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Stock Code: 2208
CSBC CORPORATION, TAIWAN.
2016 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 and Chinese versions, the Chinese version shall prevail.
Taiwan Stock Exchange Market Observation Post System: http://newmops.twse.com.tw CSBC Annual Report is available at: http://www.csbcnet.com.tw/Service/Investor Printed on 06 08, 2017
Spokesperson Name: Tseng, Kuo-Cheng Title: Vice President Tel: 886-7-8059888 E-mail: [email protected] Deputy Spokesperson Name: Lin, Foung-Tang Title: Vice President Tel: 886-7-8059888 E-mail: [email protected] Stock Transfer Agent Fubon Securities Co., Ltd. Address:169 Section 4 Jen Ai Rd. Taipei 10686 Taiwan (R.O.C.) Tel: 886-2-23611300 Website: http//www.fbs.com.tw Auditors PricewaterhouseCoopers Taiwan Auditors: Liu, Tzu-Meng, Lin, Tzu-shu Address: 22F, 95 Minzu 2nd Rd. Kaohsiung, 80048 Taiwan (R.O.C.) Tel.: 886-7-2373116 Website: http//www.pwc.tw Corporate Website http://www. Csbcnet.com.tw
Headquarters and Plant Headquarters Address: No. 3, Jhonggang Rd. Siaogang Dist. Kaohsiung 81234, Taiwan (R.O.C.) Tel: 886-7-8059888
Plant-1 Address: No. 3, Jhonggang Rd. Siaogang Dist. Kaohsiung 81234, Taiwan (R.O.C.) Tel: 886-7-8059888 Plant-2 Address: No. 224, Ho-1 Rd. Ho-Ping Island. Keelung 20203, Taiwan (R.O.C.) Tel: 886-2-24631021
1
Contents I. Letter to Shareholders .................................................................................................................. 3 II. Company Profile 2.1 Date of Incorporation ................................................................................................................... 7 2.2 Company History .......................................................................................................................... 7 III. Corporate Governance Report 3.1 Organization ................................................................................................................................. 8 3.2 Directors, Supervisors and Management Team .......................................................................... 9 3.3 Implementation of Corporate Governance ............................................................................. 33 3.4 Information Regarding the Company’s Audit Fee and Independence ...................................... 78 3.5 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders ......... 79 3.6 Relationship among the Top Ten Shareholders ......................................................................... 82 3.7 Ownership of Shares in Affiliated Enterprises ........................................................................... 83 IV. Capital Overview 4.1 Capital and Shares ...................................................................................................................... 84 4.2 Bonds .......................................................................................................................................... 88 4.3 Global Depository Receipts ........................................................................................................ 88 4.4 Employee Stock Options ............................................................................................................ 88 4.5 Status of New Shares Issuance in Connection with Mergers and Acquisitions ......................... 88 4.6 Financing Plans and Implementation ......................................................................................... 89 V. Operational Highlights 5.1 Business Activities ...................................................................................................................... 89 5.2 Market and Sales Overview ....................................................................................................... 96 5.3 Human Resources .................................................................................................................... 103 5.4 Environmental Protection Expenditure ................................................................................... 103 5.5 Labor Relations......................................................................................................................... 104 5.6 Important Contracts ................................................................................................................. 104 VI. Financial Information 6.1 Five-Year Financial Summary ................................................................................................... 107 6.2 Five-Year Financial Analysis ..................................................................................................... 114 6.3 Supervisors’ /Audit Committee’s Report in the Most Recent Year ......................................... 116 6.4 Financial Statements for the Years Ended December 31, 2016 and 2015…………………………… 116 6.5 Consolidated Financial Statements for the Years Ended December 31, 2016
and 2015…………………………………………………………………………………………………………………..……….116 VII. Review of Financial Conditions, Operating Results, and Risk Management 7.1 Analysis of Financial Status ...................................................................................................... 117 7.2 Analysis of Operation Results ................................................................................................ 118 7.3 Analysis of Cash Flow ............................................................................................................... 118 7.4 The impact of the recent major capital expenditure on the financial business ...................... 120 7.5 Financial impact on the Company for the year: No significant effect ..................................... 120 7.6 Analysis of Risk Management .................................................................................................. 120
2
VIII. Special Disclosure 8.1 Summary of Affiliated Companies ........................................................................................... 125 8.2 Private Placement Securities in the Most Recent Years .......................................................... 127 8.3 The Shares in the Company Held or Disposed of by Subsidiaries
in the Most Recent Years ......................................................................................................... 127
3
I. Letter to Shareholders Dear Shareholders, First of all, I would like to thank you for your continuing support throughout the year. CSBC has responded to the changing business climate by adopting an aggressive stance in strengthening our competitiveness. Total consolidated revenue(thousands) for 2016 was NT$15,747,699 thousands, a 26.61% decrease compared with NT$21,457,696 thousands in 2015. Net loss increased to NT$1,286,809 thousands, compared with 2015 net income of NT$472,784 thousands. Similarly, diluted earnings per share was down to NT$-1.73, compared with NT$0.63 a year earlier. The results of our operating performance in 2016, business plan for 2017, corporate development strategy, external competitive environment, regulatory environment, and macroeconomic conditions, are illustrated as follows: Operating Performance in 2016 1. Consolidated financial results
Unit: NT$ thousands
Net sales amounted to NT$15,747,699 thousands and gross loss came in at NT$1,060,228 thousands in 2016. Due to decreased operating performance and higher costs and operating expenses compared to the year before, net loss increased by more than 372.18% from 2015. 2. Budget implementation According to the Company’s 2016 annual financial plan, our business failed our targets in revenue and net income, respectively.
2016 2015
Percent Change（%）
Net sales 15,747,699 100% 21,457,696 100% -26.61%Gross profit(loss) (1,060,228) -6.73% 994,444 4.63% -206.62%Operating income(loss) (1,565,030) -9.94% 436,634 2.03% -458.43%Pre-tax income(loss) (1,535,402) -9.75% 579,025 2.70% -365.17%Net income(loss) (1,286,809) -8.17% 472,784 2.20% -372.18%R&D expenses 102,196 0.65% 155,666 0.73% -34.35%Interest income 1,972 0.01% 5,918 0.03% -66.68%Interest expenses 36,052 0.23% 13,657 0.06% 163.98%
4
3. Profitability analysis
4. Research and development status In 2016, CSBC invested a total of NT$102,196 thousands in R&D for the ship researches as well as the development of new products. Having successfully 18 developed projects in 2016, it goes into application for CSBC. CSBC is committed to investing in long-term growth by delivering continuous innovations. Business Plan for 2017 1. Business objectives
Reinforce product innovation and R&D to maintain competitive advantage; Integrate resources, lower costs, raise productive efficiency; Diversify into higher-margin and higher-growth businesses.
2. Sales forecast and sales policy
CLARKSONS RESEARCH predicts a approximate 50% decrease in orderbook of world shipyard monitor. CSBC has established full production capacity step by step in recent years, upgraded technology and earned product development certification. The sales policy is outlined as follows in accordance with the projected sales volume of 306,829 CGTs in 2017:
Maintain and establish an excellent brand image for the benefit of the client. Reinforce sensitivity and flexibility to sales changes in order to respond to market trends.
2016 2015 Debt to asset ratio (%) 55.80 41.60 Long-term capital to property, plant and equipment (%)
135.80 152.83
Current ratio (%) 118.51 169.51 Accounts receivable turnover (times) 29.24 64.20 Inventory turnover (times) 4.69 8.46 Return on assets (%) -4.79 1.85 Return on shareholders’ equity (%) -9.86 3.42 Basic after-tax EPS (NT$) -1.73 0.63
5
Development Strategy The Company’s future performance is still very much dependent on an improvement in global economic growth; however, we will leverage our product portfolio, financial strength, intellectual property, human capital, and customer relationships to improve our operational efficiency. We aim to strike a balance between mid-term to long-term strategy development and short-term market demands. Our plan is to focus resources on high-margin products, and to lower production and operating costs. Our strong portfolio of intellectual property can be leveraged to create a formidable barrier to entry for competitors. The 2017 operating strategies of CSBC is outlined as follows:
Increase productivity. Cost down. Implement schedule control(CKP). Strive for business. Reform Keelung shipyard. Strengthen education training. Diversify business layout.
The Impact of the External Competitive Environment, Regulatory Environment, Macroeconomic Conditions, and Vision 1. External competitive environment
The shipbuilding is mature in Taiwan. Competition is intense. The diversity and homogeneity of products, controlled distribution channels, imitation of business models, pricing pressures, and quality requirements have all made the competition environment brutal. CSBC has responded to the severe competition with excellent R&D and management to fulfill consumers’ demands for variety and to differentiate ourselves from competitors through outstanding quality and a reputable brand image. We are able to negotiate with the owners of distribution channels by offering good quality and popular products; therefore, we will continue to innovate and develop products that are needed by consumers, and become the leading brand in the market. 2. Regulatory environment
Governments around the world are constantly adopting new tax, environmental, investment and labor regulations. CSBC stays up-to-date with changes in laws and regulations in all of our invested areas so appropriate adjustments and allocations can be made to company resources in order to respond to these environmental and legal changes.
6
3. Macroeconomic conditions
With respect to the general business environment, global economic growth remains slow. Consumer confidence continues to be fragile, dampening market demand. By continuing to develop comprehensive shipbuilding technology and deepening our relationships with our clients, CSBC hopes to mitigate the adverse effects of the slowdown on overall market demand. Finally, we will continue to establish more integrated relationships with consumers, clients, and society as a whole, with the aim of achieving higher returns for our shareholders. Sincerely yours, Chairman President
CHENG,WEN-LON CHEN,LIE-LIN
7
II. Company Profile 2.1 Date of Incorporation: November 07, 1973 2.2 Company History
Year Milestones 1973 In July, "China Shipbuilding Company" was established, in November to obtain approval to
set up registration. 1974 January, "China Shipbuilding Company" started construction in Kaohsiung, and in May 31,
1976 to complete the construction. 1977 In July, the "China Shipbuilding Company" was changed to "state-owned". In December, it
completed the construction of Taiwan's first 440,000 DWT super-large tanker, the Bo Ma Endeavor.
1978 In January, "China Shipbuilding Corporation" and "Taiwan Shipbuilding Company" were merged and reorganized to operate as "China Shipbuilding Company" with Taipei Office, Kaohsiung Plant and Keelung Plant. In July, it completed the construction of Taiwan's second 445,000 DWT super-large tanker, the "Bo Ma Enterprise".
1996 In January, Taipei company officially moved to Kaohsiung, Kaohsiung factory office and Kaohsiung.
2000 In line with the business development and the need for privatization, the Company and Kaohsiung General Plant from May 1 of the same year, staff and business mergers.
2008 April 1, the Securities and Exchange Bureau approved the first time for the company to apply for public offering of shares declaration. July 30 to complete the application to the Stock Exchange listed delivery. December 22 The Company listed and completed the privatization.
2010 January 14 by the Republic of China annual top ten enterprises Golden Torch Award. 2013 On November 29, he was awarded the "2013 Taiwan Enterprise Sustainability Award" -
"Taiwan Top50 Enterprise Sustainability Report Award" manufacturing excellence. 2015 On October 30, he was awarded the "12th National Brand Yushan Award" - "Outstanding
Enterprise" National Award; December 21 was awarded the "24th Taiwan Excellence Award."
2016 .November 20, 2016 was awarded the "Taiwan Enterprise Sustainability Report Award" traditional manufacturing silver medal; December 23, 2016 was awarded the "Sustainable Governance Practice Award." .Achieved "2016 TIPS basic verification" and the 18th outstanding enterprise Jinfeng Award: Ten outstanding innovation research and development.
8
III. Corporate Governance Report 3.1 Organization 3.1.1 Organizational Chart 3.1.2 Major Corporate Functions：Please refer to page 11 of the Chinese annual
Shareholder's Meeting
Board of Director
Chairman
President
Secretariat
Office
Audit
Office
Executive
Vice
President
Executive
Vice
President
Department
Of Planning
Department
of Accounting
Hull Works
Department of
Occupational
Safety and
Health
Dock
Master's
Office
Legal
Affairs
Department
of Material
Department
of Financial
Analysis
Department
of Sales
Submarine
Development
Center of CSBC
Department
of Design
Department of
Information
Technology
Executive
Vice
President
Machinery Works
Executive
Vice
President
Outfitting
Works
Department of
Environmental
Protection
and Public
Utilities
Department of
Human Resources
and
Administration
Department
of Quality
Assurance
Keelung
Yard
Ship
Repair
Works
The Audit Committee Remuneration Committee
Innovation
and Research
Center
9
3.2 D
irecto
rs, Su
perv
isors
and
Man
agem
ent T
eam
3.
2.1 D
irect
ors a
nd Su
perv
isors
3.2.
1.1 T
he 15
th D
irect
ors
Title
Natio
nalit
y/
Coun
try o
f Or
igin
Nam
e ge
nder
Da
te
Elect
ed Te
rm(Ye
ars)
Date
Fir
st Ele
cted
Shar
ehol
ding
wh
en El
ecte
dCu
rrent
Sh
areh
oldi
ng
Spou
se &
M
inor
Sh
areh
oldi
ng
Shar
ehol
ding
by
Nom
inee
Arra
ngem
ent
Expe
rienc
e（Ed
ucat
ion）
Othe
r Pos
ition
Exec
utive
s, Di
rect
ors
or Su
perv
isors
who
are s
pous
es o
r wi
thin
two
degr
ees
of ki
nshi
p Sh
ares
％Sh
ares
％
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ame
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irman
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Direct
or Re
publ
ic of
Ch
ina
FANG
, MIN
G-CH
UNG
(Min
istry
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cono
mic
Affa
irs
Repr
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heng
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CHEN
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UNG
(Min
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of E
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omm
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G, JI
H-CH
IN
(Min
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ainan
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ariti
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Direct
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ater
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vestm
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06
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02 13
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or Re
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LONG
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Re
pres
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dustr
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bor U
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26,
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06.0
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06%
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%0
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ustri
al La
bor
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airm
an, K
aohs
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City
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nfed
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of Tr
ade
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epar
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ric En
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icipa
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dustr
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abor
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, CSB
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or Re
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ina
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, KUO
-JUNG
Ka
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ity
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esen
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r Uni
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07
01,
2014
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07 01
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radu
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; R
epre
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, CSB
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－
－
－
12
Note
s: (1
)Sta
rting
from
the
15th
Boa
rd o
f Dire
ctor
s, th
ere
is no
supe
rviso
r, an
d an
aud
it co
mm
ittee
cons
istin
g of
all
inde
pend
ent d
irect
ors i
s set
up
inste
ad.
(2)T
he te
nure
of t
he 15
th B
oard
of D
irect
ors i
s fro
m Ju
ne 26
, 201
3 to
June
22,
201
6.
