occupational Health and Safety Assessment Series", "ISO-14001 Environmental Management
System", and "ISO-50001 Energy Management System" certification. Furthermore, the
Company has also won all kinds of awards issued by the government, including: the "Health
Excellence Award" for a Taipei City excellent healthy workplace, "Health LOHAS Award"
and "Health Sustainability Award" for a national excellent healthy workplace, "No Smoking
Workplace Model", "Excellent Independent Management Unit", "Blood Donation Excellence
Unit", "General Industry Excellent Independent Management Unit", "Excellent Breastfeeding
Room Certification", "Healthy Workplace Independent Certification - Health Promotion
Mark", "Labor Safety Award", "Carbon Reduction Model Award", "Corporate Social
Responsibility Award", "Energy Saving and Carbon Reduction Action Badge",
"Environmental Sustainability Award", "Excellent Unit in Labor Safety and Health
Promotion", "Excellent Unit in Hazard-Free Working Hour Implementation", "Excellent
Employee Welfare Business Unit", "Labor Safety and Health - Five Star Award", etc. In 2014,
we won Taipei City’s "Labor Safety Excellent Unit - Enterprise Award", the national "Labor
Safety and Health Excellent Unit Award", the Ministry of the Interior’s "Blood Donation
Excellent Enterprise Award", the National Health Service, Executive Yuan’s "Healthy
Workplace Certification - Health Promotion Badge", "ROC Enterprise Environmental
Protection Award", and "2014 Taiwan Enterprise Sustainability Award - Gold Award". In 2015,
we won the Ministry of Labor, Executive Yuan’s "Labor Safety Excellent Unit Award",
"Certificate of Merit for Hazard-Free Working Hour Record", Commonwealth Magazine’s
"World Corporate Citizenship Award", the Ministry of Labor, Executive Yuan’s "National
Excellent Occupational Safety and Health Unit Award", the Environmental Protection
Administration, Executive Yuan’s "Enterprise Environmental Protection Award", and Taiwan
Sustainable Energy Foundation’s "Taiwan Corporate Sustainability Report Award".
Meanwhile, we have also actively coordinated with all kinds of government policies to
promote and participate in relevant activities in order to further facilitate good and
harmonious labor-capital relationships, fulfill our corporate social responsibility, and move
towards the objective of corporate sustainable development.
1. Occupational safety and health policy: The Company has formulated its Occupational
Safety and Health Policy according to the requirements of the Taiwan Occupational
Safety and Health Management System (TOSHMS) and International Occupational
Health and Safety Assessment Series (OHSAS 18001), taking them as the highest
criteria for guaranteeing employees’ work safety.
2. Occupational safety and health management unit and personnel allocation: In order to
comply with laws and regulations to carry out risk assessment and continuous
improvements, the Industrial Safety and Health Office, as a whole, plans to handle and
execute all kinds of safety, health, and environment management related affairs. All
members possess safety, health, and environment professional certificates.
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3. Setting of Occupational Safety and Health Committee and conference convening: The
Company will regularly convene the Occupational Safety and Health Committee
conference; it is currently convened once every quarter, so four times a year.
4. Safety, health and environment management plan and occupational disaster prevention:
Safety, health, and environment management plans are formulated pursuant to law and
include occupational disaster prevention. Items that are planned to be formulated include:
working environment or operation hazard identification, assessment and control,
hazardous chemicals classification and marking, general education and management,
purchase management, contractor management, safety and health operational standard
formulation, occupational disaster, near miss and investigation, handling and statistical
analysis on events affecting physical and psychological health, safety, health, and
environment management records, performance assessment measures, etc.
5. Health management plan and physical health examinations: Before reporting to the
Company, new employees shall provide a physical examination report pursuant to law;
moreover, better than what is required by regulations, in-service personnel will regularly
receive health examinations every year.
6. Automatic safety and health inspection: Pursuant to the Occupational Safety and Health
Act, the Company will automatically include each machine and piece of equipment that
should be inspected in the occupational safety and health management plan and
formulate automatic inspection management measures for management.
7. Operating environment monitoring and occupational disease prevention measures:
Based on the operating environment hazard property of the Company, as well as
monitoring purpose and relevant guidance announced by the central governing authority,
the Company has formulated an operating environment monitoring plan that includes a
sampling strategy and regularly carrying out operating environment monitoring
accordingly. Meanwhile, we also conduct results comparisons according to test results;
if the test data is relatively higher than the previous test data, we will immediately carry
out a risk identification investigation in order to reduce site hazards and achieve the
objective of preventing occupational disease and reducing site risk.
8. Strengthen contracting management: The Company has formulated contractor safety
operation management measures and requires the engineering unit to carry out
contractor safety and health educational training before starting engineering construction.
Relevant units will convene contractor safety and health management conferences to
carry out hazard notification and ask suppliers to sign the "Contracting Unit/Contractor
Safety and Health Meeting Minutes", "Contractor Safety and Health Management
Commitment", and "Contractor In-plant Work Application" of the Company. Upon
engineering construction, the contractor shall follow all kinds of operation management
measures of the Company, and the occupational safety and health unit will execute
contractor safety appraisal and abnormal deficiency analysis, as well as execute
prevention education according to the appraisal and analysis results in order to ensure
reduction of risks that might be caused by contracting construction.
9. Hazard risk assessment identification: Pursuant to the Taiwan Occupational Safety and
Health Management System "TOSHMS" and International Occupational Health and
116
Safety Assessment Series "OHSAS 18001", the Company has formulated safety and
health hazard risk identification and assessment management measures, regularly
execute comprehensive hazard identification and risk assessment operations according
to all kinds of potential factors that may cause personnel injury or accident, and further
formulate occupational safety and health targets, objects, and management plans as the
basis for planning the safety and health management system.
10. Occupational safety and health management plan: According to the results of the
occupational safety and health hazard identification and risk assessment, the Company
will give priority to certain high risk activities as improvement targets and regularly
trace the improvement effect by carrying out the management plan.
11. Safety and health educational training promotion: The Company will carry out safety,
health, and environment management and educational training for new employees;
educational training on safety, health, and environment risk identification, management
plan, laboratory education, laws and regulations, special operations, system documents,
internal audits, etc. will be otherwise given to key safety, health, and environment
members and relevant personnel in order to reduce the occurrence of occupational
disasters and ensure workplace safety.
12. The Company will regularly carry out fire lecturing and fire drills, emergency
evacuation drills, and fire tour inspections, regularly check all kinds of safety facilities,
and conduct task grouping and fire equipment drills to implement disaster prevention
and relief work.
13. Product development and design shall emphasize environmental issues and are aimed
at the advantages of low energy consumption, low pollution, recoverable, and
recyclable. Furthermore, energy saving and carbon reduction matters will be carried out
to reduce waste generation and the impact on the environment in order to achieve the
objectives of zero public hazard, diligent waste reduction, green products, and
ecological preservation, thus fulfilling our corporate responsibility and promoting
sustainable environmental protection.
14. The Company respects the life of laborers and emphasizes the health of colleagues by
effectively carrying out occupational health promotion activities and implementing
health management; furthermore, the Company is devoted to zero disaster related
prevention work to maintain zero disasters and care for its employee in order to
improve its healthy corporate image and move towards a healthy and sustainable
workplace.
4.5.3 Further education and training for employees
The Company adheres to a "talent-oriented" cultivation philosophy, provides outstanding
internal and external teachers and diversified cultivation channels to company talents, and is
devoted to balancing the emphasis on educational training and learning development in order
to continuously promote the Company’s corporate culture and continuously improve its
competitive advantage. In 2015, the expenditures related to employee training were
NT$10,775,149, and the total training hours were 56,756 hours.
117
"Talent cultivation" is the foundation for Inventec's sustainable operation, and the Company
continuously creates a friendly environment for employee's learning and growth. The
educational training system of the Company is divided into five major types of courses
centered on core value courses and delivers the corporate culture and value theory of Inventec.
Taking level type course and function type course as the two major axis, the Company teaches
employees in accordance with their aptitude, specifically plans personal development plan for
employee's career development, and assists colleagues to strengthen the capabilities required
at work. The language school provides further language education opportunities to the
employees to improve their personal competitive advantage; digital courses provide a
diversified learning environment, which allows colleagues to learn anytime, anywhere.
Course descriptions are summarized below:
(1) Core value course: Inventec pursues the maximization of shareholders' equity while
implementing corporate responsibility to make a certain contribution to society. All the
Company’s colleagues, from top to bottom and from inside out, have been shaped with
"Inventec" DNA through official conferences and activities, allowing employees to
acknowledge the operation philosophy of the company and become "Inventec Staff".
Contents include such courses and activities as monthly meetings, assistant level
meetings, management forums, strategic meetings, soft/incentive lectures, team
building exercises, etc.
(2) Level type course: Management courses are planned according to the demand of
colleagues at different levels; through meetings and daily communication, it improves
the colleagues' management capability and establishes a common communication
language and management beliefs to improve organizational performance. Contents
include: Inventec EMBA advanced class, senior supervisor training, advanced
supervisor training, basic supervisor training, professional training, new employee
training, production personnel training, etc.
(3) Function type course: These provide all kinds of professional knowledge and technical
bases, as well as advanced courses and lectures, to satisfy the functions of employees
needed in different specialties. Contents include innovation, product technology,
research and development production technology, patent and intellectual property,
industry intelligence, environmental safety and health, etc.
(4) Language school: In response to international development and the competition of the
Group, Inventec has been devoted to cultivating technology talents with multi-language
capabilities. English and Japanese seminars are held every quarter, thus providing
colleagues a learning environment for continuous language learning in the company,
and foreign language skills classes are also set up to immediately satisfy colleagues'
business demands. Meanwhile, internal English and Japanese tests will be held every
quarter to encourage colleagues to pass the test to acquire substantial affirmation and
allowance.
(5) Digital course: These provide colleagues an e-Learning on-line learning service,
constructs the Inventec networking academy, and is open as an important media for
employees' independent learning in order to facilitate the improvement and innovation
of technical capability, as well as further promote organizational learning and improve
118
work value and organizational competitiveness. Its contents cover all kinds of language,
management, and professional courses, thus allowing employees to learn independently
without time and place limitations.
4.5.4 Employee code of conduct
The Company has formulated "Global Employee Code of Conduct Management Measures" in
each plant, which stipulate the basic code of conduct for labor and capital on the basis of
fairness and impartiality. As an Inventec employee, when facing all kinds of work behaviors
and ethical and legal problems, we shall aim to create shareholder and employee value and
ensure social responsibility; therefore, under the precondition of following the basic
requirements of laws and ethical standards of each country or district, we shall abide by all
kinds of internal control systems of the company. Upon reporting for duty, every colleague
must sign and abide by it, and it shall be placed on the internal portal website, so that all
colleagues can read it at any time, and regularly carry out signing and promotion work; the
code of conduct is hereby summarized below:
(1) Safeguard a healthy work environment without sexual discrimination.
(2) All company-related confidential information must be kept confidential.
(3) Employees must protect the personal information of other persons circulated internally
or acquired upon business execution.
(4) Employees must protect intellectual property rights.
(5) Employees must abide by copyright regulations.
(6) Employees must not be involved in corruption or bribery of any kind.
(7) Employees must not participate in insider trading and avoid conflicts of interest.
In case of violation of the relevant requirements above, relevant punishment will be imposed
without exception.
In order to provide all employees with a healthy, safe, and highly efficient working
environment, the "Global Employee Code of Conduct Management Measures" also stipulates
that no employee or applicant shall be discriminated against or deprived of talent development
opportunities due to gender, age, race, color, nationality, religion, disability, or other factors
irrelevant to the legal interests of Inventec. Furthermore, each plant has set up an "Employee
Complaint System" to guarantee a fair arbitration mechanism when employees suffer from
human rights related infringements. In the plants in mainland China, a grassroots employee
caring group has been especially set up to handle employee complaints and understand the
employee's voice through employee interviews, etc.
4.5.5 Labor and capital communication mechanism
Through all the communication mechanisms listed below, the Company provides employees
with real-time responses and regular communication channels in order to facilitate a
harmonious working atmosphere and create a win-win situation for both the labor and capital.
119
(1) Two-way talks between grassroots employees and senior supervisor: quarterly
meetings and all kinds of symposiums occasionally held.
(2) Management policy and business process communication: communication meetings
for employee representatives from each department will be regularly held every
month.
(3) Cross-department communication and labor and capital communication: an internal
portal platform sets the multi-functional "Employee Opinion Exchange Area".
(4) Instant response problem and information consultation: each unit has established a
service consultation window and service hot line.
(5) Employee welfare policy and welfare promotion: employee welfare committee
monthly meetings and temporary meetings.
(6) Grassroots employees care group: handle employee complaints and understand the
employees' voice through employee interviews, etc.
4.5.6 In recent years and as of the date of the annual report publication, losses
suffered from labor dispute and disclosure of the estimated amount that are
occurring currently and likely to occur in the future and the resolution
In recent years and as of the date of the annual report publication, the Company has not
suffered any loss from labor disputes; it is estimated that, under the circumstances that the
Company continuously and actively promotes and implements all kinds of employee welfare
measures, there shall be no losses suffered from labor disputes in the future.
120
4.6 Important Contracts
Contract Nature Counterparty
Sales
Agreement
Quality
Agreement
Major Contents
Sales Contract
Hewlett
Packard
Enterprise
Company
Acceptance of order and
production of HP branded
notebook products
The duty of
confidentiality
Same as above
Production of notebook products
compliant with HP quality
requirements based on Sales
Agreement.
The duty of
confidentiality
Same as above
Provision of necessary
components, after sales services
and related technical support for
HP branded notebook products
made based on Sales Agreement
The duty of
confidentiality
Four years from 2000/12/1;
automatically renewable for
one year terms
production of HP branded server
products
The duty of
confidentiality
Production of server products
compliant with HP quality
requirements based on Sales
Agreement.
The duty of
confidentiality
HP branded server products made
based on Sales Agreement
The duty of
confidentiality
Q
Same as above
S
Service and
Support
Agreement
Same as above
Sales Contract
Toshiba
Corporation
Service
Contract
Sales Contract
Restrictions
Three years from 1998/6/1;
one year terms
HP Inc.
Service and
Support
Agreement
Quality
Agreement
Contract Term
One year from 2002/1/1 and
one year terms; effective on
production of Toshiba branded
2004/6/1 and automatically
notebook products
renewable for one year
terms
Toshiba branded notebook
products made based on Sales
Agreement
Same as above
Three years from 2008/4/21; Acceptance of order and
Dell Prpducts
automatically renewable for production of Dell branded
L.P.
notebook and server products
one year terms
121
The duty of
confidentiality
The duty of
confidentiality
The duty of
confidentiality
Contract Nature Counterparty
Sales Contract
Fujitsu
Limited
Quality
Contract
Contract Term
Major Contents
Restrictions
Five years from 2007/4/1;
one year terms
production of Fujitsu branded
computer system products
The duty of
confidentiality
Effective from 2007/4/1
until terminated by mutual
agreement of the parties
Production of products compliant
with Fujitsu quality requirements
based on the contract
The duty of
confidentiality
The Participant banks agree to
Syndicated
Loans Contract
Syndicated
Loans banks
Three Years from
2015/10/22
provide agreed credit line to
Inventec Corporation during the
contract term
122
None
Ⅴ. Financial Information
5.1 Five-Year Financial Summary
5.1.1 Five-Year Financial Summary - Consolidated Balance Sheet – IFRS
Unit: NT$ Thousands
Five-Year Financial Summary
Year
Item
2011
Current Assets
Property, Plant and Equipment
Intangible Assets
2012
2013
2014
01/01/2016
~3/31/2016
2015
121,900,414 130,970,654 168,811,543 151,098,840 133,577,659
120,941,355
38,207,206 35,238,180 34,032,310 35,073,036 34,660,330
40,052,559
887,259
901,392
872,905
866,723
12,737,205 12,029,148 10,440,024
8,628,461
6,635,579
5,893,670
Total Assets
174,003,753 179,220,208 214,171,136 195,701,729 175,746,473
167,754,307
Before Distribution
Current
Liabilities After Distribution
107,014,115 109,720,439 135,212,247 126,668,060 98,771,869
95,909,222
－
－
4,610,879 14,075,755
8,083,002
118,162,261 123,687,868 152,358,948 131,278,939 112,847,624
103,992,224
－
－
48,369,571 49,757,813 54,837,123 57,578,038 56,480,704
57,371,906
34,661,595 35,874,751 35,874,751 35,874,751 35,874,751
35,874,751
Other Assets
Non-Current Liabilities
Before Distribution
Total
Total Equity Attributable to
Owners of Parent
Share Capital
Capital Surplus
Retained
Earnings
982,226
108,053,963 112,590,419 140,952,207 132,946,141
11,148,146 13,967,429 17,146,701
119,202,109 126,557,848 158,098,908 137,557,020
2,912,784
2,912,784
Before Distribution
9,333,792 10,246,474 14,425,431 15,773,335 14,883,819
16,115,147
After Distribution
7,080,788
7,376,494
8,685,471
9,495,254
－
－
1,474,888
709,531
1,641,264
3,009,234
2,809,350
2,469,224
－
－
－
－
－
－
7,471,921
5,774,527
6,975,065
6,844,752
6,418,145
6,390,177
Before Distribution
55,841,492 55,532,340 61,812,188 64,422,790 62,898,849
63,762,083
After Distribution
54,801,644 52,662,360 56,072,228 58,144,709
－
－
Other Equity Interest
Treasury Stock
Non-Controlling Interests
Total
Equity
1,158,928
2,899,296
2,927,057
2,895,677
2,920,718
Note 1: Above financial information has been audited (review) by CPA.
Note 2: The company also compiles individual statements. The brief individual balance sheet of the recent
five years is as follows.
123
Five-Year Financial Summary - Individual Balance Sheet– IFRS
Unit: NT$ Thousands
Year
Item
2011
Current Assets
Property, Plant and Equipment
Intangible Assets
Other Assets
Total Assets
2012
76,834,419
2013
2014
2015
98,042,298 156,799,371 109,949,533
91,631,494
6,423,112
6,232,467
6,030,123
5,820,213
5,739,243
56,338
62,352
75,128
86,258
56,851
33,291,531
30,517,611
34,040,342
37,385,215
38,286,030
116,605,400 134,854,728 196,944,964 153,241,219
135,713,618
Before Distribution
Current
57,673,474
72,329,394 126,500,178
93,810,253
68,203,221
58,713,322
75,199,374 132,240,138 100,088,334
－
Non-current liabilities
10,562,355
12,767,521
15,607,663
1,852,928
11,029,693
Before Distribution
Total
68,235,829
85,096,915 142,107,841
95,663,181
79,232,914
69,275,677
87,966,895 147,847,801 101,941,262
－
Total Equity Attributable to
Owners of Parent
48,369,571
49,757,813
54,837,123
57,578,038
56,480,704
Share Capital
34,661,595
35,874,751
35,874,751
35,874,751
35,874,751
2,899,296
2,927,057
2,895,677
2,920,718
2,912,784
Before Distribution
9,333,792
10,246,474
14,425,431
15,773,335
14,883,819
After Distribution
7,080,788
7,376,494
8,685,471
9,495,254
－
1,474,888
709,531
1,641,264
3,009,234
2,809,350
Treasury Stock
－
－
－
－
－
－
－
－
－
－
Before Distribution
48,369,571
49,757,813
54,837,123
57,578,038
56,480,704
After Distribution
47,329,723
46,887,833
49,097,163
51,299,957
－
Capital Surplus
Retained
Earnings
Total
Equity
124
5.1.2 Five Year Financial Summary-Consolidated Statement of Comprehensive Income-IFRS
Unit: NT$ Thousands
Five-Year Financial Summary (Note2)
Year
2011
Item
Sales Revenues
Gross Profit from Operation
Operating Expenses
Non-Operating Income and
Expenses
Profit before Income Tax
Profit for the Period
Loss from Discontinued
Operations
Profit (Loss) for the Period
Other Comprehensive
Income (Loss) for the Period,
Net of Tax
Total Comprehensive Income
for the Period
Profit Attributable to Owners
of Parent
Profit Attributable to
Comprehensive Income
Attributable to Owners of
Parent
Attributable to
Basic Earnings Per Share
2012
2013
2014
01/01/2016~
03/31/2016
2015
410,937,895 461,091,703 435,599,968 395,470,221
19,147,808 22,808,470 23,348,338 21,705,408
3,606,340
7,511,866
7,109,079
5,407,268
95,363,591
5,645,077
1,865,142
-86,092
1,412,460
2,571,619
1,776,602
19,194
3,520,248
1,769,853
8,924,326
6,209,438
9,680,698
6,665,561
7,183,870
4,975,735
1,884,336
1,365,468
－
－
－
－
－
1,769,853
6,209,438
6,665,561
4,975,735
1,365,468
-851,066
925,163
1,359,826
-245,620
-341,736
918,787
7,134,601
8,025,387
4,730,115
1,023,732
3,253,368
7,074,172
7,097,815
5,563,633
1,231,328
-1,483,515
-864,734
-432,254
-587,898
134,140
2,400,327
8,011,952
8,455,834
5,315,880
891,202
-1,481,540
-877,351
-430,447
-585,765
132,530
0.91
1.97
1.98
1.55
0.34
Note 2: If the adoption of IFRS for the financial information is less than five years, the ROC GAAP financial
information shall be disclosed.
Note 3: The company also compiles individual statements. The brief individual comprehensive income sheet
of the recent five years is as follows.
125
Five-Year Financial Summary-Individual Statement of Comprehensive Income-IFRS
Unit: NT$ Thousands
Five-Year Financial Summary（Note2）
Year
Item
Sales Revenues
2011
2012
2013
2014
2015
320,807,295
369,228,630
330,784,531
289,354,169
13,396,524
15,126,403
13,346,958
12,049,443
5,790,761
6,666,457
4,471,632
3,801,715
-1,733,261
1,894,985
4,293,281
2,781,569
Profit before Income Tax
4,057,500
8,561,442
8,764,913
6,583,284
Profit for the Period
3,253,368
7,074,172
7,097,815
5,563,633
－
－
－
－
3,253,368
7,074,172
7,097,815
5,563,633
Other Comprehensive Income
(Loss) for the Period, Net of
Tax
-853,041
937,780
1,358,019
-247,753
Total Comprehensive Income
for the Period
2,400,327
8,011,952
8,455,834
5,315,880
Profit Attributable to Owners
of Parent
3,253,368
7,074,172
7,097,815
5,563,633
Profit Attributable to
－
－
－
－
Attributable to Owners of
Parent
2,400,327
8,011,952
8,455,834
5,315,880
Attributable to
－
－
－
－
Basic Earnings Per Share
0.91
1.97
1.98
1.55
Operating Expenses
Non-Operating Income and
Expenses
Loss from Discontinued
Operations
Profit (Loss) for the Period
126
Five-Year Financial Summary - Individual Statement of Comprehensive Income –– TW GAAP
Unit: NT$ Thousands
Year
Item
Sales revenues
Gross profit from operation
Operating expenses
Non-operating income
Non-operating expenses
Income from operations of
continued segments before tax
Income from operations of
continued segments - after
tax
Income from discontinued
departments
Extraordinary gain or loss
Cumulative effect of
accounting principle
changes
Net income (loss)
Before
Basic
earnings per adjustment
share ($)
After
(Note 2)
adjustment
2008
350,652,991
12,656,398
3,757,354
2,443,090
-683,167
2009
398,133,990
13,992,034
5,342,751
591,618
-686,878
2010
349,334,999
14,810,141
4,245,561
1,491,969
-1,749,887
2011
338,417,358
13,738,319
4,454,217
526,124
-2,002,651
2012
320,465,451
14,011,124
5,785,216
314,736
-2,083,067
5,517,277
5,247,491
3,987,643
2,977,690
4,016,885
5,335,433
4,612,739
3,482,413
2,425,354
3,214,562
－
－
－
－
－
－
－
－
－
－
－
－
－
－
－
5,335,433
4,612,739
3,482,413
2,425,354
3,214,562
2.08
1.64
1.18
0.79
0.90
1.89
1.56
1.18
0.76
－
Note 1: Above financial information has been audited by CPA.
Note 2: Earning per share is calculated according to the adjusted weighted number of shares. For
capitalization with retained earnings or additional paid-in capital, it will be adjusted by the capital
increase ratio. The issuance time of the shares will not be taken into consideration.
5.1.3 CPAs and Their Opinions for Most Recent 5-Year
Year CPA Firm
CPA’S Name
Auditing Opinion
2011
KPMG
Lin, Wan-Wan & Chen, Ying-Ju
Modified Unqualified
2012
KPMG
2013
KPMG
2014
KPMG
Chen, Ying-Ju & Yang, Liu-Fong
2015
KPMG
Chen, Ying-Ju & Yang, Liu-Fong
Unqualified
127
Remarks
Internal Adjustment in
the Accounting Firm
5.2 Five-Year Consolidated Financial Analysis – IFRS
Year
Item
Capital
structure
(%)
Debt ratio
Five-Year Financial Analysis (Note2)
01/01/2016~
2011
2012
2013
2014
2015 03/31/2016
69.01
71.14
67.08
64.21
61.99
Ratio of long-term capital to
property, plant and equipment
197.23
232.01
196.83
222.08
179.38
Current ratio
119.37
124.85
119.29
135.24
126.10
86.86
95.08
92.95
104.37
88.91
Times interest earned (Times)
4.00
14.48
8.74
8.86
30.84
Accounts receivable turnover
(Times)
6.91
7.38
6.45
6.12
6.51
53
49
57
60
56
Inventory turnover (Times)
11.11
11.34
11.10
11.74
10.74
Operating Accounts payable turnover
(Times)
ability
5.53
5.17
4.90
5.64
5.97
Average days in sales
32.86
32.19
32.88
31.09
34.00
Property, plant, and equipment
turnover (Times)
11.66
13.55
12.42
11.41
9.52
Total assets turnover (Times)
2.29
2.15
2.23
2.25
2.27
Return on total assets (%)
1.55
3.44
3.76
3.09
0.83
Return on stockholders' equity (%)
3.18
10.58
10.56
7.82
2.16
10.05
20.94
19.82
15.07
5.20
9.81
24.88
26.98
20.02
5.25
Net profit margin (%)
0.43
1.35
1.53
1.26
1.43
Basic earnings per share ($)
0.91
1.97
1.98
1.55
0.34
18.49
15.61
0.64
17.23
0.90
Solvency
(%)
Quick ratio
Average collection period
Profitability
Operating income
To pay-in
Capital (%) PBT
Cash flow ratio (%)
Cash flow Cash flow adequacy ratio (%)
Leverage
Note4
Note4
Note4
Note4
Note4
Cash reinvestment ratio (%)
0.20
0.16
-0.05
0.09
0.01
Operating leverage
3.93
4.74
5.14
3.89
3.41
Financial leverage
1.48
1.10
1.21
1.20
1.04
128
Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the analysis
is not required.)
1. Return on stockholders' equity : The decrease in this period is mainly due to the change of product
portfolio generated from market factors, which resulted in a decrease in revenue; furthermore, the
depreciation of the RMB has caused the reduction of profit and loss from foreign currency exchange, thus
resulting in the reduction of overall profit and loss after tax when compared with last period.
2. Operating income to pay-in capital ratio : The decrease in this period is mainly due to the change of
product portfolio generated from market factors, which resulted in revenue reduction and a decrease in
operating income.
3. PBT to pay-in capital ratio : The decrease in this period is mainly due to the reduction of revenue and
profit and loss from foreign currency exchange, thus resulting in the reduction of profit and loss before
tax..
4. Basic earnings per share : The decrease in this period is mainly due to the reduction of revenue and profit
and loss from foreign currency exchange, thus resulting in the reduction of profit and loss before tax.
5. Cash flow ratio : The increase in this period is mainly due to the increase of cash flow in operating
activities.
6. Cash reinvestment ratio : The increase in this period is mainly due to the increase of cash flow in
operating activities.
7. Operating leverage : The decrease in this period is mainly due to the reduction of fixed operating
expenses.
Note1: Above financial information has been audited (review) by CPA.
Note2: If the adoption of IFRS for the financial information is less than five years, the ROC GAAP financial
Note3: The Company compiles individual statements, analysis of financial ratio shall be disclosed.
Note4: If the adoption of IFRS for the financial information is less than five years, the ROC GAAP financial
Note5: Net cash flow of operating activities is not included.
Note 6: Equations:
(1). Capital Structure:
Debt ratio＝Total liability／Total assets
Ratio of long-term capital to property, plant and equipment＝（Net shareholders’ equity＋Non-current
liability）／ Net property, plant and equipment
(2). Solvency:
Current ratio＝Current assets／Current liability
Quick ratio＝（Current assets－Inventory－Prepaid expense）／Current liability
Times interest earned＝Net income before tax and interest expense／Interest expense of the year
129
(3). Operating ability:
Account receivable turnover＝ Net sales／Average accounts receivable (including accounts receivable
and notes receivable derived from business operation)
Days sales in accounts receivable＝365／Account receivable turnover
Inventory turnover＝Cost of goods sold／Average inventory amount
Account payable turnover＝ Cost of goods sold／Average accounts payable (including accounts
payable and notes payable derived from business operation)
Average days in sales＝365／Inventory turnover
Ratio of property, plant and equipment＝Net sales／Average of net property, plant and equipment
Total assets turnover＝Net sales／Average total assets
(4). Profitability:
Return on assets＝〔Net income (loss)＋Interest expense×（１－Tax rate）〕／Average total assets
Return on shareholders’ equity＝Net income (loss)／Net average shareholders’ equity
Operating income (pre-tax income) to Paid-in Capital Ratio＝Operating income (pre-tax Income) ／
Paid-in Capital
Profit ratio＝Net income (loss) ／Net sales
Basic earnings per share＝（Profit attributable to owners of parent－Preferred stock dividend)）／
Weighted average stock shares issued
(5). Cash flow:
Cash flow ratio＝Net cash flow from operating activity／Current liability
Cash flow adequacy ratio＝Net cash flow from operating activity in the past 5 years／In the past 5 years
(Capital expenditure＋Inventory interest＋Cash dividend)
Cash reinvestment ratio＝(Net cash flow from operating activity－Cash dividend)／(property, plant and
equipment＋Long- term investment＋Other assets＋Working capital)
(6). Leverage:
Degree of operating leverage＝(Net operating income－Variable operating cost and expense) ／
Operating income
Degree of financial leverage＝Operating income ／ (Operating income－Interest expense)
130
Five-Year Individual Financial Analysis– IFRS
Five-Year Financial Analysis (Note2)
Year
Item
Capital
structure
(%)
Solvency
(%)
2011
Debt ratio
2014
2015
72.16
62.43
58.38
1,003.22
1,168.21
1,021.11
1,176.29
Current ratio
135.55
123.27
117.20
134.35
Quick ratio
133.77
123.38
116.22
133.02
16.85
40.21
32.93
36.91
6.91
7.61
6.14
5.56
53
48
59
66
228.12
355.62
362.84
307.45
5.58
4.09
3.72
5.00
1.60
1.03
1.01
1.19
51.47
61.23
56.83
50.42
2.38
1.87
2.16
2.13
2.75
4.37
4.18
3.96
6.63
13.53
12.63
9.76
Operating income
16.14
18.58
12.46
10.60
PBT
11.31
23.86
24.43
18.35
1.01
1.92
2.15
1.92
0.91
1.97
1.98
1.55
11.90
Note3
8.67
23.40
Ratio of long-term capital to property,
plant and equipment
Accounts receivable turnover (Times)
Operating Accounts payable turnover (Times)
ability
turnover (Times)
To pay-in
Capital (%)
Cash flow ratio (%)
Cash flow Cash flow adequacy ratio (%)
Leverage
2013
63.10
Profitability
2012
Note4
0.12
Operating leverage
2.41
Financial leverage
1.05
131
Note4
Note3
Note4
Note4
0.04
0.14
4.37
6.02
4.01
1.03
1.07
1.05
Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the
analysis is not required.)