Indep
ende
nt dire
ctor
Repu
blic of
Ch
ina
Inde
pend
ent D
irect
orKU
, CHI
A-HU
NG
male
06
26,
2013
3
12 27
,20
100
0.00
%0
0.00
%0
0 0
0
.Pre
siden
t, Na
tiona
l Ka
ohsiu
ng Fi
rst U
nive
rsity
of
Scien
ce an
d Te
chno
logy
(Ph.
D. in
Mec
hani
cal
Engin
eerin
g, Un
iversi
ty o
f No
tre D
ame,
USA
)
Pres
iden
t, C
hina
U
nive
rsity
of
Tech
nolo
gy
－
－
－
Indep
ende
nt dire
ctor
Repu
blic of
Ch
ina
Inde
pend
ent D
irect
orW
ANG,
CHI
A-NA
N m
ale
06 26
, 20
13
3 12
27,
2010
0 0.
00%
0 0.
00%
0 0
0 0
.Ass
istan
t Man
ager
, Taiw
an
Sem
icond
ucto
r M
anuf
actu
ring C
ompa
ny
Limite
d (P
h.D.
in In
dustr
ial
Engin
eerin
g and
M
anag
emen
t, Na
tiona
l Ch
iao Tu
ng U
nive
rsity
)
Ass
ocia
te
Prof
esso
r, D
epar
tmen
t of
Indu
stria
l En
gine
erin
g an
d M
anag
emen
t, N
atio
nal
Kao
hsiu
ng
Uni
vers
ity o
f A
pplie
d Sc
ienc
es
－
－
－
Indep
ende
nt dire
ctor
Repu
blic of
Ch
ina
Inde
pend
ent D
irect
orLO
, CHU
NG-M
IN
male
06
26,
2013
3
06 26
,20
130
0.00
%0
0.00
%0
0 0
0
.Ass
istan
t Pro
fess
or,
Depa
rtmen
t of A
pplie
d Ec
onom
ics, Y
u Da
Un
iversi
ty o
f Scie
nce a
nd
Tech
nolo
gy
(DBA
, Nat
iona
l Taip
ei Un
iversi
ty)
Ass
ocia
te
Prof
esso
r, D
epar
tmen
t of
Bus
ines
s A
dmin
istra
tion,
Yu
Da
Uni
vers
ity
of S
cien
ce a
nd
Tech
nolo
gy
－
－
－
13
3.2.
1.2 T
he 16
th D
irect
ors
02 08
, 201
7
Title
Na
tiona
lity/
Co
untry
of
Origi
n Na
me
gend
er
Date
Ele
cted
Term
(Year
s)Da
te
First
Elect
ed
Shar
ehol
ding
wh
en El
ecte
dCu
rrent
Sh
areh
oldi
ng
Spou
se &
M
inor
Sh
areh
oldi
ng
Shar
ehol
ding
by
Nom
inee
Arra
ngem
entEx
perie
nce（
Educ
atio
n）Ot
her P
ositi
on
Exec
utive
s, Di
rect
ors
or Su
perv
isors
who
are s
pous
es o
r wi
thin
two
degr
ees
of ki
nshi
p Sh
ares
％
Shar
es％
Shar
es ％
Shar
es％
Ti
tle N
ame
Relat
ion
Direct
or Re
publ
ic of
Ch
ina
CHEN
G,
WEN
-LON
(Min
istry
of
Econ
omic
Affa
irs
Repr
esen
tativ
e) m
ale
06 23
, 20
16
3 11
30,
2007
249,
612,
540
33.5
7%24
9,61
2,54
033.
57%
0 0
0 0
Depu
ty M
ayor
, Kao
hsiu
ng
City
Gov
ernm
ent
.C
hairm
an o
f CSB
C,
Taiw
an
(Ph.
D., U
nive
rsity
of
Was
hing
ton,
USA
)
Cha
irman
of
CSB
C, T
aiw
an
－
－
－
Direct
or Re
publ
ic of
Ch
ina
CHEN
, LIE-
LIN(M
inist
ry o
f Ec
onom
ic Af
fairs
Re
pres
enta
tive)
male
06
23,
2016
3
08 24
, 20
1224
9,61
2,54
033
.57%
249,
612,
5403
3.57
%0
0 0
0
.Vice
Pre
siden
t of C
SBC
(Gra
duat
ed fr
om
Depa
rtmen
t of M
arin
e En
ginee
ring,
Natio
nal
Taiw
an O
cean
Uni
versi
ty)
Pres
iden
t of
CSB
C, T
aiw
an－
－
－
Direct
or Re
publ
ic of
Ch
ina
Huan
g, Yin
g-Fa
ng
(Min
istry
of
Econ
omic
Affa
irs
Repr
esen
tativ
e) m
ale
09 23
, 20
16
3 09
23,
2016
249,
612,
540
33.5
7%24
9,61
2,54
033.
57%
0 0
0 0
.Hec
hun
Tech
nica
l Col
lege
Pres
iden
t, He
ad o
f the
De
partm
ent o
f Ind
ustri
al En
ginee
ring a
nd
Man
agem
ent,
Kaoh
siung
Un
iversi
ty o
f App
lied
Scien
ce an
d Te
chno
logy
, Di
rect
or o
f the
Scho
ol o
f Ne
stle,
Kao
hsiu
ng
Unive
rsity
of A
pplie
d Sc
ience
and
Tech
nolo
gy
(Uni
versi
ty o
f Pea
rce,
UK)
Nat
iona
l K
aohs
iung
U
nive
rsity
of
App
lied
Scie
nces
In
dust
rial
Engi
neer
ing
an
d M
anag
emen
t Fu
ll-tim
e pr
ofes
sor
－
－
－
14
Direct
or Re
publ
ic of
Ch
ina
FANG
, M
ING-
CHUN
G (M
inist
ry o
f Ec
onom
ic Af
fairs
Repr
esen
tativ
e)
male
06
23,
2016
3
07 04
, 20
0224
9,61
2,54
033
.57%
249,
612,
5403
3.57
%0
0 0
0
.Vice
Dea
n of
Aca
dem
ic Af
fairs
, Nat
iona
l Che
ng
Kung
Uni
vers
ity; C
hairm
an
and
Dean
of D
epar
tmen
t of
Syste
ms &
Nav
al M
echa
troni
c Eng
inee
ring,
Natio
nal C
heng
Kung
Un
iversi
ty
(Ph.
D., S
teve
ns In
stitu
te
of Te
chno
logy
, USA
)
Dire
ctor
of
Fish
ing
Vess
el
and
Mar
ine
Mac
hine
ry
Res
earc
h C
ente
r, N
atio
nal C
heng
K
ung
Uni
vers
ity
－
－
－
Direct
or Re
publ
ic of
Ch
ina
CHEN
, YU
NG-T
SUNG
(M
inist
ry o
f Ec
onom
ic Af
fairs
Repr
esen
tativ
e)
male
06
23,
2016
3
07 29
, 20
1324
9,61
2,54
033
.57%
249,
612,
5403
3.57
%0
0 0
0
.Exe
cutiv
e Offi
cer a
nd
Chief
of S
tate
-owe
d En
terp
rise C
omm
issio
n,
Min
istry
of E
cono
mic
Affa
irs
(Mas
ter,
Grad
uate
In
stitu
te o
f Che
mica
l En
ginee
ring,
Natio
nal
Cent
ral U
nive
rsity
)
Dep
uty
Chi
ef
of S
econ
d D
ivis
ion,
Stat
e-ow
ned
Ente
rpris
e C
omm
issi
on,
Min
istry
of
Econ
omic
A
ffairs
－
－
－
Direct
or Re
publ
ic of
Ch
ina
HUAN
G, JI
H-CH
IN(M
inist
ry o
f Ec
onom
ic Af
fairs
Repr
esen
tativ
e)m
ale
06 23
, 20
16
3 06
23,
2010
249,
612,
540
33.5
7%24
9,61
2,54
033.
57%
0 0
0 0
.Supe
rviso
r, Di
rect
or an
d M
anag
ing D
irect
or, C
SBC
Labo
r Uni
on
(Gra
duat
ed fr
om Sh
eet
Met
al De
partm
ent,
Natio
nal T
ainan
Indu
strial
Hi
gh Sc
hool
)
Cha
irman
of
Empl
oyee
s’ W
elfa
re
Com
mitt
ee,
CSB
C
－
－
－
Direct
or Re
publ
ic of
Ch
ina
LAN,
SYU-
CING
(M
inist
ry o
f Ec
onom
ic Af
fairs
Repr
esen
tativ
e)m
ale
06 23
, 20
16
3 11
11,
2005
249,
612,
540
33.5
7%24
9,61
2,54
033.
57%
0 0
0 0
.Seni
or Te
chni
cian,
Ke
elung
Yard
, CSB
C (D
epar
tmen
t of
Navig
atio
n, N
atio
nal
Keelu
ng M
ariti
me
Voca
tiona
l High
Scho
ol)
Cha
irman
, C
SBC
Kee
lung
Ya
rd L
abor
U
nion
－
－
－
Direct
or Re
publ
ic of
Ch
ina
CPC
Corp
orat
ion,
Ta
iwan
-
06 23
, 20
16
3 06
23,
2016
47,0
30,6
876.
33%
47,0
30,6
876.
33%
0 0
0 0
－
－
－
－
－
15
Direct
or Re
publ
ic of
Ch
ina
Lee X
in-M
in
(Chi
na St
eel
Repr
esen
tativ
e)m
ale
11 17
, 20
16
3 11
17,
2016
18,4
14,6
412.
48%
18,4
14,6
412.
48%
0 0
0 0
.Ass
istan
t Dep
uty G
ener
al M
anag
er o
f Chi
na St
eel
Corp
orat
.P
resid
ent o
f Chi
na St
eel
Glob
al Tr
adin
g Co
rpor
atio
n (M
BA o
f U
nive
rsity
of
Calif
orni
a)
Vice
Pre
siden
t of
Chi
na St
eel
Corp
orat
ion
－
－
－
Direct
or Re
publ
ic of
Ch
ina
Yue-
Li In
vestm
ent
Corp
orat
ion
- 06
23,
2016
3
02 13
,20
095,
246,
336
0.71
%5,
246,
336
0.71
%0
0 0
0 －
－
－
－
－
Direct
or Re
publ
ic of
Ch
ina
HOU,
DE-
LONG
(K
aohs
iung
City
Re
pres
enta
tive o
f In
dustr
ial La
bor
Unio
n of
CSB
C)
male
06
23,
2016
3
06.0
4,20
0746
0,80
4 0.
06%
813,
804
0.11
%0
0 0
0
.Cha
irman
, Ind
ustri
al La
bor U
nion
, CSB
C;
Chair
man
, Em
ploy
ees’
Welf
are C
omm
ittee
, CS
BC; C
hairm
an,
Kaoh
siung
City
Co
nfed
erat
ion
of Tr
ade
Unio
n ( D
epar
tmen
t of
Elect
ric En
ginee
ring,
Kaoh
siung
Mun
icipa
l Ka
ohsiu
ng In
dustr
ial H
igh
Scho
ol )
Tech
nici
an o
f C
SBC
; R
epre
sent
ativ
e of
Indu
stria
l La
bor U
nion
, C
SBC
－
－
－
Direct
or Re
publ
ic of
Ch
ina
HSIEH
, KUO
-JUNG
Ka
ohsiu
ng C
ity
Repr
esen
tativ
e of
Indu
strial
Labo
r Un
ion
of C
SBC
male
06
23,
2016
3
07 01
,20
1466
0,80
4 0.
09%
813,
804
0.11
%0
0 0
0
.Cha
irman
of C
SBC
Corp
orat
ion,
Taiw
an St
aff
Welf
are C
omm
ittee
(G
radu
ated
from
De
partm
ent o
f Mar
ine
Engin
eerin
g, Ka
ohsiu
ng
Insti
tute
of M
arin
e Te
chno
logy
)
Tech
nici
an o
f C
SBC
; R
epre
sent
ativ
e of
Indu
stria
l La
bor U
nion
, C
SBC
－
－
－
16
Note
s 1: T
he te
nure
of t
he 1
6th
Boar
d of
Dire
ctor
s is f
rom
June
23,
201
6 to
June
22, 2
019.
No
tes 2
:CPC
Cor
pora
tion,
Taiw
an R
epre
sent
ative
be e
lecte
d as
a Di
rect
or le
gal r
epre
sent
ative
at Ju
ne 23
,201
6
Indepe
ndent
Dir
ector
Repu
blic of
Ch
ina
Inde
pend
ent
Dire
ctor
LIN
, HUI
-JENG
m
ale
06 23
, 20
16
3 06
23,
2016
0 0
0 0
0 0
0 0
.Pre
siden
t of N
atio
nal
Peng
hu U
nive
rsity
of
Scien
ce an
d Te
chno
logy
(P
h.D,
Ship
build
ing
Engin
eerin
g Ins
titut
e,
Natio
nal T
aiwan
Un
iversi
ty)
.Pro
fess
or o
f D
epar
tmen
t of
Engi
neer
ing
Scie
nce
and
Oce
an
Engi
neer
ing,
Na
tiona
l Tai
wan
U
nive
rsity
.C
hun
Yu
Wor
ks &
C
o.,L
td.
Cha
irman
(sec
ond
ed)
－
－
－
Indepe
ndent
Dir
ector
Repu
blic of
Ch
ina
Inde
pend
ent
Dire
ctor
FU
, HO-
CHUN
G m
ale
06 23
, 20
16
3 06
23,
2016
0 0
0 0
0 0
0 0
.Pre
siden
t of M
etal
Indu
stries
Res
earc
h &
Deve
lope
nt C
entre
(P
h.D.
in In
stitu
te o
f M
ater
ials S
cienc
e,
Natio
nal S
un Ya
t-sen
Un
iversi
ty )
Prof
esso
r, N
atio
nal
Kao
hsiu
ng
Uni
vers
ity o
f A
pplie
d Sc
ienc
es
－
－
－
Indepe
ndent
Dir
ector
Repu
blic of
Ch
ina
Inde
pend
ent
Dire
ctor
LIE
U, D
ER-M
ING
male
06
23,
2016
3
06 23
,20
160
0 0
0 0
0 0
0
.Secu
rities
and
futu
res
man
agem
ent c
omm
ittee
of
the M
inist
ry o
f Fin
ance
(.Ph.
D.in
Insti
tute
of
Econ
omics
, Ohi
o St
ate
Unive
rsity,
USA
)
Prof
esso
r, N
atio
nal S
un
Yat-s
en
Uni
vers
ity
－
－
－
17
◆Major shareholders of the institutional shareholders Dec. 31, 2016
Name of Institutional Stockholder Major Stockholder
CPC Corporation, Taiwan Ministry of Economic Affairs 100%
China Steel Corporation (Note)
Ministry of Economic Affairs (MOEA) 20.00%Employee’s Stock Trust of China Steel Corporation 4.42%Transglory Investment Corporation 1.58%Cathay Life Insurance Co., Ltd 1.21%Vanguard Emerging Markets Stock Index Fund 1.21%Winning Investment Corporation 1.01%Public Service Pension Fund 0.97%Bureau of Labor Insurance 0.96%Vanguard Total International Stock Index Fund 0.87%GIC Asset Management Private Limited 0.80%
Yue-Li Investment Corporation
U-Ming Marine Transport Corporation 68.18%U-Ming Marine Transport (Singapore) Private Limited 31.82%
Note: China Steel Corporation compiled the list of major stockholders on the base date of August 1, 2016. ◆Major shareholders of the Company’s major institutional shareholders
Dec. 31, 2016 Name of
Institutional Shareholders
Major Stockholder
Transglory Investment Corporation
China Steel Express Corporation 49.89%Chung Hung Steel Corporation 40.91%China Steel Chemical Corporation 9.20%
Winning Investment Corporation
Gains Investment Corporation 49.00%Maruichi Investment Corporation 42.00%Transglory Investment Corporation 9.00%
Cathay Life Insurance Co., Ltd. Cathay Financial Holdings Co., Ltd. 100%
U-Ming Marine Transport Corporation(NOTE)
Asia Cement Corporation 39.25%Nan Shan Life Insurance Co., Ltd. 2.90%Cathay Life Insurance Co. Ltd 2.84%Management Board of the Public Service Pension Fund 2.13%
Bureau of Labor Insurance Fund 1.81%Yuan Ding Investment Corp. 1.05%
18
Yu-yuan Investment Corp. 0.94%Vanguard Emerging Markets Stock Index Fund, A Series Of Vanguard International Equity Index Funds 0.93%
Asia Investment Corp. 0.92%Ya Li Transtort Corp. 0.75%
U-MingMarine Transport (Singapore)Private Limited
U-Ming Marine Transport Corporation (99.99%) 99.99%
Note : As of July 13,2016(the record date of ex-cash dividend), the major stockholder of the U-Ming and the shareholding.
19
◆Pr
ofes
siona
l qua
lifica
tions
and i
ndep
ende
nce a
nalys
is of
dire
ctors
and s
uper
visor
s 06
01, 2
017
Crite
ria
Nam
e
Mee
t One
of t
he Fo
llowi
ng P
rofe
ssio
nal Q
ualif
icatio
n Re
quire
men
ts, To
geth
er
with
at Le
ast F
ive Ye
ars W
ork E
xper
ience
In
depe
nden
ce C
riter
ia(N
ote)
Num
ber o
f O
ther
Pub
lic
Com
pani
es in
W
hich
the
Indi
vidu
al is
C
oncu
rren
tly
Serv
ing
as a
n In
depe
nden
t D
irect
or
An In
struc
tor o
r Hi
gher
Pos
ition
in a
Depa
rtmen
t of
Com
mer
ce, L
aw,
Finan
ce, A
ccou
ntin
g, or
Oth
er A
cade
mic
Depa
rtmen
t Rela
ted
to th
e Bus
ines
s Ne
eds o
f the
Co
mpa
ny in
a Pu
blic
or P
rivat
e Jun
ior
Colle
ge, C
olle
ge o
r Un
ivers
ity
A Ju
dge,
Pub
lic
Pros
ecut
or, A
ttorn
ey,
Certi
fied
Publ
ic Ac
coun
tant
, or O
ther
Pr
ofes
siona
l or T
echn
ical
Spec
ialist
Who
has
Pa
ssed
a Na
tiona
l Ex
amin
atio
n an
d be
en
Awar
ded
a Cer
tifica
te in
a P
rofe
ssio
n Ne
cess
ary
for t
he B
usin
ess o
f the
Co
mpa
ny
Have
Wor
k Exp
erien
ce in
the
Area
s of C
omm
erce
, Law
, Fin
ance
, or A
ccou
ntin
g, or
Ot
herw
ise N
eces
sary
for t
he
Busin
ess o
f the
Com
pany
12
34
56
78
910
Min
istry
of Ec
onom
ic Af
fairs
Repr
esen
tativ
e:
CHEN
G, W
EN-LO
NV
V V
--
VV
VV
VV
V-
- M
inist
ry o
f Eco
nom
ic Af
fairs
Repr
esen
tativ
e:
CHEN
, LIE-
LIN-
- V
--
VV
VV
VV
V-
- M
inist
ry o
f Eco
nom
ic Af
fairs
Repr
esen
tativ
e:
FANG
, MIN
G-CH
UNG
V -
V V
-V
VV
V V
VV
--
Min
istry
of E
cono
mic
Affa
irsRe
pres
enta
tive:
CH
EN, Y
UNG-
TSUN
G-
- V
V-
VV
VV
VV
V-
- M
inist
ry o
f Eco
nom
ic Af
fairs
Repr
esen
tativ
e:
Huan
g, Yin
g-Fa
ngV
- V
V-
VV
VV
VV
V-
2 M
inist
ry o
f Eco
nom
ic Af
fairs
Repr
esen
tativ
e:
HUAN
G, JI
H-CH
IN-
- -
--
VV
VV
VV
V-
-
20
Note
: Plea
se ti
ck th
e co
rresp
ondi
ng b
oxes
that
app
ly to
the
dire
ctor
s or s
uper
visor
s dur
ing
the
two
year
s prio
r to
bein
g ele
cted
or d
urin
g th
e te
rm o
f offi
ce.
1. N
ot an
empl
oyee
of t
he C
ompa
ny o
r any
of i
ts af
filiat
es.
2. N
ot a
dire
ctor
or s
uper
visor
of t
he C
ompa
ny o
r any
of i
ts af
filiat
es. N
ot ap
plica
ble i
n ca
ses w
here
the p
erso
n is
an in
depe
nden
t dire
ctor
of
the C
ompa
ny, it
s par
ent c
ompa
ny, o
r any
subs
idiar
y in
which
the C
ompa
ny h
olds
, dire
ctly
or in
dire
ctly,
mor
e th
an 5
0% o
f the
votin
g sh
ares
. 3.
Not
a n
atur
al-pe
rson
shar
ehol
der w
ho h
olds
shar
es, t
oget
her w
ith th
ose
held
by
the
pers
on’s
spou
se, m
inor
child
ren,
or h
eld b
y th
e pe
rson
und
er o
ther
s’ na
mes
, in
an a
ggre
gate
am
ount
of 1
% or
mor
e of
the
tota
l num
ber o
f out
stand
ing
shar
es o
f the
Com
pany
or
rank
ing i
n th
e top
10 in
hol
ding
s. 4.
Not
a sp
ouse
, rela
tive
with
in th
e se
cond
deg
ree
of ki
nshi
p, o
r lin
eal r
elativ
e wi
thin
the
third
deg
ree
of ki
nshi
p, o
f any
of t
he p
erso
ns in
th
e pre
cedi
ng th
ree s
ubpa
ragr
aphs
. 5.
Not
a d
irect
or, s
uper
visor
, or e
mpl
oyee
of a
corp
orat
e sh
areh
olde
r who
dire
ctly
hold
s 5%
or m
ore
of th
e to
tal n
umbe
r of o
utsta
ndin
g sh
ares
of t
he C
ompa
ny o
r who
hol
ds sh
ares
rank
ing i
n th
e top
five
hol
ding
s.
Min
istry
of E
cono
mic
Affa
irsRe
pres
enta
tive:
LA
N, SY
U-CI
NG-
- -
--
VV
VV
VV
V-
- CP
C Co
rpor
atio
n, Ta
iwan
I -
--
--
--
--
--
--
-
Chin
a Ste
el Re
pres
enta
tive
Lee X
in-M
in
- -
V V
VV
V-
- V
VV
--
Yue-
Li In
vestm
ent
Corp
orat
ion
- -
- -
--
--
- -
--
--
Kaoh
siung
City
Re
pres
enta
tive o
f Ind
ustri
al La
bor U
nion
of C
SBC
HOU,
DE-
LONG
- -
- -
-V
VV
V V
VV
--
Kaoh
siung
City
Re
pres
enta
tive o
f Ind
ustri
al La
bor U
nion
of C
SBC
HSIEH
, KUO
-JUNG
- -
- -
-V
VV
V V
VV
--
Inde
pend
ent D
irect
orLIN
, HUI
-JENG
V
V V
VV
VV
VV
VV
VV
- In
depe
nden
t Dire
ctor
FU, H
O-CH
UNG
V -
V V
VV
VV
V V
VV
V-
Inde
pend
ent D
irect
orLIE
U, D
ER-M
ING
V -
V V
VV
VV
V V
VV
V1
21
6. N
ot a
dire
ctor
, sup
ervis
or, o
ffice
r, or
shar
ehol
der h
oldi
ng 5
% or
mor
e of
the
shar
es, o
f a sp
ecifi
ed co
mpa
ny o
r ins
titut
ion
which
has
a fin
ancia
l or b
usin
ess r
elatio
nshi
p wi
th th
e Com
pany
. 7.
Not
a p
rofe
ssio
nal in
divid
ual w
ho is
an
owne
r, pa
rtner
, dire
ctor
, sup
ervis
or, o
r offi
cer o
f a so
le pr
oprie
torsh
ip, p
artn
ersh
ip, c
ompa
ny,
or in
stitu
tion
that
pro
vides
com
mer
cial,
legal,
fina
ncial
, acc
ount
ing
serv
ices o
r con
sulta
tion
to th
e Co
mpa
ny o
r to
any
affil
iate
of th
e Co
mpa
ny, o
r a sp
ouse
ther
eof.
Thes
e re
strict
ions
do
not a
pply
to a
ny m
embe
r of t
he re
mun
erat
ion
com
mitt
ee w
ho e
xerc
ises p
ower
s pu
rsua
nt t
o Ar
ticle
7 of
the
“Re
gulat
ions
Gov
erni
ng t
he E
stabl
ishm
ent
and
Exer
cise
of P
ower
s of
Rem
uner
atio
n Co
mm
ittee
s of
Co
mpa
nies
who
se St
ock i
s List
ed o
n th
e TW
SE o
r Tra
ded
on th
e TPE
x“.
8.
Not
hav
ing a
mar
ital r
elatio
nshi
p, o
r a re
lative
with
in th
e sec
ond
degr
ee o
f kin
ship
to an
y oth
er d
irect
or o
f the
Com
pany
. 9.
Not
bee
n a p
erso
n of
any c
ondi
tions
def
ined
in A
rticle
30 o
f the
Com
pany
Law.
10
. Not
a go
vern
men
tal, j
urid
ical p
erso
n or
its r
epre
sent
ative
as d
efin
ed in
Arti
cle 27
of t
he C
ompa
ny La
w.
22
3.2.
2 Man
agem
ent T
eam
03,23,2017 Unit：
Share
Title
Na
tiona
lity/
Coun
try
of O
rigin
Na
me
gend
er
Date
Ef
fect
ive
Shar
ehol
ding
Sp
ouse
& M
inor
Sh
areh
oldi
ng
Shar
ehol
ding
by
Nom
inee
Ar
rang
emen
t Exp
erien
ce（Ed
ucatio
n）
Othe
r Pos
ition
Man
ager
s who
are
Spou
ses o
r With
in
Two
Degr
ees o
f Ki
nshi
p
Shar
es
％
Shar
es％
Sh
ares
％
Ti
tle
Nam
e Re
lat ion
Pres
iden
t R.
O.C
CHEN
,LIE
-LIN
male
08
/24/2
012
308,
229
0.04
145%
00
00
1. B
ache
lor d
egre
e 2.
Dire
ctor
of
Depa
rtmen
t of
Plan
ning
3.
Exec
utive
Vice
Pr
esid
ent
4.Se
nior
Vice
Pre
siden
t
None
－
－
－
Exec
utive
Vi
ce
Pres
iden
t R.
O.C
TSEN
G,KU
O-
CHEN
Gm
ale
06/0
1/201
496
,594
0.01
299%
00
00
1.M
aste
r deg
ree
2.Di
rect
or o
f De
partm
ent o
f Des
ign3.
Seni
or V
ice P
resid
ent
Dire
ctor
of S
hip
and
Ocea
n In
dustr
ies
R&D
Cent
er
－
－
－
Exec
utive
Vi
ce
Pres
iden
t R.
O.C
CHAN
G,CH
IEH-T
Em
ale
06/0
1/201
410
2,66
90.
0138
1%0
00
01.
Bach
elor d
egre
e2.
Gene
ral
Man
ager
of
Hull W
orks
3.
Seni
or V
ice P
resid
ent
com
mitt
ee o
f CR
class
ifica
tion
socie
ty
－
－
－
Exec
utive
Vi
ce
Pres
iden
t R.
O.C
LIN,FO
UNG
- TA
NGm
ale
03/2
3/201
70
00
00
01.
Doct
or d
egre
e2.
Dire
ctor
of
Depa
rtmen
t of D
esign
3.Chi
ef Su
perv
isor
com
mitt
ee o
f CR
class
ifica
tion
socie
ty
－
－
－
Exec
utive
Vi
ce
Pres
iden
t R.
O.C
WEI
,CH
ENG-
TZU
male
03
/23/2
017
00
00
00
1.Col
lege
deg
ree
2.Ge
nera
l M
anag
er o
f Ou
tfitti
ng W
orks
None
－
－
－
23
Secr
etar
y
Gene
ral
R.O.
C W
ANG,
CHEN
-FU
male
12
/01/2
013
00
00
00
1.Ba
chelo
r deg
ree
2.De
puty
Di
rect
or o
f De
partm
ent o
f Qua
lity
Assu
ranc
e
None
－
－
－
Audi
t Offi
ce
Audi
tor
Gene
ral
R.O.
C LIU
,CHU
NG-H
E m
ale
12/0
1/201
30
00
00
0
1.Ba
chelo
r deg
ree
2.De
puty
Di
rect
or o
f De
partm
ent o
f Hum
an
Reso
urce
s and
Ad
min
istra
tion
None
－
－
－
Hull W
orks
Ge
nera
l M
anag
er
R.O.
C YU
,MAO
-HUA
male
01
/01/2
017
61,0
000.
0082
0%0
00
0
1.M
aste
r deg
ree
2.De
puty
Gen
eral
M
anag
er o
f Hul
l W
orks
3.
Dire
ctor
of
Depa
rtmen
t of
Plan
ning
None
－
－
－
Depa
rtmen
t of
Sales
Di
rect
or
R.O.
C TS
AI,K
UN-
TSUN
Gm
ale
01/0
1/201
70
00
00
0
1.M
aste
r deg
ree
2.Di
rect
or o
f De
partm
ent o
f Sale
s 3.
Dire
ctor
of
Depa
rtmen
t of D
esign
None
－
－
－
Depa
rtmen
t of
Des
ign
Dire
ctor
R.
O.C
CHOU
-CHI
H-M
ING
m
ale
01/0
1/201
714
0,03
50.
0188
3%0
00
0
1.M
aste
r deg
ree
2.De
puty
Dire
ctor
of
Depa
rtmen
t of D
esign
3.Di
rect
or o
f De
partm
ent o
f Sale
s
None
－
－
－
Depa
rtmen
t of
Mat
erial
Di
rect
or
R.O.