1. Accounts payable turnover : The decrease in this period is mainly due to the reduction of payment for
materials payable by interested parties, thus increasing the turnover rate of accounts payable.
2. Return on stockholders' equity : The decrease in this period is mainly due to the reduction of revenue
and profit and loss from foreign currency exchange, thus resulting in the reduction of profit and loss
after tax.
3. PBT to pay-in capital ratio : The decrease in this period is mainly due to the reduction of revenue and
profit and loss from foreign currency exchange, thus resulting in the reduction of profit and loss after
tax.
4. Basic earnings per share : The decrease in this period is mainly due to the reduction of revenue and
profit and loss from foreign currency exchange, thus resulting in the reduction of profit and loss after
tax.
5. Cash flow ratio : The increase in this period is mainly due to the increase of cash flow in operating
activities.
6. Cash reinvestment ratio : The increase in this period is mainly due to the increase of cash flow in
operating activities.
7. Operating leverage : The decrease in this period is mainly due to the reduction of fixed operating
expenses.
Note 3: Net cash flow of operating activities are not included.
Note 4: If the adoption of IFRS for the financial information is less than five years, the ROC GAAP
financial information shall be disclosed.
132
Five-Year Consolidated Financial Analysis– TW GAAP
Five-Year Financial Analysis
Year
Item
2008
Capital Debt ratio
structure Ratio of long-term capital to property, plant
(%)
and equipment
2010
979.99
818.51
789.51 1,115.63 1,221.60
142.81
133.51
135.45
134.04
136.37
141.07
131.82
132.83
131.26
134.58
19.99
50.00
28.71
16.16
16.70
6.40
6.34
6.15
6.83
6.91
57
58
59
53
53
385.21
427.11
291.92
229.60
227.42
7.11
7.03
6.65
7.41
5.57
0.95
0.85
1.25
1.59
1.60
74.00
67.63
59.32
65.72
64.41
3.31
3.24
3.37
2.91
2.38
5.79
4.11
3.18
2.35
2.73
14.21
11.67
8.59
5.45
6.54
Operating income
14.67
18.94
14.33
12.85
16.13
PBT
21.54
18.60
13.46
8.59
11.20
1.52
1.16
1.00
0.72
1.00
1.89
1.56
1.18
0.76
0.90
17.90
14.96
11.90
80.29
77.93
94.84
0.15
0.09
0.12
Accounts receivable turnover (Times)
Operating
Accounts payable turnover (Times)
ability
Property, plant, and equipment turnover (Times)
Profitabi- To pay-in
-lity
Capital (%)
Cash flow ratio (%)
Note3
Cash flow adequacy ratio (%)
54.71
Note3
Note3
49.82
Note3
58.33
2012
67.09
Solvency
Quick ratio
(%)
60.85
2011
63.59
Current ratio
Cash
flow
2009
62.94
Operating leverage
3.00
2.66
2.85
2.67
2.36
Financial leverage
1.09
1.02
1.04
1.05
1.05
Leverage
133
Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the
1. Accounts payable turnover: In this period, due to the improvement of gross profit and the decrease of
sales costs, the turnover rate of accounts payable has decreased.
2. Operating income to pay-in capital ratio: In this period, due to the increase of gross profit margins and
reduction of operating costs, the proportion of operating income in paid-up capital has increased.
3. Pre-tax income to issued capital ratio: The increase of proportion of net profit before tax in paid-up
capital is mainly due to certain increases in operating income.
4. Net profit margin: The increase of the net profit ratio is mainly due to the increase of operating income
in this period.
5. Cash flow ratio:This decrease is mainly due to the increase of current liabilities - accounts payable in
this year.
6. Cash flow adequacy ratio:In the past three years, the operating cash flow has been increasing when
compared with the previous year, thus increasing the cash flow adequacy ratio.
7. Cash reinvestment ratio: The increase of the cash reinvestment ratio compared to last year is mainly
due to the long-term investment amount in this year decreasing when compared with last year.
Note 1: Earning per Share is calculated according to the adjusted weighted number of shares. For
capitalization with retained earnings or additional paid-in capital, it will be adjusted by the capital
increase ratio. The issuance time of the shares will not be taken into consideration.
Note 2: Above financial information has been audited by CPA.
Note 3: Net cash flow of operating activities are not included.
Note 4: The calculation of inventory turnover is mainly based on the inventory in Taiwan.
Note 5: Equations:
1、Capital Structure:
Debt ratio＝Total liability／Total asset
Ratio of long-term capital to fixed assets＝（Net shareholders’ equit＋Long-term liability）／Net
fixed assets
2、Solvency:
Current ratio＝Current assets／Current liability
Quick ratio＝（Current assets－Inventory－Prepaid expense）／Current liability
Times interest earned＝Net income before tax and interest expense／Interest expense of the year
3、Operating ability:
Account receivable turnover＝Net sales／Average accounts receivable (including accounts
receivable and notes receivable derived from business operation)
Days sales in accounts receivable＝365／Account receivable turnover
Inventory turnover＝Cost of goods sold／Average inventory amount
134
Account payable turnover＝Cost of goods sold ／Average accounts payable (including accounts
payable and notes payable derived from business operation)
Average days in sales＝365／Inventory turnover
Fixed assets turnover＝Net sales／Net fixed assets
Total assets turnover＝Net sales／Total assets
4、Profitability:
Return on assets＝〔Net income (loss)＋Interest expense×（１－Tax rate）〕／Average total assets
Return on shareholders’ equity＝Net income (loss)／Net average shareholders’ equity
Operating income (pre-tax Income) to Paid-in Capital Ratio＝Operating income (pre-tax Income)
／Paid-in Capital Profit ratio＝Net income (loss)／Net sales
Basic earnings per share＝﹙Net income－Preferred stock dividend﹚／Weighted average stock
shares issued
5、Cash flow:
Cash flow ratio＝Bet cash flow from operating activity／Current liability
Cash flow adequacy ratio＝Net cash flow from operating activity in the past 5 years／In the past
5 years（Capital expenditure＋Inventory interest＋Cash dividend）
Cash reinvestment ratio＝（Net cash flow from operating activity－Cash dividend）／（Fixed
assets＋Long-term investment＋Other assets＋Working capital）
6、Leverage:
Degree of operating leverage＝(Net operating income－Variable operating cost and expense)／
Operating income Degree of financial leverage＝Operating income／(Operating income－
Interest expense)
135
5.3 Supervisors’ Report or Audit Committee’s Review Report in the Most
Recent Year
Supervisors' Review Report
Date: Apr. 28, 2016
The Board of Directors has prepared and submitted to us the Company’s 2015 financial statements
which have been audited and certified by Chen Ying Ju and Yang Liu Fong of KPMG Certified
Public Accountants, along with Company's business report and earnings distribution proposals. We,
the Supervisors, have duly examined the same as correct and accurate. We hereby report to the 2016
Annual General Shareholders Meeting in accordance with Article 219 of the Company Act for your
review.
Supervisor : Wang, Ping-Hui
Supervisor : Cheng, Hsien-Ho
Supervisor : Shyh Shiunn Investment Corp.
(Representative :Yang, Chiung-Nan)
5.4 Consolidated Financial Statements with Subsidiaries Audited by CPA
Please refer to AppendixⅠ, page 178.
5.5 The Effect on Company or its Affiliates have Experienced Financial
Difficulties: None
136
VI. Review of Financial Conditions, Operating Results, and
Risk Management
6.1 Analysis of Financial Status
6.1.1. Consolidated
Year
Item
2015
2014
Unit: NT$Thousand
Difference
Amount
%
133,577,659
151,098,840
-17,521,181
-11.60%
34,660,330
35,073,036
-412,706
-1.18%
872,905
901,392
-28,487
-3.16%
Other assets
6,635,579
8,628,461
-1,992,882
-23.10%
Total assets
175,746,473
195,701,729
-19,955,256
-10.20%
Current liabilities
98,771,869
126,668,060
-27,896,191
-22.02%
14,075,755
4,610,879
9,464,876
205.27%
112,847,624
131,278,939
-18,431,315
-14.04%
35,874,751
35,874,751
-
0.00%
2,912,784
2,920,718
-7,934
-0.27%
Retained earnings
14,883,819
15,773,335
-889,516
-5.64%
Total equity attributable to
owners of parent
56,480,704
57,578,038
-1,097,334
-1.91%
Current assets
Property, plant and equipment
Intangible assets
Total liabilities
Share capital
Capital surplus
Analysis of financial ratio changed in the last two years. (If the difference does not exceed 20%,
the analysis is not required.)
1. Other assets: caused by the reduction of advance payments and long-term prepaid rents.
2. Current liabilities: the decrease in this period is mainly due to the newly added syndicated
loan case, which is used for enriching working capital and repaying due bank borrowings.
3. Non-current liabilities: mainly caused by the newly added syndicated loan case being
classified as long-term borrowing.
137
6.1.2. Individual
Year
Item
2015
2014
Unit: NT$Thousand
Difference
Amount
%
91,631,494
109,949,533
-18,318,039
-16.66%
5,739,243
5,820,213
-80,970
-1.39%
56,851
86,258
-29,407
-34.09%
Other assets
38,286,030
37,385,215
900,815
2.41%
Total assets
135,713,618
153,241,219
-17,527,601
-11.44%
Current liabilities
68,203,221
93,810,253
-25,607,032
-27.30%
11,029,693
1,852,928
9,176,765
495.26%
Total liabilities
79,232,914
95,663,181
-16,430,267
-17.18%
Share capital
35,874,751
35,874,751
0
0.00%
2,912,784
2,920,718
-7,934
-0.27%
Retained earnings
14,883,819
15,773,335
-889,516
-5.64%
Total equity
56,480,704
57,578,038
-1,097,334
-1.91%
Current assets
Property, plant and quipment
Intangible assets
Capital surplus
Analysis of financial ratio changed in the last two years. (If the difference does not exceed 20%,
the analysis is not required.)
1. Intangible assets: caused by disposing part of the intangible assets in the current period.
2. Current liabilities: the decrease in this period is mainly due to the newly added syndicated
loan case, which is used for enriching working capital and repaying due bank borrowings.
3. Non-current liabilities: mainly caused by the newly added syndicated loan case being
classified as long-term borrowing.
138
6.2 Analysis of Operation Results
6.2.1 Consolidated
Year
Item
Gross Sales Revenue
2015
2014
Amount
Amount
395,470,221
435,599,968
-
-
-
-
395,470,221
-373,764,813
435,599,968
-40,129,747
38,486,817
-9.21%
-9.34%
-1,642,930
-7.04%
Less：Sales Discounts and Allowances
Net Sales Revenue
Operating Costs
Unit: NT$Thousand
Change
Amount
percentage
changed
(%)
-40,129,747
-9.21%
21,705,408
-412,251,630
23,348,338
-16,298,140
-16,239,259
-58,881
0.36%
Operating Profit
5,407,268
7,109,079
-1,701,811
-23.94%
Non-operating Income and Expense
1,776,602
2,571,619
-795,017
-30.92%
Income from Operations of continued
segments - before tax
7,183,870
9,680,698
-2,496,828
-25.79%
-2,208,135
-3,015,137
807,002
-26.77%
Profit attributable to owners of parent
5,563,633
7,097,815
-1,534,182
-21.61%
Profit attributable to non-controlling
interests
-587,898
-432,254
-155,644
36.01%
Income from Operations of continued
segments - after tax
4,975,735
6,665,561
-1,689,826
-25.35%
Operating Expense
Less: Income Tax (Expense)
Analysis of financial ratio changed in the last two years. (If the difference does not exceed 20%, the
1. Operating Profit: market factors affecting the change of product portfolio have caused revenue
reduction, thus also reducing the operating profit.
2. Non-operating Income and Expense: the reduction in the current period is mainly caused by losses
from RMB depreciation in foreign currency exchange..
3. Income from Operations of continued segments-before tax: mainly caused by revenue reduction
and a decline in non-operating income and expenses.
4. Income Tax Expense: it is mainly due to the decrease of net profit, which causes the reduction of
income tax expenses; furthermore, the Company has also strengthened tax planning to reduce the
effective tax rate.
5. Profit attributable to owners of parent: caused by revenue reduction and a decline in non-operating
income and expenses.
6. Profit attributable to non-controlling interests: mainly caused by the reduction of the net profit of
invested companies.
7. Income from Operations of continued segments-after tax: caused by revenue reduction and a
decline in non-operating income and expenses.
139
Individual
Year
Item
Gross Sales Revenue
2015
2014
Amount
Amount
Unit: NT$Thousand
Change
Amount
percentage
changed
(%)
-41,430,362
-12.52%
289,354,169
330,784,531
-
-
-
-
289,354,169
330,784,531
-41,430,362
-12.52%
-277,304,726
-317,437,573
40,132,847
-12.64%
12,049,443
13,346,958
-1,297,515
-9.72%
-15,615
-12,315
-3,300
26.80%
12,315
16,869
-4,554
-27.00%
Realized Gross Profit from operation
12,046,143
13,351,512
-1,305,369
-9.78%
Operating Expense
-8,244,428
-8,879,880
635,452
-7.16%
Operating Profit
Non-operating Income and Expense
3,801,715
2,781,569
4,471,632
4,293,281
-669,917
-1,511,712
-14.98%
-35.21%
Income from operations of continued
segments - before tax
6,583,284
8,764,913
-2,181,629
-24.89%
-1,019,651
-1,667,098
647,447
-38.84%
5,563,633
7,097,815
-1,534,182
-21.61%
Less：Sales Discounts and Allowances
Net Sales Revenue
Operating Costs
Gross Profit from operation
Less：Unrealized Profit(Loss) from Sales
Plus：Realized Profit(Loss) from Sales
Less: Income Tax Expense
Income from operations of continued
segments - after tax
Analysis of financial ratio changed in the last two years. (If the difference does not exceed 20%, the analysis
is not required.)
1. Unrealized Profit (Loss) from Sales: mainly caused by customers’ delay in picking up goods at the
end of the year.
2. Realized Profit (Loss) from Sales: the inventory from previous delivery to affiliated companies has
been sold to customers in the current period.
3. Non-operating Income and Expense: the decrease in this period is mainly due to the decrease of
income from investments recognized by the Equity Method.
4. Income from Operations of continued segments-before tax: mainly caused by revenue reduction and a
5. Income Tax Expense: it is mainly due to the decrease of net profit, which causes the reduction of
income tax expenses; furthermore, the Company has also strengthened tax planning to reduce the
effective tax rate.
6. Income from operations of continued segments-after tax: mainly caused by revenue reduction and a
140
6.2.2 Expected sales volume and its basis
In 2015, the decline in emerging market demand and environmental turbulence in Europe
impacted the consuming intentions of the general public, in addition to Win10 not driving the
market demand to change machines, the global personal computer market experienced a
recession. Furthermore, the tablet PC market was affected by continuously larger mobile
phone sizes, which have replaced the status of small tablets, and no innovative product
attracted consumers; therefore, tablet PCs experienced their first negative growth since their
launch. In 2015, the shipment volume of global notebook computers was approximately 164.4
million computers, with an annual decline rate of almost 6.3%. In 2016, in general, the decline
rate of notebook computers will slow compared to 2015. In 2016, with the launch of the new
platform Intel Skylake, and driven by brand dealers actively importing minimized E-sports
products to satisfy the niche market demand, the decline rate is expected to lessen. With the
gradual growth slowdown of personal computer products, the Company has been recently
devoted to seeking product innovation, such as the Internet of Things (IoT), virtual reality
related applications, etc. with the hope of deploying the production capacity of declining
demand and bringing continuous growth momentum to personal computer products.
Regarding global servers, the expansion of public clouds and the rise of private clouds both
drive the growth of server demand. In 2015, the overall server market emerged as a rising
trend. Looking toward the future, the boom of the Internet of Things in recent years has driven
the server demand. Through the computing demand of the data center and the emerging
market demand, the market scale will continue to grow. The Institute for Information Industry
MIC estimates that the global server market in 2016 will grow by 6.8% when compared with
2015.
Affected by manufacturers in China, the solar energy industry continued to have a supply that
exceeded demand in the first half of 2015. However, with the elimination of uncertain factors
of the U.S. double negative survey, China approved a policy to raise installation targets and
achieve the objective of carbon, fog, and haze reduction, and, together with India, established
solar energy power generation on a large scale to improve basic electric power construction.
The solar energy industry is again rising from the bottom. As of the end of 2015, more than
180 countries worldwide have jointly signed the Paris Climate Agreement, ensuring the
long-term development foundation of alternative energy sources, such as solar energy, etc.
Looking toward 2016 for the solar energy industry, due to the hot market demand in China,
India, the U.S., and the Southeast Asian market, global solar energy installations will continue
to increase, and Taiwan’s solar battery industry is expected to continuously grow. Despite the
active expansion of manufacturers increasing uncertain factors in the market in 2016, with the
rise of emerging market demand and continuous development of environmental protection
issues, the solar energy industry of the Company is expected to create large-scale economic
effects in the long run through the integration of industry chain resources. It is expected that it
will be good for mastering the layout of the future solar energy market.
141
With regard to the handheld mobile device industry, in 2015, due to product homogeneity and
gradual market saturation, the growth rate slowed. Looking toward the future, the smart phone
will enter into its mature period, and smart phone manufacturers from mainland China will
battle for the market with high cost performance methods, resulting in the rapid market
saturation of mainland China and the continuous decline of sales prices. The market growth of
smart phones will be inferior to the explosive growth seen in previous years. However, with
the upgrading of mobile and wearable device products, together with the demand of 4G and
5G networks, Internet of Things, etc., driven by Internet communication products in cloud
service demand, the handheld mobile device industry can still be expected to grow in the
future. Furthermore, the penetration rate of smart phones is still low in developing countries,
and their demand to change to smart phones will become one of the industry’s driving forces.
6.2.3 Possible impact on the future financial business of the Company and
response plan
Looking toward 2016 and beyond, in addition to focusing on its original operation strategies,
the Company will continuously carry out vertical integration and strategic alliance to initiate
new opportunities. In order for the operation growth to face the rise of capital demand, the
Company’s professional team will give comprehensive consideration to financial resource
allocation, cost of capital, etc. through rigorous internal and external financial risk management
mechanisms in order to achieve the most thorough financial planning and ensure smooth
operations. Therefore, we currently have no doubt regarding significant impacts on future
financial business.
142
6.3 Cash flow analysis –Consolidated
Annual net
Beginning
cash flow
cash balance A from operating
activities B
37,123,631
12,982,548
Annual cash
outflow C
13,542,941
Cash surplus
(insufficient)
amount
A+B-C
36,563,238
Unit: NTD thousand
Remedial measures for cash
shortfall
Investment
plan
Financial
management plan
－
－
1. Analysis on change of cash flow this year:
Operating activity: In 2015, since the Group continuously adjusted product proportion,
improved cost structure, and was devoted to stabilizing gross profit ratio,
along with proper capital movement employed by the Company’s team, the
operating cash flow is definitely proper this year, and the overall cash flow
is sufficient for the operation expenditures of the Group.
2. Remedial measures for expected cash shortfall and liquidity analysis: Comprehensively
influenced by all kinds of cash flow activities, there should be no circumstance causing
insufficient cash this year.
3. Cash liquidity analysis in the coming year:
Beginning cash balance (A): NTD 37,123,631 thousand
Expected annual net cash flow from operating activity (B): NTD 12,982,548 thousand
Expected annual cash outflow (C): NTD 13,542,941 thousand
Expected cash surplus (insufficient) amount (A+B-C): NTD 36,563,238 thousand
In 2016, despite the growth rate in the notebook computer business slowing, driven by the
growth in the server, solar energy, and handheld device businesses, and with the Company’s
professional team continuously adjusting product proportion and stabilizing gross profit ratio,
the cash flow in operating activities is expected to be sufficient. In addition to the expenditures
from operating activities due to investment activities, such as asset procurement, replacing old
equipment with new, etc. and issuing cash dividends, regarding financing activities, the
Company may also utilize loans from financial institutions and properly manage them for
employment, and the cash liquidity will be suitable.
143
6.4 The impact of Significant Capital Expenditure in Recent Years on
Financial Business
6.4.1 Employment of significant capital expenditure and capital source:
Planned
project
Actual or
expected
capital
source
Actual or
expected
completion
date
Total capital
needed
Purchase
more
plant
space and
equipment
Own
capital
Current
year
19,762,999
Unit: NTD thousand
Circumstance of actual or expected capital
employment
2015
2016
3,762,999 8,000,000
2017
2018
4,000,000 4,000,000
Note: The actual and expected capital employment in significant capital expenditure is consolidated data.
6.4.2 The impact of significant capital expenditure on financial business
Purchase more plant space: In response to the future product business expansion demands of
business units, each unit of the Group in Taiwan will conduct integration planning, reduce
management cost, and improve the Group’s overall research and development capability of
innovative products.
Purchase and update machines and R&D equipment: New product research and development
lineup are increased in order to accelerate product development schedules and improve
production efficiency.
144
6.5 Reinvestment Policy in Recent Years, the Main Reason for Profit
Earning or Loss, Improvement Plan, and Analysis on the Investment
Plan in the Coming Year
Inventec Corporation was established over 40 years ago. Starting in the field of notebook
computers and servers at an early stage, Inventec gradually crossed fields to enter enterprise
network solutions, and even solar energy and smart end devices at later stages, actively
transforming Inventec into an Internet company. In recent years, the Group has done well in
reinvestments and has respectively achieved certain increases. Inventec Appliances Corp. has
started to focus on developing wireless smart end products and has taken planning the best
solutions for customers as its orientation. It is currently involved in the hottest Internet theme and
is dedicated to putting smart end devices into smart living. The delivery in 2016 is expected to
yield unusually brilliant results due to the customers’ order expansions. Inventec Besta Co., Ltd. is
the leading brand in computer dictionary and translation software in the overseas Chinese area; as
it continuously moves towards all-around learning and video entertainment platform, it will take
initiating cloud related products as its objective. TPV-Inventa Technology Co., Ltd. engages in the
research and development and production of All-in-one PC and AIO and will aim to enrich its
product line to improve future revenue. E-TON Solar Tech. Co., Ltd, Inventec Solar Energy
Corporation, and Inventec Energy Corporation are mainly dedicated to the research and
development, production, and sales of solar batteries, photovoltaic module manufacturing, and
photovoltaic system integration. The resource integration strategy between Inventec Solar Energy
Corporation and Inventec Energy Corporation in 2015 can ensure the production mode of a
coordinated process in order to effectively reduce cost. In February 2016, the European Union
published the anti-circumvention results, which affirmed that 21 Taiwan manufacturers, including
three solar energy subsidiaries of the Group, were real manufacturers, and anti-circumvention tax
could be exempted, thus stabilizing the sales situation in the European market. Despite the U.S.
Department of Commerce’s affirmation that our country practices dumping behavior and has then
levied anti-dumping tax on us, with the continuous expansion of market demand and development
of environmental protection issues, the solar energy company of the Group will accelerate the
adjustment of its overseas layout, utilization of product portfolios, development of high
performance products, and automation of manufacturing processes, it is expected to reverse from
loss to profit earnings. In general, although the growth of notebook computers still tends to be
conservative, with gradual recovery the in the server, smart end, and solar energy markets, the
performance in 2016 is expected to be acceptable.
145
6.6 Analysis and assessment of risk items
6.6.1 The impact of interest rate, change in exchange rate, inflation on loss and
profit of the Company, and future resolutions:
1.
2.
Impact on loss and profit of the Company:
2015
Net amount ofinterest
income (expenditure)
Net amount of
exchange (loss) profit
Unit: NTD thousand
1,198,055
(669,167)
Future resolutions:
A. Interest rate: The uncertainty of the global economy has made the interest rates in
European and American countries attract more attention. However, the U.S.
economic recovery, the slowdown of China’s economic growth rate, oil price
fluctuations, and the demand in the energy and mining industry and raw materials can
affect consumer’s confidence, as well as the authority on whether or not to raise
interest rates. Since most of the industry investment momentum in Taiwan is still
insufficient, the inflation is not obvious, and the commodity price is also moderate;
only consumption still suffers from the dual impact by structural factors and
short-term prosperity; therefore, it is expected that, the central bank will still comply
in 2016 with international trends and adopt loose monetary policies to reduce the
impact brought by the sharp fluctuation on the domestic economy. Regarding the
impact of interest rate change risk on capital operation, the Company will continue to
carry out the best employment on capital portfolio under the premise of considering
liquidity, safety, etc.
B. Exchange rate: For many years, the monetary policy in European and American
countries has always affected the performance of all other countries around the world,
and the long-term recession in the Eurozone and England’s desire to quit the
European Union has impacted the Eurozone’s recovery. Fortunately, since the market
inflation is still moderate, and the financial condition and overseas economic risk is
high, despite continuous rumors about raising interest rates, the market still expects
that the U.S. will postpone raising interest rates within a short time; therefore, the
exchange rate in each country throughout the world can be maintained relatively
stable. Among higher uncertainty factors in international major currency, the central
bank is still expected to adopt moderate exchange rate policies in response in 2016.
Major customers of the Company are big international manufacturers, and they have
the same transaction currency in goods purchase and sales; therefore, the mutual
offset of credit and debt can achieve a natural hedging effect. Furthermore, the
Company will make up the shortcomings of natural hedging through foreign currency
146
hedging operations in order to reduce the impact of exchange rate change risk on
profit and loss on exchange.
C. Inflation: Inflation is closely linked to monetary policy, but compared with dual-rate,
inflation has no directly significant impact on the profit and loss of the Company. The
different economic performance of each country causes divergence of opinions on
monetary policy. For example, the Eurozone implements negative interest rate, but
due to the limited effect, the expansion of quantitative easing seems to be
unavoidable; as far as the U.S. is concerned, since the economic data tends to be
positive and the employment market is getting stronger, the rumor of raising interest
rates begins again. However, in general, the adjustment of U.S. monetary policy is
still a major risk source affecting global economic growth and financial stability. It is
expected that when the central bank adopts a moderate monetary policy in 2016, it
shall also simultaneously consider the consequence of real interest rates on the
domestic economy in order to maintain it at a relatively stable status. In the future,
the Company will continue to actively carry out cost and operating expenditure
control, process improvement, and asset activating in order to mitigate the impact of
inflation on its operation.
6.6.2 Engage in high risk and high leverage investments, lend funds to other parties,
endorsement and derivatives transaction policy, main reasons for profit or
loss, and future resolutions:
Based on a steady operation philosophy, the Company mainly focuses on the operation of its
original product field. Regarding investments, in addition to relevant investments in the original
industry, upstream and downstream of the product field, vertical cooperation, etc., the Company
does not engage in any high risk or high leverage investments. Regarding lending funds to
other parties, endorsements, and derivatives related transactions, such is actually handled
according to the execution policy stipulated in Procedures for Acquisition and Disposal of
Assets, Procedures for Lending Funds to Other Parties, and Procedures for Endorsements and
Guarantees of the Company. In the future, the Company will still rigorously execute such
matters according to the handling procedures of relevant regulations in order to guarantee the
maximum rights and interests of the Company and its shareholders.
6.6.3 Future research and development plan and research and development
expenditures expected to be invested
1. Five major policies:
A. Rapid Innovation: “Innovation” has been the basic spirit of our operation philosophy
since the foundation of the Company in 1975; it is also the best media shaping enterprise
differentiated value, even for our commitment to customers and partners. In addition to
147
internal and external research and development, innovation cultivation, and accumulation
of competitive energy, the activation of intellectual property assets can also effectively
improve the international competitiveness and influence of the Company. As of December
2015, the Company has acquired more than 14,000 patent certificates worldwide and
more than 6,000 patents are currently under application. In addition to focusing on
notebook computers and servers, the Company has also achieved breakthroughs in the
fields of consumer electronics, mobile communication, wearable devices, wireless
integration plans, and application software. Recently, it has also actively transformed into
an Internet enterprise to initiate more abundant smart living tools.
B. Sustainable Energy: The increasing deterioration of climate warming and environment
has facilitated the rise of environmental protection awareness and further drives the rise
of global green consumerism. In order to respond to customers’ demands for green
products, enterprises around the world have started focusing on green production and
integrating ubiquitous environmental protection elements into green life in order to
reduce environmental impact and fulfill social responsibility. In addition to satisfying
customer demands and strengthening core competitiveness in product research and
development, the Group also spares no effort in fulfilling its social environment
responsibility. The Group completely implements green supply chain management by
formulating environmental objectives, environmental policies, and environmental projects,
as well as exerting green value-added benefits. Furthermore, regarding solar energy
products, the Group will strive to improve relevant manufacturing processes and energy
consumption in order to promote the use of alternative energy and contribute to society.
C. Cloud Solutions: As times change, cloud related products are expected to drive the overall
demand among considerations of resource benefits, price performance, and operational
assistance. As a cloud supplier, the Company will be dedicated to developing cloud
computing SaaS, PaaS, and IaaS and integrate them in the direction of a software,
hardware, and service three-in-one, taking overall solutions as a basis for creating more
unique market value.
D. Mobile Lifestyle: The coming of the Internet era not only makes high information and
communication technology more advanced, but also drives the reformation of smart end
products and their relevant extended devices. The Company mainly focuses on
developing wireless smart end products and provides diversified smart handheld devices
and network application products by linking cloud technology and services. In the future,
the Company will continuously adhere to such principles as innovation, good quality,
excellent talent, design, manufacturing, marketing, after-sales service, etc., with the aim
of becoming a benchmark in the global wireless communication industry. Since the smart
phone market is currently facing an awkward situation of growth slowdown and price
cutting competition, increasing profits is more difficult, and how to achieve further
148
transformation of products will become an important key for success in the future.
E. Emerging Markets: The notebook computer and server industry is subject to the impact of a
high saturation degree in mature European and American markets, and the law of survival
competition forces the territory to migrate to emerging markets with stronger growth
momentum in Latin America, Asia, etc. Furthermore, regarding the solar energy industry,
despite the final judgment on the U.S.’s new anti-dumping and countervailing policy, or the
European Union’s lifting its ban on Taiwan manufacturers that directly or indirectly affect
Taiwan manufacturers, the strategy of the Company will be to move towards adhering to
product efficiency improvement and overseas layout in order to reduce the impact.