C W
U,HU
I-T
SAI
male
09
/01/2
016
00
00
00
1.M
aste
r deg
ree
2.De
puty
Dire
ctor
of
Depa
rtmen
t of
Mat
erial
None
－
－
－
Depa
rtmen
t of
Plan
ning
Di
rect
or
R.O.
C LE
E,YEN
-CHI
ANG
male
03
/23/2
017
24,5
140.
0033
0%5,
000
0.00
067%
00
1.M
aste
r deg
ree
2.De
puty
Dire
ctor
of
Depa
rtmen
t of
Plan
ning
3.
Depu
ty D
irect
or o
f De
partm
ent o
f Hum
an
Reso
urce
s and
Ad
min
istra
tion
None
－
－
－
24
Inno
vatio
n an
d Re
sear
ch
Cent
er C
hief
Ex
ecut
ive
Offic
er
R.O.
C LIU
,CH
WAN
-CH
ANG
male
01
/01/2
017
97,74
00.
0131
4%0
00
0
1.Ba
chelo
r deg
ree
2.Di
rect
or o
f De
partm
ent o
f Pl
anni
ng
3. G
ener
al M
anag
er o
f Hu
ll Wor
ks
None
－
－
－
Outfi
tting
W
orks
Ge
nera
l M
anag
er
R.O.
C KA
O,CH
IEN-
I m
ale
03/2
3/201
70
00
00
0
1.Ba
chelo
r deg
ree
2.De
puty
Gen
eral
M
anag
er o
f Out
fittin
g W
orks
None
－
－
－
Ship
Rep
air
Wor
ks
Gene
ral
Man
ager
R.
O.C
LU,FE
NG-W
ENm
ale
11/1
1/201
50
00
00
01.C
olle
gede
gree
2.De
puty
Gen
eral
M
anag
er o
f Shi
p Re
pair
Wor
ks
None
－
－
－
Mac
hine
ry
Wor
ks
Gene
ral
Man
ager
R.
O.C
YEN,
CHI
H-M
ING
male
04
/03/2
009
00
00
00
1.Ba
chelo
r deg
ree
2.De
puty
Gen
eral
M
anag
er o
f M
achi
nery
Wor
ks
None
－
－
－
Dock
M
aste
r's
Offic
e Do
ck M
aste
r
R.O.
C CH
OU,
CHIN
-Im
ale
01/0
1/201
30
00
00
1. B
ache
lor d
egre
e2.
Pilo
t No
ne－
－
－
Depa
rtmen
t of
In
form
atio
n Te
chno
logy
Di
rect
or
R.O.
C W
ANG,
FU-Y
ING
male
05
/10/
2014
00
00
00
1.Ba
chelo
r deg
ree
2.De
puty
Dire
ctor
of
Depa
rtmen
t of
Plan
ning
No
ne－
－
－
Depa
rtmen
t of
Qua
lity
Assu
ranc
e Di
rect
or
R.O.
C CH
EN,H
UI-S
HAN
male
01
/01/2
013
987
0.00
013%
00
00
1.Col
lege
degr
ee2.
Gene
ral
Man
ager
of
Ship
Rep
air W
orks
Dire
ctor
of S
ociet
y fo
r Non
destr
uctiv
e Te
sting
&
Certi
ficat
ion
of
Taiw
an(S
NTCT
)
－
－
－
25
Depa
rtmen
t of
Hum
an
Reso
urce
s an
d Ad
min
istra
tion
Dire
ctor
R.O.
C CH
IANG
,CHI
H-W
ENm
ale
03/2
3/201
718
,000
0.00
242%
00
00
1.Ba
chelo
r deg
ree
2.De
puty
Gen
eral
M
anag
er o
f Hul
l W
orks
3.
Depu
ty
Dire
ctor
of
Depa
rtmen
t of H
uman
Re
sour
ces a
nd
Adm
inist
ratio
n
None
－
－
－
Depa
rtmen
t of
Fina
ncial
An
alysis
Di
rect
or
R.O.
C HS
IEH,
LING
-LING
Fem
ale
12/0
1/201
30
00
00
0
1.Ba
chelo
r deg
ree
2.Pr
esid
ent e
nter
prise
Ch
ina H
oldi
ng
Com
pany
Chi
ef
Finan
cial O
ffice
r
Supe
rviso
r of
TA
NG EN
G IR
ON
WOR
KS C
O., L
TD
－
－
－
Depa
rtmen
t of
Acc
ount
ing
Dire
ctor
R.
O.C
SU,C
HEN
-AN
male
12
/01/2
013
00
00
00
1.Ba
chelo
r deg
ree
2.Se
ctio
n M
anag
er o
f De
partm
ent
of
Acco
untin
g
None
－
－
－
Depa
rtmen
t of
Oc
cupa
tiona
l Sa
fety
and
Healt
h Di
rect
or
R.O.
C YE
H,CH
IA-JE
NG
male
08
/10/
2016
140,
786
0.01
893%
00
00
1.Ba
chelo
r deg
ree
2.De
puty
Di
rect
or o
f De
partm
ent o
f Oc
cupa
tiona
l Saf
ety
and
Healt
h
None
－
－
－
Depa
rtmen
t of
En
viron
men
tal
Prot
ectio
n an
d Pu
blic
Utilit
ies
Dire
ctor
R.O.
C HO
U,YA
-WEN
m
ale
01/0
1/201
714
,700
0.00
198%
00
00
1.Ba
chelo
r deg
ree
2.De
puty
Gen
eral
M
anag
er o
f Hul
l W
orks
None
－
－
－
Keelu
ng Ya
rd
Gene
ral
Man
ager
R.
O.C
TANG
,JU
NG-
KUEI
male
08
/10/
2016
16,0
000.
0021
5%0
00
01.
Bac
helo
r deg
ree
2. P
rojec
t M
anag
er
None
－
－
－
26
3.2.
3 Rem
uner
atio
n of
Dire
ctor
s, Pr
esid
ent,
and V
ice Pr
esid
ent
◆Re
mun
erat
ion
of D
irect
ors
Unit:
NT$
tho
usan
ds
Title
Na
me
Rem
uner
atio
n Ra
tio of
Tota
l Re
mun
erat
ion
(A+B
+C+D
) to N
et
Inco
me (
%)
Relev
ant R
emun
erat
ion R
eceiv
ed by
Dire
ctors
Who
are A
lso
Emplo
yees
Ra
tio of
Tota
l Co
mpe
nsat
ion
(A+B
+C+D
+E+F
+G) t
o Ne
t Inc
ome (
%)
Com
pens
atio
n Pa
id to
Di
recto
rs fro
m
an In
veste
d Co
mpa
ny
Base
Co
mpe
nsat
ion (
A)Se
vera
nce P
ay (B
) Bo
nus t
o
Dire
ctors
(C)
Allo
wanc
es (D
) Sa
lary,
Bonu
ses,
and A
llowa
nces
(E
)
Seve
ranc
e Pay
(F
) Pr
ofit
Shar
ing-
Emplo
yee B
onus
(G)
The
comp
any
All
comp
anies
in
the
cons
olid
ated
finan
cial
statem
ents
The
comp
any
All
comp
anies
in
the
cons
olid
ated
finan
cial
statem
ents
The
comp
any
All
comp
anies
in
the
cons
olid
ated
finan
cial
statem
ents
The
comp
any
All
comp
anies
in
the
cons
olid
ated
finan
cial
statem
ents
The
comp
any
All
comp
anies
in
the
cons
olida
ted
finan
cial
statem
ents
The
comp
any
All
comp
anies
in
the
cons
olid
ated
finan
cial
statem
ents
The
comp
any
All
comp
anies
in
the
cons
olid
ated
finan
cial
statem
ents
The
comp
any
All
comp
anies
in
the
cons
olida
ted
finan
cial
statem
ents
The
comp
any
All
comp
anies
in
the
cons
olida
ted
finan
cial
statem
ents
Ca sh
St oc k
Ca sh
St oc k
Chairman
Min
istry
of
Ec
onom
ic
Affa
irs
Rep
rese
nta
tive
LA
I, SU
N-QU
AE
1,76
5 1,803
1,000 1,000
00
00
-0.215%
-0.218%
0
0
0
0
00
00
-0.215%
-0.218%
None
27
Chairman
Min
istry
of
Ec
onom
ic A
ffairs
R
epre
sen
tativ
e
CHEN
G,
WEN
-LO N
1,82
0 1,866
0
0
00
00
-0.141%
-0.145%
0
0
0
0
00
00
-0.141%
-0.145%
None
Dire
ctor
Min
istry
of
Ec
onom
ic A
ffairs
R
epre
sen
tativ
e W
U,FO
NG-
SHEN
G
69
69
0
0
00
00
-0.005%
-0.005%
0
0
0
0
00
00
-0.005%
-0.005%
None
Dire
ctor
Min
istry
of
Ec
onom
ic
Rep
rese
nta
tive
CHEN
, YU
NG-T
SUN
G
125
125
0
0
00
00
-0.010%
-0.010%
0
0
0
0
00
00
-0.010%
-0.010%
None
Dire
ctor
Min
istry
of
Ec
onom
ic A
ffairs
R
epre
sen
tativ
e
CHEN
, LIE
-LIN
0
0
0
0
00
00
0%
0%
2,861
2,861
0
0
00
00
-0.222%
-0.222%
None
28
Dire
ctor
Min
istry
of
Ec
onom
ic A
ffairs
R
epre
sen
tativ
e FA
NG,
M
ING
-CH
UN
G
125
125
0
0
00
00
-0.010%
-0.010%
0
0
0
0
00
00
-0.010%
-0.010%
None
Dire
ctor
Min
istry
of
Ec
onom
ic A
ffairs
R
epre
sen
tativ
e
Su,
Wei
-Jin
60
60
0
0
00
00
-0.005%
-0.005%
0
0
0
0
00
00
-0.005%
-0.005%
None
Dire
ctor
Min
istry
of
Ec
onom
ic A
ffairs
R
epre
sen
tativ
e
Huan
g, Yin
g-Fa
ng
34
34
0
0
00
00
-0.003%
-0.003%
0
0
0
0
00
00
-0.003%
-0.003%
None
Dire
ctor
Min
istry
of
Ec
onom
ic A
ffairs
R
epre
sen
tativ
e HU
ANG,
JIH
-CHI
N
0
0
0
0
00
00
0%
0%
1,107
1,107
0
0
00
00
-0.086%
-0.086%
None
Dire
ctor
Min
istry
of
Ec
onom
ic A
ffairs
R
epre
sen
tativ
e LA
N,
SYU-
CIN
G
0
0
0
0
00
00
0%
0%
1,164
1,164
0
0
00
00
-0.090%
-0.090%
None
29
Dire
ctor
CPC
(Cor
pora
tio
n,
Taiw
an
Repr
esen
tativ
e)
LEE,
SHAO
-YI
125
125
0
0
00
00
-0.010%
-0.010%
0
0
0
0
00
00
-0.010%
-0.010%
None
Dire
ctor
Yue-
Li In
vestm
ent
Co
rpor
ati
on
125
125
0
0
00
00
-0.010%
-0.010%
0
0
0
0
00
00
-0.010%
-0.010%
None
Director
Chin
a St
eel
Repr
esen
tativ
e LIU
, JIH
-GAN
G
110
110
0
0
00
00
-0.009%
-0.009%
0
0
0
0
00
00
-0.009%
-0.009%
None
Director
Chin
a St
eel
Repr
esen
tativ
e Le
e Xi
n-M
in
15
15
0
0
00
00
-0.001%
-0.001%
0
0
0
0
00
00
-0.001%
-0.001%
None
Dire
ctor
Kaoh
siun
g City
Re
pres
enta
tive o
f In
dustr
ial
Labo
r Un
ion
of
CSBC
HO
U,
DE-LO
NG
125
125
0
0
00
00
-0.010%
-0.010%
1,109
1,109
0
0
00
00
-0.096%
-0.096%
None
30
Dire
ctor
Kaoh
siun
g City
Re
pres
enta
tive o
f In
dustr
ial
Labo
r Un
ion
of
CSBC
HS
IEH,
KUO-
JUN
G
125
125
0
0
00
00
-0.010%
-0.010%
1,148
1,148
0
0
00
00
-0.099%
-0.099%
None
Independ
ent
Dire
ctor
KU,
CHIA
-HU
NG
344
344
0
0
00
00
-0.027%
-0.027%
0
0
0
0
00
00
-0.027%
-0.027%
None
Independ
ent
Dire
ctor
WAN
G,
CHIA
-NA
N 344
344
0
0
00
00
-0.027%
-0.027%
0
0
0
0
00
00
-0.027%
-0.027%
None
Independ
ent
Dire
ctor
LO,
CHUN
G-M
I 344
344
0
0
00
00
-0.027%
-0.027%
0
0
0
0
00
00
-0.027%
-0.027%
None
Independ
ent
Dire
ctor
LIEU,
DE
R-M
ING
376
376
0
0
00
00
-0.029%
-0.029%
0
0
0
0
00
00
-0.029%
-0.029%
None
Independ
ent
Dire
ctor
FU,
HO-C
HUNG
376
376
0
0
00
00
-0.029%
-0.029%
0
0
0
0
00
00
-0.029%
-0.029%
None
Independ
ent
Dire
ctor
LIN,
HUI-J
ENG
376
376
0
0
00
00
-0.029%
-0.029%
0
0
0
0
00
00
-0.029%
-0.029%
None
No
te：
Plea
se re
fer t
o pag
e 29 o
f the
Chin
ese a
nnua
l rep
ort.
31
◆Re
mun
erat
ion
of th
e Pre
siden
t and
Vice
Pres
iden
t
Unit:
NT$
thou
sand
s
Title
Na
me
Salar
y(A)
Seve
ranc
e Pay
(B)
Bonu
ses a
nd
Allo
wanc
es (C
) Pr
ofit
Shar
ing-
Empl
oyee
Bon
us (D
) Ra
tio o
f tot
al co
mpe
nsat
ion
(A+B
+C+D
) to
net
in
com
e (%)
Co
mpe
nsat
ion
Paid
to
Dire
ctor
s fro
m
an In
veste
d Co
mpa
ny
The
com
pany
Co
mpa
nies
in th
e co
nsoli
date
d
finan
cial
state
men
ts
The
com
pan
y
Com
panie
s in
the
cons
olida
ted
fin
ancia
l sta
tem
ents
The
com
pan
y
Com
panie
s in
the
cons
olida
ted
fin
ancia
l sta
tem
ents
The c
ompa
ny
Com
panie
s in th
e co
nsoli
dated
finan
cial st
atem
ents
The
com
pany
Co
mpa
nies
in th
e co
nsoli
date
d
finan
cial
state
men
ts
Cash
St
ock
Cash
Stoc
k
Pres
iden
t CH
EN,LI
E-LIN
2,431
2,431
0
0
430
430
0
0
0
0
-0.222%
-0.222%
None
Exec
utive
Vi
ce P
resid
ent
WAN
G,HA
I-TAW
1,765
1,768
0
0
282
282
0
0
0
0
-0.159%
-0.159%
None
Exec
utive
Vi
ce P
resid
ent
CHAN
G,CH
IEH-
TE1,773
1,773
0
0
282
282
0
0
0
0
-0.160%
-0.160%
None
Exec
utive
Vi
ce P
resid
ent
TSEN
G,KU
O-CH
ENG
1,714
1,714
0
0
276
276
0
0
0
0
-0.155%
-0.155%
None
Exec
utive
Vi
ce P
resid
ent
WU,
RAY-D
AN
(201
6/11/0
1 re
tirem
ent)
1,474
1,536
2,309
2,309
210
210
0
0
0
0
-0.310%
-0.315%
5
Note
：Pl
ease
refe
r to
page
30 o
f the
Chi
nese
annu
al re
port.
32
3.2.4 Comparison of Remuneration for Directors, Supervisors, Presidents and Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents
A. The ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two most recent fiscal years to directors, supervisors, presidents and vice presidents of the Company, to the net income.
Year
Ratio of total remuneration paid to directors, presidents and Executive vice presidents to net income (%)
The company Companies in the consolidated financial statements
2015 5.61% 5.65% 2016 -1.96% -1.97%
B. The policies, standards, and portfolios for the payment of remuneration,
the procedures for determining remuneration, and the correlation with business performance. The Remuneration Committee assists the Board in discharging its responsibilities relating to the Company’s compensation and benefits policies, plans and programs, and the evaluation of the directors’ and executives’ compensation. The compensation to directors and other key management personnel were determined by the Remuneration Committee of the Company in accordance with the individual performance and the market trends. The compensation is measured based on the employee’s personal achievements, contribution made to the business operation, and the market averages. It has a positive correlation with the performance of the Company's business.
33
3.3 Implementation of Corporate Governance 3.3.1 Board of Directors A total of 6 (A) meetings of the Board of Directors were held in the previous period. The attendance of director and supervisor were as follows:
Title Name Attendance
in Person (B)
By ProxyAttendance
Rate (%)【Ｂ/Ａ】
Remarks
Chairman Ministryof Economic Affairs Representative
Lai,Sun-Quae 2 0 100.00 On 2016/6/23, the Ministry of Economic Affairs reappointed CHENG, WEN-LON as a director of the Company. CHENG,
WEN-LON 4 0 100.00
Director Ministryof Economic Affairs Representative
Su, Wei-Jin 1 1 50.00 To 2016/6/22 Term of office of the 15th Board of Directors
CHEN, LIE-LIN 4 0 100.00
2016/6/23 The 16th Shareholders' General Meeting was elected as Director
Director Ministryof Economic Affairs Representative
Wu,Fong-Shen 3 0 100.00 Wu,Fong-Shen resigned in 2016/7/21; the Ministry of Economic Affairs 2016/9/23 reappointed Director Representative Huang, Ying-Fang took over
Huang, Ying-Fang 2 0 100.00
Director Ministryof Economic Affairs Representative FANG, MING-CHUNG
6 0 100.00 -
Director Ministryof Economic Affairs Representative CHEN, YUNG-TSUNG
6 0 100.00 -
Director Ministryof Economic Affairs Representative HUANG, JIH-CHIN
6 0 100.00 -
Director Ministryof Economic Affairs Representative LAN, SYU-CING
5 1 83.83 -
Director CPC Corporation, Taiwan 6 0 100.00 -
Director China Steel Representative
Liu Jih-Gang 5 0 100.00 On 2016/11/17, China Steel Corporation (CSC) was re-appointed as Director Representative Lee Xin-MinLee Xin-Min 1 0 100.00
Director Yue-Li Investment Corporation 3 2 50.00 -
Director Kaohsiung City Representative of Industrial Labor Union of CSBC HOU, DE-LONG
6 0 100.00 -
Director Kaohsiung City Representative of Industrial Labor Union of CSBC HSIEH, KUO-JUNG
6 0 100.00 -
34
Independent director
KU, CHIA-HUNG 2 0 100.00 To 2016/6/22 Term of office of the 15th Board of Directors
LIN, HUI-JENG 3 1 75.00 2016/6/23 The 16th Shareholders' General Meeting was elected as an independent director
Independent director
WANG, CHIA-NAN 2 0 100.00 To 2016/6/22 Term of office of the 15th Board of Directors
FU, HO-CHUNG 4 0 100.00 2016/6/23 The 16th Shareholders' General Meeting was elected as an independent director
Independent director
LO, CHUNG-MIN 2 0 100.00 To 2016/6/22 Term of office of the 15th Board of Directors
LIEU, DER-MING 3 1 75.00 2016/6/23 The 16th Shareholders' General Meeting was elected as an independent director
Other mentionable items: 1. The operation of the board of directors shall, if any of the following circumstances, specify the date, period, the
contents of the board of directors, the opinions of all independent directors and the handling of the opinions of the independent directors: (1) Section 14 of the Securities Exchange Act: None (2) Unless otherwise stated, other board of directors of the board of directors who opposes or retains the opinion and has a record or written statement: None
2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: (1) 2016/5/10 The board of directors reviewed and approved the nomination of candidates for directors and
independent directors，Lai,Sun-Quae Chairman of the board、CHEN, LIE-LIN general manager、Wu,Fong-Shen director、FANG, MING-CHUNG director、CHEN, YUNG-TSUNG director、HUANG, JIH-CHIN director、LAN, SYU-CING director、Liu Jih-Gang director、 HOU, DE-LONG director、HSIEH, KUO-JUNG director，according to one by one to avoid.
(2) 2016/8/9 The board of directors reviewed and approved CHENG, WEN-LON Chairman of the board holds the position of CSBC Coating Solutions Co., Ltd Director and Chairman of the Board, CHENG, WEN-LON chairman of the board in accordance with the law to avoid.
(3) 2016/11/8 The board of directors proposed amendments to the Company "Regulations Governing the Payment of Remuneration to Chairman and General Manager"，CHEN, LIE-LIN general manager in accordance with the law to avoid.
(4) 2016/12/27 The board of (extraordinary) directors proposed amendments to the Company "Regulations Governing the Payment of Remuneration to Chairman and General Manager”，CHENG, WEN-LON chairman of the board and CHEN, LIE-LIN general manager in accordance with the law to avoid.
3. Measures taken to strengthen the functionality of the board: The Board of Directors has established an Audit Committee and a Remuneration Committee to assist the board in carrying out its various duties.
35
3.3.2 Audit Committee （or Attendance of Supervisors at Board Meetings） A total of 5 (A) Audit Committee meetings were held in the previous period. The attendance of the independent directors was as follows:
Title Name Attendance in Person
(B)
By Proxy
Attendance Rate (%)【Ｂ/Ａ】
Remarks
Independent director
KU, CHIA-HUNG
2 0 100.00 The 15th Session of the Audit Committee was closed at 2016/6/22.
Independent director
WANG, CHIA-NAN 2 0 100.00
The 15th Session of the Audit Committee was closed at 2016/6/22.
Independent director
LO, CHUNG-MIN
2 0 100.00 The 15th Session of the Audit Committee was closed at 2016/6/22.
Independent director
LIN, HUI-JENG 3 0 100.00
2016/6/23 The 16th independent director of the Company is elected by the shareholders' meeting.
Independent director
FU, HO-CHUNG
3 0 100.00
2016/6/23 The 16th independent director of the Company is elected by the shareholders' meeting.
Independent director
LIEU, DER-MING 3 0 100.00
2016/6/23 The 16th independent director of the Company is elected by the shareholders' meeting.
Other mentionable items: 1. The operation of the Audit Committee shall, if any of the following circumstances, specify the date
of the Board, the date, the contents of the motion, the results of the Audit Committee resolutions and the handling of the opinions of the Audit Committee (1) The matters listed in Article 14.5 of the Securities Exchange Act: None. (2) other than before, other unapproved by the Board of Auditors, and all the directors Two-thirds of the agreed matters: None.
2. If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: 2016/8/9 The board of directors reviewed and approved The third remuneration committee, should be invited to LIN, HUI-JENG、FU, HO-CHUNG、LIEU, DER-MING three new independent directors, LIN, HUI-JENG Independent director、 FU, HO-CHUNG Independent director、 LIEU, DER-MING Independent director in accordance with the law to avoid.
3. Communications between the independent directors, the Company's chief internal auditor and CPAs (e.g. the items, methods and results of audits of corporate finance or operations, etc.)
36
Date Way Object Item Result 105.3.8 Audit
Committee meetings
Auditor GeneralVisa accountant
1.2015 annual financial report and consolidated financial report.
2.Statement of Internal Control System for 2015 .
3.Internal audit business report.
Agreed to submit a statement on the internal control system for 2015.(同
105.5.3 Audit Committee meetings
Auditor GeneralVisa accountant
1.Review the consolidated financial statements for the first quarter of 2016
2.Internal audit business report.105.8.2 Audit
Committee meetings
Auditor GeneralVisa accountant
1.Review the consolidated financial statements for the second quarter of 2016
2.Internal audit business report.105.11.1 Audit
Committee meetings
Auditor GeneralVisa accountant
1.Review the consolidated financial statements for the third quarter of 2016
2.Internal audit business report.
37
3.3.
3 Cor
pora
te G
over
nanc
e Im
plem
enta
tion
Stat
us an
d Dev
iatio
ns fr
om “t
he Co
rpor
ate G
over
nanc
e Bes
t-Pra
ctice
Prin
ciples
for T
WSE
/TPE
x Lis
ted C
ompa
nies
”
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om “t
he C
orpo
rate
Go
vern
ance
Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
” and
Rea
sons
Ye
sNo
Abstr
act I
llustr
atio
n
1. D
oes t
he co
mpa
ny es
tabl
ish an
d di
sclo
se th
e Co
rpor
ate G
over
nanc
e Bes
t-Pra
ctice
Prin
ciples
ba
sed
on “C
orpo
rate
Gov
erna
nce B
est-P
ract
ice
Prin
ciples
for T
WSE
/TPE
x List
ed C
ompa
nies
”?
vCS
BC h
as C
odex
on
Corp
orat
e Gov
erna
nce a
nd
has b
een
disc
lose
d on
the C
SBC
webs
ite an
d th
e Pu
blic
Info
rmat
ion
Obse
rvat
ory.
webs
ite h
ttp: /
/ www
. Csb
cnet
.com
.tw in
vesto
r an
d inv
esto
r rela
tions
area
.
Refe
renc
e to
the l
istin
g and
OTC
Co
de o
f Cor
pora
te G
over
nanc
e Pr
actic
e and
CSB
C ch
arac
teris
tics.
2. S
hare
hold
ing s
truct
ure &
shar
ehol
ders’
righ
ts (1
) Doe
s the
com
pany
esta
blish
an in
tern
al op
erat
ing p
roce
dure
to d
eal w
ith sh
areh
olde
rs’
sugg
estio
ns, d
oubt
s, di
sput
es an
d lit
igatio
ns,
and
impl
emen
t bas
ed o
n th
e pro
cedu
re?
(2
) Doe
s the
com
pany
pos
sess
the l
ist o
f its
majo
r sh
areh
olde
rs as
well
as th
e ulti
mat
e own
ers o
f th
ose s
hare
s?
V V
CSBC
exte
rnal
webs
ite h
as th
e "In
vesto
r Zon
e"
and
the i
nfor
mat
ion
on th
e "In
vesto
r Zon
e M
anag
emen
t Poi
nts"
shou
ld b
e disc
lose
d in
this
area
. All t
he d
epts.
of C
SBC
shou
ld fo
llow
this
poin
t. A
cont
act w
indo
w (h
ttp://
www.
csbc
net.c
om.th
/Ser
vice/
Inve
stor
/Con
tact
Us.h
tm) i
s ava
ilabl
e for
pub
lic co
ntac
t an
d ad
vice t
o sh
areh
olde
rs.
CSBC
is re
spon
sible
for c
ollec
ting a
nd u
pdat
ing
the l
ist o
f ulti
mat
e con
trolle
rs of
majo
r sh
areh
olde
rs an
d m
ajor s
hare
hold
ers.
CSBC
has
set u
p sp
ecifi
c man
agem
ent p
oint
s and
Re
fere
nce t
o th
e list
ing a
nd O
TC
Code
of C
orpo
rate
Gov
erna
nce
Prac
tice a
nd C
SBC
char
acte
ristic
s. Re
fere
nce t
o th
e list
ing a
nd O
TC
Code
of C
orpo
rate
Gov
erna
nce
Prac
tice a
nd C
SBC
char
acte
ristic
s.
38
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om “t
he C
orpo
rate
Go
vern
ance
Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
” and
Rea
sons
Ye
sNo
Abstr
act I
llustr
atio
n
(3) D
oes t
he co
mpa
ny es
tabl
ish an
d ex
ecut
e the
risk
m
anag
emen
t and
fire
wall s
yste
m w
ithin
its
cong
lom
erat
e stru
ctur
e?
(4
) Doe
s the
com
pany
esta
blish
inte
rnal
rules
ag
ainst
insid
ers t
radi
ng w
ith u
ndisc
lose
d in
form
atio
n?
V V
oper
atin
g pro
cedu
res f
or th
e fin
ancia
l and
bu
sines
s-rela
ted
oper
atin
g met
hods
of t
he
relat
ed en
terp
rise c
ompa
nies
and
impl
emen
ted
them
. In ad
ditio
n, in
ord
er to
impl
emen
t a
com
preh
ensiv
e risk
cont
rol o
f sub
sidiar
ies, s
et
the "
subs
idiar
y sup
ervis
ion
and
man
agem
ent
poin
ts" o
f the
inte
rnal
cont
rol m
echa
nism
sta
ndar
ds.
CSBC
has
the "
Signi
fican
t Inf
orm
atio
n Pr
oces
sing
and
Prev
entio
n of
Insid
er Tr
adin
g Man
agem
ent"
, wh
ich re
gulat
es th
at th
e dire
ctor
s, m
anag
ers
and
empl
oyee
s of C
SBC
actu
ally k
now
that
CSB
C ha
s a si
gnifi
cant
impa
ct o
n th
e pric
e of i
ts sh
ares
. Afte
r the
info
rmat
ion
has b
een
clarif
ied,
Or w
ithin
18 h
ours
afte
r the
expi
ry o
f CSB
C,
CSBC
may
not
buy
or s
ell in
the n
ame o
f the
sh
ares
of C
SBC
or o
ther
secu
rities
of t
he n
atur
e of
the e
quity
inte
rest
in th
e sec
uriti
es b
usin
ess
prem
ises o
r on
or in
the n
ame o
f ano
ther
pe
rson.
This
poin
t can
be f
ound
on
our w
ebsit
e（
http
://ww
w.cs
bcne
t.com
.tw/S
ervic
e/In
vesto
r/C
orpo
rate
Gov
erna
nce/
Inte
rnal
Regu
latio
ns.
htm
）
Refe
renc
e to
the l
istin
g and
OTC
Co
de o
f Cor
pora
te G
over
nanc
e Pr
actic
e and
CSB
C ch
arac
teris
tics.