Regarding smart phones, despite brand manufacturers from mainland China rising rapidly
around the world, with increasing saturation in the China market, “black mainland” has
aroused the investment fever of East Asia manufacturers, and India and Africa will be the
emerging industry cluster after the “made in China” age. The low penetration rate of
mobile phones in India and Africa makes for high consumption growth. Through the
improvement of brand recognition degree, high customization, and after-sales service, it is
expected to break through the current growth plateau period of smart phones.
2. Future research and development plan:
A. Notebook computers: After the performance and specification development of notebook
computers have satisfied the demand of most consumers, the specification competition of
the consumption style machine gradually transfers from computing performance to display
screen. Since the specifications of consumption style machines are diversified and of small
quantity, OEM no longer seeks economic scale but is oriented toward profit making. In
response to the change of OEM mode, consumer behavior, and operation system, the future
notebook of the Company will integrate cloud service applications and move towards the
direction of light, thin, long service, touch control, portable, low price, cross industry,
mashup, etc. In general, the consumption style machine still has relative pressure, but the
Company will focus on quality differentiation instead of pursuing quantity increase in
order to improve profit making.
B. Servers: The age of big data is driving the rise of cloud computing. Due to the change of
operation and consumption mode triggered by it, servers must be equipped with stronger
computing capabilities in order to effectively resolve the huge cloud data loading capacity
and effectively provide information to users for decision making. In order to expand the
market share and avoid a price war, the product research and development strategy of the
Company will strive for product differentiation and focus on products with high
performance computing, coordinated with the integration of all-around software and
hardware systems in order to provide customers with a complete solution. In 2016, in
consideration of dealers’ price-oriented and performance-oriented philosophies, as well as
the expanding demand, the revenue and shipment volume in the server business is expected
149
to have good performance.
C. Cloud service: In recent years, with the coming of the Internet era appreciated and promoted
by China and each European and American country, the government of our country is also
aiming to build Taiwan as the Asian center of the Internet of Things. In order to carry the
cloud service needed in the Internet of Things, in addition to strategic system integration, the
Company also coordinates with overall resolution and localized services to accompany
customer growth in order to achieve the perfection of a software, hardware, and service
three-in-one. Furthermore, the Company still takes building a cross-strait cloud operation
center as its objective, and in 2015, we completed the establishment of a southwest (offshore)
cloud operation center, which will expand to East China, North China, South China, and all
of the Greater China area in 2016 and 2017. In 2016, the Company expects to increase order
receiving, which is good for revenue.
D. Solar energy: Since the solar energy market is becoming more and more mature, the
traditional price war is no longer the major battlefield; instead, higher quality and a more
stable power source will be the key factor for victory in the future, including module
efficiency, a stable system, and monitoring. The Company mainly focuses on the design and
manufacturing of the key supply chain for solar batteries (including single crystalline silicon
and polycrystalline silicon) and solar energy modules. Through the automation import of all
kinds of machines and the breakthrough in process conversion rate and optimization of
personnel quality, both the conversion efficiency and yield rate of solar wafers have
increased to some extent. Regarding solar modules, they continue to provide wafers and
power converters with high efficiency, stable system operation, and customized beautiful
installation in order to satisfy the end demands of customers.
E. Smart phones: In recent years, with a strong domestic demand, China brand manufacturers
have globally risen against the trend. With the gradual saturation of the mainland China
market, the exploitation of the overseas market is imperative. The future market mainly
originates from old customers’ demand to change phones, and fingerprint recognition,
uniform standard new specifications, customer loyalty establishment, and the active
development of products with high performance cost ratio, etc. will become the future
development trend.
3. Research and development expenditure expected to be invested:
The future development plan of the Company will continue to move in five major directions,
namely independent innovation, green energy environmental protection, cloud service, wireless
broadband, and emerging market by mastering market fluctuation and understanding customer
demands. In response to new market environments, manufacturing process improvement, and
technology development, the Group is expected to input more than NTD 9.1 billion in research
150
and development this year and will control the product development and market sales schedule
within six months.
4.
The research and development plans in recent years, current progress of unfinished research and
development plans, research and development expenses that need to be invested, expected time
of completing mass production, and major factors influencing the success of research and
development in the future:
Time of
R&D
Recent
completing
Current
expenses
Major factors influencing the success of
annual
mass
progress
to be
research and development in the future
plans
production
invested
(Note)
Provision of long-term accumulated
Notebook
Under
NTD 1.9
2017
software and hardware technology and
computer
development
billion
customized overall solutions
Server and
cloud
computing
Solar
energy
Under
development
Under
development
NTD 4.5
billion
NTD 200
million
2017
Provision of long-term accumulated
software and hardware technology and
customized overall solutions
2017
Group resource integration and
combination of automation import,
manufacturing process conversion rate
improvement, and optimization of
personnel quality
Smart
Continuous innovation, good quality,
phone and
Under
NTD 2.3
excellent talent, design, manufacturing,
wireless
2017
development
billion
marketing, and after-sales service
communica
capability
tion devices
Note: This refers to the mass production time currently expected; the actual situation is still
subject to market and customer demands.
6.6.4 Important policies at home and abroad, the impact of law changes on the
Company’s financial business, and resolutions:
The relevant units of the Company have always strictly followed important policies at home and
abroad, as well as law changes, and pay close attention to any changes at all times. They also
actively coordinate and adjust company financial business activities in response to such changed
matters. With regard to the promotion of corporate governance by competent authorities,
successive issuing and amendment of the Company Act, Securities Exchange Act, and handling
criterion for all kinds of businesses, the reformation of the tax regulations environment, etc., the
Company actively coordinates to handle such matters as required.
Since 2013, listed companies have comprehensively applied IFRs, the Taiwan-IFRSs translated
151
and issued by the Domestic Accounting Research and Development Foundation are the basis for
preparing the enterprise financial report. In the face of the change of accounting principles, the
Company has actively carried out training on financial and accounting personnel with relevant
knowledge, smoothly matching up with the accounting system. Furthermore, the Company
simultaneously maintains close communication with information personnel and coordinates with
the response method of the information system according to the change to the accounting system
in order to reduce the impact brought by the change of accounting principles in the future.
6.6.5 The impact of technology change and industry change on company financial
business and resolutions:
In light of the huge changes to network in modern times led by global Internet companies, the
rapid development of information and communication technology has also been driven. With the
increasing maturity of the notebook computer market, and the server market facing the impact of
cloud computing, the electronic industry will certainly face more challenges. In response to
technology and industry transformation and high speed competition, as well as the achievement of
the corporate mission of “Best system, software, and service company”, the Company strives to
follow five major policies, namely “Rapid Innovation, Sustainable Energy, Cloud Solutions,
Mobile Lifestyle, and Emerging Markets”, in order to create new prospects. In the short term, the
Company will accelerate asset activation; through the initiation of venture capital investments and
the integration of software and hardware, we will improve the level of research and development
and make the new investments increase Internet thinking. In the long term, in addition to product
diversity, the Company will optimize Group resources through cross-industry alliance and supply
chain integration. Furthermore, throughout research and development, design, production,
distribution and service, the Company will provide customers with all-around solutions to improve
profit making and further maintain corporate sustainable development. Mobile technologies such
as joint Internet, wireless communication transmission, etc. shorten the space barrier, allowing for
the smooth sharing of internal and external environmental resources of the company organization.
Importing an enterprise resource integration system and financial consolidation system will
improve the overall operation and handling efficiency of financial affairs. With regard to the solar
photovoltaic industry, despite being boycotted by the U.S.’s anti-dumping and countervailing
policy, the market of the Company has a decentralized arrangement, and customers themselves
also carry out strategic arrangements, so that we can minimize the impact. Furthermore, the
Company will accelerate the change and breakthrough of the Group this year by implementing
five changes, which include: 1. Handover inheritance, promoting younger supervisors; 2. Select
person based on talent, with men and women being equal; 3. Management must be innovative, and
supervisors must be responsible; 4. Business losing money must be stopped; and 5. Professional
leadership is required for future investments. Moreover, the so-called five breakthroughs refer to:
1. Manufacturing servitization, enterprise socialization; 2. Active investment merger, transforming
152
into an Internet company, 3. Tangible assets activation, input start-up company; 4. Intangible
assets reevaluation, consolidate core war; and 5. Extensively recruit international talents and seek
strategic global alliances. Through comprehensive change and breakthrough, the Company is
expected to be able to break through the awkward operation situations of a bad political and
economic environment and courageously move forward. Through active and effective financial
and information technology application, the Company will assist in integrating upstream of vision
and strategy, medium of process and indicator, and down to management information, action plans,
etc. in order to take it as the best management tool in response to the change of technology and
industry.
6.6.6 The impact of corporate image change on corporate crisis management and
resolutions:
2015 is a milestone year as Inventec Corporation celebrates its 40th anniversary. For a long time,
the Company has adhered to the operation philosophy of“Innovation, Quality, Open Mind, and
Execution”. From professional OEM at the early stage to current high technology product fields,
such as cloud computing, green energy, Internet, etc., Inventec has expanded its operation scale
and developed a long-term competition advantage through product diversification, strategic
alliance, and supply chain resource integration. The so-called “Top ten beliefs” take
“talent-oriented” as its first priority and “social responsibility” as its ultimate commitment. The
combination of operation philosophy and top ten beliefs constitutes the core value system of
Inventec and has formed the corporate culture of Inventec in its pursuit of sustainable
development. The baptism and shaping of corporate culture has also facilitated the understanding
and recognition of all colleagues in the company. Within a rigorous business environment, it can
improve work intention and attitude and then strengthen the company competition system to
create the maximum value of corporate culture.
In the spirit of “Talent-oriented, increase gross profit, and invest in the future”, in addition to the
originally established enterprise and brand image of innovation and high quality, as a member of
the global Internet industry, Inventec should also face such issues as climate change, energy
depletion, ecological conservation, protecting the underprivileged, public spirit, etc. with an active
attitude in order to promote social enterprise with core values. In the future, in addition to
providing support to non-profit institutions or non-governmental organizations, Inventec will
jointly discuss how to strengthen the function of social enterprises, thus effectively improving the
social responsibility of Internet enterprises.
The Company adheres to a consistent operation philosophy and corporate culture. Through
internal management mechanisms and external auditing execution, the Company vigorously
examines and approves the setting and execution of objectives and strategies, actually mastering
the overall organizational risk. As of the publication date of this annual report, the Company has
no impact on enterprise crisis management caused by a change of corporate image.
153
6.6.7 Expected benefits of mergers, possible risks, and resolutions:
Since 2015 and as of the publication date of this annual report, the Company has no circumstances
related to conducting a merger.
6.6.8 Expected benefits of plant expansion, possible risks, and resolutions:
Based on customer demands, production capacity planning, and market layout, the Company
actively integrates group resources and exploits territory externally, in the hope of achieving the
objective of production optimization and cost control through scale economic benefits. However,
success or failure, both are due to the same reason: simultaneously considering the idling capacity
and capital risk hidden behind active plant expansion; this is indeed an important issue. Therefore,
the Company will continuously and prudently evaluate the demand for plant expansion and the
corresponding future economic benefits and accelerate current assets activation to reduce the
exposure risk accompanied by plant expansion. At the beginning of 2016, the Company newly
purchased a plant building in Guishan, Taoyuan, which is to be mainly used for server research
and development and operation. The new plant is expected to improve overall production
efficiency and make management simpler and more centralized.
6.6.9 Risks faced in centralized goods purchase and sales and resolutions:
2015 is a year of global mergers and acquisitions. Many large-scale brand manufacturers are
spreading consolidation news one after another, which indirectly impacts the OEM plant under the
Group. Regardless of internal acquisition, internal separation, external panel discussion, or hostile
takeover, we can clearly see that the global market layout has started to change, and the original
supply mode of OEM will cause market loss due to the operating decision of major customers.
However, instead of making excuses, in addition to pursuing further improvement of quality and
quantity and cost control, OEM dealers should go deep into establishing diversified customer
relationships in order to avoid the awkward situation brought by excessive concentration of sales.
The purchases and sales of the Company are mostly from and to suppliers or international brand
manufacturers with considerable scale in the industry. In addition to seeking alternative materials
and properly managing inventory levels to reduce the risk of material shortage by actively
dispersing supplier sources, the Company also continuously and actively opens channels and
exploits overseas markets; by reducing sales risk through product quality optimization, it is
expected to harvest potential global markets and grow against trends.
154
6.6.10 The impact of massive transfer or change of stock equity between and among
directors, supervisors, or major shareholders holding more than ten percent
of the total share of the company and resolutions: not available.
6.6.11 The impact of change of operation rights of the company, risks, and resolutions:
not available.
6.6.12 Litigation or non-litigation cases:
1.
Significant litigation, non-litigation or administrative litigation cases of the Company and
affiliated companies in the past two years, such cases that have been sentenced or are currently
pending, and the results thereof that have a significant impact on shareholders’ equity or
securities price:
A. Litigation case:
a.
American merchant Convergence Technologies USA, LLC applied to the U.S. District
Court of the Northern District of California in November 2011 to add the Company as a
defendant; claims included that the Company and seven other joint defendants infringed
on one of its patent rights in the U.S., but Convergence did not specifically indicate the
amount it was requesting. After receiving the notice in January 2012, the Company
specially appointed American lawyers to handle it, and the court judged on motion to
stay on April 6, 2012, after the end of the Convergence patent reexamination procedure
conducted by the U.S. Patent and Trademark Office Patent Trial and Appeal Board. On
February 10, 2015, the final decision of the committee was that the scope of the patent
in the reexamination part is invalid. On May 18, 2015, the litigation parties reached a
consensus to withdraw the lawsuit.
b. The relationship between E-TON Solar Tech. Co., Ltd and Ji-Ee Industry Co., Ltd.
changed due to a dispute regarding the old land and building in the plant. Ji-Ee Industry
Co., Ltd. intended not to continue to lease to E-TON Solar Tech. Co., Ltd on the ground
that the leasehold relationship expired on December 31, 2013; therefore, E-TON Solar
Tech. Co., Ltd initiated litigation to the court, claiming a temporary state injunction. The
case was tried by Taiwan Tainan District Court, and the civil ruling thereof was that,
after E-TON Solar Tech. Co., Ltd had provided a guarantee of NTD 120 million to Ji-Ee
Industry Co., Ltd., before conforming to the litigation of a temporary state injunction
case between two parties, regarding the sidewalk and lane on land No. 73, 74, Kegong
Section, Annan District, Tainan City, and the gate set at land No. 74 of the same section
owned by Ji-Ee Industry Co., Ltd., Ji-Ee Industry Co., Ltd. was prohibited to change the
current situation, set a barrier, or conduct other similar behaviors that would obstruct the
155
access of E-TON Solar Tech. Co., Ltd, and shall allow the building at Building No.
16-10, Kegong Section, Annan District, Tainan City owned by E-TON Solar Tech. Co.,
Ltd to continue to occupy and use the land with the aforementioned land numbers,
namely allow E-TON Solar Tech. Co., Ltd to continue to use the building with Building
No. 16-1 and 16-7 at Kegong Section, Annan District, Tainan City, and shall not change
the current condition of such buildings.
E-TON Solar Tech. Co., Ltd applied for compulsory execution after providing the
guarantee according to the aforementioned civil ruling; in accordance with the
execution order of Nan-Yuan-Kun-2014-Si-Zhi-Quan-Jian-Zi No. 82, Ji-Ee Industry Co.,
Ltd. shall perform the contents of temporary state injunction mentioned above.
On July 15, 2014, according to the order of 2014 Si-Sheng-Zi No. 160 issued by Taiwan
Tainan District Court, litigation may be initiated with the competent court for civil
ruling if it intends to ask for preservation enforcement. On July 15, 2014, E-TON Solar
Tech. Co., Ltd initiated a civil litigation with Taiwan Tainan District Court for
conforming to the leasehold relationship, and it was accepted by Taiwan Tainan District
Court with case number of 2014 Chong-Su-Zi No. 196 and is currently being heard.
Furthermore, Ji-Ee Industry Co., Ltd. claimed to the court for payment order on the
ground that the liquidated damages incurred in January 2014, a total of NTD 8.537
million, that should be paid by E-TON Solar Tech. Co., Ltd was still in arrears, and
Taiwan Tainan District Court issued the 2014 Si-Cu-Zi No. 6096 Payment Order;
E-TON Solar Tech. Co., Ltd shall pay Ji-Ee Industry Co., Ltd. NTD 8.537 million, as
well as the interest calculated based on a five percent annual interest rate from the next
day after serving such payment order until the repayment date. The case entered into
civil procedures due to the objection raised by E-TON Solar Tech. Co., Ltd, and Ji-Ee
Industry Co., Ltd. added a standby request for unjust enrichment equivalent to the rent
from January to March 2014. According to the 2014 Chong-Su-Zi No. 73 Judgment
issued by Taiwan Tainan District Court, E-TON Solar Tech. Co., Ltd shall pay Ji-Ee
Industry Co., Ltd. NTD 6,098,000, and the interest calculated based on a five percent
annual interest rate from May 22, 2014 until the repayment date (namely the previous
request for liquidated damages was rejected, and the request for standby unjust
enrichment was approved). E-TON Solar Tech. Co., Ltd filed an appeal to the Tainan
Branch of Taiwan High Court on December 5, 2014, and it was accepted by such court
with case number 2015 Chong-Shang-Zi No. 5, which is currently being heard.
B. Non-litigation cases: not available in the past two years.
C. Administrative litigation cases: not available in the past two years.
156
2. As of the publication date of annual report, whether the directors, supervisors, President, and
shareholders with shareholding ratio over ten percent of the Company are involved in any
significant litigation, non-litigation or administrative litigation cases, such cases have been
sentenced or are currently pending, and the results thereof have a significant impact on
shareholders' equity or securities price: there is no such circumstance.
6.6.14 Other important risks and response measures: None.
6.7 Other Important Matters: None
157
VII. Special Disclosure
7.1 Summary of Affiliated Companies
7.1.1 The chart of Inventec Corporation
Inventec
Corporation
Inventec
Holding
(North
America)
Corp.
100%
Inventec
(Czech), s.r.o.
100%
IEC
(Cayman)
Corporation
100%
Inventec
(Cayman)
Corp.
100%
Inventec
Corporation
(Hong Kong)
Ltd.
100%
Inventec
Manufacturing
(India) Private
Limited
99.99%
E-TON
Solar
Tech.
Co., Ltd
29.70%
Inventec
Solar
Energy
Corporation
33.45%
Invnetec
Investments
Co., Ltd.
100%
4.95 %
4.64 %
Refer to the
chart of
Inventec
(Cayman)
Corp.
Inventec
(Tianjin)
Electronics
Co., Ltd.
100%
Refer to the
chart of
E-TON
Solar Tech
Co., Ltd.
100%
Inventec
Besta
Co., Ltd.
37.53%
0.1 %
1.59 %
0.79 %
Inventec
Technology
(Chongqing)
Corp.
100%
Inventec
Development
Japan
Corporation
9.55 %
0.01 %
Refer to the
chart of
Inventec
Holding
(North
America)
Inventec
Appliances
Corp.
100%
Inventec
Energy
Corporation
48.47%
Refer to the
chart of
Inventec
Appliances
Corp
Corp.
Note1：
Investments in subsidiaries
Investments accounted for under the equity method
Inventec
(Beijing)
Electronics
Technology
Co., Ltd
100%
Investments between subsidiaries
Note 2：As of 12/31/2015
158
The chart of Inventec Holding (North America) Corp.
Inventec
Corporation
Inventec Holding
(North America)
Corp.
100%
Inventec Electronics
(USA) Corp.
100%
Inventec
Manufacturing
(North America)
Corp.
100%
Inventec
Configuration
(North America)
Corp.
100%
Inventec Distribution
(North America)
Corp.
100%
IEC
Technologies, S. de
R.L. de C.V.
99%
1%
159
The chart of Inventec (Cayman) Corp.
Inventec
Corporation
Inventec
(Cayman)
Corp.
100%
Inventec
(Shanghai)
Corp.
100%
Inventec
(Pudong)
Corp.
100%
Inventec
(Pudong)
Technology Corp.
100%
Inventec
(Shanghai)
Service Co., Ltd.
100%
Inventec
Hi-Tech
Corp.
100%
Inventec AssetManagement
(Shanghai)
Corporation
78%
Inventec
Huan Hsin
(Zhejiang)
Technology Co., Ltd.
100%
Inventec
(Chongqing)
Corp.
100%
Chongqing
Rongjie Cloud
Service Co., Ltd.
100%
Chongqing
TaiYu Cloud
Service Co., Ltd.
100%
Chongqing
YuYa Cloud
Service Co., Ltd.
100%
160
Inventec
(Chongqing)
Service Co., Ltd.
100%
TPV-Inventa
Holding
Ltd.
90%
TPV-Inventa
Technology Co.,
Ltd.
100%
TPV-Inventa
Technology
(Fujian) Ltd.
100%
The chart of E-TON Solar Tech. Co., Ltd.
Inventec
Corporation
E-TON Solar Tech.
Co., Ltd.
29.70%
Gloria Solar
International
Holding, Inc.
50.76%
Adema Techologies,
Inc.
100%
Gloria Solar Co., Ltd
100%
161
The Chart of Inventec Apliances Corp.
Inventec
Corporation
Inventec
Appliances Corp.
100%
Inventec
Appliances
(Cayman)
Holding Corp.
100%
Inventec
Appliances
(USA)
Distribution Corp.
100%
Inventec
Appliances
Corporation USA
Inc.
100%
Inventec
Electronics
(Shanghai) Co.,
Ltd.
100%
Inventec
Appliances
(Pudong) Corp.
100%
Inventec
(Nanjing)
ElectronicsCo.
Ltd.
100%
Inventec
Appliances
(Shang Hai) Co.,
Ltd.
100%
162
Inventec
Appliances
(Nanjing) Corp.
100%
Inventec
Appliances
(Nanjing) System
Corp.
100%
Inventec
Appliances
(XI'AN)
Corporation
100%
Inventec
Appliances
(Nanchang)
Corporation
100%
7.1.2 Inventec Corporation Subsidiaries
Unit: NT$ Thousands
Company
(Hong Kong) Ltd.
Inventec (Tianjin)
Electronics Co., Ltd.
Inventec (Beijing)
Electronics Technology
Co., Ltd.
Inventec (Cayman)
Corp.
Date of
Incorpo-ration
1990.08
Place of Registration
Level 28,Three Pacific Place 1,
Queen`s Road East, Hong Kong
Capital
Stock
As of 12/31/2015
Business Activities
Investing in Mainland
8,705 China and import and
export business
1993.11
23F, Wanzhao Smart Valley Building,
No. 218 Hongqi Road, Nankai
District, Tianjin, China
Research, manufacture,
sale and warranty services
164,100
of electronic computers
and related.
1994.07
A-206, No.1 Building (Information
Center), Zhongguancun Software
Park, No.8 Dongbeiwang West Road,
Haidian District, Beijing, China.
Manufacture, and
warranty services of
47,589 computers and related; as
well as business
information consultation.
2000.06
Floor 4,Willow House,Cricket
Square, P.O.Box 2804, Grand
Cayman KY1-1112, Cayman
Islands
9,812,963 Holding Company
Inventec (Shanghai) Corp 2000.10
No.1295, Yi Shan Road Shanghai,
China
968,190
Inventec Asset-Management
(Shanghai) Corporation
2014.06
The first floor 08 business of No.7
building , No.1528 Gumei road, ,
Xuhui district, Shanghai ,China
Equipment leasing,
storage, technological
647,975
development and sale of
computer
Inventec (Pudong) Corp.
2003.01
No.699 Puxing Road, Minhang
District,Shanghai, China
1,641,000 assembly operations and
1,641,000
Inventec (Pudong) Technology
Corp.
2004.04
District, Shanghai, China
Inventec (Shanghai) Service
Co., Ltd
2004.03
2F Building, No.1295, Yi Shan Road
Shanghai, China
Inventec Hi-Tech Corp.
2004.09
District, Shanghai, China
Inventec Huan Hsin
(Zhejiang) Technology Co.,
Ltd.
2007.03
No. 8, XinDa Road, Huimin
Avenue ,Jiashan County, Zhejiang
Province, China
Sale of servers, notebooks
and related.
Computer products
sale of computer
95,178
Manufacture and sale of
Servers and related
Research, and sale of
software products
Computer products
1,641,000 assembly operations and
sale
Complete of the electronic
941,934 computer and product and
sale of external equipment
Inventec (Chongqing) Corp. 2010.05
No.66, Xiqu Sceond Road, Shapingba
District, ChongQing, China
Chongqing Rongjie Cloud
2015.03
Service Co., Ltd.
No.1, 8F, B Building, No.24 Honghu
West Road, Yubei District, Chongqing,
China
101,084
Computer software
system integration service
Chongqing TaiYu Cloud
Service Co., Ltd.
2015.03
China
101,084
Computer software
Chongqing YuYa Cloud
Service Co., Ltd.
2015.03
China
101,084
Computer software
Inventec (Chongqing)
Service Co., Ltd.
2010.05
3F Building No.98, Xiqu Sceond
Road, Shapingba District, ChongQing,
China
32,820
163
Assembly and sale of
1,641,000
computer products
computer products
Company
Date of
Incorpo-ration
Capital
Stock
Business Activities
TPV-Inventa Holding Ltd. 2010.05
54F, Hopewell Centre, 183 Queen’s
Road East, Hong Kong
TPV-Inventa Technology
Co., Ltd.
2011.05
7F, No.166 Chengde Rd Sec 4, Shilin
District, Taipei City, Taiwan, R.O.C
152,500
Assembly and sale of AIO
PC
(Fujian) Ltd.
2010.06
Rongqiao Economic and
Technological Development Zone,
Fuqing City, Fujian Province, China.
1,476,900
Assembly and sale of AIO
PC
2013.11
Floor 4,Willow House,Cricket
Square, P.O.Box 2804, Grand
Cayman KY1-1112, Cayman
Islands
739,500 Holding Company
2013.12
No.1-6, Building 9t, GuiFuJiaYuan,
No.18, GuiFu No.2 branch,
ShuangLongHu Sub-district, Yubei
District, Chongqing, China
820,500 and computer system
Inventec Holding (North
1997.09
America) Corp.
11450 Compaq Center Dr. West
Suite 200, Houston, TX 77070
159,003
(USA) Corp.
1997.02
11450 Compaq Center Dr. West Suite
200
Inventec Manufacturing
(North America) Corp.
1997.09
200
Holding company in
America
Computer product
16,410 assembles and warranty
services
Technical and Marketing
65,640
support service
1998.08
200
16,410 Sale of computer products
Inventec Configuration
1998.08
200
65,640
Assembly of computer
products
IEC Technologies, S. de
R.L. de C.V.
2006.09
Blvd.Independencia #10150,Centro
Industrial del Norte #1, CD Juarez,
Chihuahua, Mexico 32575
65,640
Assembly of servers and
related.
Inventec (Czech), s.r.o.
2004.02
Modrice, Central Trade Park
Evropska 863 664 42 Modrice,
Czech Republic
85,921
Computer products
assembly operations
Inventec Development
Japan Corporation
2004.12
7F, No.1 Shinbashi-Ekimae
BL.,2-20-15 Shinbashi,
Minakotu-ku, Tokyo, Japan
32,048 and selling computer
IEC (Cayman)
Corporation
Inventec Technology
(Chongqing) Corp.
Survey No.381, Padur Road,
Kuthambakkam Village,
Poonamallee Taluk. Chennai, Tamil
Nadu, India, Pin:602107
Computer software design
integration service.
Developing, designing
peripherals
Computer product
(India) Private Limited
2015.04
Invnetec Investments
Co., Ltd.
2009.08
3F-1, No.166, Sec. 4, Chengde Rd.,
Shilin Dist., Taipei City, Taiwan
1,088,000 Investment activities
Inventec Solar Energy
Corporation
2010.10
No.349, Sec 2, Renhe Rd., Daxi
Township, Taoyuan City, Taiwan.
3,233,548
Inventec Energy Corporation
2004.01
No.2, Gongye 3rd Rd., Hukou
Township, Hsinchu County, Taiwan
1,267,801 of photovoltaic systems
2001.12
NO.498,Sec.2, Bentian St., Tainan,
Taiwan
7,794,498
2007.12
The Grand Pavilion Commercial
Centre, Oleander Way, 802 West Bay
Road, P.O. Box 32052 Grand Cayman,
KY1-1208 Cayman Islands
1,166,345 Investment activities
E-TON Solar Tech. Co.,
Ltd.
Gloria Solar International
Holding, Inc.
164
281,720 assembles and warranty
services
Developing, production
and selling of solar cells.
Manufacturing and selling
integration
Manufacturing and
selling of solar cells
Company
Adema Techologies, Inc.
Date of
Incorpo-ration
2000.11
4701 Patrick Henry Dr. Bldg 16, Ste
3H Santa Clara, CA 95051
Capital
Stock
Business Activities
Design and consulting
0 service of photovoltaic
systems
2006.08
No.110, Ln. 320, Sec. 4, Anzhong Rd.,
Annan Dist., Tainan City, Taiwan
639,081
Inventec Appliances
Corp.
2000.05
No.37, Wugong 5th Road, Wugu
Industrial Park, Wugu District, New
Taipei City, Taiwan
5,368,573
Inventec Appliances
(Cayman) Holding Corp.
2000.06
The Grand Pavilion Commercial
Center, Oleander Way, 802 West Bay
Road, P.O. Box 32052, Grand Cayman
KY1-1208, Cayman Islands.
Inventec Appliances
(USA) Distribution Corp.
2000.07
555 Republic Drive, Suite 200, Plano,
Texas 75074 , USA
Inventec Appliances
Corporation USA Inc.
2006.04
2880 Lakeside Drive, Suite 247, Santa
Clara, California 95054
(Shanghai) Co., Ltd.
1991.07
No.7, Gui Qing Rd., Shanghai, China.
131
photovoltaic modules
Wireless terminal
products
Sale of MP3 Play, and
consumer electronics etc.
33 Sales activities
1,693,512 Consumer electronics and
IT products.
Development and
consultation on software
1,264 and hardware; as well as
selling of electronic
products
2015.04
Room B506, Building 3, No.7
Guiqing Road, Xuhui District,
Shanghai, China.
Inventec Appliances
(Pudong) Corp.
2004.03
No.789, Puxing Rd., Minhang District,
Shanghai, China.
Inventec (Nanjing)
Electronics Co. Ltd.
1993.10
No.100 Xian He Street, Nanjing,
China
Inventec Appliances
(Nanjing) Corp.
2004.02
No.133, Jiang-Jun Road ,Jiangning
Economic and Technological
Development Zone, Nanjing, China.
1,903,560 manufacture of
Inventec Appliances
(Nanjing) System Corp.
2006.07
No.133 ,Jiang-Jun Road ,Jiangning
Economic and Technological
Development Zone, Nanjing, China.
328,200 manufacture of
Inventec Appliances
(XI’AN) Corporation
2007.12
No.50 Jin-Ye 1st Road High-tech
Industrial Development Zone, Xi' an
China
131,280 of electronic and software
2008.12
C401-417,No. 698 Jingdong
Boulevard, High-Tech Zone of
Nanchang,Jiangxi,China.
Inventec Appliances
(Shang Hai) Co., Ltd.
Inventec Appliances (Na
nchang) Corporation
Research, design and
manufacture of consumer
2,527,140
electronics, and MP3
Player
164,100
Real Estate Rental and
Leasing
telecommunication
telecommunication
Research, design and sale
products
Research, design and sale
68,922 of electronic and software
products
7.1.3 Shareholders in Common of Inventec Corporation and Its Subsidiaries with
Deemed Control and Subordination: None.
165
7.1.4 Industrial Classification in Inventec Corporation Subsidiaries
Industrial Classification
Company
Relationships to Related Party
Holding company
Inventec Corporation (HongKong)
Ltd.
Direct investment in Inventec (Beijing) Electronics
Technology Co., Ltd. and Inventec (Tianjin)
Electric Product Manufacturing
Inventec (Tianjin) Electronics Co.,
Ltd.
Research, manufacture, sale and warranty services of
electronic computers and related.
Inventec (Beijing) Electronics
Manufacture, and warranty services of computers and
related; as well as business information consultation.
Holding company
Inventec (Cayman) Corp.
Direct investment in Inventec (Shanghai) Corp. etc.
Inventec (Shanghai) Corp.
Sale of servers, notebooks and related.
Inventec Asset-Management
(Shanghai) Corporation
Equipment leasing, storage, technological
development and sale of computer
Computer products assembly operations and sale of
computer
Inventec (Pudong) Technology Corp
Manufacture and sale of servers and related
Inventec (Shanghai) Service Co., Ltd
Research and sale of sofeware products
Computer products assembly operations and sale
Inventec Huan Hsin (Zhejiang)
Inventec (Chongqing) Corp.
Chongqing Rongjie Cloud Service Co.
Computer software system integration service
Chongqing TaiYu Cloud Service Co.
Chongqing YuYa Cloud Service Co.
Inventec (Chongqing) Service Co.,
Ltd.
Assembly and sale of computer products
Holding company
TPV-Inventa Holding Ltd.
Direct investment in TPV-Inventa Technology Co.,
Ltd. etc.
TPV-Inventa Technology Co., Ltd.
Assembly and sale of AIO PC
TPV-Inventa Technology (Fujian) Ltd.
Assembly and sale of AIO PC
Holding company
IEC (Cayman) Corporation
Direct investment in Inventec Technology
(Chongqing) Corp.
Inventec Technology (Chongqing)
Corp.
Computer software design and computer system
integration service.
Holding company
InventecHolding (NorthAmerica)
Corp.
Direct investment in Inventec Electronics (USA)
Corp. etc.
Electric Producs Manufacturing
Inventec Electronics (USA) Corp.
Computer product assembles and warranty services
Inventec Manufacturing (North
America) Corp.
Technical and Marketing support service
Inventec Distribution (North America)
Corp.
Computer product assembles and sales
Electric Products Manufacturing
Inventec Configuration (North
America) Corp.
Computer product assembles
IEC Technologies, S. de R.L. de C.V.
Assembly of servers and related..
Computer product assembles and warranty
services
166
Industrial Classification
Company
Relationships to Related Party
Inventec Development Japan
Corporation
Developing, designing and selling computer
peripherals
Inventec Manufacturing (India)
Private Limited
Computer product assembles and warranty
services
Investment
Invnetec Investments Co., Ltd.
Investment activities
Energy Technical Services
Developing, production and selling of solar cells.
Manufacturing of photovoltaic systems integration
E-TON Solar Tech. Co., Ltd.
Manufacturing and selling of solar cells
Investment
Gloria Solar International Holding,
Inc.
Investment in Adema Technologies, Inc. etc.
Adema Technologies, Inc.
Design and consulting service of photovoltaic systems
Manufacture and sale of photovoltaic modules
Inventec Appliances Corp.
Communication and digital accessory product
assembles and sales
Holding company
Inventec Appliances (Cayman)
Holding Corp.
Investment in Inventec Electronics (Shanghai) Co.,
Ltd. etc.
Inventec Appliances (USA)
Distribution Corp.
assembles and sales
Inventec Appliances Corporation USA
Inc.
assembles and sales
Inventec Electronics (Shanghai) Co.,
Ltd.
assembles and sales
Inventec Appliances (Shang Hai) Co.,
Ltd.
assembles and sales
Inventec Appliances (Pudong) Corp.
assembles and sales
Inventec (Nanjing) Electronics Co.
Ltd.
assembles and sales
Inventec Appliances (Nanjing) Corp.
assembles and sales
Inventec Appliances (Nanjing) System
Corp.
assembles and sales
Inventec Appliances (XI’AN)
Corporation
assembles and sales
Inventec Appliances (Nanchang)
Corporation
assembles and sales
167
7.1.5 Rosters of Directors, Supervisors, and Presidents of Inventec Corporation’s Subsidiaries
Unit: Shares；%
Company
Inventec
Corporation
(Hong Kong) Ltd.
Inventec (Tianjin)
Electronics Co.,
Ltd.
Inventec (Beijing)
Electronics
Technology Co.,
Ltd.
Inventec
(Cayman) Corp.
Inventec
(Shanghai) Corp.
Inventec
Appliances (Shang
Hai) Co., Ltd.
Inventec (Pudong)
Corp.
Inventec (Pudong)
Technology Corp.
Inventec
(Shanghai) Service
Co., Ltd
Title
Name
Representative of Inventec Corporation：
Yeh, Kuo-I
Lee, Tsu-Chin
Representative of Inventec Corporation (Hong Kong) Ltd.：
Chairman
Lee, Tsu-Chin
Director
Wen, Shih-Chih
Director
Huang, Kuo-Chun
Supervisor
Chen, Pei-chia
*General manager Chen, Chih-Feng
Director
Director
Representative of Inventec Corporation (HongKong) Ltd.：
Chairman
Lee, Tsu-Chin
Director
Wen, Shih-Chih
Director
Huang, Kuo-Chun
*General manager Chiu, Chuan-Cheng
Director
Lee, Tsu-Chin
Representative of Inventec (Cayman) Corp.：
Chairman
Wu,Yung-Tsai
Director
Chien, Chin-Yen
Director
Chang, Chung-Ming
Supervisor
Chen,Pei-Chia
*General manager Wu,Yung-Tsai
Representative of Inventec (Shanghai) Corp.：
Chairman
Wu,Yung-Tsai
Director
Chien, Chin-Yen
Supervisor
Chen,Pei-Chia
Director
Shanghai Caohejing Hi-Tech Park Development Corp.
*General manager Chien, Chin-Yen
Chairman
Wu,Yung-Tsai
Director
Chien, Chin-Yen
Director
Chang, Chung-Ming
Supervisor
Chen,Pei-Chia
*General manager Hsun, Chin-Ta
Chairman
Wu,Yung-Tsai
Director
Chien, Chin-Yen
Director
Chang, Chung-Ming
Supervisor
Chen,Pei-Chia
*General manager Hu,Chih-Kuan
Chairman
Wu,Yung-Tsai
Director
Chien, Chin-Yen
Director
Chang, Chung-Ming
Supervisor
Chen,Pei-Chia
*General manager Wu,Yung-Tsai
168
As of 12/31/2015
Shareholding
Investment
Shares
Holding (%)
2,500,000
100%
N/A
100%
N/A
100%
301,768,161
100%
N/A
100%
N/A
78%
22%
N/A
100%
N/A
100%
N/A
100%
Company
Inventec Hi-Tech
Corp.
Inventec Huan
Hsin (Zhejiang)
Technology Co.,
Ltd.
Inventec
(Chongqing) Corp.
Chongqing
Rongjie Cloud
Service Co.
Chongqing TaiYu
Cloud Service Co.
Chongqing YuYa
Cloud Service Co.
Inventec
(Chongqing)
Service Co., Ltd.
TPV-Inventa
Holding Ltd.
TPV-Inventa
Technology Co.,
Ltd.
Title
Name
Chairman
Wu, Yung-Tsai
Director
Chien, Chin-Yen
Director
Chang, Chung-Ming
Supervisor
Chen, Pei-Chia
*General manager Hu,Chih-Kuan
Chairman
Huang, Kuo-Chun
Director
Wen, Shih-Chih
Director
Wu, Yung-Tsai
Supervisor
Chen, Pei-Chia
Chairman
Huang, Kuo-Chun
Director
Wu, Yung-Tsai
Director
Chien, Chin-Yen
Supervisor
Chen, Pei-Chia
Representative of Inventec (Chongqing) Corp.：
Chairman
Yang, Jen-Chieh
Supervisor
Chen, Pei-Chia
*General manager Tsung, Yu-Lin
Representative of Chongqing Rongjie Cloud Service Co.：
Chairman
Kung, Ching-Cheng
Supervisor
Ma, Pin-Pin
*General manager Chin, Ching
Representative of Chongqing TaiYu Cloud Service Co ：
Chairman
Kung, Ching-Cheng
Supervisor
Ma, Pin-Pin
*General manager Chin, Ching
Chairman
Huang, Kuo-Chun
Director
Wu,Yung-Tsai
Director
Chien,Chin-Yen
Supervisor
Chen,Pei-Chia
*General manager Chien,Chin-Yen
Chairman
Huang, Kuo-Chun
Director
Wu,Yung-Tsai
Director
Chang, Hui
Director
Chen, Wan-Chien
Director
Yu, Chin-Pao
*General manager Chen, Wan-Chien
Chairman
Representative TPV-Inventa Holding Ltd.：
Director
Huang, Kuo-Chun
Director
Chang, Hui
Director
Chen, Wan-Chien
Supervisor
Yu, Chin-Pao
169
Shareholding
Investment
Shares
Holding (%)
N/A
100%
N/A
100%
N/A
100%
N/A
100%
N/A
100%
N/A
100%
N/A
100%
302,421,330
90%
15,250,000
100%
Company
TPV-Inventa
Technology
(Fujian) Ltd.
IEC (Cayman)
Corporation
Inventec
Technology
(Chongqing) Corp.
Inventec Holding
(North America)
Corp.
Title
Chairman
Representative TPV-Inventa Holding Ltd.：
Director
Huang, Kuo-Chun
Director
Chang, Hui
Director
Chen, Wan-Chien
Supervisor
Yu, Chin-Pao
Director
Lee, Tsu-Chin
Representative of IEC (Cayman) Corp.：
Chairman
Wu, Yung-Tsai
Director
Chien, Chin-Yen
Director
Chang, Chung-Ming
Supervisor
Chen, Pei-Chia
Director
Director
Director
Inventec
Electronics (USA)
Corp.
Director
Director
Director
*General manager
Inventec
Manufacturing
(North America)
Corp.
Director
Director
Director
*General manager
Inventec
Distribution (North
America) Corp.
Director
Director
Director
*General manager
Inventec
Configuration
(North America)
Corp.
Director
Director
Director
*General manager
IEC Technologies,
S. de R.L. de C.V.
Inventec (Czech),
s.r.o.
Name
Director
Director
Representative
Representative
Representative
Lee, Tsu-Chin
Huang, Kuo-Chun
Wu, Yung-Tsai
Representative of Inventec Holding (North America) Corp.：
Lee, Tsu-Chin
Huang, Kuo-Chun
Wu, Yung-Tsai
Lin, Chin-Wen
Lee, Tsu-Chin
Huang, Kuo-Chun
Wu, Yung-Tsai
Lin, Chin-Wen
Lee, Tsu-Chin
Huang, Kuo-Chun
Wu, Yung-Tsai
Lin, Chin-Wen
Lee, Tsu-Chin
Huang, Kuo-Chun
Wu, Yung-Tsai
Lin, Chin-Wen
Lee, Tsu-Chin
Huang, Kuo-Chun
Tsai, Chih-An
John William Busby
Tseng, Kuang-Chao
170
Shareholding
Investment
Shares
Holding (%)
N/A
100%
25,000,000
100%
N/A
100%
5,000,000
100%
500,000
100%
2,000,000
100%
500,000
100%
2,000,000
100%
2
100%
68,000,000
100%
Company
Inventec
Development
Japan
Corporation
Inventec
Manufacturing
(India) Private
Limited
Invnetec
Investments Co.,
Ltd.
Inventec Solar
Energy
Corporation
Inventec Energy
Corporation
Title
Lee, Tsu-Chin
Ryu Kazuyoshi
Yuan, Chen-Fa
Yu, Chin-Pao
Representative
Wu, Yung-Tsai
Representative
Chang, Hui
Representative N. Ramalingam
*General manager Hsu, Yu-Kuang
Chairman
Lee, Tsu-Chin
Director
Huang, Kuo-Chun
Director
Yu, Chin-Pao
Supervisor
Cheng, Hsien-Ho
*General manager Yu, Chin-Pao
Director
Chairman
Cho, Tom-Hwar
Representative of Invnetec Investments Co., Ltd.：
Director
Yu, Chin-Pao
Director
Fu-Tai investment Corporation
Director
Hsieh, Jui-Hai
Supervisor
Cheng, Hsien-Ho
Supervisor
Chen, Chin-Tsai
General manager Hsieh, Jui-Hai
Representative
Representative
Director
Supervisor
Chairman
Director
Director
Director
Supervisor
Supervisor
General manager
Chairman
Director
Director
E-TON Solar
Tech. Co., Ltd.
Director
Supervisor
Supervisor
General manager
Gloria Solar
International
Holding, Inc.
Name
Chairman
Director
Director
Director
Director
Chen, Chin-Tsai
Huang, Ping-Lin
E-TON Solar Tech. Co., Ltd.
WIN Semiconductors Corp.
Cheng, Hsien-Ho
Chuang, Shuo-Hung
Hsieh, Jui-Hai
Hsu, Shen-Chun
Yu, Chin-Pao
Yang, Hsin-Hua
Representative of Fu-Tai investment Corporation：
Wen, Ching-Chang
Lai, Ming-Chang
Tsai, Yang-Tsung
Wu, Ying-Chih
Yeh, Li-Cheng
Cheng, Hsien-Ho
Wen, Ching-Chang
Representative of E-TON Solar Tech. Co., Ltd. ：
Hsu, Shen-Chun
Wen, Ching-Chang
Chen, Chao-Chuan
Lee, Chung-I
Su, Yao-Chuan
171
Shareholding
Investment
Shares
Holding (%)
45,100
100%
55,994,400
99.99%
NA
NA
108,800,000
100%
108,150,000
2,120,000
33.45%
0.66%
15,000,000
16,422,320
7,291,760
530,000
10,000
7,291,760
4.64%
5.08%
2.26%
0.16%
0.00%
2.26%
18,878
226,538
1,000,000
43,770,481
0
481,392
0
0.01%
0.18%
0.79%
34.52%
0.00%
0.38%
0.00%
231,520,528
29.70%
42,500,000
5.45%
0
0
0
25,100,000
0
420,000
0.00%
0.00%
0.00%
3.22%
0.00%
0.05%
59,200,000
50.76%
Company
Adema
Technologies, Inc.
Gloria Solar Co.,
Ltd
Inventec
Appliances Corp.
Inventec
Appliances
(Cayman) Holding
Corp.
Title
Name
Representative of Gloria Solar International Holding, Inc.：
Hsu, Shen-Chun
Chen, Chao-Chuan
Lee, Chung-I
Representative of Gloria Solar International Holding, Inc.：
Chairman
Hsu, Shen-Chun
Director
Wen, Ching-Chang
Director
Lee, Chung-I
Supervisor
Chen, Chao-Chuan
*General manager Hsu, Shen-Chun
Chairman
Chang, Ching-Sung
Director
Lee, Tsu-Chin
Director
Wen, Shih-Chih
Director
Wu, Yung-Tsai
Director
Lee, Chia-En
Supervisor
Cheng, Hsien-Ho
*General manager Ho, Tai-Shui
Chairman
Director
Director
Director
Representative of Inventec Appliances Corporation：
Chang, Ching-Sung
Shareholding
Investment
Shares
Holding (%)
1,100,000
100%
63,908,120
100%
536,857,254
100%
199,385,369
100%
400,000
100%
10,000
100%
N/A
100%
N/A
100%
N/A
100%
Representative of Inventec Appliances (Cayman) Holding Corp.：
Inventec
Appliances (USA)
Distribution Corp.
Director
Chang,Ching-Sung
*General manager Wang, Po-Hung
Inventec
Appliances
Corporation USA
Inc.
Director
Chang,Ching-Sung
*General manager Wang,Po-Hung
Inventec
Electronics
(Shanghai) Co.,
Ltd.
Inventec
Appliances (Shang
Hai) Co., Ltd.
Chairman
Chang, Ching-Sung
Director
Tsai, Shih-Kuang
Director
Ho, Tai-Shui
Supervisor
Tseng, Ching-An
*General manager Tsai, Shih-Kuang
Representative of Inventec Electronics (Shanghai) Co., Ltd.：
Chairman
Chang, Ching-Sung
Supervisor
Tseng, Ching-An
*General manager Tsai, Shih-Kuang
Inventec
Appliances
(Pudong) Corp.
Chairman
Chang,Ching-Sung
Director
Lin,Wen-Yao
Director
Chen, Kun-Hui
Director
Ho, Tai-Shui
Director
Chang, Hsueh-Ling
Supervisor
Tseng, Ching-An
*General manager Chen, Kun-Hui
172
Company
Title
Name
Shareholding
Investment
Shares
Holding (%)
Inventec (Nanjing)
Electronics Co.
Ltd.
Chairman
Chang, Ching-Sung
Director
Kao, Chao-Yang
Director
Chen, Lieh-Hung
Supervisor
Shen, Cheng-Hung
*General manager Kao, Chao-Yang
N/A
100%
N/A
100%
N/A
100%
N/A
100%
N/A
100%
Inventec
Appliances
(Nanjing) Corp.
Chairman
Chang, Ching-Sung
Director
Chang, Hsueh-Ling
Director
Kao, Chao-Yang
Supervisor
Chang, Shu-Ching
Inventec
Appliances
(Nanjing) System
Corp.
Chairman
Chang, Ching-Sung
Director
Yang, Ming-Hsien
Director
Kao, Chao-Yang
Supervisor
Chang, Shu-Ching
Inventec
Appliances
(XI’AN)
Corporation
Chairman
Chang, Ching-Sung
Director
Chang, Hsueh-Ling
Director
Pien, Yung-Tsai
Supervisor
Shen, Cheng-Hung
*General manager Pien, Yung-Tsai
Inventec
Appliances
(Nanchang)
Corporation
Chairman
Chang, Ching-Sung
Director
Chen, Kun-Hui
Director
Chang, Ju-Nan
Supervisor
Shen, Cheng-Hung
*General manager Chang, Ju-Nan
Note: General managers marked with * are assigned and are not individual shareholders.
173
7.1.6 Operational Highlights of Inventec company Subsidiaries
Unit: NT$ Thousands (Except EPS)；As of 12/31/2015
Company
(Hong Kong) Ltd.
Inventec (Tianjin)
Inventec (Beijing)
Electronics Technology
Co., Ltd.
Capital
Total
Assets
Total
Total
Stockholders'
Liabilities
Equity
8,705 56,860,724 56,361,564
Sales
Revenue
Income
after Tax
Operating
Income
499,160 203,336,695
EPS after
Tax
6,701
174,530
－
164,100
456,783
67,977
388,806
143,938
(30,243)
127,075
－
47,589
94,846
9,842
85,004
37,942
1,287
2,535
－
0
65,775
(50,164)
－
968,190
4,072,801
3,303,646
769,155
10,198,666
(14,026)
(12,715)
－
Inventec Appliances
647,975
738,247
4,448
733,799
0
(19,617)
(21,170)
－
1,641,000 15,524,058 13,744,824
1,779,234
23,966,662
(539,407)
(678,243)
－
Inventec (Pudong)
Technology Corp.
1,641,000 22,349,522 17,137,689
5,211,833
51,416,223
367,265
(46,584)
－
8,605
41,226
32,520
4,552
5,769
－
1,641,000 12,918,077 11,153,380
1,764,697
18,390,901
15,257
(42,450)
－
271,955
755,423
(400,884)
(440,918)
－
4,629,644 152,416,967
749,671
1,213,502
－
Inventec (Shanghai)
Service Co., Ltd
Inventec Huan Hsin
(Zhejiang) Technology
Co., Ltd.
Corp.
9,812,963 13,983,905
95,178
941,934
49,832
956,504
0 13,983,905
684,549
1,641,000 28,745,534 24,115,890
Chongqing Rongjie Cloud
Service Co.
101,084
101,033
2
101,031
0
(1)
(54)
－
Chongqing TaiYu Cloud
Service Co.
101,084
101,032
2
101,030
0
(1)
(55)
－
Chongqing YuYa Cloud
Service Co.
101,084
101,064
34
101,031
0
(173)
(54)
－
32,820
105,491
69,444
36,047
94
(132)
516
－
1,834,968
15,363
171,198
(155,835)
1,693,130
4,192
(150,699)
－
152,500 12,683,281 12,834,993
(151,712)
23,070,957
(303,997)
(130,984)
(8.59)
Service Co., Ltd.
Co., Ltd.
(Fujian) Ltd.
1,476,900
308,812
274,361
34,451
259,280
(14,558)
(12,110)
－
739,500
784,561
0
784,561
0
0
12,346
－
Inventec Technology
(Chongqing) Corp.
820,500
784,666
105
784,561
0
0
12,346
－
Inventec Holding (North
America) Corp.
159,003
1,248,653
87,136
1,161,516
0
0
53,512
－
(USA) Corp.
16,410
246,050
313
245,737
58,173
2,770
1,840
－
65,640
233,970
8,353
225,617
291,170
13,865
8,413
－
16,410 13,557,169 13,149,118
408,051
61,934,526
21,023
12,046
－
IEC (Cayman)
Corporation
174
Company
Total
Total
Assets
Capital
Total
Stockholders'
Liabilities
Equity
Sales
Revenue
Income
after Tax
Operating
Income
EPS after
Tax
Inventec Configuration
65,640
195,228
10
195,218
50,567
2,408
2,870
－
IEC Technologies, S. de
R.L. de C.V.
65,640
180,701
51,721
128,980
513,148
20,504
28,321
－
85,921
8,542,242
8,400,650
141,592
35,515,180
190,452
10,811
－
Inventec Development
Japan Corporation
32,048
127,394
2,982
124,412
20,856
(3,458)
(3,679)
－
281,720
313,020
81,609
231,412
8
(50,482)
(44,216)
－
Inventec Investments Co.,
Ltd.
1,088,000
559,717
152
559,565
0
(238)
(94,407)
(0.87)
Corporation
3,233,548
5,993,418
2,908,875
3,084,543
7,831,894
245,755
208,502
0.64
1,267,801
1,003,797
158,624
845,173
949,814
(125,191)
(258,847)
(2.04)
E-TON Solar Tech. Co.,
Ltd.
7,794,498
7,652,542
854,444
6,798,098
4,527,777
(787,120)
(808,218)
(1.04)
1,166,345
162,312
547,916
(385,604)
0
(5,348)
(46,239)
－
0
388
17,897
(17,509)
0
(2,669)
(2,266)
－
639,081
172,664
530,740
(358,076)
0
(2,157)
(43,111)
(0.67)
5,368,573 26,337,666 11,926,311 14,411,355
40,948,618
1,190,554
1,693,572
3.15
0
0
884,840
－
(India) Private Limited
Gloria Solar International
Holding
Adema Technologies
Gloria Solar Co.
Inventec Appliances
(Cayman) Holding Corp.
Inventec Appliances
(USA) Distribution Corp.
Inventec Appliances
Corporation USA Inc.
(Shanghai) Co., Ltd.
Inventec Appliances
Inventec Appliances
(Pudong) Corp.
6,543,828 12,819,625
0 12,819,625
131
555,165
455,828
99,337
1,940,979
1,243
1,262
－
33
11,402
1,094
10,308
29,459
1,667
999
－
1,693,512
2,134,316
171,565
1,962,751
90,540
(77,156)
119,001
－
1,264
44
0
44
0
(1,228)
(1,228)
－
2,527,140 16,591,258 10,519,199
6,072,059
38,408,670
560,049
556,258
－
Inventec (Nanjing)
Electronics Co. Ltd.
164,100
328,707
5,004
323,703
0
(4,264)
13,476
－
Inventec Appliances
(Nanjing) Corp.
1,903,560
6,877,520
3,293,550
3,583,970
5,838,020
204,409
203,025
－
Inventec Appliances
(Nanjing) System Corp.
328,200
591,930
29,449
562,481
30,546
(1,421)
27,126
－
Inventec Appliances
(XI’AN) Corporation
131,280
194,539
176,930
17,609
0
(17,448)
4,810
－
68,922
158,217
11,377
146,840
75,386
242
3,981
－
Inventec Appliances
(Nanchang) Corporation
175
7.1.7 Consolidated Financial Statements of Affiliates
Representation Letter
The entities that are required to be included in the combined financial statements of Inventec
Corporation as of and for the year ended December 31, 2015 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 by the Financial Supervisory Commission, "Consolidated and
Spearate Financial Statements." In addition, the information required to be disclosed in the
combined financial statements is included in the consolidated financial statements.
Consequently, Inventec Corporation and its Subsidiaries do not prepare a separate set of
combined financial statements.
Company Name : Inventec Company.
Chairman : Lee, Tsu-Chin
Date: March 22, 2016
7.2 Private Placement Securities in the Most Recent Years: None
7.3 The Shares in the Company Held or Disposed of by Subsidiaries in
the Most Recent Years: None
7.4 The Matters Listed in Article 36, Paragraph 3, Subparagraph 2 of
the Securities and Exchange Act, which might Materially affect
Shareholders' Equity or the Price of the Company's Securities:
None
7.5 Other Matters that Require Additional Description: None
176
AppendixⅠ: Consolidated Financial Statements with Subsidiaries
Audited by CPA of 2015
177
Representation Letter
The entities that are required to be included in the combined financial statements of Inventec
Corporation as of and for the year ended December 31, 2015 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 by the
Financial Supervisory Commission, "Consolidated and Spearate Financial Statements." In addition,
the information required to be disclosed in the combined financial statements is included in the
consolidated financial statements. Consequently, Inventec Corporation and its Subsidiaries do not
prepare a separate set of combined financial statements.
Company Name : Inventec Company.
Date: March 22, 2016
178
Independent Auditors’ Report
The Board of Directors of Inventec Corporation：
We have audited the accompanying consolidated balance sheets of Inventec Corporation and its subsidiaries (the
"Group") as of December 31, 2015 and 2014, and the related consolidated statements of comprehensive
income, changes in equity and cash flows for the years then ended. These financial statements are the
responsibility of the Group's management. Our responsibility is to express an audit report based on our audits.
We did not audit the financial
statements of certain consolidated subsidiaries with the total assets of
$72,686,249 thousand, representing 37% of the consolidated total assets as of December 31, 2014; and the net
sales of $82,918,862 thousand, representing 19% of the consolidated net sales for the years ended December
31, 2014. Also, we did not audit the long-term investments of other companies which amounted to $(542,888)
thousand, representing (0.28)% of the consolidated total assets as of December 31, 2014; and the related
investment income of $44,090 thousand, representing 0.45% of the consolidated net income before tax for the
years ended December 31, 2014. The financial statements of these subsidiaries and investees accounted for
under the equity method were audited
by other auditors, whose reports have been furnished to us, and our
opinion, insofar as it relates to the amounts for these companies, were based solely on the reports of other
auditors.
We conducted our audits in accordance with the "Regulation Governing Auditing and Certification of Financial
Statements by Certified Public Accountants" and the auditing standards generally accepted in the Republic of
China. Those regulations and standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatements. An audit includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audit and the reports of other auditors, the accompanying consolidated financial
statements referred to above present fairly, in all material respects, the financial position of the Consolidated
Company as of December 31, 2015 and 2014, and the results of their operations and their cash flows for the
years then ended, in conformity with the Regulations Governing the Preparation of Financial Reports by
Securities Issuers and the International Financial Reporting Standards, International Accounting Standards,
IFRIC Interpretations and SIC Interpretations as endorsed by the Financial Supervisory Commission.
Note to Readers
The accompanying financial statements are intended only to present the financial position, results of operations and cash
flows in accordance with the International Financial Reporting Standards approved by the Financial Supervisory
Commissions in the Republic of China and not those of any other jurisdictions. The standards, procedures, and practices to
audit such financial statements are those generally accepted and applied in the Republic of China.
The independent auditors' report and the accompanying financial statements are the English translation of the Chinese
version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation
of, the English and Chinese language auditors’ report and financial statements, the Chinese version shall prevail.
179
We have also audited the non-consolidated financial statements of the Company as of and for the years ended
December 31, 2015 and 2014, and have issued an unqualified audit report and a modified unqualified audit
report thereon.
KPMG
CPA： Ying Ru, Chen
Leou Fong, Yang
Taipei, Taiwan, R.O.C.
March 22, 2016
Note to Readers
The accompanying financial statements are intended only to present the financial position, results of operations and cash
flows in accordance with the International Financial Reporting Standards approved by the Financial Supervisory
Commissions in the Republic of China and not those of any other jurisdictions. The standards, procedures, and practices to
audit such financial statements are those generally accepted and applied in the Republic of China.
The independent auditors' report and the accompanying financial statements are the English translation of the Chinese
version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation
of, the English and Chinese language auditors’ report and financial statements, the Chinese version shall prevail.