Refe
renc
e to
the l
istin
g and
OTC
Co
de o
f Cor
pora
te G
over
nanc
e Pr
actic
e and
CSB
C ch
arac
teris
tics.
39
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om “t
he C
orpo
rate
Go
vern
ance
Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
” and
Rea
sons
Ye
sNo
Abstr
act I
llustr
atio
n
3. Co
mpo
sitio
n an
d Re
spon
sibilit
ies o
f the
Boa
rd o
f Di
rect
ors
(1) D
oes t
he B
oard
dev
elop
and
impl
emen
t a
dive
rsifie
d po
licy f
or th
e com
posit
ion
of it
s m
embe
rs?
(2
) Doe
s the
com
pany
volu
ntar
ily es
tabl
ish o
ther
fu
nctio
nal c
omm
ittee
s in
addi
tion
to th
e Re
mun
erat
ion
Com
mitt
ee an
d th
e Aud
it Co
mm
ittee
?
(3) D
oes t
he co
mpa
ny es
tabl
ish a
stand
ard
to
mea
sure
the p
erfo
rman
ce o
f the
Boa
rd, a
nd
impl
emen
t it a
nnua
lly?
V V V
The n
omin
ated
dire
ctor
s and
inde
pend
ent
dire
ctor
s hav
e inc
lude
d a w
ide r
ange
of
back
grou
nds s
uch
as p
rodu
ctio
n, m
anag
emen
t, sc
ience
and
tech
nolo
gy, f
inan
ce an
d so
ciety.
CS
BC se
ts th
e Sala
ry R
emun
erat
ion
Com
mitt
ee
and
the A
udit
Com
mitt
ee ac
cord
ing t
o law
CS
BC es
tabl
ished
the "
Boar
d Pe
rform
ance
Ev
aluat
ion
Met
hod"
in 20
11. T
he p
erfo
rman
ce
evalu
atio
n wa
s con
duct
ed o
n a r
egul
ar b
asis
from
2012
onw
ards
. In ad
ditio
n to
bein
g a
refe
renc
e for
the m
anag
emen
t of t
he b
usin
ess
info
rmat
ion
and
reso
urce
s, it
was a
lso u
sed
as a
refe
renc
e for
the d
irect
ors'
, And
the r
esul
ts of
th
e eva
luat
ion
from
2016
onw
ards
anno
unce
d on
the c
ompa
ny's
exte
rnal
webs
ite
http
://ww
w.cs
bcne
t.com
.tw /
Serv
ice /
Inve
stor
Re
fere
nce t
o th
e list
ing a
nd O
TC
Code
of C
orpo
rate
Gov
erna
nce
Prac
tice a
nd C
SBC
char
acte
ristic
s. Re
fere
nce t
o th
e list
ing a
nd O
TC
Code
of C
orpo
rate
Gov
erna
nce
Prac
tice a
nd C
SBC
char
acte
ristic
s. Re
fere
nce t
o th
e list
ing a
nd O
TC
Code
of C
orpo
rate
Gov
erna
nce
Prac
tice a
nd C
SBC
char
acte
ristic
s.
40
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om “t
he C
orpo
rate
Go
vern
ance
Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
” and
Rea
sons
Ye
sNo
Abstr
act I
llustr
atio
n
(4
) Doe
s the
com
pany
regu
larly
evalu
ate t
he
inde
pend
ence
of C
PAs?
V
/ Cor
pora
teGo
vern
ance
. CS
BC ev
aluat
es th
e ind
epen
denc
e of C
PAs
annu
ally,
ensu
ring t
hat t
hat t
hey a
re n
ot
stake
hold
ers s
uch
as a
Boar
d m
embe
r, su
perv
isor,
shar
ehol
der o
r per
son
paid
by t
he
Com
pany
.
Refe
renc
e to
the l
istin
g and
OTC
Co
de o
f Cor
pora
te G
over
nanc
e Pr
actic
e and
CSB
C ch
arac
teris
tics.
4.
Whe
ther
the c
ompa
ny h
as es
tabl
ished
a ch
anne
l of
com
mun
icatio
n wi
th in
tere
sted
parti
es an
d se
t up
stake
hold
er ar
eas o
n th
e com
pany
's we
bsite
and
prop
erly
resp
ond
to im
porta
nt co
rpor
ate s
ocial
re
spon
sibilit
y iss
ues t
hat a
re o
f int
eres
t to
stake
hold
ers?
VCS
BC w
ebsit
e has
a sta
keho
lder
area
(web
site:
ht
tp://
www.
csbc
net.c
om.tw
/Ser
vice/
Inte
reste
dAr
ea.h
tm , a
s a ch
anne
l of c
omm
unica
tion
with
in
tere
sted
parti
es, t
his a
rea i
s uni
fied
The
info
rmat
ion
disc
lose
d on
the C
ompa
ny's
webs
ite
will b
e eas
ier fo
r the
inte
reste
d pa
rties
to fi
nd
the i
nfor
mat
ion
requ
ired
by th
e int
eres
ted
parti
es, a
nd th
e con
tact
box
will
be p
rovid
ed fo
r th
e int
eres
ted
parti
es to
resp
ond.
Refe
renc
e to
the l
istin
g and
OTC
Co
de o
f Cor
pora
te G
over
nanc
e Pr
actic
e and
CSB
C ch
arac
teris
tics.
5. D
oes t
he co
mpa
ny ap
poin
t a p
rofe
ssio
nal
shar
ehol
der s
ervic
e age
ncy t
o de
al wi
th
shar
ehol
der a
ffairs
?
VCS
BC is
entru
sted
by Fu
bon
Gene
ral S
ecur
ities
Co
., Ltd
. to
hand
le th
e sha
reho
lder
s' Re
fere
nce t
o th
e list
ing a
nd O
TC
Code
of C
orpo
rate
Gov
erna
nce
Prac
tice a
nd C
SBC
char
acte
ristic
s.
41
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om “t
he C
orpo
rate
Go
vern
ance
Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
” and
Rea
sons
Ye
sNo
Abstr
act I
llustr
atio
n
6. In
form
atio
n Di
sclo
sure
(1
) Doe
s the
com
pany
hav
e a co
rpor
ate w
ebsit
e to
disc
lose
bot
h fin
ancia
l sta
ndin
gs an
d th
e sta
tus
of co
rpor
ate g
over
nanc
e?
(2
) Doe
s the
com
pany
hav
e oth
er in
form
atio
n di
sclo
sure
chan
nels
(e.g.
bui
ldin
g an
Engli
sh
webs
ite, a
ppoi
ntin
g des
ignat
ed p
eopl
e to
hand
le in
form
atio
n co
llect
ion
and
disc
losu
re,
crea
ting a
spok
esm
an sy
stem
, web
casti
ng
inve
stor c
onfe
renc
es)?
V V
CSBC
shall
, in ac
cord
ance
with
the p
rovis
ions
of
the p
ublic
info
rmat
ion
obse
rvat
ory,
decla
re th
e fin
ancia
l and
bus
ines
s inf
orm
atio
n an
d se
t up
the i
nves
tor s
ervic
e web
site o
n th
e Com
pany
's we
bsite
to d
isclo
se fi
nanc
ial, s
hare
hold
er an
d pr
oduc
t inf
orm
atio
n ( w
ebsit
e: ht
tp://
www.
cs
bcne
t.com
.tw)
. Th
e CSB
C we
bsite
also
has
an En
glish
versi
on o
f th
e web
site (
http
://ww
w.cs
bcne
t.com
.tw/
Engli
sh/)
and
has a
"set
spea
ker's
poi
nt" t
o es
tabl
ish a
spok
esm
an sy
stem
to h
andl
e the
m
atte
r.
Re
fere
nce t
o th
e list
ing a
nd O
TC
Code
of C
orpo
rate
Gov
erna
nce
Prac
tice a
nd C
SBC
char
acte
ristic
s. Re
fere
nce t
o th
e list
ing a
nd O
TC
Code
of C
orpo
rate
Gov
erna
nce
Prac
tice a
nd C
SBC
char
acte
ristic
s.
42
7. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, 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)? (1) Status of employee rights and employee wellness:
A. For the benefit of employees, CSBC has signed a group agreement with the trade unions on August 17, 104, including trade union activities, working hours, leave leave, salary, bonus, welfare, safety and health, labor relations, human development, retirement Pensions and other working conditions, and in accordance with labor laws and regulations, the provisions of the rules of work and the management requirements, the contents of the staff rights and obligations and welfare items, and regular review to safeguard the rights and interests of employees. B. CSBC provide considerable welfare measures, in addition to labor insurance, health insurance, and for staff mutual gold insurance, the other for employees to insure 3 million group accident insurance, foreign travel safety insurance, employee health checks, and cultural and recreational, Activities and other subsidies, the current labor relations are quite harmonious.
(2) Employee Concern: CSBC has set the terms of the "Employee Injuries" and sent condolences to the Spring Festival, the Dragon Boat Festival, the Mid-Autumn Festival, the Mid-Autumn Festival, the Spring Festival, the Mid-Autumn Festival, the Mid-Autumn Festival, Where the hospital colleagues, and other condolences to send gold.
(3) Investor Relations: CSBC has set up a spokesperson to communicate with investors. CSBC website to set up the investor area service website to expose corporate governance, financial information, shareholder information, contacts and product-related information to provide investors with timely service information. website is: http: // www. Csbcnet.com. Tw.
(4) Supplier Relationships: CSBC suppliers are managed by the Supplier Management Activity Benchmark and the Material Supplier Selection Benchmark. There are long-term supply contracts for good suppliers, and suppliers can match the needs of the company's production and marketing , And to maintain long-term relationship, and the quality of good supply, as the supplier of environmental protection, safety and health issues have been in the "supplier management benchmark" and "material supplier selection benchmark" norms.
43
(5) stakeholders rights: CSBC has set up a spokesman and has a stakeholder area on theCSBC website ( http://www.csbcnet.com.tw/Service/InterestedArea.htm As a means of communicating with stakeholders, this area will unify the information disclosed in the website of the Company and make it easier for the stakeholders to find the information needed by the stakeholders. The area also provides a contact box for Stakeholder Response.
(6) CSBC for the directors to purchase liability insurance situation: CSBC has been responsible for the purchase of directors of insurance, insurance US $ 3 million.
44
(7) D
irect
ors a
nd m
anag
ers a
nd st
aff t
rain
ing r
ecor
ds:
A. D
irect
or ab
out c
orpo
rate
gove
rnan
ce tr
ainin
g Title
Na
me
Train
ing
hour
s St
udy p
erio
d Sp
onso
ring O
rgan
izatio
nCo
urse
Fr
om
To
Ch
airm
an
Min
istry
of E
cono
mic
A
ffairs
Rep
rese
ntat
ive
CH
ENG,
WEN
-LON
3H
2016
/10/
20
2016
/10/
20
Fina
ncial su
pervis
ory
comm
ission
R.O.