180
(English Translation of Financial Report Originally Issued in Chinese)
INVENTEC CORPORATION AND ITS SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
2015.12.31
Amount
ASSETS
2014.12.31
Amount
%
%
Current Assets：
1100
Cash and cash equivalents (Notes (4) and (6)(a))
1110
Current financial assets at fair value through profit or loss (Notes (4) and (6)(b))
1125
Current available-for-sale financial assets (Notes (4) and (6)(b))
1170
Accounts receivable, net (Notes (4) and (6)(c))
1180
Accounts receivable due from related parties, net (Notes (4), (6)(c) and (7))
1200
Other receivables (Notes (4), (6)(c) and (7))
1310
Inventories, manufacturing business, net (Notes (4) and (6)(d))
1479
Other current assets – others (Notes (4) and (6)(k))
2015.12.31
Amount
LIABILITIES AND EQUITY
2014.12.31
Amount
%
%
Current Liabilities：
$
37,123,631
221,615
21
-
37,731,741
440,972
19
-
2100
Short-term borrowings (Note (6)(l))
2120
Current financial liabilities at fair value through profit or loss (Notes (4) and (6)(b))
88,985
-
41,666
-
12,132
-
24,263
-
3,290,684
2
8,401,561
4
2160
Notes payable－related parties (Note (7))
60,343,565
34
59,281,105
30
2170
Accounts payable
8,967,761
5
2180
Accounts payable－related parties (Note (7))
20,254
-
$
7,744,025
58,582,313
27,239
1,004,386
1
1,039,645
1
2230
Current tax liabilities
28,959,904
16
31,772,851
16
2200
Other payables (Note (7))
2,613,620
2
3,463,204
2
2322
Long-term borrowings－current portion (Note (6)(l))
133,577,659
76
151,098,840
77
2399
Other current liabilities－others
8,993,423
2313
Unearned revenue
Non-current assets：
1523
Non-current available-for-sale financial assets (Notes (4) and (6)(b))
331,492
-
457,501
-
1543
Non-current financial assets at cost (Notes (4) and (6)(b))
502,173
-
533,751
-
1550
Investments accounted for using equity method (Notes (4) and (6)(e))
532,888
-
613,137
-
1600
Property, plant, and equipment (Notes (4) and (6)(h))
1760
Investment property, net (Notes (4) and (6)(i))
548,071
1780
Intangible assets (Notes (4) and (6)(j))
872,905
1
901,392
1
1900
Other non-current assets (Notes (4), (6)(k) and (6)(o))
4,720,955
3
6,433,992
4
42,168,814
24
44,602,889
23
34,660,330
20
-
35,073,036
590,080
4
33
-
15,859,736
8
67,231,370
35
6,712,732
3
2,446,103
2
2,115,698
1
17,456,471
10
12,165,426
6
15,232,531
8
5
4,571,486
2
3,154,378
2
2,713,152
1
98,771,869
56
126,668,060
64
11,293,260
6
1,005,492
1
1,030,424
1
1,014,760
1
266,800
-
Non-current Liabilities：
18
-
2540
Long-term borrowings (Note (6)(l))
2640
Net defined benefit liabilities－non-current (Notes (4) and (6)(n))
2670
Other non-current liabilities－others (Notes (4), (6)(e) and (6)(o))
Total Liabilities
1,752,071
1
2,590,627
1
14,075,755
8
4,610,879
3
112,847,624
64
131,278,939
67
Equity attributable to owners of parent：
3110
Ordinary share (Note (6)(p))
35,874,751
20
35,874,751
18
3200
Capital surplus (Note (6)(p))
2,912,784
2
2,920,718
1
3300
Retained earnings (Note (6)(p))
14,883,819
8
15,773,335
8
3400
Other equity (Note (6)(p))
2,809,350
2
3,009,234
2
56,480,704
32
57,578,038
29
36XX
Non-controlling interests
6,418,145
4
6,844,752
4
62,898,849
36
64,422,790
33
175,746,473
100
195,701,729
100
Total equity attributable to owners of parent
Total Equity
TOTAL ASSETS
$
175,746,473
100
195,701,729
TOTAL LIABILITIES AND EQUITY
100
The accompanying notes are an integral part of the consolidated financial statements.
181
$
Consolidated Statements of Comprehensive Income
For the Years Ended December 31, 2015 and 2014
4110
5000
Sales revenue (Notes (4), (6)(s) and (7))
Operating costs (Notes (4) and (7))
Gross profit from operation
Operating expenses：
6100
6200
6300
6400
Selling expenses
Administrative expenses
Research and development
Total operating expenses
Operating profit
Non-operating income and expenses：
7010
7020
7050
7060
7900
7950
8200
8310
8311
8320
8349
8360
8361
8362
8370
8399
8500
8610
8620
$
2015
Amount
395,470,221
373,764,813
21,705,408
%
100
95
5
2014
Amount
435,599,968
412,251,630
23,348,338
2,688,381
4,792,827
8,816,932
16,298,140
5,407,268
1
1
2
4
1
2,926,456
4,800,839
8,511,964
16,239,259
7,109,079
-
1
2,864,110
1,015,376
(1,251,417)
(56,450)
-
1
2
1
1
2,571,619
9,680,698
3,015,137
6,665,561
-
Other income (Note (6)(u))
Other gains and losses (Note (6)(u))
Finance costs (Note (6)(u))
Share of losses of associates and joint ventures accounted for using equity method
(Notes (4) and (6)(e))
2,112,228
676,152
(914,173)
(97,605)
Total non-operating income and expenses
Profit before income tax
Less: Tax expenses (Notes (4) and (6)(o))
Profit for the year
Other comprehensive income (loss):
Items that will not be reclassified subsequently to profit or loss
Remeasurement from the defined benefit plans
Share of other comprehensive income of associates and joint ventures
accounted for using equity method
Income tax expense related to items that will not be reclassified subsequently
Total items that will not be reclassified subsequently to profit or loss
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign financial statements
Unrealized losses on available-for-sale financial assets
Share of other comprehensive income of associates and joint ventures
accounted for using equity method
Income tax benefit (expense) related to items that are or may be reclassified
subsequently
Total items that may be reclassified subsequently to profit or loss
Other comprehensive income (loss), net of tax
Total comprehensive income
$
Profit attributable to：
1,776,602
7,183,870
2,208,135
4,975,735
Owners of parent
$
$
-
%
100
95
5
1
2
3
2
2
2
(58,068)
69
-
(6,610)
(4,265)
-
9,781
(48,218)
-
1,194
(9,681)
-
(640,299)
48,545
12,423
-
1,472,514
32
6,101
-
381,929
-
(109,140)
-
(197,402)
(245,620)
4,730,115
-
1,369,507
1,359,826
8,025,387
-
1
5,563,633
(587,898)
4,975,735
-
1
5,315,880
(585,765)
4,730,115
-
1
2
7,097,815
(432,254)
6,665,561
-
2
8,455,834
(430,447)
8,025,387
-
2
Comprehensive income attributable to：
8710
8720
Owners of parent
$
$
9750
9850
Earning per share attributable to stockholders of parent (Notes (4) and (6)(r))
Basic earnings per share (NT dollars)
Diluted earnings per share (NT dollars)
$
$
1
1
1.55
1.54
182
2
2
1.98
1.96
Consolidated Statements of Changes in Equity
Capital Stock
Balance at January 1, 2014
$
Share Capital
35,874,751
Capital Surplus
2,895,677
Equity Attributable to Owners of Parent
Exchange
Differences on
Unrealized Gains
Retained Earnings
Translation of
(Losses)
Unappropriated
Foreign
on
Total Equity
Legal
Retained
Financial
Available-for-Sale
Attributable to
Non-Controlling
Reserve
Earnings
Statements
Financial Assets Owners of Parent
Interests
6,936,854
7,488,577
1,495,109
146,155
54,837,123
6,975,065
Net income (loss) for the period
-
-
-
7,097,815
-
-
Other comprehensive income (loss) for the period
-
-
-
(9,951)
1,373,853
Total comprehensive income (loss) for the period
-
-
-
7,087,864
1,373,853
Legal reserve appropriated
-
-
Cash dividends of ordinary share
-
-
-
Changes in non-controlling interests
-
-
-
Others
-
-
Balance at December 31, 2014
35,874,751
Net income (loss) for the period
-
-
-
5,563,633
Other comprehensive income (loss) for the period
-
-
-
(47,869)
(264,790)
Total comprehensive income (loss) for the period
-
-
-
5,515,764
(264,790)
Legal reserve appropriated
-
-
Cash dividends of ordinary share
-
-
-
Changes in non-controlling interests
-
-
-
Others
-
Total Equity
61,812,188
7,097,815
(432,254)
6,665,561
(5,883)
1,358,019
1,807
1,359,826
(5,883)
8,455,834
(430,447)
8,025,387
Appropriation and distribution of retained earnings:
707,417
25,041
2,920,718
7,644,271
(707,417)
-
-
(5,739,960)
-
-
-
-
-
-
-
-
8,129,064
2,868,962
-
-
-
(5,739,960)
-
-
-
(5,739,960)
294,973
294,973
25,041
5,161
30,202
57,578,038
6,844,752
64,422,790
5,563,633
(587,898)
4,975,735
64,906
(247,753)
2,133
(245,620)
64,906
5,315,880
(585,765)
4,730,115
140,272
-
Appropriation and distribution of retained earnings:
$
709,781
(7,934)
35,874,751
2,912,784
(709,781)
-
-
(6,278,081)
-
-
-
-
-
-
-
-
(127,199)
8,354,052
6,529,767
2,604,172
183
-
-
(6,278,081)
205,178
-
-
(6,278,081)
16,943
16,943
(135,133)
142,215
7,082
56,480,704
6,418,145
62,898,849
Consolidated Statements of Cash Flows
2015
2014
Cash flows from operating activities：
Profit before income tax
$
7,183,870
9,680,698
Depreciation expenses
3,976,246
3,813,990
Amortization expenses
964,995
1,222,212
25,179
15,856
914,173
1,251,417
(2,112,228)
(2,864,110)
8,533
9,575
97,605
56,450
(Gains) losses on disposal of property, plant, equipment and inventory property
(136,531)
162,409
Gain on disposal of investments
(331,861)
(383,461)
Adjustments to reconcile profit before income tax to net cash provided by operating
activities：
Provisions for bad debt expenses
Interest expenses
Interest income
Share-based payments
Share of losses of associates and joint ventures accounted for using equity method
Impairment losses on financial assets
-
109,590
Impairment losses on non-financial assets
140,379
1,454,743
(772)
(38,264)
3,545,718
4,810,407
215,185
(227,010)
11,810,327
6,006,396
Decrease (increase) in other receivables
2,596,999
(27,568)
Decrease in inventories
2,892,534
8,914,388
Decrease (increase) in other current assets
1,610,970
(1,646,819)
19,126,015
13,019,387
48,343
(64,739)
(12,131)
(26,239)
(20,374,773)
(31,253,048)
Increase in other payables
3,370,735
2,366,838
Increase in other current liabilities
4,276,868
1,638,197
Decrease in net defined benefit liabilities-non-current
(41,869)
(30,129)
Increase in deferred income
355,366
581,934
(12,377,461)
(26,787,186)
6,748,554
(13,767,799)
10,294,272
(8,957,392)
17,478,142
723,306
Interests received
2,269,550
2,942,046
Interests paid
(864,916)
(944,491)
(1,861,137)
(1,904,967)
17,021,639
815,894
Others
Total adjustments to reconcile profit
Changes in operating assets and liabilities：
Changes in operating assets：
Decrease (increase) in financial assets held for trading
Decrease in accounts receivable
Total changes in operating assets
Changes in operating liabilities：
Increase (decrease) in financial liabilities held for trading
Decrease in notes payable
Decrease in accounts payable
Total changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash inflow generated from operations
Income taxes paid
Net cash flows from operating activities
184
Consolidated Statements of Cash Flows (CONT'D)
2015
2014
Cash flows from investing activities：
Acquisition of available-for-sale financial assets
Proceeds from disposal of available-for-sale financial assets
(23,452,524)
(33,777,739)
28,952,230
29,491,624
35,371
6,650
Proceeds from capital reduction of available-for-sale financial assets
Proceeds from repayments of bond investment without active market
-
Acquisition of financial assets at cost
208,740
(55,595)
Proceeds from disposal of financial assets at cost
(144,403)
-
1,268
Proceeds from capital reduction of financial assets at cost
88,354
Acquisition of investments accounted for using equity method
-
(367,399)
(939)
Proceeds from disposal of investments accounted for using equity method
-
67,329
Acquisition of property, plant and equipment
(3,762,999)
(4,781,393)
250,519
93,680
Acquisition of intangible assets
(239,988)
(378,368)
Net cash inflows from business combination
1,305,370
(Increase) decrease in other non-current assets
(145,720)
438,857
2,607,619
(8,774,694)
Decrease in short-term borrowings
(8,351,998)
(9,035,069)
(Repayments) proceeds from long-term debt
(4,659,943)
1,982,345
13,762
19,090
(6,278,081)
(5,739,960)
249,395
19,175
(19,026,865)
(12,754,419)
(1,210,503)
1,512,290
(608,110)
(19,200,929)
37,731,741
56,932,670
37,123,631
37,731,741
Proceeds from disposal of property, plant and equipment
Net cash flows from (used in) investing activities
-
Cash flows from financing activities：
Increase in other non-current liabilities
Cash dividends paid
Change in non-controlling interests
Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
185
Notes to the Consolidated Financial Statements
(Amounts Expressed in Thousands of New Taiwan Dollars, Unless Stated Otherwise)
(1) Overview
Inventec Co., Ltd. (the “Company”) was organized in 1975. The Company engages primarily in
the developing, manufacturing, processing and trading of computers and related products. The
Company’s registered office address is located at No. 66 Hou-gang Street, Shin-Lin District,
Taipei, Taiwan, R.O.C. The shares of the Company became officially listed and traded on the
Taiwan Stock Exchange in November 1996.
The consolidated financial statements of the Company as of and for the year ended December 31,
2015 comprised the Company and its subsidiaries (together referred to as the “Group” and
individually as “Group entities”). The Group primarily is involed in the developing, computer
hardware and software products, manufacturing, processing and trading of computers and
related products, and sale of wired and wireless communication and digital accessory products.
Please refer to Note 4(c) for details.
(2) Financial Statements Authorization Date and Authorization Process
The consolidated financial statements were authorized for issuance by the Board of Directors on
March 22, 2016.
(3)
New Standards and Interpretations not yet Adopted
(a) Impact of the 2013 version of the International Financial Reporting Standard (“IFRS”) endorsed by
the Financial Supervisory Commissions R.O.C. (“FSC”).
The Group has adopted the 2013 version of the IFRS endorsed by the FSC (excluding IFRS 9
Financial instruments) in preparing consolidated financial statements starting in 2015.
The related new standards, interpretations and amendments issued by the International Accounting
Standards Board (“IASB”) were as follows:
New Standards and amendments
Amended IFRS 1“Limited Exemption from Comparative IFRS 7
Disclosures for First-time Adopters”
Amended IFRS 1“Severe Hyperinflation and Removal of Fixed
Dates for First-time Adopters”
Amended IFRS 1“Government Loans”
Amended IFRS 7“Disclosure－Transfers of Financial Assets”
Amended IFRS 7“Disclosure－Offsetting Financial Assets and
Financial Liabilities”
IFRS10 “Consolidated Financial Statements”
186
Effective date
per IASB
July 1, 2010
July 1, 2011
January 1, 2013
July 1, 2011
January 1, 2013
January 1, 2013
(Investment Entities
amendments to be
adopted on January
1, 2014.)
Notes to the Consolidated Financial Statements (CONT'D)
(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)
New Standards and amendments
IFRS 11 “Joint arrangements”
Effective date
per IASB
January 1, 2013
IFRS 12 “Disclosure of Interests in Other Entities”
IFRS 13 “Fair Value Measurement”
January 1, 2013
January 1, 2013
Amended IAS 1“Presentation of Items of Other Comprehensive
Income”
Amended IAS 12“Deferred Tax: Recovery of Underlying Assets”
Amended IAS 19“Employee Benefits”
July 1, 2012
Amended IAS 27“Separate Financial Statements”
Amended IAS 32“Offsetting Financial Assets and Financial
Liabilities”
January 1, 2013
IFRIC20－“Stripping Costs in the Production Phase of a Surface
Mine”
January 1, 2013
January 1, 2012
January 1, 2013
January 1, 2014
The Group had assessed that the 2013 version of the IFRS may not have any significant impact on
the consolidated financial statements except for the following:
A. IAS 1 Presentation of Financial Statements
The other comprehensive income section is required to present line items which are classified by
their nature, and are grouped between those items that will or will not be reclassified to profit or
loss in subsequent periods. Allocation of income tax to two groups of items of other
comprehensive is also required. The Group is expecting to change the presentation of
comprehensive income statements in accordance with the standard. The Group has changed the
presentation of comprehensive income statement along with its comparison periods in
accordance with the standard.
B. IFRS 12 Disclosure of Interests in Other Entities
The Group will disclose any additional information about its subsidiaries accordingly by the
standard; please refer to Note 6(e).
C. IFRS 13 Fair value measurement
The standard revised the definition of the fair value, provides a framework for measuring fair
value, and requires the disclosures on fair value measurement. Under this standard, Group has
increased its disclosures on the measurement of fair value (Please refer to note 6(w)) and
postponed the adoption of the standard regarding fair value measurement during the transition
period of IFRS 13.
Comparative information need not be disclosed for periods before initial application.
187
(b) Impact of IFRSs issued by IASB but not yet endorsed by the FSC
The 2013 version of the IFRS issued by the IASB but not yet endorsed by the FSC were as
follows：
New Standards, Interpretations and Amendments
IFRS 9, ‘Financial instruments’
Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture (amendments to IFRS 10 and IAS 28)
Investment entities: Applying the Consolidation Exception
(amendments to IFRS 10, IFRS 12 and IAS 28)
Accounting for acquisitions of interests in joint operations
(amendments to IFRS 11)
IASB Effective
Date
January 1, 2018
Not yet endosed by
IASB
January 1, 2016
January 1, 2016
IFRS 14 ‘Regulatory deferral accounts’
IFRS 15 ‘Revenue from contracts with customers’
IFRS16 ‘Lease’
January 1, 2016
January 1, 2018
January 1, 2019
Disclosure initiative (amendments to IAS 1)
Disclosure initiative (amendments to IAS 7)
Recognition of deferred tax assets for unrealized losses
(amendments to IAS 12)
Clarification of Acceptable Methods of Depreciation and
Amortization (amendments to IAS 16 and 38)
Agriculture: bearer plants (amendments to IAS 16 and IAS 41)
Services related contributions from employees or third parties
Equity Method in Separate Financial Statements (amendments to
IAS 27)
Recoverable amount disclosures for non-financial assets
Novation of derivatives and continuation of hedge accounting
The Annual Improvements: 2010-2012 and 2011-2013 Cycles
January 1, 2016
January 1, 2017
The Annual Improvements to IFRS: 2012-2014 Cycles
IFRIC 21, ‘Levies’
January 1, 2016
January 1, 2014
January 1, 2017
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
July 1, 2014
As the standards and amendments above have not been endorsed by the FSC, the Group is in the
process of assessing the impact on the financial position and results of operations. Related impact
will be disclosed following the completion of its assessments.
188
(4)
Significant Accounting Policies
The consolidated financial statements are the English translation of the Chinese version prepared and
used in the Republic of China. If there is any conflict between, or any difference in the interpretation of,
the English and the Chinese language, the Chinese version shall prevail.
The significant accounting policies presented in the consolidated financial statements are summarized as
follows:
The significant accounting policies have been applied consistently to all periods presented in these
consolidated financial statements, except when otherwise indicated.
(a) Statement of compliance
These consolidated annual financial statements have been prepared in accordance with the
Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter
referred to the Regulations) and International Financial Reporting Standards, International
Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by FSC (hereinafter
referred to as the IFRSs endorsed by FSC).
(b) Basis of preparation
1.Basis of measurement
The consolidated financial statements have been prepared on historical cost basis except for the
following material items in the statement of financial position:
1) Financial instruments measured at fair value through profit or loss are measured at fair value;
2) Available-for-sale financial assets are measured at fair value;
3) Liabilities for cash-settled share-based payment arrangements are measured at fair value;and
4) The net defined benefit liability (or asset) is recognized as the fair value of plan assets, net of
aggregation of the present value of the defined benefit obligation, with a limit based on a
defined benefit asset as disclosed in Note 4(s).
2.Functional and presentation currency
The functional currency of each entity of the Group is determined based on the primary
economic environment in which the entity operates. The Group 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
1.Principle 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.
189
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. Income (losses) applicable to 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.
2.List of subsidiaries in the consolidated financial statements
Principal
Investor
The Company
Name of Subsidiary
activity
Shareholding Ratio
2015.12.31
2014.12.31
Inventec Corporation (Hong Kong) Ltd.
Investing in Mainland
China and import and
export business
100.00%
100.00%
〞
Inventec Holding (North America) Corp.
Investment of holding
company in America
100.00%
100.00%
〞
Holding Company
100.00%
100.00%
〞
IEC (Cayman) Corporation
Holding Company
100.00%
100.00%
〞
Computer products
assembly operations
100.00%
100.00%
〞
Inventec Development Japan Corporation
Developing,
designing
and selling
computer peripherals
100.00%
100.00%
〞
Inventec Investments Co., Ltd.
Investment company
100.00%
100.00%
The Company、
Inventec Investments
Co., Ltd.、 Inventec
Appliances Corp. and
Inventec Energy
Corporation
Developing,
production and selling
of multi-crystalline
solar cells
49.23%
49.23%
The Company and
E-TON Solar Tech. Co., Ltd
Inventec Investments
Co., Ltd.
Manufacturing and
selling of solar cells
34.65%
34.65%
The Company,
Corporation and
E-TON Solar Tech.
Co., Ltd
Manufacturing and
selling of
photovoltaic systems
integration
49.36%
49.36%
The Company
Wireless terminal
products
100.00%
100.00%
The Company and
Inventec Manufacturing (India) Private
Inventec Investments Limited
Co., Ltd.
Computer product
assembles and
warranty services
100.00%
Inventec Corporation Inventec (Tianjin) Electronics Co., Ltd.
(Hong Kong) Ltd.
Electronic product
software and
hardware
development
manufacturing
100.00%
100.00%
100.00%
100.00%
〞
〞
Inventec (Beijing) Electronics Technology
Co., Ltd.
190
-
%
Note
Principal
Investor
Inventec (Cayman)
Corp.
Name of Subsidiary
activity
Electronic
product
software and
hardware
development
manufacturing
Shareholding Ratio
2015.12.31
2014.12.31
100.00%
100.00%
Note
〞
〞
100.00%
100.00%
〞
Inventec (Pudong) Technology Corp.
〞
100.00%
100.00%
〞
Inventec (Shanghai) Service Co., Ltd.
〞
100.00%
100.00%
〞
〞
100.00%
100.00%
〞
Inventec Huan Hsin (Zhejiang) Technology
Co., Ltd.
Complete of the
electronic computer
and product and sale
of external equipment
100.00%
100.00%
〞
Inventec (Chongqing) Corp.
computer products
100.00%
100.00%
〞
Inventec (Chongqing) Service Co., Ltd
〞
100.00%
100.00%
〞
Holding Company
90.00%
-
% The board of Directors decided to terminate the
joint venture agreement with TPV Technology
Limited. The Company obtained all of the numbers
of the board of directors of TPV-Inventa Holding
Ltd. and obtain the controlling power in 2015.
Inventec Asset-Management (Shanghai)
Corporation
Equipment leasing,
Storage, technological
development and sale
of computer
78.00%
-
%
100.00%
-
%
Inventec (Shanghai)
Corp.
Inventec (Chongqing) Chongqing Rongjie Cloud Service Co., Ltd.
Corp.
Software production
Chongqing Rongjie
Cloud Service Co.,
Ltd.
Chongqing TaiYu Cloud Service Co., Ltd.
〞
100.00%
-
%
Chongqing TaiYu
Cloud Service Co.,
Ltd.
Chongqing YuYa Cloud Service Co., Ltd.
〞
100.00%
-
%
100.00%
-
%
-
%
TPV-Inventa Holding TPV-Inventa Technology Co., Ltd.
Ltd.
〞
AIO PC
〞
TPV-Inventa Technology (Fujian) Ltd.
100.00%
IEC (Cayman)
Corporation
Inventec Technology (Chongqing) Corp.
Computer software
design and computer
system integration
service
100.00%
100.00%
Inventec Holding
(North America)
Corp.
Inventec Electronics (USA) Corporation
Computer product
assembles and
warranty services
100.00%
100.00%
〞
Inventec Manufacturing (North America)
Corporation
〞
100.00%
100.00%
〞
Inventec Configuration (North America)
Corporation
〞
100.00%
100.00%
〞
Inventec Distribution (North America)
Corporation
〞
100.00%
100.00%
〞
IEC Technologies, S. de R.L. de C.V.
〞
E-TON Solar Tech.
Co., Ltd
Gloria Solar International Holding, Inc.
Gloria Solar
Adema Technologies, Inc.
International Holding,
Inc.
〞
Gloria Solar Co., Ltd.
100.00%
100.00%
Investment company
50.76%
50.76%
Design and consulting
service of
photovoltaic systems
100.00%
100.00%
Manufacture and sale
of photovoltaic
modules
100.00%
100.00%
191
Principal
Investor
Name of Subsidiary
activity
Shareholding Ratio
2015.12.31
2014.12.31
Inventec Appliances
Corp.
Inventec Appliances (Cayman) Holding Corp. Holding Company
100.00%
100.00%
Inventec Appliances
(Cayman) Holding
Corp.
Inventec Appliances (USA) Distribution
Corp.
Marketing promotion
100.00%
100.00%
Corporation USA, Inc. Customer information
service
100.00%
100.00%
〞
Inventec Appliances
(Cayman) Holding
Corp.
Inventec Appliances
Inventec Electronics (Shanghai) Co.Ltd.
Telecommunication
research
100.00%
100.00%
〞
Inventec Appliances (Pudong) Corp.
Electronic
communication and
products
manufacturing
100.00%
100.00%
〞
Inventec Appliances (Nanjing) Corp.
100.00%
100.00%
〞
Inventec (Nanjing) Electronics Co. Ltd.
100.00%
100.00%
〞
Inventec Appliances (Nanjing) System Corp. Electronic
communication and
products
manufacturing
100.00%
100.00%
〞
Inventec Appliances (XI'AN) Corporation
100.00%
100.00%
〞
Inventec Appliances (Nanchang) Corporation
100.00%
100.00%
(Shanghai) Co.Ltd.
Inventec Appliances (Shang Hai) Co., Ltd.
〞
house leasing
Telecommunication
research and service
〞
Development and
consultation on
software and
hardware; as well as
selling of electronic
products
100.00%
-
Note
%
3.Subsidiaries excluded from the consolidated financial statements: None.
(d) Foreign Currency
1.Foreign currency transaction
Transactions in foreign currencies are translated to the respective functional currencies of
Group entities 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 amortized cost in the functional currency at the beginning of the period
adjusted for the effective interest and payments during the period, and the amortized cost in
foreign currency translated at the exchange rate at the end of the period.
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
those differences relating to available-for-sale equity investment which are recognized in other
comprehensive income.
192
2.Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments
arising on acquisition, are translated to the reporting currency at exchange rates at the reporting
date. The income and expenses of foreign operations are translated at average exchange rate.
Translation differences are recognized in other comprehensive income, and presented in the
foreign currency translation reserve 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 dispose 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 dispose of only part of investment in an associate or 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
form such items are considered to form parts 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-curent assets and liabilities
An asset is classified as current under one of the following criteria, and all other assets are classified
as non-current.
1.It expects to realize the asset or intends to sell or consume it, in its normal operating cycle;
2.It holds the asset primarily for the purpose of trading;
3.It expectes to realize the asset within twelve months after the reporting period; or
4.The asset is cash and its cash equivalent (as defined in IAS 7) unless the asset is restricted from
being exchanged or used to settle a liability for at least twelve months after the reporting period.
A liability is classified as current under one of the following criteria, and all other liabilities are
classified as non-current.
1.It expects to settle the liability in its normal operating cycle;
2.It
holds the liability primarily for the purpose of trading;
3.The liability is due to be settled within twelve months after the reporting period; or
4.It does not have any 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 affect its classification.
193
(f) Cash and cash equivalents
Cash comprise cash balances and call deposits. Cash equivalents with maturities of twelve months
or less from the acquisition date are subject to an insingnificant risk of changes in their fair value,
and are used by the Group in the management of its short-term commitments.
Time deposits which are held for the purpose of meeting short-term cash commitments, rather than
for investment or other purposes, are reported as cash equivalents.
(g) Financial instruments
Financial assets and financial liabilities are initially recognized when the Group become a party to
the contractual provisions of the instruments.
1.Financial assets
Financial assets are classified into the following categories: financial assets at fair value
through profit or lss, loans and receivables, and available-for-sale financial assets.
1) Financial assets are at fair value through profit or loss
A financial asset is classified in this category if they are 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 designate 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 takes into account
any dividend and interest income, are recognized in profit or loss, under non-operating income
and expense. 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 amortised cost, and are
included in financial assets measured at cost.
194
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, under non-operating income and
expense. 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 amortised cost, and are
included in financial assets measured at cost.
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 the ex-dividend date.
Such dividend income is included in other income of non-operating income and expenses.
Interest income from investment in bond security is recognized in profit or loss, under other
income of 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 amortised cost using the effective interest
method, less any impairment losses other than insignificant interest on short-term receivables.
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, under non-operating income and expense.
4) Impairment of financial assets
Except for financial assets at fair value through profit or loss, other financial assets are
assessed for impairment at each reporting date. A financial asset is impaired if, and only if,
there is 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 assets that can be estimated reliably.
195
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 use
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 accounts 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 impairment loss of financial assets 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 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.
If, in a subsequent period, the fair value of an impaired available-for-sale debt security
increases and the increase can be related objectively to an event occurring after the impairment
loss was recognized, then the impairment loss is reversed, with the amount of the reversal
recognized in profit or loss.
196
Provision for doubtful accounts is recorded as general and administrative expenses. The
impairment loss on financial assets other than accounts receivable is recorded as other gains
and losses under non-operating income and expenses.
5) Derecognition of financial assets
Financial assets are derecognized when the contractual rights of the cash inflow from the asset
are terminated, or when the Group transfer substantially all the risks and rewards of ownership
of financial assets.
On derecognition of a financial asset in its entity, 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 are recognized in profit or
loss, under non-operating income and expenses.
2.Financial liabilities and equity instruments
1) Financial liabilities at fair value through profit or loss
A financial liability is classified in this category if it is classified as held-for-trading or is
designated as such on initial recognition.
A financial liability is classified as held-for-trading if it is acquired principally for the purpose
of selling in the short term. The Group designates financial liabilities, other than the ones
classified as held-for-trading, as at fair value through profit or loss at initial recognition under
one of the following situations:
A.Such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise from measuring assets or liabilities or recognizing
the gains and losses on them on a different basis;
B.Performance of the financial liabilities is evaluated on a fair value basis;
C.A hybrid instrument contains one or more embedded derivatives.
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, under non-operating income and
expenses.
The Group provides and designates financial guarantee contracts and loan commitments as at
fair value through profit or loss. Any gains and losses are recognized in profit or loss, under
non-operating income and expenses.
197
2) Other financial liabilities
Financial liabilities not classified as held-for-trading, or designated as at fair value through
profit or loss, which comprise of loans and borrowings, and trade and other payables, 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. Interest expense not capitalized as capital cost is
recognized in profit or loss, under non-operating income and expenses.
3) Derecognition of financial liabilities
A financial liability is derecognized when its contractual obligation has been discharged or
cancelled, or expires. 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 under non-operating income and expenses.
4) Offsetting of financial assets and liabilities
The Group presents financial assets and liabilities on a net basis when the Group has the
legally enforceable rights 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.
3.Derivative financial instruments
The Group holds derivative financial instruments to hedge its foreign currency and interest rate
fluctuation exposures. Derivatives are recognized initially at fair value and attributable
transaction costs 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, under
“non-operating income and expenses”. When the fair value of derivative instrument is positive,
it is classified as a financial asset; otherwise, it is classified as a financial liability.
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 derivating that are classified as financial assets are measured at amortized cost,
and are included in financial assets measured at cost, and are included in financial liabilities
measured at cost.
Embedded derivatives are separated from the host contract and are 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.
(h) Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is
based on the weighted average method, and includes expenditure incurred in acquiring the
inventories, production or conversion 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.
198
(i) Investment in associates
Associates are those entities in which the Group has significant influence, but not control or jointly
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. The Group recognizes any changes, proportionately with
shareholding ratio under additional-paid-in capital, when an associate’s equity changes due to
reasons other than profit and loss or comprehensive income, which did not result in changes in
actual controlling power.
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.
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 the Group has an obligation or has
made payments on behalf of the investee.
The Group shall discontinue the use of 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 disposals, and the carrying
amount of the investment at the date the equity method that 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 investee
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
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.
199
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 will differ 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. The aforesaid adjustment should first be adjusted under additional
paid-in capital. If the additional paid-in capital resulting from changes in ownership interest is not
sufficient, the remaining difference is debited 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.
The Group ceases to have a significant influence over an associate and shall account for the
investment in accordance with IAS 9 and IAS 39 from that date, provided the associate does not
become a subsidiary or a joint venture as defined in IAS 31. On the loss of significant influence, the
investor shall measure at fair value any investment the investor retains in the former associate. The
investor shall recognize in profit or loss any difference between:
1.The fair value of any retained investment and any proceeds from disposing of the part interest in
the associate; and
2.The carrying amount of the investment at the date when significant influence is lost.
( j) Joint Arrangements
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement
(ie joint venturers) have rights to the net assets of the arrangement. A joint venturer 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 Venturers」. 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.
A joint arrangement is an arrangement of which two or more parties have joint control. The IFRS
classifies joint arrangements into two types-joint operations and joint ventures, and have the
following characteristics: (a)The participants are bound by a contractual arrangement; (b) The
contractual arrangement gives two or more of those parties joint control of the arrangement. IFRS
11 “Joint Arrangements” defines joint control as the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities (ie activities that
significantly affect the returns of the arrangement) require the unanimous consent of the parties
sharing control.
200
(k) Investment property
Investment property is a property held either to earn rental income or for capital appreciation or for
both, but not for sale in the ordinary course of business, use in the production or supply of goods or
services or for administrative purposes. Investment property is measured at cost on initial
recognition and subsequently at cost less accumulated depreciation and accumulated impairment
losses. Depreciation method, useful lives, and hesidual values shall be treated in accordance with
IAS 16.
Cost includes expenditure that is directly attributable to the acquisition of the investment property.
The cost of self-constructed investment property includes the cost of raw materials and direct labor,
and any other costs directly attributable to bringing the investment property to a working condition
for their intended use and capitalized borrowing costs.
Any gain or loss on disposal of an investment property (caculated as the difference between the net
proceeds from disposal and its carrying amount) is recognized in profit or loss. When an investment
property that was previously classified as property, plant and equipment is sold, any related amount
included in the revaluation reserve is transferred to retained earnings.
When the use of an investment property changes such that it is reclassified as property, plant and
equipment, its book value at the date of reclassification becomes its cost for subsequent accounting.
The estimated useful lives for the current and comparative years of significant items of property,
plant and equipment are as follows:
Buildings
10 ~ 25years
(l) Property, plant, and equipment
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.
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 in profit or loss, under other gains and losses.
Subsequent expenditure is capitalized only when it is probable that 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 is expensed as incurred.
201
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.
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:
Buildings
10 ~ 50years
Machinery
2 ~ 11years
Transportation equipment
3 ~ 6years
Furniture and office facilities
2 ~ 18years
Power equipment
2 ~ 16years
Renovation and leasehold improvements 2 ~ 20years
Miscellaneous equipment
2 ~ 25years
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.
(m) Leases
1.Lessor
Lease income from an operating lease is recognized in profit or loss 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.
Contingent rents are recognized as income in the period when the lease adjustments are
confirmed.
2.Lessee
Other leases are operating leases and are not recognized in the Group’s statement of financial
position.
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.
202
(n) Intangible assets
1.Goodwill
1) Recognition
Goodwill arising from the acquisition of subsidiaries is recognized as intangible assets. For the
measurement of initial recognition of goodwill, please refer to Note 4(v).
2) Measurement
Goodwill is measured at its cost less impairment losses. Investments in associates are
accounted for using the equity method. The carrying amount of the investment in associates
includes goodwill, in which the kind of investment of impairment losses are recognized as a
part of the carrying amount of the investment, not associated to goodwill and any other assets.
2.Research and 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) The technical feasibility of completing the intangible asset so that it will be available for use or
sale.
2) Its intention to complete the intangible asset and use or sell it.
3) Its ability to use or sell the intangible asset.
4) How the intangible asset will generate probable future economic benefits.
5) The availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset.
6) Its ability to measure reliably the expenditure attributable to the intangible asset during its
development.
Capitalized development expenditure is measured at cost less accumulated amortisation and any
accumulated impairment losses.
Other intangible assets that are acquired by the Group are measured at cost less accumulated
amortisation and any accumulated impairment losses.
Subsequent expenditure is capitalized only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditures, including expenditure
on internally generated goodwill and brands, are recognized in profit or loss as incurred.
Depreciable amount of intangible asset is calculated based on the cost of an asset less its residual
values.
203
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:
Patents
1 ~ 5years
Trademark rights
1 ~ 10years
Computer software cost
1 ~ 6years
The residual value, amortization period, and 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.
(o) Impairment-Non-derivative-financial assets
The Group assesses the following assets for impairment and estimates the recoverable amounts for
any impaired assets at the end of each reporting period:
‧Inventories
‧Deferred tax assets
‧Assets arising from employee benefit
If it is not possible to determine the recoverable amount (fair value less cost to sell and value in use)
for an individual asset, then the Group will have to determine the recoverable amount for the asset's
cash-generating unit (CGU).
Notwithstanding whether indicators exist, recoverability of goodwill and intangible assets with
indefinite useful lives or those not yet in use are required to be tested at least annually. Impairment
loss is recognized if the recoverable amount is less than the carrying amount.
The recoverable amount for an individual asset or a cash-generating unit is the higher of its fair
value less costs to sell or 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 acquiree are assigned to those units or group
of units.
If the carring amount of the cash-generating units exceeds the recoverable amount of the unit, the
enity 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.
204
The Group assess 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. If any such indication exists, the entity shall estimate the recoverable amount
of that asset.
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, as a reversal of a previously recognized
impairment loss.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortization, if no impairment loss had
been recognized.
(p) 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.
1.Warranties
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.
2.Onerous contracts
A provision for onerous contracts is recognized when the expected benefits to be derived by the
Group from a contract are lower than the unavoidable cost of meeting its obligations under the
contract. The provision is measured at the present value of the lower of the expected cost of
terminating the contract and the expected net cost of continuing with the contract. Before a
provision is established, the Group recognizes any impairment loss on the assets associated with
that contract.
(q) Treasury stock
Repurchased shares are recognized under treasury shares (a contra-equity account) based on their
repurchase price (including all directly accountable costs), 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 of different types of repurchase.
205
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.
(r) Revenue recognition policies for the various businesses activities
1.Goods sold
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.
2.Service
Revenue from services rendered including consulting and management is recognized in profit or
loss in proportion to the stage of completion of the transaction at the reporting date. The stage of
completion is assessed by reference to surveys of work performed.
3.Commissions
When the Group acts in the capacity of an agent rather than as the principal in a transaction, the
revenue recognized is the net amount of commission made by the Group.
4.Transfer of goods and or services
When goods or services are exchanged or swapped for goods or services which are of a similar
nature and value, the exchange is not regarded as a transaction which generates revenue. This is
often the case with commodities like oil or milk where suppliers exchange or swap inventories in
various locations to fulfill demand on a timely basis in a particular location. When goods are sold
or services are rendered in exchange for dissimilar goods or services, the exchange is regarded as
a transaction which generates revenue. The revenue is measured at the fair value of the goods or
services received, adjusted by the amount of any cash or cash equivalents transferred. When the
fair value of the goods or services received cannot be measured reliably, the revenue is measured
at the fair value of the goods or services given up, adjusted by the amount of any cash or cash
equivalents transferred.
206
(s) Employee benefits
1.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.
2.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. Any fair value of any plan assets are 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 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 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.
When the benefits of a plan are improved, the portion of the increased benefit relating to past
service by employees is recognized immediately in profit or loss.
Remeasurements of the net defined benefit liability (asset), which comprise (1) actuarial gains
and losses, (2) the return on plan assets (excluding interest) and (3) the effect of the asset ceiling
(if any, excluding interest), are recognized immediately in other comprehensive income. The
Group reclassified the amounts recognized in other comprehensive income 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 any change in the present value of the
defined benefit obligation.
3.Terminated benefits
Termination benefits are recognized as an expense when the Group is committed demonstrably,
without realistic possibility of withdrawal, to a formal detailed plan to either terminate
employment before the normal retirement date, or to provide termination benefits as a result of
an offer made to encourage voluntary redundancy. The Group is required to recognize the
termination benefits at the earlier of when the Group can no longer withdraw the offer of those
benefits and when it recognizes any related restructuring costs. If benefits are payable more than
12 months after the reporting period, then they are discounted to their present value.
207
4.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 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.
(t) Share-based payment
The grant-date fair value of share-based payment awards granted to employee is recognized as
employee salary 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 whose 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 awards 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.
The Company shall reserve a certain portion of the shares of its capital increase, which is issued on
the grant-date, to its employees. The subscription price and the number of shares should be
confirmed at the grant-date.
(u) Income taxes
Income tax expenses include both current taxes and deferred taxes. Except for expenses related to
business combinations or these recognised 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,
they also include 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 recognised
except for the following:
1.Assets and liabilities that are initially recognised but are not related to the business combination
and have no effect on net income or taxable gains (losses) during the transaction.
2.Temporary differences arising from equity investments in subsidiaries or joint ventures where
there is a high probability that such temporary differences will not reverse.
3.Initial recognition of goodwill.
208
Deferred tax assets and liabilities shall be measured at the tax rates that are expected to be applied
to the period when the asset is realised or the liability is settled based on the 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:
1.The entity has the legal right to settle tax assets and liabilities on a net basis; and
2.the taxing of deferred tax assets and liabilities fulfill one of the below scenarios:
1) levied by the same taxing authority; or
2) 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 recognised 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
adjusted based on the probability that the future taxable profit will be available against which the
unused tax losses, unused tax credits, and deductible temporary differences can be utilized.
(v) Business combination
For those business acquisitions occurring goodwill is measured as the aggregation of the
consideration transferred (which generally is measured at fair value at the acquisition date) and the
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.
The Group shall measure any non-controlling equity interest in the acquiree either at fair value or at
the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets, if the
shareholder of non-controning equity interest has the right to claim ownership of the acquiree's net
assets when the acquiree is liquidated.
Other non-controlling interest is evaluated by its fair valne or by other basis permitted by IFRSs
endorsed by F.S.C..
209
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 the 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.
(w) Earnings per share
The Group disclose the Company’s 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 shareholders of the Company divided by the 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 the weighted-average number of
ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares,
such as employee bonus and employee compensation.
(x) Operating segments
An operating segment is a component of the Group that engages in business activities from which it
may earn 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 Judgments, Estimation, Assumptions, and Sources of Estimation
Uncertainty
The preparation of the consolidated anuual financial statements in conformity with IFRSs endorsed by
the FSC requires management to make judgements, estimations 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 continuously reviews the estimates and basic assumptions. Changes in accounting
estimates are recognized in the period of change.
210
The group does not have any accounting policies which involve significant judgment which have
significant influence to the consolidated annual financial statements.
Information on assumptions and estimation uncertainties that do not have a significant risk of resulting in
a material adjustment within the next year.
(6)
Explanation to Significant Accounts
(a) Cash and cash equivalents
Cash
$
Demand deposits and checking accounts
Time deposits
Cash and cash equivalents in consolidated
statement
of cash flows
$
2015.12.31
9,397
2014.12.31
7,054
18,126,234
18,988,000
12,711,623
25,013,064
37,123,631
37,731,741
Refer to Note 6(w) for the sensitivity analysis and interest rate risk of the financial assets and
liabilities of the Group.
(b) Financial assets and liabilities at fair value through profit or loss、available-for-sale financial
assets and financial assets carried at cost
1.Details of financial assets are as follows：
2015.12.31
2014.12.31
Financial assets：
Financial assets at fair value through profit or loss
Held for trading
$
Available-for-sale financial assets
Financial assets carried at cost
221,615
440,972
3,622,176
8,859,062
502,173
533,751
Total
$
4,345,964
9,833,785
Current
$
3,512,299
8,842,533
833,665
991,252
4,345,964
9,833,785
Non-current
Total
$
Financial liabilities：
Financial liabilities at fair value through profit or loss
Held for trading
Current
$
88,985
41,666
$
88,985
41,666
Non-current
-
Total
$
211
88,985
41,666
All of the abovementioned investments in common stock and preferred stock which do not have
quoted market prices in an active market and whose fair value cannot be reliably measured were
reflected as non-current financial assets carried at cost on initial recognition and subsequently at
cost less accumulated impairment losses. There were objective evidences indicating that some
financial assets were impaired, and the Group recognized impairment loss for the asset whose
carrying value is higher than the recoverable amount. The Group recognized an impairment loss
of $109,590 in 2014.
As of December 31, 2015 and 2014, the aforesaid financial assets were not pledged as collateral.
2.Sensitivity analysis：
If the equity price changes, the sensitivity analysis shall be based on the same variables except
for the price index for both year, the impact to other comprehensive income will be as follows:
Equity price at
reporting day
Increase3%
For the years ended December 31,
2015
2014
After-tax other
After-tax other
comprehensive
After-tax
comprehensive
After-tax
income
profit (loss)
income
profit (loss)
$
22,570
1,436
26,601
4,267
Decrease3%
$
(22,570)
(1,436)
(26,601)
(4,267)
3.Foreign equity investments
Significant foreign equity investments at the end of the each period were as follows:
2015.12.31
Exchange
Rate
Foreign
Currency
CNY
$
537,774 CNY／TWD＝5.05
2014.12.31
Exchange
Rate
Foreign
Currency
CNY
$
1,542,043 CNY／TWD＝5.17
212
TWD
2,715,761
TWD
7,972,361
4.Derivative financail instruments not used for hedging:
The Group uses derivative financial instruments to hedge certain foreign exchange and interest
risk arising from its operating, financing and investing activities. The following are the
transactions that do not qualify for hedge accounting which are presented as held-for-trading
financial assets and liabilities as of December 31, 2015 and 2014:
1) Financial assets:
Forward
Contract Amount
USD
81,531
2015.12.31
Currency
USD:CNY
Contract Period
2016.04.11-2016.04.22
Foreign exchange Swap USD
217,000
USD:TWD
2016.01.13-2016.03.31
4,452
USD:JPY
2016.03.14
2014.12.31
Currency
USD:CNY
Contract Period
2015.07.01-2015.12.14
USD:TWD
2015.01.14-2015.03.23
Forward
Contract Amount
USD
669,023
112,000
2) Financial liabilities:
2015.12.31
Forward
Contract Amount
USD
80,914
Currency
USD:CNY
Contract Period
2016.01.11-2016.03.14
2014.12.31
Forward
Contract Amount
USD
159,293
Currency
USD:CNY
Contract Period
2015.01.23-2015.12.14
Forward
JPY
18,000
JPY:TWD
2015.01.19-2015.02.03
12,000
USD:TWD
2015.03.26
5,047
USD:JPY
2015.01.14
(c) Accounts receivable and other receivables
2015.12.31
20,254
2014.12.31
8,967,761
60,791,480
59,462,677
522
29,900
Other receivables due from non-related parties
1,003,864
1,009,745
Less: Allowance for impairment
(148,721)
(162,377)
(299,194)
(19,195)
61,368,205
69,288,511
Accounts receivable due from related parties
$
Accounts receivable due from non-related parties
Other receivables due from related parties
Allowance for sales returns and discounts
$
213
2015.12.31
2014.12.31
Total amount Impairment
Total amount
Impairment
$
57,223,377
41,996
63,484,455
12,754
Not past due
Past due up to 180 days
4,435,743
8,164
5,770,684
6,016
Past due over 180 days
157,000
98,561
214,944
143,607
61,816,120
148,721
69,470,083
162,377
$
As of March 10, 2016, the amount that received by the Group is $58,448,688.
The movement in the allowance for impairment with respect to accounts receivable and other
receivables during the period were as follow:
Individually
Collectively
assessed
assessed
impairment
impairment
$
12,020
150,357
Balance on January 1, 2015
Impairment loss
Written off unrecoverable amount
Foreign exchange gain (loss) and other
Total
162,377
2,824
(21,989)
47,845
22,355
(24,625)
(40,066)
25,179
(46,614)
7,779
Balance on December 31, 2015
$
40,700
108,021
148,721
Balance on January 1, 2014
(Reversal of) impairment loss
$
618,125
20,604
154,785
(4,748)
772,910
15,856
Written off unrecoverable amount
Foreign exchange gain (loss)
(589,250)
(37,459)
Balance on December 31, 2014
$
12,020
320
(589,250)
(37,139)
150,357
162,377
The allowance for impairment account is used to record bad debt expenses. If the Group believes
that it may not be able to collect the receivables. The accumulated impairment was used to offset
the receivables when it is certain they are unrecoverable, after related legal actions were taken by
the Group.
As of December 31, 2015 and 2014, none of the receivables above are pledged as collateral for
loans and borrowings.
As of December 31, 2015 and 2014, the Group sold its accounts receivable without recourse as
follows:
(Unit: Foreign currency/TWD in Thousands)
2015.12.31
Purchaser
Non-related
parties
Assignment
Advanced
Facility
Factoring Line
Amount
$
2,235,586 USD
80,000 USD
40,940
214
Range of
Interest Rate
0.97%~1.28%
Collateral
None
Significant Transferring
Terms
The accounts receivable
factoring is without
recourse but the seller
still bears the risks except
for eligible obligor’s
insolvency.
Derecognition
Amount
(Note 1)
1,343,636
Purchaser
Non-related
parties
Assignment
Facility
Factoring Line
Note
$
1,574,184
2014.12.31
Advanced
Range of
Amount
Interest Rate
0.6985%
USD
49,753
Collateral
None
Significant Transferring
Terms
The accounts receivable
factoring is without
recourse but the seller
still bears the risks except
for eligible obligor’s
insolvency.
Derecognition
Amount
1,574,184
Note1: The Group entered into an accounts receivable factoring agreement with a financial
institution. According to the agreement, the Group can only collect the amounts transferred
which are not yet drawn in advance, after the collection of transferee from the third party.
Therefore, the Group continues to recognized the full carrying value of its accounts
receivable. As of December 31, 2015, accounts receivable which were not derecognized
amounted to $891,950.
Note2: The Company and its client signed a factoring agreement with purchaser. The purchaser has
the right to make factoring transactions with the company based on the amount allocated by
the client under factoring agreement.
(d) Inventories
Raw materials and consumables
$
Work in process
Finished goods
Materials and supplies in transit
$
2015.12.31
17,011,371
2014.12.31
19,133,857
6,563,538
5,302,552
6,861,460
5,385,817
82,443
391,717
28,959,904
31,772,851
For the years ended December 31, 2015 and 2014, the reversal of write-down of inventories
amounted to $20,280 and $183,713, respectively; expenses of idle capacity amounted to $277,474
and $262,986, respectively.
As of December 31, 2015 and 2014, the aforesaid inventories were not pledged as collateral.
(e) Investments accounted for under the equity method
The investment under equity method is as follows:
Associate
Joint venture
215
$
2015.12.31
532,888
-
2014.12.31
613,137
(556,600)
$
532,888
56,537
1.Associate
The Group’s financial information for investments in individually insignificant associates
accounted for using equity method at the reporting date was as follows. These financial
information are included in the consolidated financial statements.
Individually insignificant associates
$
2015.12.31
532,888
2014.12.31
613,137
2015
2014
The Group’s share of profit (loss) of the
associates
Losses for the year
Other comprehensive income
$
(87,548)
12,170
(96,765)
2,504
$
(75,378)
(94,261)
2.Joint venture
The Group’s financial information for investments in individually insignificant joint venture
accounted for using equity method at the reporting date was as follows. These financial
information are included in the consolidated financial statements.
Individually insignificant joint venture
$
2015.12.31
-
2014.12.31
(556,600)
2015
2014
The Group’s share of profit (loss) of the joint
venture
Losses for the year
$
$
(10,057)
40,315
(24,079)
(31,969)
(34,136)
8,346
The Group jointly invested in TPV-Inventa Holding Ltd., and owns 49% of TPV-Inventa
Holding Ltd.’s shares. On September 8, 2015, the board of Directors decided to terminate the
joint venture agreement with TPV Technology Limited. The Company obtained all of the
numbers of the board of directors of TPV-Inventa Holding Ltd. and obtain the controlling power.
The Group used the equity method to account for jointly controlled entity, of which the total
equity was negative; therefore, the Group recognized the credit balance of investments as other
non-current liabilities. Please refer to Note 13(a) for information of guarantee and endorsement.
As of December 31, 2015 and 2014, the Group’s investments under equity method has not been
pledged as collaterals or restricted in any way.
216
(f) Business combination
In September, 2015, the board of Directors decided to terminate the joint venture agreement with
TPV Technology Limited. The Company obtained all of the numbers of the board of directors of
TPV-Iventa Holding Ltd. and gain control over it. The Group adjusted its structure through this
acquisition and included the acquired subsidiary in its consolidated financial statements.
1.The fair value of identifiable assets acquired and liabilities assumed at the date of acquistion were
as follow:
Cash
$
Accounts receivable and other receivables
1,335,051
62,516
5,549,532
Inventories
Other current assets
387,278
161,509
91,297
Intangible assets
Other non-current assets
5,783
78,457
Long-term and short term borrowings
Notes payable and accounts payable
Other payables
(1,236,750)
(4,873,475)
(1,661,560)
Other current liabilities
(348,544)
$
(448,906)
At acquisition date, the gross amount of accounts receivable was $5,559,101, with the amount of
$9,569 expected to be unrecoverable.
2.Differences between equity price and carrying amount of the acquiree
Transfer price
$
Non-controlling interest (calculated proportionately based on the
acquiree's identifiable net assets)
Less: Fair value of identifiable net assets
(228,942)
(448,906)
$
217
(219,964)
-
(g) Changes in a parent's ownership interest in a subsidiary
1.Acquisition extra shares of subsidiaries without changes in controlling power
On September, 2015, in pursuant to the resolutions of the Board of Directors, the Group acquired
270,137 thousand shares of TPV-Inventa Holding Ltd. and paid the amount of USD12,967
thousand, which resulted in an increase in the equity interest of TPV-Inventa Holding Ltd. from
49% to 90%.
The aforesaid transaction did not affect the controlling power of the Group over TPV-Inventa
Holding Ltd. Therefore, the transaction was accounted for as equity transaction, which resulted
in a capital surplus in debit of 288,198 thousands.
2.Re-organization of Group structure
The Company adjusted its Group structure by transfering its 47.68% shares of ownership in
Inventec Energy Corporation to Inventec Solar Energy Corporation, with a transfer price
amounting to $483,634 thousands.
The effect of change in ownership attributable to the owners of the parent was as follows:
2015
Carrying amount of subsidiary of disposal
$
478,985
Transfer price (net of securities transaction tax)
(482,184)
Capital surplus-difference between consideration and carrying
$
(3,199)
amount of subsidiaries disposed
(h) Property, plant and equipment
The cost, depreciation, and impairment of the property, plant and equipment of the Group for the
years ended December 31, 2015 and 2014 were as follows:
Building and
construction
Land
Machinery
and
equipment
Transportation
equipment
Office
equipment
Other
facilities
Leasehold
improvements
Others
Total
Cost or deemed cost:
$
3,737,914
20,572,908
29,989,482
120,196
6,570,562
10,411,437
1,382,009
2,039,981
1,978
51,934
776,740
12,098
440,069
420,459
60,054
2,344,983
(160,724)
(703,627)
(10,609)
(386,302)
(170,062)
(39,581)
Additions
4,108,315
Disposals
-
Other
-
820,682
1,466,903
1,200
95,116
1,082,580
31,499
(2,926,914)
571,066
Effect of movements in
exchange rate
-
(374,511)
(384,136)
(1,668)
(97,349)
(167,867)
(868)
(20,810)
(1,047,209)
Balance at December 31, 2015 $
3,739,892
20,910,289
31,145,362
121,217
6,622,096
11,576,547
1,433,113
1,437,240
76,985,756
3,737,914
68,938,075
$
-
74,824,489
(1,470,905)
19,672,134
26,063,989
118,580
6,348,973
10,999,716
1,354,970
641,799
Additions
-
14,334
2,440,872
21,775
395,303
42,272
106,958
1,730,321
4,751,835
Disposals
-
(5,664)
(1,476,190)
(24,552)
(611,072)
(40,286)
(81,973)
(6,056)
(2,245,793)
Other
-
10,149
2,056,702
353
201,772
(1,064,967)
(364,035)
839,974
exchange rate
-
881,955
904,109
4,040
235,586
474,702
2,054
37,952
2,540,398
3,737,914
20,572,908
29,989,482
120,196
6,570,562
10,411,437
1,382,009
2,039,981
74,824,489
218
-
Land
Building and
construction
Machinery
and
equipment
Transportation
equipment
Office
equipment
Other
facilities
Leasehold
improvements
Others
Total
Depreciation and impairment
losses:
-
4,621,884
21,621,821
76,563
5,215,824
7,618,338
597,023
-
39,751,453
Depreciation for the period
$
-
501,146
2,302,871
12,511
449,908
549,121
132,601
-
3,948,158
Reversal of impairment loss
-
(11,357)
5,983
57,270
-
140,379
Disposals
-
(354,219)
(159,522)
(39,222)
-
(1,371,386)
Other
-
exchange rate
-
88,483
-
(44,537)
(764,008)
(13,816)
1,068
47,655
356,915
7,964
-
399,786
-
(84,168)
(272,780)
(1,033)
(70,300)
(114,233)
(450)
-
(542,964)
-
4,994,325
22,962,571
79,231
5,277,511
8,256,602
755,186
-
42,325,426
$
-
(9,878)
-
2,945,241
18,711,875
85,553
4,909,147
7,696,055
557,894
-
34,905,765
-
505,798
2,131,114
11,639
458,545
558,412
119,726
-
3,785,234
Impairment loss
-
988,314
107,596
12
246,097
Disposals
-
(4,144)
(1,312,105)
(476,143)
(38,890)
Other
-
153,795
(1,184,897)
-
323,019
exchange rate
-
186,675
629,220
2,619
170,468
341,561
1,181
-
1,331,724
-
4,621,884
21,621,821
76,563
5,215,824
7,618,338
597,023
-
39,751,453
-
(23,248)
1,354,121
-
(81,778)
-
-
1,342,019
-
(1,936,308)
Carrying amounts:
3,739,892
15,915,964
8,182,791
41,986
1,344,585
3,319,945
677,927
1,437,240
34,660,330
$
3,737,914
16,726,893
7,352,114
33,027
1,439,826
3,303,661
797,076
641,799
34,032,310
3,737,914
15,951,024
8,367,661
43,633
1,354,738
2,793,099
784,986
2,039,981
35,073,036
The Group performed an impairment test and adopted the value in use as its recoverable amount,
and recognized the impairment losses based on the differences between the book values and the
recoverable amounts of the property, plant and equipment. For the years ended December 31, 2015
and 2014, the impairment losses were $140,379 and $1,342,019, respectively.
As of December 31, 2015 and 2014, the details of property are subject to a registered debenture to
secure bank loans (see Note 8).
(i) Investment property
Building and
construction
Land
Total
Cost or deemed cost:
$
Disposals for the period
Effect of movements in exchange rate
$
$
1,057,916
1,067,408
(67,866)
(77,712)
354
2,440
2,794
992,490
992,490
8,955
1,054,215
1,063,170
537
3,701
4,238
9,492
1,057,916
1,067,408
-
9,492
(9,846)
$
219
Building and
construction
Land
Total
Depreciation and impairment losses:
$
-
477,328
477,328
-
28,088
28,088
Disposals for the period
-
(63,272)
(63,272)
-
2,275
2,275
$
-
444,419
444,419
$
-
445,145
445,145
-
28,756
28,756
-
3,427
3,427
$
-
477,328
477,328
$
-
548,071
548,071
$
8,955
609,070
618,025
$
9,492
580,588
590,080
Carrying amounts:
Fair value:
$
579,882
$
664,451
$
643,869
Based on the purposes of earning rental income or for capital appreciaiton income or both, the
Group reclassified land and buildings to investment property.
The fair value of investment property as disclosed in the financial statements is based on the
valuation of the independent valuator. The inputs of levels of fair value hierarchy in determing the
fair value is classified to Level 3. It is measure at cost, and value of an objects is estimated by the
cost of re-acquisition or reconstruction deducting the accumulated depreciaion and other
deductibles, with a consideration of current situation, economy, and function of the object.
The Group assessed the recoverable amount for investment property and recognized the
accumulative impairment loss of $305,169 and $346,196 as of December 31, 2015 and 2014,
respectively.
Please refer to Note 8 for the information of the Group’s investment property pledging for bank
mortgage as of December 31, 2015 and 2014.
220
(j) Intangible assets
The costs of intangible assets, amortization, and impairment loss of the Group for the years ended
December 31, 2015 and 2014 were as follows:
Goodwill
Patent and
trademark Software
right
cost
Total
Cost:
Additions
Other
$ 1,083,429
-
Disposals
-
124,621
92
-
860,531
239,897
33,295
2,068,581
239,989
33,295
(286,338)
1,086
(286,338)
1,086
$ 1,083,429
124,713
848,471
2,056,613
$ 1,167,745
124,621
711,200
2,003,566
-
378,368
378,368
-
4,141
(233,431)
253
(80,175)
(233,431)
253
Additions
-
Other
Disposals
Amortization and impairment losses:
(84,316)
$ 1,083,429
124,621
860,531
2,068,581
$
124,518
767,662
1,167,189
60
274,266
27,646
275,009
Amortization for the period
Other
-
-
274,206
27,646
Disposals
$
-
-
(286,330)
937
(286,330)
937
275,009
124,578
784,121
1,183,708
Amortization for the period
Other
359,325
(84,316)
124,488
30
-
632,494
368,391
-
1,116,307
368,421
(84,316)
(233,431)
208
(233,431)
208
$
Disposals
$
275,009
221
124,518
767,662
1,167,189
Patent and
trademark Software
right
cost
Goodwill
Total
Carrying amounts:
$
808,420
135
64,350
872,905
$
808,420
133
78,706
887,259
$
808,420
103
92,869
901,392
The amortization of intangible assets and impairment losses are respectively included in the
statement of comprehensive income:
2015
2014
$
153,916
217,975
120,350
150,446
Operating costs
Operating expenses
Total
$
274,266
368,421
As of December 31, 2015 and 2014, the aforesaid Intangible assets were not pledged as collateral.