C(Taiw
an)
The
11th
Tai
pei C
orpo
rate
G
over
nanc
e Fo
rum
3H
2016
/08/0
9 20
16/0
8/09
Secu
rities
& Fu
ture
s In
stitu
te
Adv
ance
d se
min
ar o
f dire
ctor
s and
su
perv
isor
s (in
clud
ing
inde
pend
ent
dire
ctor
s
Dire
ctor
M
inis
try o
f Eco
nom
ic
Affa
irs R
epre
sent
ativ
e C
HEN
, YU
NG
-TSU
NG
3H
2016
/10/
04
2016
/10/
04
Secu
rities
& Fu
ture
s In
stitu
te
Adv
ance
d se
min
ar o
f dire
tors
and
su
perv
isor
s (in
clud
ing
inde
pend
ent
dire
ctor
s-Pu
blic
issu
e of
dire
ctor
s of
the
com
pany
shou
ld p
ay a
ttent
ion
to
the
lega
l iss
ues)
3H
2016
/08/0
9 20
16/0
8/09
Secu
rities
& Fu
ture
s In
stitu
te
Adv
ance
d se
min
ar o
f dire
ctor
s and
su
perv
isor
s (in
clud
ing
inde
pend
ent
dire
ctor
s)
Dire
ctor
M
inis
try o
f Eco
nom
ic
Affa
irs R
epre
sent
ativ
e
CH
EN, L
IE-L
IN
3H
2016
/09/
01
2016
/09/
01
Secu
rities
& Fu
ture
s In
stitu
te
Inte
grity
Man
agem
ent A
nd C
orpo
rate
So
cial
Res
pons
ibili
ty S
ympo
sium
)
3H
2016
/08/0
9 20
16/0
8/09
Secu
rities
& Fu
ture
s In
stitu
te
Adv
ance
d se
min
ar o
f dire
ctor
s and
su
perv
isor
s (in
clud
ing
inde
pend
ent
dire
ctor
s))
Dire
ctor
M
inis
try o
f Eco
nom
ic
Affa
irs R
epre
sent
ativ
e W
U,F
ON
G-S
HEN
G
3H
2016
/01/2
6 20
16/0
1/26
Secu
rities
& Fu
ture
s In
stitu
te
Cor
pora
te G
over
nanc
e Fo
rum
Se
ries,2
016-
Insi
der T
radi
ng a
nd
Cor
pora
te S
ocia
l Res
pons
ibili
ty)
45
Dire
ctor
C
PC (C
orpo
ratio
n,
Taiw
an
Rep
rese
ntat
ive)
LE
E, S
HA
O-Y
I
3H
2016
/09/
02
2016
/09/
02
Secu
rities
& Fu
ture
s In
stitu
te
Inte
grity
Man
agem
ent A
nd C
orpo
rate
So
cial
Res
pons
ibili
ty S
ympo
sium
3H
2016
/08/0
9 20
16/0
8/09
Secu
rities
& Fu
ture
s In
stitu
te
Adv
ance
d se
min
ar o
f di
rect
ors
and
supe
rvis
ors
(incl
udin
g in
depe
nden
t di
rect
ors)
3H
2016
/04/2
1 20
16/0
4/21
Secu
rities
& Fu
ture
s In
stitu
te
Cor
pora
te G
over
nanc
e Fo
rum
Se
ries,2
016-
Insi
der T
radi
ng a
nd
Cor
pora
te S
ocia
l Res
pons
ibili
ty
Dire
ctor
M
inis
try o
f Eco
nom
ic
Affa
irs R
epre
sent
ativ
e FA
NG,
MIN
G-C
HU
NG
3H
2016
/08/0
9 20
16/0
8/09
Secu
rities
& Fu
ture
s In
stitu
te
Adv
ance
d se
min
ar o
f di
rect
ors
and
supe
rvis
ors
(incl
udin
g in
depe
nden
t di
rect
ors)
)
3H
2016
/03/3
1 20
16/0
3/31
Secu
rities
& Fu
ture
s In
stitu
te
Cor
pora
te G
over
nanc
e Fo
rum
Se
ries,2
016-
Insi
der T
radi
ng a
nd
Cor
pora
te S
ocia
l Res
pons
ibili
ty
Dire
ctor
M
inis
try o
f Eco
nom
ic
Affa
irs R
epre
sent
ativ
e
Su, W
ei-J
in
3H
2016
/04/2
1 20
16/0
4/21
Secu
rities
& Fu
ture
s In
stitu
te
Cor
pora
te G
over
nanc
e Fo
rum
Se
ries,2
016-
Insi
der T
radi
ng a
nd
Cor
pora
te S
ocia
l Res
pons
ibili
ty)
Dire
ctor
M
inis
try o
f Eco
nom
ic
Affa
irs R
epre
sent
ativ
e HU
ANG,
JIH-
CHIN
3H
2016
/08/0
9 20
16/0
8/09
Secu
rities
& Fu
ture
s In
stitu
te
Adv
ance
d se
min
ar o
f dire
ctor
s and
su
perv
isor
s (in
clud
ing
inde
pend
ent
dire
ctor
s))
3H
2016
/08/0
5 20
16/0
8/05
Secu
rities
& Fu
ture
s In
stitu
te
Sem
inar
of
law
for t
he in
side
r sha
re
trans
fer o
f t
he li
sted
com
pany
)
Dire
ctor
M
inis
try o
f Eco
nom
ic
Affa
irs R
epre
sent
ativ
e LA
N, SY
U-CI
3H
2016
/10/
06
2016
/10/
06
Secu
rities
& Fu
ture
s In
stitu
te
Dis
cuss
ion
on P
reve
ntin
g Em
ploy
ees'
Frau
d in
Ent
erpr
ises
)
3H
2016
/10/
06
2016
/10/
06
Secu
rities
& Fu
ture
s In
stitu
te
Adv
ance
d se
min
ar o
f di
rect
ors
and
supe
rvis
ors
(incl
udin
g in
depe
nden
t
46
dire
ctor
s))
Dire
ctor
Kaoh
siung
City
Re
pres
enta
tive o
f In
dustr
ial La
bor U
nion
of
CSBC
HO
U, D
E-LO
NG
3H
2016
/08/0
9 20
16/0
8/09
Secu
rities
& Fu
ture
s In
stitu
te
Adv
ance
d se
min
ar o
f di
rect
ors
and
supe
rvis
ors
(incl
udin
g in
depe
nden
t di
rect
ors)
)
3H
2016
/04/2
1 20
16/0
4/21
Secu
rities
& Fu
ture
s In
stitu
te
Cor
pora
te G
over
nanc
e Fo
rum
Se
ries,2
016-
Insi
der T
radi
ng a
nd
Cor
pora
te S
ocia
l Res
pons
ibili
ty)
Dire
ctor
Kaoh
siung
City
Re
pres
enta
tive o
f In
dustr
ial La
bor U
nion
of
CSBC
HS
IEH,
KUO-
JUNG
9.5H
20
16/0
9/12
20
16/0
9/13
M
inist
ry o
f Lab
or
Labo
r dire
ctor
pro
fess
iona
l kn
owle
dge
train
ing
activ
ities
,201
6)
3H
2016
/08/0
9 20
16/0
8/09
Secu
rities
& Fu
ture
s In
stitu
te
Adv
ance
d se
min
ar o
f di
rect
ors
and
supe
rvis
ors
(incl
udin
g in
depe
nden
t di
rect
ors)
)
3H
2016
/04/2
1 20
16/0
4/21
Secu
rities
& Fu
ture
s In
stitu
te
Cor
pora
te G
over
nanc
e Fo
rum
Se
ries,2
016—
Insi
der T
radi
ng a
nd
Cor
pora
te S
ocia
l Res
pons
ibili
ty)
Dire
ctor
Ch
ina S
teel
Repr
esen
tativ
e LIU
, JIH
-GAN
G 3H
20
16/0
8/09
2016
/08/0
9 Se
curit
ies &
Futu
res
Insti
tute
A
dvan
ced
sem
inar
of d
irect
ors a
nd
supe
rvis
ors (
incl
udin
g in
depe
nden
t di
rect
ors)
)
Inde
pend
ent
D
irec
tor
FU, H
O-CH
UNG
3H
2016
/09/
01
2016
/09/
01
Secu
rities
& Fu
ture
s In
stitu
te
Inte
grity
Man
agem
ent a
nd C
orpo
rate
So
cial
Res
pons
ibili
ty S
ympo
sium
)
3H
2016
/08/0
9 20
16/0
8/09
Secu
rities
& Fu
ture
s In
stitu
te
Adv
ance
d se
min
ar o
f di
rect
ors
and
supe
rvis
ors
(incl
udin
g in
depe
nden
t di
rect
ors)
)
Inde
pend
ent
Dir
ecto
r LIE
U, D
ER-M
ING
3H
2016
/08/0
9 20
16/0
8/09
Secu
rities
& Fu
ture
s In
stitu
te
Adv
ance
d se
min
ar o
f di
rect
ors
and
supe
rvis
ors
(incl
udin
g in
depe
nden
t di
rect
ors)
)
3H
2016
/08/0
5 20
16/0
8/05
Taiw
an A
cade
my o
f Ba
nkin
g and
Fina
nce
Cor
pora
te G
over
nanc
e Fo
rum
- H
ow
to R
efor
m T
axes
) In
depe
nden
t
LIN, H
UI-JE
NG
3H
2016
/08/0
9 20
16/0
8/09
Secu
rities
& Fu
ture
s A
dvan
ced
sem
inar
of
dire
ctor
s an
d
47
Dir
ecto
r In
stitu
te
supe
rvis
ors
(incl
udin
g in
depe
nden
t di
rect
ors
3H
2016
/03/3
1 20
16/0
3/31
Secu
rities
& Fu
ture
s In
stitu
te
Cor
pora
te G
over
nanc
e Fo
rum
,201
6
Inde
pend
ent
D
irec
tor
LO, C
HUNG
-MI
3H
2016
/01/2
6 20
16/0
1/26
Secu
rities
& Fu
ture
s In
stitu
te
Cor
pora
te G
over
nanc
e Fo
rum
Se
ries,2
016—
Insi
der T
radi
ng a
nd
Cor
pora
te S
ocia
l Res
pons
ibili
ty)
B. M
anag
ers a
bout
corp
orat
e gov
erna
nce t
rain
ing
Title
Na
me
Train
ing
hour
s St
udy p
erio
d Sp
onso
ring
Orga
niza
tion
Cour
se
From
To
Aud
it O
ffic
e A
udit
or
Gen
eral
LIU,CHU
NG-H
E
6H
2016
/11/2
8 20
16/1
1/28
Secu
rities
& Fu
ture
s In
stitu
te
Cor
pora
te B
usin
ess D
ecis
ion
- m
akin
g B
usin
ess C
onsi
dera
tion
and
Lega
l Ris
k
6H
2016
/06/0
8 20
16/0
6/08
Acco
untin
g Res
earch
an
d De
velo
pmen
t Fo
unda
tion
Inte
rnal
aud
iting
rela
ted
law
s and
re
gula
tions
and
com
pute
r aud
iting
pr
actic
e an
d ap
plic
atio
n)
Dep
artm
ent
of
Acc
ount
ing
Dir
ecto
r
SU,CHEN
-AN
4H
2016
/05/1
1 20
16/0
5/11
PwC T
aiwan
Le
asin
g A
ccou
ntin
g N
ew A
ge
IFR
S16
Sem
inar
)
4H
2016
/06/0
6 20
16/0
6/06
Taiw
an St
ock E
xcha
nge
Sem
inar
to p
rom
ote
the
adop
tion
of
the
Inte
rnat
iona
l Fin
anci
al R
epor
ting
Gui
delin
es)
12H
2016
/09/
22
2016
/09/
23
Acco
untin
g Res
earch
an
d De
velo
pmen
t Fo
unda
tion
Con
tinui
ng e
duca
tion
to th
e he
ad o
f
the
acco
unt o
f iss
uer t
he b
roke
rage
fir
m)
3H
2016
/01/2
0 20
16/0
1/20
PwC T
aiwan
Se
min
ar fo
r the
thin
g th
at th
e he
ad o
f
finan
cil a
nd a
ccou
nt sh
ould
be
know
)
48
C.sta
ff tra
inin
g rec
ords
: We have established training center to perform employee training function,
tota
l act
ual t
raining fee was NT$
30,2
95,0
00
in 2
016,and training hours as follow:
Item
Num
ber o
f cl
asse
s N
umbe
r of
tra
inin
g Training hours
Male
Female
Male
Female
Hig
h le
vel m
anag
er tr
aini
ng
8 130
7 636
34
Inte
rmed
iate
man
ager
trai
ning
11
163
6 1,391
44
Engi
neer
ing
and
man
agem
ent
pers
onne
l tra
inin
g 33
991
232
11,468
2,689
Tech
nica
l per
sonn
el tr
aini
ng
106
4,808
98
123,358
2,518
Tota
l 158
6,092
343
136,853
5,285
D. W
ith th
e fin
ancia
l info
rmat
ion
trans
pare
nt re
levan
t per
sonn
el to
obt
ain th
e rele
vant
auth
ority
to in
dica
te th
e rele
vant
circ
umsta
nces
: (A
). Th
e aud
it ro
om o
f CSB
C ha
s obt
ained
the i
nter
nal a
udito
r's ce
rtific
ate o
f the
inte
rnal
audi
ting a
ssoc
iatio
n of
the R
OC.
(B).
The a
ccou
ntin
g dep
artm
ent o
f CSB
C ha
s obt
ained
the c
ertif
icate
of h
igher
qua
lifica
tion
for t
he p
rofe
ssio
nal a
nd te
chni
cal p
erso
nnel
of t
he ex
amin
atio
n in
stitu
te.
49
(8) Risk management policy and risk measurement standards: CSBC had a Risk Management Policy ,and established Risk Management Committee to promote risk management procedure, and established he Risk Management Promotion Team to assist procedure .Construct the risk management structure to implement the overall risk management performance of CSBC.
(9) Implementation of Customer Policy: CSBC is a qualified company for the Quality Management System (ISO 9001). The quality policy is "Customer Satisfaction and Quality First" and provides customer satisfaction with the core values of "team, commitment, security and service" products and services.
8.Has the company implemented a self-evaluation report on corporate governance or has it authorized any other professional organization to conduct such evaluation? If so, please describe the opinion from the Board, the result of self or authorized evaluation, the major deficiencies, suggestions, or improvements. 2016 CSBC industry in accordance with the provisions of the Taiwan Stock
Exchange in the Securities and Futures Market Development Fund corporate
governance self-assessment platform to declare CSBC corporate governance
evaluation self-assessment operations, evaluation results listed as the top 6% to
20% blue chip companies.
50
3.3.
4 Com
posit
ion,
Res
pons
ibilit
ies an
d Ope
ratio
ns of
the R
emun
erat
ion C
omm
ittee
CS
BC h
as es
tabl
ished
the R
emun
erat
ion
Com
mitt
ee's
Orga
niza
tiona
l Rul
es in
acco
rdan
ce w
ith th
e pro
visio
ns o
f Arti
cle 14
of t
he Se
curit
ies
Exch
ange
Act
and
the M
easu
res f
or th
e List
ing o
f the
Stoc
k Exc
hang
e or t
he A
dmin
istra
tion
of th
e Sala
ry an
d Re
mun
erat
ion
of th
e Com
pani
es in
th
e Sec
uriti
es an
d Fu
ture
s Bus
ines
ses p
rom
ulga
ted
by th
e Exe
cutiv
e Yua
n Fin
ancia
l Sup
ervis
ion
and
Man
agem
ent C
omm
issio
n Th
e Re
mun
erat
ion
Com
mitt
ee is
com
pose
d of
thre
e ind
epen
dent
dire
ctor
s who
se te
rms o
f ref
eren
ce ar
e the
pol
icies
, sys
tem
s, sta
ndar
ds an
d str
uctu
re fo
r the
pur
pose
of f
orm
ulat
ing a
nd re
gular
ly re
viewi
ng th
e per
form
ance
and
rem
uner
atio
n of
dire
ctor
s and
man
ager
s. A.
Prof
essio
nal Q
ualif
icatio
ns an
d Ind
epen
denc
e Ana
lysis
of R
emun
erat
ion
Com
mitt
ee M
embe
rs
Ti
tle
Crite
ria Na
me
Mee
ts On
e of t
he Fo
llowi
ng P
rofe
ssio
nal Q
ualif
icatio
n Re
quire
men
ts,
Toge
ther
with
at Le
ast F
ive Ye
ars’
Wor
k Exp
erien
ce
Inde
pend
ence
Crit
eria
(Not
e)
Num
ber o
f Oth
er
Publ
ic C
ompa
nies
in
Whi
ch th
e In
divi
dual
is
Con
curr
ently
Se
rvin
g as
an
Rem
uner
atio
n C
omm
ittee
M
embe
r
Rem
arks
An in
struc
tor o
r high
er
posit
ion
in a
depa
rtmen
t of
com
mer
ce, la
w, fi
nanc
e,
acco
untin
g, or
oth
er
acad
emic
depa
rtmen
t re
lated
to th
e bus
ines
s ne
eds o
f the
Com
pany
in
a pu
blic
or p
rivat
e ju
nior
colle
ge, c
olleg
e or
unive
rsity
A ju
dge,
pub
lic p
rose
cuto
r, at
torn
ey, C
ertif
ied P
ublic
Ac
coun
tant
, or o
ther
pr
ofes
siona
l or t
echn
ical
spec
ialist
who
has
pas
sed
a na
tiona
l exa
min
atio
n an
d be
en aw
arde
d a c
ertif
icate
in
a pr
ofes
sion
nece
ssar
y fo
r the
bus
ines
s of t
he
Com
pany
Has w
ork
expe
rienc
e in
the
area
s of c
omm
erce
, law
, fin
ance
, or
acco
untin
g, or
ot
herw
ise n
eces
sary
fo
r the
bus
ines
s of
the C
ompa
ny
12
3 4
56
7 8
Inde
pend
ent
Dire
ctor
W
ANG,
CH
IA-N
AN
ˇ
ˇˇ
ˇ ˇ ˇ
ˇˇ
ˇ None
The s
econ
d se
ssio
n co
nven
er
Inde
pend
ent
Dire
ctor
KU
, CH
IA-H
UNG
ˇ
ˇˇ
ˇ ˇ ˇ
ˇˇ
ˇ None
The s
econ
d se
ssio
n m
embe
r
Inde
pend
ent
Dire
ctor
LO
, CH
UNG-
MI
ˇ
ˇˇ
ˇ ˇ ˇ
ˇˇ
ˇ None
The s
econ
d se
ssio
n m
embe
r
Inde
pend
ent
Dire
ctor
LIE
U,
DER-
MIN
G ˇ
ˇ
ˇ
ˇ ˇ
ˇ ˇ ˇ
ˇ ˇ
ˇ 1
The t
hird
sess
ion
conv
ener
51
Inde
pend
ent
Dire
ctor
LIN
, HUI
-JENG
ˇ
- ˇ
ˇ ˇ
ˇ ˇ ˇ
ˇ ˇ
ˇ None
The t
hird
sess
ion
mem
ber
Inde
pend
ent
Dire
ctor
FU
, HO
-CHU
NG
ˇ
- ˇ
ˇ ˇ
ˇ ˇ ˇ
ˇ ˇ
ˇ None
The h
ird se
ssio
n m
embe
r
Note
: Plea
se ti
ck th
e cor
resp
ondi
ng b
oxes
that
appl
y to
a mem
ber d
urin
g the
two
year
s prio
r to
bein
g elec
ted
or d
urin
g the
term
(s) o
f offi
ce.