(k) Other current assets-others and other non-current assets
The other current assets-others and other non-current assets of the Group were as follows:
2015.12.31
217,998
2014.12.31
215,228
Prepayments to suppliers
Long-term prepaid rents
1,406,945
1,418,422
2,364,980
2,268,767
Prepayments for building
Others
606,000
3,685,210
5,048,221
7,334,575
9,897,196
Refundable deposits
$
$
As of December 31, 2015 and 2014, the details of
collateral, please refer to Note 8.
other non-current assets-others were pledged as
The Group entered into land and building purchase agreement. According to the agreement, the
total amount of $6,060,000 should be paid with a prepayment amount of $606,000. The related
legal transferring process was completed in February 2016.
222
(l) Long-term and short-term borrowings
The significant terms and conditions of long-term and short-term borrowings were as follows:
Secured bank loans
Interest Rate
1.64%-2.50%
Unsecured bank loans
0.74%-3.19%
2015.12.31
Currency
Period
TWD
2016-2017
$
Amount
596,570
TWD
2016
1,379,942
USD
2016-2018
17,327,573
Total
$
19,304,085
Current
$
8,010,825
Non-current
11,293,260
Total
$
19,304,085
Unused credit line
$
88,795,529
$
Amount
1,034,312
Secured bank loans
Interest Rate
1.66%-2.51%
0.85%-6.00%
2014.12.31
Currency
Period
TWD
2015-2018
USD
2015
1,265,600
TWD
2015
1,010,653
USD
2015-2017
27,530,695
CNY
2015
1,256,499
Total
$
32,097,759
Current
$
31,092,267
Non-current
1,005,492
Total
$
32,097,759
Unused credit line
$
71,687,165
1.Collateral of bank loans
Please refer to Note 8 for details of the related assets pledged as collateral. In order to assist the
Company to access credit line from banks, some shareholders and board of directors pledged
their assets as collaterals, please refer to Note 7 for details.
2.Contract of bank loans
According to the Company’s credit loan facility agreements with the banks, during the loan
repayment periods, the Company must comply with certain financial covenants based on its
audited annual consolidated financial statements and non-consolidated financial statements
(December 31) and reviewed semi-annual consolidated financial statement (June 30). The
Company is in compliance with these financial covenants.
223
According to the credit loan facility agreement with the banks, Inventec Solar Energy
Corporation must comply with certain financial covenants based on its audited annual financial
statements. If the covenants are breached, the credit line and relevant conditions must be
reviewed.
Inventec Solar Energy Corporation was not violate with the above financial covenants.
According to the credit loan facility agreement with the banks of Inventec Appliances
Corporantion's subsidiaries, the subsidiaries of Inventec Appliances Corporation must comply
with certain financial covenants based on its audited annual financial statements. If the covenants
are breached, the interest rates of the loans will increase by 15%.
Inventec Appliances Corporation was not violate with the above financial covenants.
Base on the above financial covenants, Inventec Appliances Corporation's subsidiaries must
comply with certain financial covenants based on its audited annual financial statments. If the
following covenants are breached, the interest rates of the loans will increase by 15%.
Inventec Appliances Corporation's subsidiaries was not violate with the above financial
conenants.
(m) Operating Leases
1.Leases entered into as lessee
Non-cancellable operating lease payable were as follows:
Within 1 year
$
Period after 1 to 5 years
Period after 5 years
$
2015.12.31
193,065
2014.12.31
102,276
465,234
169,467
383,800
201,394
827,766
687,470
The Group lease a number of office, warehouse, factory facilities and staff dormitories under
operating leases. The leases typically run for a period of 1 to 20 years, with an option to renew
the lease after that date. The Group lease the land which is located on Ke Gong Section, Annan
Dist., Tainan City, the first two years of the leasing period is rent free; in the third and forth year
the rent accounts for 60% of the agreed rent in the contract; the fifth and sixth year the rent
accounts for 80% of the agreed rent in the contract, and the full amount of the agreed rent is
applied for the rest of the period.
For the years ended December 31, 2015 and 2014, expenses recognized in profit or loss in
respect of operating leases were $226,271 and $132,263.
224
The warehouse and factory leases were entered into many years ago as combined leases of land
and buildings. The Group determined that the land and building elements of the warehouse and
factory leases are operating leases. The rent paid to the landlord is increased to market rent at
regular intervals, and the Group does not participate in the residual value of the land and
buildings. As a result, it was determined that substantially all the risks and rewards of the land
and buildings are with the landlord.
2.Leases- Lessor
The future minimum lease payments under non-cancellable leases are as follows:
2015.12.31
Within 1 year
$
Period after 1 to 5 years
Period after 5 years
$
2014.12.31
186,208
198,217
195,860
334,791
56,934
177,310
439,002
710,318
The rental revenues incurred by leasing plants were $217,450 and $241,353 for the years ended
December 31, 2015 and 2014, respectively.
(n) Employee benefits
1.Defined benefit plans
Reconciliation of defined benefit obligation at present value and plan asset at fair value are as
follows:
Present value of the defined benefit obligations $
Fair value of plan assets
Net defined benefit liabilities
$
2015.12.31
1,746,837
(721,427)
2014.12.31
1,844,731
(835,395)
1,025,410
1,009,336
The Group makes defined benefit plan contributions to the pension fund account at Bank of
Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labor
Standards Law) entitle a retired employee to receive an annual payment 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 Bureau of Labor Funds, Ministry of Labor. 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 two-year time deposits with
interest rates offered by local banks.
225
The Group’s pension reserve account in Bank of Taiwan amounted to $721,351 at the end of
December 31, 2015. For information on the utilization of the labor pension fund assets
including the assets allocation and yield of the fund, please refer to the website of the Bureau
of Labor Funds, Ministry of Labor.
2) Movements in present value of the defined benefit obligations
The movements in present value of defined benefit obligations for the Group were as follows:
Defined benefit obligation at January 1
2015
2014
$
1,844,731
1,864,142
Current service costs and interest
Remeasurement on the net defined benefit
liability
－Experience adjustments arising on the
actuarial gain or loss
－Actuarial loss (gain) arising from changes
in financial assumptions
Benefits paid by the plan assets
Defined benefit obligation at December 31
$
44,152
48,728
6,339
11,557
59,477
(238)
(207,862)
(79,458)
1,746,837
1,844,731
3) Movements of defined benefit plan assets
The movements in the present value of the defined benefit plan assets for the Group were as
follows:
Fair value of plan assets at January 1
Interest income
Remeasurement on the net defined benefit
liability
2015
2014
$
835,395
813,921
13,764
14,239
－Return on plan assets (excluding current
interest)
Contributions made
Benefits paid by the plan assets
Other
Fair value of plan assets at December 31
226
$
7,748
4,708
72,382
82,987
(207,862)
-
(79,458)
(1,002)
721,427
835,395
4) Expenses recognized in profit or loss
The expenses recognized in profit or loss for the Group were as follows:
2015
2014
$
12,899
16,101
Current service costs
Net interest of net liabilities for defined
benefit obligations
Operating cost
17,489
18,388
$
30,388
34,489
$
2,374
3,269
3,378
3,499
9,329
15,307
10,916
16,805
30,388
34,489
Selling expenses
Administration expenses
Research and development expenses
$
5) Remeasurement on the net defined benefit liability recognized in other comprehensive income
The Group’s remeasurement on the net defined benefit liability recognized in other
comprehensive income were as follows:
Cumulative amount at January 1
Recognised during the period
2015
2014
$
(90,758)
(84,148)
(58,068)
(6,610)
Cumulative amount at December 31
$
(148,826)
(90,758)
6) Actuarial assumptions
The following are the Group’s principal actuarial assumptions:
Present Value of defined benefit obligations:
2015
2014
1.50%~2.30%
1.00%~1.70%
Discount rate
Future salary increases rate
1.00%~2.50%
227
1.00%~2.50%
The expected allocation payment made by the Group to the defined benefit plans for the one
year period after the reporting date was $300,190.
The weighted-average duration of the defined benefit obligation is 6~21.3 years.
7) Sensitivty analysis
When calculating the present value of the defined benefit obligations, the Group uses
judgments and estimations to determine the actuarial assumptions, including discount rate and
future salary changes, as of the financial statement date. Any changes in the actuarial
assumptions may significantly impact the amount of the defined benefit obligations.
If the actuarial assumptions had changed, the impact on the present value of the defined
benefit obligation shall be as follows:
Influences of defined benefit
obligations
Increased 0.25% Decreased 0.25%
(20,869)
21,340
Discount rate
Future salary increasing rate
714
(585)
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 of pension liabilities in the balance sheets.
There is no change in the method and assumptions used in the preparation of sensitivity
analysis for 2015 and 2014.
2.Defined contribution plans
In accordance with the provisions of the Labor Pension Act, the Group contribute an amount
equal to 6% of the employee’s monthly wages to the Labor Pension personal account with the
Bureau of the Labor Insurance.
The pension costs incurred from the contributions to the to the Bureau of the Labour Insurance
amounted to $228,685 and $223,411 for the years ended December 31, 2015 and 2014,
respectively.
The pension expenses contributed by the foreign entities following the local regulations
amounted to $1,738,012 and $1,148,009 for the years ended December 31, 2015 and 2014,
respectively.
228
(o) Income taxes
1.The components of income tax expense (gain) in the years 2015 and 2014 were as follows:
2015
2014
Current tax expense
Current period
Adjustment for prior periods
$
Deferred tax expense
Origination and reversal of temporary
differences
Recognition of previously unrecognised tax
losses, tax credits and temporary
differences
Tax incentives
2,085,895
73,775
2,159,670
2,328,427
(292,043)
2,036,384
41,302
998,056
(4,064)
(11,229)
-
Other
Income tax expense from continuing operations $
(10,000)
11,227
1,926
48,465
978,753
2,208,135
3,015,137
The amount of income tax recognized in other comprehensive income for 2015 and 2014 was as
follows:
2015
2014
Items that will not be reclassified subsequently
to profit or loss:
Remeasurement from defined benefit plans
$
9,781
1,194
Items that may be reclassified subsequently to
profit or loss:
Unrealized gains (losses) on
available-for-sale financial assets
$
381,929
(109,140)
229
A reconciliation of income before income tax and income tax expense recognized in profit or loss
was as follows:
2015
2014
$
7,183,870
9,680,698
Income before tax
Income tax using the Company’s domestic tax rate
Permanent differences
Tax credits
Recognition of previously unrecognized tax losses
Current-year losses for which no deferred tax asset
was recognized
Change in unrecognized temporary differences
Under (over) provision in prior periods
Under (over) provision of tempopary differences
10% surtax on undistributed earnings
Other
Income tax expense
$
1,983,188
(367,566)
(171,444)
(4,064)
641,881
2,751,273
(312,304)
(245,561)
(11,229)
64,378
(41,142)
73,775
31,361
10,000
52,146
2,208,135
971,266
(292,043)
29,539
62,738
(2,920)
3,015,137
2.Deferred Tax Assets and Liabilities
1) Unrecognized Deferred Tax Assets
Deferred tax assets that have not been recognized in respect of the following items:
Tax effect of deductible Temporary
Differences
The carryforward of unused tax losses
$
2015.12.31
2,537,916
2014.12.31
2,799,412
$
2,797,376
5,335,292
2,052,891
4,852,303
The carryforward of unused tax credits were determined in accordance with the rules
established by each taxation authorities, and can be applied to offset against profit and income
tax in the future respectively. The deferred tax assets have not been recognized in respect of
the aforementioned items because they are not probable that future taxable profit will be
available against which the Group can utilize the benefits therefrom.
The Subidiaries located in China, where the income tax rate is 25%, in accordance with the
rules for the implementation of the Income Tax Law of the People's Republic of China for
enterprises with Foreign Investment and Foreign Enterrises, was entitled to the preferential
treatment for advanced technology industries with respect to reduction of or exemption from
income tax.
Under such tax law, commencing with the first profit-making year is exempted from income
tax in the first and second profitable year and is entitled to a 50% reduction from the third to
fifth year.
230
The Group invested in the companies which were incorporated in the Cayman Islands. The
earnings of these entities are not taxable by the local government in their respective
jurisdictions. Other foreign subsidiaries are taxed in accordance with the Income Tax Law of
their respective jurisdiction.
As of December 31, 2015 and 2014, the Group estimated that the part of the temporary
differences do not have more than 50% possiblity to realize in the visible future, so they were
not recognized as deferred tax assets.
The profits attributable to the expansion and construction projects of Photovoltaic (“PV”) cells
were exempted from income tax for a five-year period. Additionally, according to the Statue
for Upgrading Industries “Regulations for Encouraging Manufacturing Enterprises and
Technical Service Enterprises in the Newly Emerging, Important and Strategic Industries”, the
Company was granted certain investment tax credits. These credits may be applied over a
period of five years and may be deducted in any year.
Each company is taxed in accordance with the income tax law of their respective jurisdiction.
Unused operating loss carry-forwards can be applied to offset against profit in the future after
being examined by the Tax Authority. As of December 31, 2015, the company that have loss
carry forwards which can be used to offset profit were as follow. Among the taxable losses,
$70,292 were recognized as deferred tax assets.
As of December 31, 2015, the Group did not recognized its prior years' loss carry-forwards as
deferred tax assets, whose expiring years were as follows:
The carryforward of unused $
losses
Unused balance
14,223,097
Expring year
2016~2025
Due to the unstable economic environment recovery, the realizability of tax assets of the tax
losses, which amounted to $14,223,097, is doubtful. Therefore, the Group has recognized the
partial tax losses as deferred tax assets. If the sales grow continuously, the Group would
recognize the aforementioned tax losses in the future and generate the additional tax benefits.
2) Recognized Deferred Tax Assets and Liabilities
The movements in deferred tax assets and liabilities for the years ended December 31, 2015
and 2014 were as follows:
Gain (loss) on
investment
Other
Total
Deferred Tax Liabilities:
$
1,223,737
568,813
1,792,550
Recognized in profit or loss
183,357
(86,326)
97,031
Recognized in other comprehensive income
-
(381,929)
(381,929)
100,558
1,507,652
$
231
1,407,094
Gain (loss) on
investment
Other
Total
Deferred Tax Liabilities:
Recognized in equity
$
$
Loss of
market
decline on
financial
assets
Warranty
expense
Deferred Tax Assets:
Balance at January 1 2015
$
Recognized in other comprehensive
income
Other
$
$
Recognized in other comprehensive
income
$
759,511
464,226
1,223,737
Defined
Benefit
Plans
452,699
61,343
-
54,517
14,567
-
140,269
(6,437)
9,781
-
-
-
319,036
140,637
109,140
568,813
Investment
tax credits
10,000
(10,000)
-
1,486,118
48,566
9,781
-
133,870
(2,950)
133,870
(2,950)
948,646
1,675,385
10,000
1,018,176
(208,577)
-
1,839,780
(373,890)
1,194
19,034
19,034
10,000
828,633
1,486,118
69,084
143,613
-
352,101
100,598
-
324,983
(270,466)
-
144,520
(5,445)
1,194
-
-
-
-
54,517
-
140,269
Total
828,633
(10,907)
-
514,042
452,699
Others
1,078,547
604,863
109,140
1,792,550
3.The Company’s income tax returns through 2013 have been examined and approved by the Tax
Authority.
The income tax return in 2012 is still in the process of examination.
4.Information related to the unappropriated earnings and tax deduction ratio is summarized below:
Accumulated in 1997 and prior years
Accumulated in 1998 and thereafter
Stockholders’ imputation tax credit account
Tax deduction ratio for earnings distributable
to R.O.C. residents
$
2015.12.31
6,529,767
6,529,767
2014.12.31
108,940
8,020,124
8,129,064
$
888,376
681,214
$
2015 (Estimated)
23.13%
2014 (Actual)
19.45%
The aforesaid information of tax deduction ratio for earnings distributable to R.O.C. residents
was prepared in accordance with Decree NO.10204562810 issued by Taxation Administration,
Ministry of Finance, R.O.C. on October 17, 2013.
232
5.Business income tax administrative remedies
The Group's income tax return for the year 2013 and 2012 had been examined by the tax
authorities, and the Group paid additional $93,653 and $39,551 for tax, respectively. The Group
disagreed with the examination results and requested for a re-examination.
(p) Capital and reserves
As of December 31, 2015 and 2014, the authorized capital of the Company both consisted of
3,650,000 thousand shares and both issued worth $36,500,000, with par value of $10 per share, and
its outstanding capital both consisted of 3,587,475 thousand shares of stock. All issued shares were
paid up upon issuance.
1.Capital surplus
The components of the capital surplus were as follows:
Share capital
$
Other
$
2015.12.31
2,891,959
2014.12.31
2,891,959
20,825
28,759
2,912,784
2,920,718
In accordance with the ROC company Act, realized capital reserves can only be reclassified as
share capital 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 reserve to be reclassified under share capital shall
not exceed 10 percent of the actual share capital amount.
2.Retained earnings
The Company’s articles of incorporation require that after-tax earnings shall first be offset
against any deficit, and 10% of the rest be set aside as legal reserve. The appropriation for legal
reserve is discontinued when the balance of the legal reserve equals the total authorized capital.
Special reserve may be appropriated for operations or to meet regulations. Of the remainder, a
minimum of 3% will be distributed as employee bonus and a maximum of 3% will be allotted for
directors’ and supervisors’ remuneration. The remaining earnings, if any, may be appropriated
according to the proposal presented to the annual stockholders’ meeting by the board of directors.
If the employee bonus is distributed in the form of stock, the employees qualifying for such
distribution may include the employees of subsidiaries of the Company who meet certain specific
requirements. Such qualified employees and the distribution ratio shall be decided by the board
of directors. In consideration of the Company’s long-term operating plan, funding needs, and
satisfying shareholder demand for cash flow, the Company distributes cash dividends of at least
10% of the aggregate of cash dividends and stock dividends if the distributions include cash
dividend. According to The Company Act which was amended on May 2015, the employee
benefits and the rewards of the directors and supervisors should no longer be subject to earnings
distribution. The Company will amend its articles of association before the deadline set by the
authorities.
233
1) Legal reserve
In accordance with the ROC Company Act, 10 percent of net income should be set aside as
legal reserve, until it is equal to share capital. If the Company experienced profit for the year,
the meeting of shareholders shall decide on the distribution of the statutory earnings reserve
either by new shares or by cash, of up to 25 percent of the actual share capital.
2) Special reserve
In accordance with Permit No.1010012865 as issued by the Financial Supervisory
Commission on 6 April 2012, a special reserve equal to the contra account of other
shareholders' equity is appropriated from the current and prior period earnings. When the debit
balance of any of the contra accounts in the shareholders' equity is reveresd, the related special
reserve can be reversed. The subsequent reversals of the contra accounts in shareholders'
equity shall qualify for additional distributions.
3) Earnings Distribution
For the years ended December 31, 2014, the Company accrued employee bonuses of $447,162,
and directors’ and supervisors’ remuneration of $127,761. These amounts were estimated from
the Company’s net profit for 2014, to the earnings allocation method, priority and factor for
employee benefits and the board of director's remuneration as stated under the Articles of
Association. These benefits are charged to operating costs or expenses for the years ended
December 31, 2014.
There were no difference between the actual distribution for employee bonus and directors'
and superrisors' remuneration for the years 2014 and the amount estimated in the financial
statements. Related information can be accessed from the Market Observation Post System on
the web site.
During the meeting of shareholders on June 16, 2015 and June 12, 2014, the shareholders
approved to distribute the 2014 and 2013 earnings, respectively, as follows:
2014
Dividend per
share ($)
Amount
2013
Dividend per
share ($)
Amount
1.75
1.60
Dividends disrtibuted to common
shareholders
Cash
$
6,278,081
5,739,960
The information on prior year's distribution of the Company's earnings were announced
through the Market Observation Post System on the internet.
234
3.Other equity (net of taxes) and non-controlling interests
Balance, January 1, 2015
Exchange differences
on translation of
foreign financial
statements
$
2,868,962
Exchange differences on foreign operations
(260,852)
Exchange differences on subsidiaries accounted
for using equity method
-
(258,370)
(3,938)
-
48,545
-
48,545
-
16,361
-
16,361
(429,089)
(429,089)
205,178
6,418,145
9,227,495
146,155
6,975,065
8,616,329
(487)
1,363,374
2,604,172
Balances, January 1, 2014
1,495,109
Exchange differences on foreign operations
1,363,861
Exchange differences on subsidiaries accounted
for using equity method
2,482
-
$
Total
9,853,986
-
Unrealized gains (losses) on available-for-sale
financial assets of subsidiaries accounted for
using equity method
Acquisition control and extra shares of
subsidiaries
Non-controlling
interests
6,844,752
(3,938)
financial assets
Balance, December 31, 2015
Unrealized gains
(losses) on
available-for-sale
financial assets
140,272
-
9,992
-
-
9,992
financial assets
-
(1,992)
2,024
32
financial assets of subsidiaries accounted for
using equity method
-
(3,891)
-
(3,891)
Subsidiaries liquidation, lose control of
subsidiaries, and noncontrolling interests
Balances, December 31, 2014
$
-
-
(131,850)
(131,850)
2,868,962
140,272
6,844,752
9,853,986
(q) Share-Based payments
1.E-ton Solar Tech Co. Ltd. and its subsidiaries
As of December 31, 2015, share-based payments of E-ton Solar Tech Co., Ltd. and its
subsidiaries were as follows:
Grant date
Number of shares granted
Employee Stock Option Plan
Second plan in 2010
First plan in 2010
August 1, 2011
September 3, 2010
1,567 thousand units
3,433 thousand units
6years
6years
Employees of E-Ton Solar Tech.
Co., Ltd.
Employees of E-Ton Solar Tech.
Co., Ltd.
Subsequent 2~4 years service
Subsequent 2~4 years service
Contractual life
Grant target
Vesting period
235
1) Determining the fair value of equity instruments granted
E-Ton Solar Tech. Co., Ltd. and its subsidiaries adopted the Black-Scholes Model to calculate
the fair value of the stock option at grant date, and the assumptions adopted in this valuation
model were as follows:
Fair value at grant date
Second plan in 2010
First plan in 2010
$
9.60 $
13.22
Share price at grant date
26.10
35.55
Exercise price
26.10
35.55
44%
45%
Expected volatility(%)
Expected life of the option (year)
6
Expected dividend yield rate
-
Risk-free interest rate (%)
6
%
-
%
1.20%
1.00%
E-ton Solar Tech Co. Ltd. and its subsidiaries use the historical volatility as base to estimate
the expected volatility; the duration of stock options is in accordance with the regulations. The
expected dividends were set at 0, and the risk free rate was set considering the rate of the
short-term government bonds. The definition of fair value did not cover the service fee of the
trade or the non-market achievement conditions.
2) Employee stock options
Information on aforesaid employee stock options was as follows:
(Unit:Thousands)
Balance, beginning of January 1
For the years ended December For the years ended December
31, 2015
31, 2014
Weighted-aver
Weighted-ave
age
Numbers of
rage
Numbers of
Exercise Price
Options
Exercise Price
Options
$
20.72
1,847
20.73
2,024
Options granted
-
Options forfeited
20.47
(292)
20.79
(177)
Options exercised
-
-
-
-
Options expired
-
-
-
-
Balance, end of December 31
$
20.77
1,555
20.72
1,847
Options exercisable, end of
December 31
$
20.77
1,555
20.82
1,690
As of December 31, 2015 and 2014, the exercise prices of outstanding options were both
$21.50 for the first grant, and both $19.70 for the second grant. The weighted-average
remaining life of outstanding options of E-TON company were 1.04 years and 2.06 years.
236
3) Expenses and liabilities resulted from share-based payments
The E-TON company and its subsidiaries incurred expenses and liabilities from share-based
payments transactions for the years ended December 31, 2015 and 2014 as follows:
2015
2014
Expenses arising from granting of employee
share options
$
(13)
53
2.Inventec Solar Energy Corporation
As of December 31, 2015, the share-based payment of Inventec Solar Energy Corporation were
as follows:
Equity transaction
Capital increase by cash
for the employees to have
Employee Stock
the share options in 2014
Option in 2011
April 28, 2014
August 1, 2011
Grant date
Number of shares granted
2,000,000 shares
20,000,000 shares
-
5years
Employees of Inventec Solar
Energy Corporation
Employees of Inventec Solar
Energy Corporation
-
Subsequent 1 year service
Contractual life
Grant target
Vesting period
1) Determining the fair value of equity instruments granted
Inventec Solar Energy Corporation adopted the Black-Scholes Option Valuation Model to
estimate the fair value of its employee stock options on the date of grant. The assumptions
used in this valuation model were as follows:
Fair value at grant date
$
2014
2011
Capital increase by cash
for the employees to have
the share options
Employee Stock Option
1.48 $
Share price at grant date
13.19
Exercise price
Expected volatility(%)
Expected life of the option (year)
Expected dividend yield rate
-
Risk-free interest rate (%)
7.76
12.00
10.00
40.96%
53.38%
0.13
4.00
%
0.47%
237
2.68
-
%
1.07%
Inventec Solar Energy Corporation use the historical volatility as base to estimate the expected
volatility; the duration of stock options is in accordance with the regulations. The expected
dividends were set at 0, and the risk free rate was set considering the rate of the short-term
government bonds. The definition of fair value did not cover the service fee of the trade or the
non-market achievement conditions.
2) Employee stock options
Information on aforesaid employee stock options was as follows:
(Unit:Thousands)
Balance, beginning of January 1
2015
2014
Weighted-aver
Weighted-aver
age
Numbers of
age
Numbers of
Exercise Price
Options
Exercise Price
Options
$
10.00
6,051
10.00
11,121
Options granted
-
-
Options forfeited
10.00
Options exercised
10.00
Options expired
10.00
Balance, end of December 31
10.00
Options exercisable, end of
December 31
(195)
(5,856)
-
-
-
-
10.00
(116)
10.00
(3,355)
10.00
(1,599)
10.00
6,051
-
As of December 31, 2015 and 2014, the exercise prices of outstanding options were both
$10.00. The weighted-average remaining life of outstanding options of Inventec Solar
Energy Corporation were 0.58 years and 1.58 years, respectively.
3) Expenses and liabilities resulted from share-based payments
The Inventec Solar Energy company incurred its expenses and liabilities from the share-based
payments transactions for the years ended December 31, 2015 and 2014 as follows:
Expenses arising from granting of employee
share options
2015
2014
$
8,546
6,062
Expenses arising from capital increase by cash
for the employees to have the share options
Total
$
238
2,960
8,546
9,022
(r) Earnings per share
The following are the calculation of basic earnings per share and diluted earnings per share:
2015
2014
Basic earnings per share:
Profit attributable to ordinary shareholders
$
5,563,633
7,097,815
3,587,475
3,587,475
$
1.55
1.98
Diluted earnings per share:
Profit attributable to ordinary shareholders of the $
Company (adjusted for the effects of all dilutive
potential ordinary shares)
5,563,633
7,097,815
3,587,475
3,587,475
26,479
3,613,954
28,479
3,615,954
1.54
1.96
Weighted average number of ordinary shares
(thousand shares)
Basic earnings per share (NT dollars)
(thousand shares)
Effect of dilutive potential common shares
(thousand shares)
profit sharing to employees
(adjusted for the effects of all dilutive potential
ordinary shares)
Diluted earnings per share (NT dollars)
$
(s) Revenue
The details of revenue for the years ended December 31, 2015 and 2014 were as follows:
2015
2014
$
394,511,666
434,971,494
958,555
628,474
Sale of goods
Rendering of services
$
395,470,221
435,599,968
(t) Rewards of employees, directors and supervisors
The Company's articles of incorporation which were authorized by the Board of Directors, but has
not yet been determined by the stockholders, require that earnings shall first be offset against any
deficit. A minimum of 3% will be distributed as employee compensation and a maximum of 3%
will be allocated as directors' and supervisors' compensation.
239
If the employee compensation are distributed in the form of stock or cash, the employees qualifying
for such distribution shall include the employees of the subsidiaries of the Company who meet
certain specific requirements. Such qualified employees and the distribution ratio shall be decided
by the board of divectors.
The rewards of employees amounted to $336,884 thousand, and rewards of directors and
supervisors amounted to $98,258 thousand for the years ended December 31, 2015. These amounts
are calculated using the Company's profit before tax for each period described above, and are
determined using the earnings allocation method which stated under the Company's article. These
bonus are expensed under operating cost or expenses in 2015. Related information can be accessed
from the Market Observation Post System on the web site. The difference between the actual
amounts of employee compensation and estimation of employee compensation, if any, will be
treated as changes in accounting estimates and adjusted in profit or loss in 2016.
(u) Non-operating income and expenses
1.Other income
The details of other income for the years ended December 31, 2015 and 2014 were as follows:
2015
2014
$
2,112,228
2,864,110
Interest income
2.Other income and losses
The details of other income and losses for the years ended December 31, 2015 and 2014 were as
follows:
Rent income
Foreign exchange gains (losses)
Gains (losses) on disposal of investments and
financial liabilities
Net gains (losses) on financial assets
(liabilities) measured at fair value through profit
or loss
Held-for-trading
Impairment losses on financial assets at cost
Impairment loss on non-financial assets
Gains (losses) on disposal of property, plant,
equipment, investment properties and other
assets
Other
2015
2014
$
241,477
256,872
(669,167)
870,133
331,861
383,461
31,250
$
240
(140,379)
136,531
613,138
(109,590)
(1,454,743)
(162,409)
744,579
618,514
676,152
1,015,376
3.Finance costs
The details of finance expenses for the years ended December 31, 2015 and 2014 were as
follows:
2015
2014
Interest expenses
Bank borrowings
Others
$
910,050
4,123
1,247,235
4,182
$
914,173
1,251,417
(v) Reclassification adjustments of components of other comprehensive income
For the years ended December 31, 2015 and 2014, the reclassification adjustments of components
of other comprehensive income amounted for $330,867 and $313,660, respectively.
(w) Financial instruments
1.Credit risks
1) Credit risks exposure
The carrying amounts of financial assets represented the maximum credit risk exposure of the
Group.
For contingencies resulting from guarantees and endorsements provided by the Company,
please refer to Note (13).
2) Condition of credit risk concentration
Implicit credit risk of the Group is inherent in its cash and accounts receivable. The cash is
deposited in different financial institutions. The Company manages the credit risk exposure
with each of these financial institutions and believes that cash do not have a significant credit
risk concentration.
The major customers of the Group are centralized in the high-tech computer industry. To
minimize credit risk, the Company periodically evaluates the Company’s financial positions
and the possibility of collecting trade receivables.
Besides, the Consolidated Company monitors and reviews the recoverable amount of the trade
receivables to ensure the uncollectible amount are recognized approprately as impairment loss.
As of December 31, 2015 and 2014, 60% and 56%, respectively, of accounts receivable were
two major customers. Thus, credit risk is significantly centralized.
241
2.Liquidity risks
The following are the contractual maturities of financial liabilities of the Group, including
estimation of interest, but excluding the impact of netting arrangements:
Carrying
amount
Contractual
cash flows
Less than
6 months
6 to 12
months
1 to 2 years
2 to 5 years
More than
5 years
-
-
December 31, 2015
Non-derivative financial liabilities
Secured bank loans
$
596,570
606,702
211,592
193,600
201,510
18,707,515
19,161,601
7,709,257
83,753
1,083,862
12,132
12,132
12,132
-
-
-
-
Accounts payable
58,609,552
58,609,552
58,609,552
-
-
-
-
Other payables
11,911,563
11,911,563
11,911,563
-
-
-
-
88,985
(2,577,197)
(2,577,197)
-
-
-
-
2,488,212
2,488,212
-
-
-
-
90,212,565
78,365,111
Notes payable
10,284,729
-
Derivative financial liabilities
Forward exchange contracts not
used for hedging:
Outflow
inflow
$
89,926,317
277,353
1,285,372
10,284,729
-
December 31,2014
Non-derivative financial liabilities
Secured bank loans
$
2,299,912
2,299,912
1,322,620
240,740
29,797,847
29,797,847
11,541,152
17,987,755
Notes payable
Accounts payable
Other payables
468,080
268,472
-
-
268,940
-
24,263
24,263
24,263
-
-
-
-
73,944,102
73,944,102
73,944,102
-
-
-
-
7,898,426
7,898,426
7,898,426
-
-
-
-
17,095
(533,454)
(533,454)
-
-
-
-
516,359
516,359
-
-
-
-
(5,207,675)
(5,207,675)
-
-
-
-
5,183,104
5,183,104
-
-
-
-
113,922,884
94,688,897
468,080
537,412
-
Foreign exchange swap contracts
not used for hedging:
Outflow
Inflow
-
Forward exchange contracts not
used for hedging:
Outflow
24,571
Inflow
$
114,006,216
18,228,495
The Group are not expecting that the cash flows included in the maturity analysis could occur
significantly earlier or at significantly different amounts.
242
3.Currency risks
1) Exposure to currency risks
The Group's exposures to significant currency risk were those from its foreign currency
denominated financial assets and liabilities as follows:
2015.12.31
Foreign currency
(In thousand)
Financial assets
Monetary items
USD
$
1,200,137
Exchange rate
USD：TWD 32.82
TWD
39,388,496
293,319
USD：CNY
6.49
9,626,730
199,532
USD：CUZ
24.83
6,548,640
JPY
4,179
JPY ：TWD
0.27
1,128
EUR
2,484
EUR：TWD 35.77
88,853
Non-monetary items
USD
54,981
EUR
USD：TWD29.50~33.02
1,787,761
182
EUR：TWD 35.77
6,510
1,320,318
USD：TWD 32.82
43,332,837
1,000,752
USD：CNY
6.49
32,844,681
4,665
USD：CUZ
24.83
153,105
JPY
7,200
JPY ：TWD
0.27
1,944
EUR
5,803
EUR：TWD 35.77
207,573
Financial Liabilities
Monetary items
USD
2014.12.31
Foreign currency
(In thousand)
Financial assets
Monetary items
USD
JPY
$
1,835,392
TWD
USD：TWD 31.64
58,071,803
668,563
USD：CNY
6.12
21,153,333
201,112
USD：CUZ
22.83
6,363,184
286,227
JPY ：TWD
0.26
74,419
EUR：TWD 38.34
26,378
EUR
Non-monetary items
USD
Exchange rate
688
90,920
243
USD：TWD29.25~33.59
2,968,734
2014.12.31
Foreign currency
(In thousand)
Financial Liabilities
Monetary items
USD
Exchange rate
TWD
1,946,793 USD：TWD
1,577,310 USD：CNY
31.64
61,596,531
6.12
49,906,088
22.83
143,930
JPY
4,549 USD：CUZ
11,062 JPY ：TWD
0.26
2,876
EUR
4,682 EUR：TWD
38.34
179,508
17,592 USD：TWD
31.64
556,600
Non-monetary items
USD
2) Sensitivity analysis
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. A 0.5% depreciation or appreciation of the functional currency against
all the non-functional currency as of December 31, 2015 and 2014 would have increased or
decreased the net profit after tax by $81,468 and $106,664, respectively. The analysis is
performed on the same basis for both periods.
3) Gains or losses on foreign exchange
As Group deals with diverse foreign currencies, therefore, the gains or losses on foreign
exchange were summarized as a single amount. For the years ended December 31, 2015 and
2014, the foreign exchange gain (loss), including realized and unrealized, amounted to
$(669,167) and $870,133, respectively.
4.Interest rate analysis
The Group’s financial assets and financial liabilities with interest rate exposure risk were noted
in the liquidity risk section.
The following sensitivity analysis in interest rates is based on the risk exposure to interest rates
on the reporting date. For variable rate instruments, the sensitivity analysis assumes the variable
rate liabilities are outstanding for the whole year on the reporting date.
If the interest rate increases or decreases by 0.5%, the Group’s profit will decrease or increase by
$7,057 and $63,323 for the years ended December 31, 2015 and 2014, respectively, assuming all
other variable factors remain constant. This is mainly due to the Group's variable rate in
borrowings and time deposits.
244
5.Fair value of financial instruments
1) Fair value hierarchy
The Group uses the observable market data to evaluate its assets and liabilities. The different
inputs of levels of fair value hierarchy in determing the fair value are as follows:
‧Level 1: quoted prices (unadjusted) in active markets for identified assets or liabilities.
‧Level 2: inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
‧Level 3: inputs for the assets or liability that are not based on observable market data
(unobservable inputs).
The carrying amount and fair value of the Group’s financial assets and liabilities, including the
information on fair value hierarchy were as follows; however, except as described in the
following paragraphs, for financial instruments not measured at fair value whose carrying
amount is reasonably close to the fair value, and for equity investments that has no quoted
prices in the active markets and whose fair value cannot be reliably measured, disclosure of
fair value information is not required :
Book Value
Level 1
2015.12.31
Fair Value
Level 2
Level 3
Total
Financial assets at fair value
through profit or loss
Derivative financial assets
$
163,956
Non derivative held-for-trading
financial assets
-
163,956
-
163,956
57,659
57,659
-
-
57,659
221,615
57,659
163,956
-
221,615
Stocks of listed companies
574,923
574,923
-
-
574,923
Unquoted equity instruments
331,492
-
298,136
Subtotal
Unquoted financial instruments
Subtotal
Total
$
33,356
331,492
2,715,761
-
-
2,715,761
2,715,761
3,622,176
574,923
298,136
2,749,117
3,622,176
3,843,791
632,582
462,092
2,749,117
3,843,791
Financial liabilities at fair value
$
-
245
-
88,985
-
88,985
Book Value
Financial assets at fair value
Derivative financial assets
$
298,746
Non derivative held-for-trading
financial assets
142,226
Subtotal
440,972
Available- for sale financial assets
Stocks in listed companies
429,200
Unquoted equity instruments
457,501
Unquoted financial instruments
7,972,361
Subtotal
8,859,062
Total
$
9,300,034
Financial liabilities at fair value
$
41,666
Level 1
2014.12.31
Fair Value
Level 2
Level 3
Total
-
298,746
-
298,746
142,226
142,226
298,746
-
142,226
440,972
429,200
429,200
571,426
420,178
420,178
718,924
-
429,200
457,501
7,972,361
8,859,062
9,300,034
-
41,666
37,323
7,972,361
8,009,684
8,009,684
-
41,666
2) Valuation techniques and assumption for financial instruments measured at fair value:
The fair value of financial assets and liabilities were decided in accordance with the solutions
as follows:
(2.1)Non-derivative financial instruments
A.The stocks of listed companies are financial assets with standard terms which are
traded in the active markets. Their fair values are based on the quoted market prices.
B.The fair value of private equity is based on standard terms and quoted market prices.
C.The fair value of unquoted instruments were estimated using either the discounted cash
flow model in which future cash flow were estimated and discounted or the fair value
of the recognized assets and liabilities of the consolidated subsidiaries on the
measurement day.
(2.2)Derivative financial instruments
Foreign exchange swap and forward exchange were usually evaluated in the latest
forward rate.
3) Transfers between level 1 and level 2
There were no transfers between level 1 and level 2 of the fair value in the year of 2015 and
2014.
246
4) The following table shows the movements in fair value measurements under level 3 of the fair
value hierarchy:
Available-for-sale
financial assets
$
8,009,684
Balance as of January 1, 2015
Total gains and losses recognized in
Profit or loss
330,867
(4,108)
Purchase
Disposals
23,452,524
(28,621,363)
(412,087)
Proceeds from capital reduction
(6,400)
Balance as of December 31, 2015
$
2,749,117
Balance as of January 1, 2014
Total gains and losses recognized in
$
3,016,571
Profit or loss
313,660
Purchase
Disposals
(5,819)
34,177,265
(29,485,343)
Proceeds from capital liquidation
(6,650)
Balance as of December 31, 2014
$
8,009,684
For the years ended December 31, 2015 and 2014, total gains and losses included in “other
gains and losses” and “unrealised gains and losses from available-for-sale financial assets were
as follows:
2015
2014
Total gains and losses recognized in :
In other comprehensive income (recognized as $
(4,108)
(5,819)
“unrealised gains and losses from
available-for-sale financial assets ”)
5) The quantified information for significant unobservable inputs (Level 3) used in fair value
measurement
The Company uses level 3 inputs to measure fair values of available-for-sale financial assets.
247
Quantified information of significant unobservable inputs was as follows:
Item
Available-for-sale financial
assets-financial instruments
without an active market
assets -equity investments
Valuation Technique
Discounted Cash Flow
Method
Net Asset Value Method
Significant
Non-observable Input
‧Discount Rate
The Relationship between
Significant Non-observable
Input and Fair Value
‧The higher the discount rate,
the lower the fair value.
‧Net Asset Value
‧Not applicable
6) Sensitivity analysis for fair values of financial instruments using Level 3 Inputs
The measurement would differ if different valuation models or valuation parameters are used.
For financial instruments using level 3 inputs, if the valuation parameters are changed, the
impact on net income or loss and other comprehensive income or loss will be as follows:
Input
Impact of Fair Value Change on Other
Comprehensive income or loss
Favorable Change
Unfavorable Change
Variation
December 31, 2015
assets financial instruments
Discount Rate
0.5%
$
1,334
(1,334)
The favorable change and unfavorable change refer to the fluctuation of fair value. The fair
value is calculated based on the different levels of unobservable inputs. The table above shows
the impact on single input. Therefore, the relations and variations between inputs are not
considered.
6.Offsetting financial assets and financial liabilities
The Group has financial instruments transactions applicable to the International Financial
Reporting Standards Sections 42 NO. 32 approved by the FSC which required for offsetting.
Financial assets and liabilities relating those transactions are recognized in the net amount of the
balance sheets.
The Group also performs transactions not applicable to the International Financial Reporting
Standards Sections 42 NO. 32, but the Group has an exercisable master netting arrangement or
similar agreement in place with its counterparties, and both parties reach a consensus regarding
net settlement. The aforesaid exercisable master netting arrangement or similar agreement can be
net settled after offsetting the financial assets and financial liabilities. Otherwise, the transaction
can be settled at the total amount. In the event of default involving one of the parties, the other
party can have the transaction net settled.
248
The following tables present the aforesaid offsetting financial assets and financial liabilities.
Offsetting
agreement
2015.12.31
Financial assets that are offset which have an exercisable master netting arrangement
or similar agreement
Gross amounts Net amount of
Amounts not off set in the
of financial
financial assets
balance sheet (d)
Gross amounts liabilities offset
presented in
of recognized
in the balance
the balance
Financial
Cash
financial assets
sheet
sheet
instruments
collateral
Net amount
(a)
(b)
(c)=(a)-(b)
(Note)
received
(e)=(c)-(d)
$
191,361,207
190,923,408
437,799
437,799
Derivative
financial
instruments
Total
Derivative
financial
instruments
Offsetting
agreement
113,321
$
190,23,408
113,321
-
-
113,321
551,120
-
-
551,120
2015.12.31
Financial liabilities that are offset which have an exercisable master netting arrangement
Net amount of
Gross amounts
financial
Gross amounts
of financial
liabilities
balance sheet (d)
of recognized
assets offset in
presented in
financial
the balance
the balance
Financial
Cash
liabilities
sheet
sheet
instruments
collateral
Net amount
(a)
(b)
(c)=(a)-(b)
(Note)
received
(e)=(c)-(d)
$
88,985
88,985
88,985
2014.12.31
Financial assets that are offset which have an exercisable master netting arrangement
Gross amounts Net amount of
of financial
financial assets
balance sheet (d)
presented in
Gross amounts liabilities offset
of recognized
in the balance
the balance
Financial
Cash
financial assets
sheet
sheet
instruments
collateral
Net amount
(a)
(b)
(c)=(a)-(b)
(Note)
received
(e)=(c)-(d)
$
162,719,102
162,194,618
524,484
524,484
Derivative
financial
instruments
Total
191,474,528
259,344
$
162,978,446
162,194,618
249
259,344
5,099
-
254,245
783,828
5,099
-
778,729
Derivative
financial
instruments
2014.12.31
Financial liabilities that are offset which have an exercisable master netting arrangement
Net amount of
Gross amounts
financial
of financial
liabilities
Gross amounts
balance sheet (d)
assets offset
presented in
of recognized
financial
in the balance
the balance
Financial
Cash
liabilities
sheet
sheet
instruments
collateral
Net amount
(a)
(b)
(c)=(a)-(b)
(Note)
received
(e)=(c)-(d)
$
36,397
36,397
36,397
Note: Master netting arrangements and non-cash financial collaterals are included.
(x) Financial risk management
1.Overview
The Group have exposures to the following risks from its financial instruments:
1) credit risk
2) liquidity risk
3) market risk
The following likewise discusses the Group’s objectives, policies and processes for measuring
and managing the above mentioned risks. For more disclosures about the quantitative effects of
these risks exposures, please refer to the respective notes in the accompanying consolidated
financial statements.
2.Risk management framework
The group are exposed to credit risk, market risk, operating risk and liquidity risk due to its
operating activities. To lower the latent unfavorable effects of changing market to the Group's
financial performance, the Group have made efforts in identifying and evaluating the risks and
avoiding the uncertainty of the market through derivative financial instruments.
The board of directors has the overall responsibility for the establishment and oversight of the
Group’s risk management framework. The fincancial units follows the risk managment policies,
and report the operating status to the board of dirctors regularly. The internal auditors perform
regular reviews by taking risk management control procedures and report to the board of
directors.
3.Credit risk
Please refer to Note 6(w) for the analysis of credit risk of cash, cash equivalent and accounts
receivable. Please refer to Note 13(a) for the endorsement and guarantee provided to the
subsidiaries and affiliates as of December 31, 2015 and 2014.
250
4.Liquidity risk
Liquidity risk is a risk that the Group is unable to meet the obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset. The Group’s
approach to managing liquidity is to ensure, as much as possible, that it always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation.
The Group use actual cost to estimate the cost of its products and services to better assist the
Group's monitoring on the cash flow and optimizing the return on investment. As of December
31, 2015, the capital and working funds of the Group are sufficient to meet its entire contractual
obligation; therefore, the management is not expecting any significant issue on liquidity risk. As
of December 31, 2015 and 2014, the Group's unused credit line were amounted to $88,795,529
and $71,687,165, respectively.
5.Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rate,
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 optimising the return.
The Group buys and sells derivatives, and also incurs financial liabilities, in order to manage
market risks. All such transactions are carried out within the guidelines set by the Group.
1) Currency risk
The Group is exposed to currency risk on sales, purchases and borrowings that are
denominated in a currency other than the respective functional currencies of the Group’s
entities, primarily the New Taiwan Dollars (TWD), US Dollars (USD), Czech Koruna (CZK),
Japanese Yen (JPY) and China Yuan (CNY). The currencies used in these transactions are
denominated in TWD, USD, JPY and CNY.
The Group often uses the principle of natural hedging as its basis, and proceed
supplemented by derivative instruments for hedging exchange rate risk.
The interest is denominated in the same currency as borrowings. Generally, borrowings are
denominated in currencies that match the cash flows generated by the underlying operations of
the Group. This provides an economic hedge without derivatives being entered into, and
therefore, hedge accounting is not applied in these circumstances.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Group
ensures that its net exposure is kept to an acceptable level by buying or selling foreign
currencies at spot rates when necessary to address short-term imbalances.
251
2) Interest rate risk
The Group's interest rate risk arises from long-term borrowings bearing floating interest rates.
The fluctuation of the the market interest rate changes the floating interest rates of the
long-term borrowings, and thus affect the future cash flow. In order to decrease the effect of
the market interest rate fluctuation on to the future cash flow, the Group periodically evaluates
bank and currency borrowing rate to hedge the cash flow risk caused by the market interest
rate fluctuation.
(y) Capital Management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and
market confidence and to sustain future development of the business. Capital consists of ordinary
shares, additional paid-in capital, retained earnings and non-controlling interests of the Group. The
Board of Directors monitors the return on capital as well as the level of dividends to ordinary
shareholders.
The group's objective for managing capitals is to maintain investor, creditor and market confidence,
and to sustain future development of the business by making debts and equities the most suitable
capital structure and optmizing the best of it based on industrial scales, future growth development,
and capital expenditures needed for plants and equipments. Thus, the Group calculates the operating
funds based on the life cycle of the products, plans for the development in the long run, and then
decides the most suitable captial structure considering the business cycle.
The Group ensures the financial resources and the operating plan are sufficient to support the future
needs of operating funds, capital expenditures, debt refunding and dividend distribution.
The Group’s debt to equity ratio at the reporting date was as follows:
Total Liabilities
$
Less: cash and cash equivalents
Net debt
Total Equity
Total Capital
$
Debt to equity ratio
2015.12.31
112,847,624
2014.12.31
131,278,939
(37,123,631)
75,723,993
(37,731,741)
93,547,198
62,898,849
64,422,790
138,622,842
157,969,988
54.63%
59.22%
According to the Company's management, there were no changes in the Group's approach to capital
management at of December 31, 2015.
(7)
Related Party Transactions
(a) The Company and the ultimate controlling party
The Company is the ultimate controlling party of the Group.
252
(b) Significant transactions with related parties
1.Sale revenue
The amounts of significant sales transactions and outstanding balances between the Group and
related parties were as follows:
2015
2014
$
15,503,838
30,160,467
Associates
For related parties, the price and terms were determined in accordance with mutual agreements
with its collection terms of OA30~90 days for sales. Receivables from related parties were not
secured with collaterals, and did not require provisions for bad debt expenses.
2.Purchase
The amounts of significant purchase transactions between the Group and related parties were as
follows:
2015
2014
$
1,822,700
4,640,199
Associates
There is no other vendor as comparison for the above purchases, and the purchase prices are
based on the settling price agreed by both sides. The payment term is 30~75 days。
3.Account receivables from related parties
The amounts of account receivables between the Group and related parties were as follows:
Financial Statement Account
Related Party Categories
Account receivables
Associates
Other receivables
2015.12.31
$
Associates
$
20,254
2014.12.31
8,967,761
522
29,900
20,776
8,997,661
4.Account payables from Related Parties
The amounts of Account payables between the Group and related parties were as follows:
Financial Statement Account
Related Party Categories
Accounts payable
Associates
2015.12.31
$
27,239
2014.12.31
6,712,732
12,132
24,263
Notes payable
Other related parties
Other accounts payable
Associates
3,732
Other accounts payable
(excluding borrowings)
Other related parties
5,045
899
48,148
6,737,894
$
253
-
5.Property transactions
The amounts of acquisition of property, plant and equipment between the Group and related
parties were as follows:
1) Acquisition of property, plant and equipment
For the year ended December 31, 2015 the Group purchused property, plant and equipment
from associates and paid the amounted $7,629.
2) On September 8, 2015 and September 30, 2015, in pursuant to the resolution of the board of
Directors, the Group paid the amount of $367,399 to TPV-Inventa Holding Ltd..
3) In 1999, the Group sold property, deferred assets, assets stated under expense, and trademarks
to associates resulting in a gain on property disposal of $51,712 and other revenue of $40,453.
As of December 31, 2015 and 2014, the unrealized other revenues are both $1,211.
6.Borrowings of Related Parties
The amount of the Group financed from related parties was as follows:
For the years ended
December 31, 2015
Related parties
$
For the years ended
December 31, 2014
Related parties
$
Ending
Balance
328
Interest rate
2.20%~3.14%
4,746
2.20%~3.14%
Ending interests
payable
-
Interest
expense
114
26
36
7.Guarantees and endorsements
As of December 31, 2014, guarantee and endorsements of bank loans provided by the Group for
related parties amounted for $1,240,288, the amount of $860,597 were exercised.
8.Others
1) As of December 31, 2015 and 2014, in order to assist the affiliate to access credit line from
banks, related parties pledge a time deposit amounted to $131,500 and $126,700 certificate
as collateral. As of December 31, 2015, the accrued expenses resulting from time deposit,
which was pledged as collateral, amounted to $5,045.
2) General and adminstrative expense and SAP expense collected amount from related parties
were as follow:
2015
2014
$
12,008
19,681
Associates
3) Donation for other related parties for the years ended December 31, 2015 and 2014 were
$17,800 and $11,500, respectively.
254
4) Administrative expenses paid to associates were as follows:
For the years
ended December
31, 2015
$
14,843
Associates
(c) Key management personnel compensation
Key management personnel compensation includes:
2015
2014
$
642,557
628,286
Short-term employee benefits
Post-employment benefit
Share-based payments
7,887
7,318
888
-
Terminated benefits
564
$
651,008
636,492
Please refer to Note 6(q) for further explanations related to share-based payment transactions.
(8) Pledged Assets
The carrying values of pledged assets were as follows:
Pledged assets
Refundable deposits
(Other non-current assets)
Object
Customs duty guarantee and rental $
deposit
2015.12.31
217,998
2014.12.31
215,228
Restricted cash in banks
(Other current assets and
Other non-current assets)
Short-term borrowings,
construction contract guarantee,
long-term borrowings and
Secured deposits for executing
technology agreements with
goverment
5,760
1,000,720
Other non-current assets
Guaranty for material purchase
contracts
17,723
24,632
1,597,510
1,621,365
1,838,991
2,861,945
Land, buildings, structures,
Long-term borrowings, and
machinery and equipment, net short-term borrowings
(Property, plant and equipment,
Investment property and Other
non-current assets)
Total
$
255
(9)
Significant Commitments and Contingencies
(a) Major Commitments:
1.Unused standby letters of credit were as follows:
2015.12.31
EUR
USD
$
JPY
TWD
2014.12.31
2,888
8,105
3,511
6,971
25,210
48,710
322,839
-
2.Promissory notes issued for bank credit, forward contracts, and Secured deposits for executing
technology agreements with the goverment and property deposits are as follows:
TWD
$
USD
2015.12.31
21,758,059
2014.12.31
21,415,172
1,319,000
1,239,900
3.As of December 31, 2015, the executed agreement for acquisition of plants amounted to
$6,060,000, in which, $5,454,000 has not yet been paid.
(b) Contingencies
1.Inventec Energy Corporation sold photovoltaic modules to TOPCO Scientific Co., Ltd.. Upon the
installation of the said products by TOPCO Scientific Co., Ltd., it was discovered that there were
some flaws on the products. Therefore, TOPCO Scientific Co., Ltd. hired another company to
repair or replace the damaged products. On August 10, 2010, TOPCO Scientific Co., Ltd. filed a
lawsuit in the Taipei District Court against Inventec Energy Corporation, asking Inventec Energy
Corporation to pay the amount of USD1,799 thousand as compensation for the maintenance and
the replacement of the products sold by Inventec Energy Corporation to TOPCO Scientific Co.,
Ltd.. However, on July 3, 2013, Taipei District Court ruled in favor of Inventec Energy
Corporation and dismissed the case.
On July 26, 2013, TOPCO Scientific Co., Ltd. appealed against Inventec Energy Corporation
demanding for the damage costs of NT$3,486 and US$961 thousand.
On August 31, 2015, Inventec Energy Corporation received the investigation result from Taiwan
High Court, which includes a fine of USD 83 thousand.
Inventec Energy Corporation is to pay 8% of the expenses for filing the lawsuit, except for those
already confirmed.
Inventec Energy Corporation and TOPCO scientific Co., Ltd. both appealed to Taiwan Supreme
Court before September 29, 2015. The case is still in investigation.
256
2.The relationship between E-Ton Company and JI-EE Industry Co., Ltd. has deteriorated due to a
dispute over the lands and buildings which JI-EE Industry Co., Ltd. leased to E-Ton Company.
JI-EE Industry Co., Ltd. claimed that the lease is due on December 31, 2013 and decided to
discontinue to rent the aforesaid lands and buildings to E-Ton Company. Therefore, E-Ton
Company filed a temporary injunction to the Tainan District Court concerning this matter.
Tainan District Court requests that E-ton Company should provide a guarantee deposit of 1.2
billion New Taiwan Dollars for the temporary injunction mentioned above. In return, JI-EE
Industry Co., Ltd. should leave the driveways and doors of the building (which is located on No.
73 and 74 Ke Gong Section, Annan Dist., Tainan City) in its current condition until this case is
resolved. Furthermore, JI-EE Industry Co., Ltd. should allow E-ton Company to continue using
the other buildings located on No.16-1, 16-7, and 16-10 Ke Gong Section, Annan Dist., Tainan
City.
In accordance with the enforcement order No.82 (103), JI-EE Industry Co., Ltd. has to follow the
aforementioned injunction. E-Ton Company has received the civil ruling No. 160 (103) from the
Tainan District Court and submitted the indictment to the Tainan District Court on July 15,
2014. The case is filed as No. 196 (103) and is still in progress.
In accordance with the payment order No.6096 from Tainan District Court, JI-EE Industry Co.,
Ltd. advocated that E-Ton Company should pay a penalty of $8,537, plus, interest payables
accrued with an annual interest rate of 5% from the issuance date of the payment order to the
payment date.
E-Ton Company disagreed with the demand of JI-EE Industry Co., Ltd. and filed an appeal to the
Tainan District Court against JI-EE Industry Co., Ltd.. JI-EE Industry Co., Ltd. filed an appeal
against E-Ton Company asking for compensation for the damage. In 2014, according to case No.
73 of Zhong-Su-Zi, Tainan District Court granted the demand of JI-EE Industry Co., Ltd., which
resulted to the penalty of 6,098, plus, interest payables accrued with an annual interest rate of 5%
from the issuance date on May 22, 2014. Therefore, E-Ton Company filed an appeal to the
Taiwan High Court against JI-EE Industry Co., Ltd. on December 5, 2014. Currently, the case is
filed as No. 5 (104) and is still in progress.
257
3.As of December 31, 2015, the long-term supply agreement of the Group entered with various
vendors were summarized as follows:
Supplier
M.Setek
Term of
Unused Down
Contract
Prepayment
Payment
Note
2006.4- 2016.12 US$
149,000 US$
50,048 M. Setek is required to supply E-TON SOLAR
TECH.CO., LTD (E-TON) with “Monocrystalline Silicon
Wafer" and polysilicon at the contract price. Pursuant to
the agreement, E-TON has to prepay a certain amount as
down payment. E-TON entered into a Memorandum of
Understanding (“MOU”) with M. Setek on August 17,
2011. According to the MOU, E-TON and M. Setek
agreed to subsequently reframe another purchase contract
to replace the original one. The expiry date of the
renewed agreement will be extended to December 31,
2020. In addition, M. Setek is required to repay
US$3,000 thousand in settlements by December 31, 2011.
E-TON had received US$2,000 thousand as of the date
the report was issued, because the settlement is not
reached , remainder US$1,000 thousand is reclassified
account to other receivables.
According to the MOU, if E-TON didn't reached the
agreement of the plan of supply, prepayment of
carryforward and principle with M.Setek, the original
contracts will be excuted.
E-TON and M. Setek have signed a new MOU in March
2013, the remainding prepayments can be deferred for
future purchases.
E Company
2009.1- 2014.12
4,105
2,644 E company is required to supply E-TON
with“Monocrystalline Silicon Wafer” at the contract
price. Pursuant to the agreement, E-TON has to prepay
a certain amount as down payment. As of December 31,
2015 the two parties are still in the negotiation.
N Company
2009.1- 2015.12
16,280
4,620 N company is required to supply E-TON
with“Monocrystalline Silicon Wafer” at the contract
price. Pursuant to the agreement, E-TON has to prepay
a certain amount as down payment.
J Company
2011.1- 2012.12
W Company
2011.01-2016.12
-
-
22,825
E-TON entered an agreement to purchase
“Monocrystalline Silicon Wafer” at the negotiated price.
E-TON has to provide 45 metric tons of polysilicon as
collateral which will be returned by supplier when the
agreement is expired. In 2011, E-TON did not purchase
the required quantities of products in compliance with the
contract due to fluctuation in market
conditions.Therefore, E-TON entered into a agreement
with J Company on November 23, 2011 and agreed to
extend the expiry date of the original agreement to the
first quarter in 2013. As of December 31, 2015, the two
parties are still in the negotiation.
5,704 W company is required to supply ADEMA with
polysilicon at the contract price. Pursuant to the
agreement, ADEMA has to prepay a certain amount as
down payment.
258
Supplier
GCL
Term of
Contract
2011.02-2015.12
Prepayment
7,499
US$
Unused Down
Payment
Note
312 GCL is required to supply Inventec Solar Engergy
Corporation with “Monocrystalline Silicon Wafer” at the
contract price. Pursuant to the agreement, Inventec Solar
Engergy Corporation has to prepay a certain amount as
down payment. Although the agreement had reached its
expiry date, the supplier continued to agree with Inventec
Solar Energy Corporation for the usage of its
“Monocrystalline Silicon Wafer” until February 2016.
199,709 US$
63,328
Considering the significant price fluctuation in the solar market as compared to the date of the
supply contract, the purchase price per unit and deductible amount from the down payment were
adjusted to a negotiated price to reflect the change in spot price for the individual transaction.
Besides, the Group has accrued the impairment loss based on the estimation of solar market
fluctuation.
(10)
Losses Due to Major Disasters : None.
(11) Subsequent Events : None.
(12) Other
(a) The employee benefits, depreciation, depletion and amortization expenses categorized by function
were as follows:
By function
By item
For the years ended December 31, 2015
For the years ended December 31, 2014
Operating
costs
Operating
costs
Operating
expense
Total
Operating
expense
Total
Employee benefits
Salary
Labor and health
insurance
Pension
Others
10,918,860
8,361,983
19,280,843
11,392,985
8,249,554
19,642,539
944,605
722,532
1,667,137
795,852
582,379
1,378,231
1,423,399
573,686
1,997,085
950,271
455,638
1,405,909
940,698
229,101
1,169,799
948,254
174,817
1,123,071
Depreciation
3,020,004
956,242
3,976,246
2,653,925
1,160,065
3,813,990
Amortization
534,071
430,924
964,995
537,965
684,247
1,222,212
259

Inventec Corporation

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