B. A
ttend
ance
of M
embe
rs at
Rem
uner
atio
n Com
mitt
ee M
eetin
gs
Ther
e ar
e 3
mem
bers
in th
e Re
mun
erat
ion
Com
mitt
ee. A
tota
l of 3
(A) R
emun
erat
ion
Com
mitt
ee m
eetin
gs w
ere
held
in th
e pr
evio
us p
erio
d.
The a
ttend
ance
reco
rd o
f the
Rem
uner
atio
n Co
mm
ittee
mem
bers
was a
s fol
lows
:
Title
Nam
e At
tend
ance
in
Per
son(
B)By
Pro
xy
Atte
ndan
ce R
ate
(%)【
Ｂ/Ａ
】Re
mar
ks
Conv
ener
W
ANG,
CHI
A-NA
N
1
0
100%
Th
e sec
ond
sess
ion
(old
) con
vene
r (
Augu
st 8,
2013
to Ju
ne 2
2, 20
16)
Com
mitt
ee
Mem
ber
KU, C
HIA-
HUNG
1
0
100%
Th
e sec
ond
sess
ion
(old
) mem
ber
(Au
gust
8, 20
13 to
June
22,
2016
) Co
mm
ittee
M
embe
rLO
, CHU
NG-M
I
1
0
100%
Th
e sec
ond
sess
ion
(old
) mem
ber
(Au
gust
8, 20
13 to
June
22,
2016
)
Conv
ener
LIE
U, D
ER-M
ING
2
0
10
0%
The t
hird
sess
ion
(new
) con
vene
r (
Augu
st 9,
2016
to Ju
ne 2
2, 20
19)
Com
mitt
ee
Mem
ber
LIN, H
UI-JE
NG
2
0
10
0%
The T
hird
sess
ion
(new
) mem
ber
(Au
gust
9, 20
16 to
June
22,
2019
) Co
mm
ittee
M
embe
rFU
, HO-
CHUN
G
2
0
100%
Th
e Thi
rd se
ssio
n (n
ew) m
embe
r (
Augu
st 9,
2016
to Ju
ne 2
2, 20
19)
Othe
r men
tiona
ble i
tem
s: 1.
If th
e boa
rd o
f dire
ctor
s dec
lines
to ad
opt o
r mod
ifies
a re
com
men
datio
n of
the r
emun
erat
ion
com
mitt
ee, it
shou
ld sp
ecify
the d
ate o
f the
m
eetin
g, se
ssio
n, co
nten
t of t
he m
otio
n, re
solu
tion
by th
e boa
rd o
f dire
ctor
s, an
d th
e Com
pany
’s re
spon
se to
the r
emun
erat
ion
com
mitt
ee’s
52
opin
ion
(eg.,
the r
emun
erat
ion
pass
ed b
y the
Boa
rd o
f Dire
ctor
s exc
eeds
the r
ecom
men
datio
n of
the r
emun
erat
ion
com
mitt
ee, t
he
circu
msta
nces
and
caus
e for
the d
iffer
ence
shall
be s
pecif
ied):
None
. 2.
Res
olut
ions
of t
he re
mun
erat
ion
com
mitt
ee o
bjec
ted
to b
y mem
bers
or su
bjec
t to
a qua
lified
opi
nion
and
reco
rded
or d
eclar
ed in
writ
ing,
the
date
of t
he m
eetin
g, se
ssio
n, co
nten
t of t
he m
otio
n, al
l mem
bers’
opi
nion
s and
the r
espo
nse t
o m
embe
rs’ o
pini
on sh
ould
be s
pecif
ied: N
one.
53
3.3.
5 Ful
fillm
ent o
f Cor
pora
te So
cial R
espo
nsib
ility
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om th
e Cor
pora
te
Socia
l Res
pons
ibilit
y Be
st-Pr
actic
e Prin
ciples
for
TWSE
/TPE
x List
ed C
ompa
nies
an
d Re
ason
s Ye
sNo
Abstr
act E
xplan
atio
n 2
1. C
orpo
rate
gove
rnan
ce im
plem
enta
tion
(1) H
as th
e Com
pany
esta
blish
ed it
s cor
pora
te so
cial
resp
onsib
ility p
olicy
or s
yste
m an
d re
viewe
d th
e re
sults
of im
plem
enta
tion?
(2
) Doe
s the
Com
pany
org
anize
educ
atio
nal t
rain
ing
on co
rpor
ate s
ocial
resp
onsib
ility o
n a r
egul
ar
basis
? (3
) Has
the C
ompa
ny es
tabl
ished
an ex
clusiv
ely (o
r co
ncur
rent
ly) d
edica
ted
unit
that
cons
ists o
f fir
st-lin
e man
ager
s aut
horiz
ed b
y the
boa
rd to
be i
n ch
arge
of p
rom
otin
g cor
pora
te so
cial r
espo
nsib
ility
and
repo
rting
the p
rom
otio
n sta
tus t
o th
e boa
rd?
(4) H
as th
e Com
pany
esta
blish
ed a
reas
onab
le re
mun
erat
ion
polic
y, in
tegr
ated
the e
mpl
oyee
pe
rform
ance
appr
aisal
syste
m w
ith it
s cor
pora
te
socia
l res
pons
ibilit
y pol
icy, a
nd se
t up
a clea
r and
ef
fect
ive re
ward
and
disc
iplin
e sys
tem
?
√ √ √ √
(1) T
he C
ompa
ny h
as es
tabl
ished
the C
orpo
rate
Socia
l Re
spon
sibilit
y Pol
icy an
d th
e Prin
ciples
of C
orpo
rate
So
cial R
espo
nsib
ility,
which
hav
e bee
n re
viewe
d an
d ad
opte
d by
the b
oard
. In te
rms o
f the
syste
m, t
he
Com
pany
has
esta
blish
ed th
e Cor
pora
te So
cial
Resp
onsib
ility C
omm
ittee
, whi
ch co
nven
es tw
o re
gular
mee
tings
each
year
to re
view
the f
ulfil
lmen
t of
corp
orat
e soc
ial re
spon
sibilit
y and
impl
emen
tatio
n of
co
rpor
ate g
over
nanc
e by t
he C
ompa
ny.
(2) T
he C
ompa
ny o
rgan
izes e
duca
tiona
l tra
inin
g on
corp
orat
e soc
ial re
spon
sibilit
y, su
ch as
GRI
/G3.
1 and
G4
.0, f
or th
e mem
bers
of th
e Cor
pora
te So
cial
Resp
onsib
ility a
nd Su
stain
abilit
y Man
agem
ent
Com
mitt
ee as
well
as it
s bus
ines
s and
man
agem
ent
perso
nnel
on an
annu
al ba
sis.
(3) T
he D
epar
tmen
t of P
lanni
ng se
rves
as th
e de
dica
ted
unit
of th
e Com
pany
to b
e in
char
ge o
f es
tabl
ishin
g a co
rpor
ate s
ocial
resp
onsib
ility p
olicy
an
d pr
omot
ing a
corp
orat
e soc
ial re
spon
sibilit
y sy
stem
. So
far,
the C
orpo
rate
Socia
l Res
pons
ibilit
y Po
licy a
nd th
e Prin
ciples
of C
orpo
rate
Socia
l Re
spon
sibilit
y hav
e bee
n es
tabl
ished
in ac
cord
ance
wi
th th
e Cor
pora
te So
cial R
espo
nsib
ility B
est-P
ract
ice
Prin
ciples
for T
WSE
/TPE
x List
ed C
ompa
nies
, and
re
viewe
d an
d ad
opte
d by
the b
oard
, to
serv
e as t
he
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
54
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om th
e Cor
pora
te
Socia
l Res
pons
ibilit
y Be
st-Pr
actic
e Prin
ciples
for
TWSE
/TPE
x List
ed C
ompa
nies
an
d Re
ason
s Ye
sNo
Abstr
act E
xplan
atio
n 2
basis
for s
uch
prom
otio
n an
d im
plem
enta
tion.
An
addi
tiona
l rep
ort w
ill be
subm
itted
to th
e boa
rd w
hen
nece
ssar
y. (4
) For
the r
emun
erat
ion
polic
y of t
he C
ompa
ny, s
uch
fact
ors a
s the
wor
king c
ondi
tions
, pro
fess
iona
l kn
owled
ge an
d sk
ills, d
ifficu
lty o
f wor
k, an
d re
spon
sibilit
ies co
nstit
ute t
he re
lative
valu
e crit
eria
for
evalu
atin
g eac
h po
sitio
n. M
oreo
ver,
a pay
scale
(or
poin
ts) is
crea
ted
to ca
lculat
e the
bas
ic re
mun
erat
ion
for e
ach
posit
ion.
Thes
e mea
sure
s are
to en
sure
the
reas
onab
lenes
s and
fairn
ess o
f job
s in
the
orga
niza
tion.
Thro
ugh
such
mea
sure
s tog
ethe
r with
m
erit
bonu
ses,
perfo
rman
ce b
onus
es, e
mpl
oyee
bo
nuse
s, an
d ot
her r
emun
erat
ion
sche
mes
, the
Co
mpa
ny st
rives
to m
otiva
te em
ploy
ees t
o in
crea
se
prod
uctiv
ity, g
uara
ntee
a go
od q
ualit
y of l
ife an
d em
ploy
men
t for
empl
oyee
s, an
d fu
lfill i
ts so
cial
resp
onsib
ility i
n co
njun
ctio
n wi
th th
e cor
pora
te so
cial
resp
onsib
ility p
olicy
. Th
e Com
pany
has
esta
blish
ed th
e Dire
ctio
ns
Gove
rnin
g Ann
ual E
mpl
oyee
App
raisa
ls an
d Bo
nus
Pays
for c
ondu
ctin
g app
raisa
ls at
the e
nd o
f eac
h ye
ar,
and
the D
irect
ions
Gov
erni
ng R
ewar
ds an
d Pu
nish
men
ts fo
r Em
ploy
ees f
or re
ward
ing a
nd
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
55
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om th
e Cor
pora
te
Socia
l Res
pons
ibilit
y Be
st-Pr
actic
e Prin
ciples
for
TWSE
/TPE
x List
ed C
ompa
nies
an
d Re
ason
s Ye
sNo
Abstr
act E
xplan
atio
n 2
impo
sing p
unish
men
ts on
empl
oyee
s. 2.
Susta
inab
le en
viron
men
t dev
elopm
ent
(1) D
oes t
he C
ompa
ny en
deav
or to
util
ize va
rious
re
sour
ces m
ore e
fficie
ntly
and
use r
enew
able
mat
erial
s whi
ch h
ave l
ow im
pact
on
the
envir
onm
ent?
(2
) Has
the C
ompa
ny es
tabl
ished
an en
viron
men
tal
man
agem
ent s
yste
m th
at is
appr
opria
te to
the
char
acte
ristic
s of t
he in
dustr
y?
(3) D
oes t
he C
ompa
ny m
onito
r the
impa
ct o
f clim
ate
chan
ge o
n its
ope
ratio
ns, c
ondu
ct gr
eenh
ouse
gas
insp
ectio
ns, a
nd d
evelo
p str
ateg
ies fo
r ene
rgy
cons
erva
tion,
carb
on re
duct
ion,
and
gree
nhou
se
gas r
educ
tion?
√ √ √
(1) A
s the
lead
ing c
ompa
ny in
ship
build
ing i
n Ta
iwan
, we
striv
e to
deve
lop
a sus
tain
able
envir
onm
ent b
y in
trodu
cing n
ew te
chno
logie
s tha
t im
prov
e the
ef
ficien
cy in
the u
se o
f ene
rgy r
esou
rces
(for
exam
ple,
61
4,46
4 kW
h of
the e
lectri
cal e
nerg
y was
save
d an
d 32
6,89
5 to
ns o
f CO2
e red
uced
in 20
15 af
ter t
he
insta
llatio
n of
thro
ttle c
ontro
l valv
es fo
r the
air
com
pres
sors)
, and
by p
uttin
g mor
e effo
rt in
to
cont
rollin
g the
use
of f
uel, w
ater
reso
urce
s, kin
etic
and
elect
rical
ener
gy o
f the
mov
ing a
ir. In
addi
tion,
the
Com
pany
cont
inue
s to
impr
ove t
he re
cycli
ng,
treat
men
t, an
d re
use o
f was
tewa
ter.
Abo
ut 4
0,40
6 to
ns o
f rec
ycled
wat
er w
as u
sed
in 20
15.
(2) A
ll the
envir
onm
enta
l man
agem
ent s
yste
ms o
f the
Co
mpa
ny h
ave b
een
work
ing e
fficie
ntly.
Dur
ing t
he
first
half
(in A
pril)
and
the s
econ
d ha
lf (in
Oct
ober
) of
2016
, a ce
rtific
atio
n bo
dy w
as co
mm
issio
ned
to
supe
rvise
and
insp
ect t
he sy
stem
s on
a reg
ular
bas
is to
ensu
re th
at th
e ISO
/CNS
1400
1 cer
tifica
te re
main
ed
valid
. The
refo
re, t
he in
spec
tion
for r
enew
al of
the
ISO/C
NS 1
4001
certi
ficat
e was
succ
essfu
lly co
mpl
eted
in
2016
. The
Dep
artm
ent o
f Env
ironm
enta
l Pro
tect
ion
and
Publ
ic Ut
ilities
of t
he C
ompa
ny is
ded
icate
d to
en
viron
men
tal m
anag
emen
t, in
cludi
ng th
e m
ainte
nanc
e and
man
agem
ent o
f env
ironm
enta
l qu
ality
again
st wa
ste, a
ir po
llutio
n, an
d wa
stewa
ter.
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
56
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om th
e Cor
pora
te
Socia
l Res
pons
ibilit
y Be
st-Pr
actic
e Prin
ciples
for
TWSE
/TPE
x List
ed C
ompa
nies
an
d Re
ason
s Ye
sNo
Abstr
act E
xplan
atio
n 2
(3
) The
Com
pany
has
esta
blish
ed th
e Sta
ndar
d Op
erat
ing G
uide
lines
for R
espo
nses
to Ex
trem
e Cl
imat
e Eve
nts i
n or
der t
o re
duce
the f
inan
cial lo
ss
poss
ibly
caus
ed b
y rec
ent e
xtre
me c
limat
e eve
nts a
s a
resu
lt of
clim
ate c
hang
e and
to en
sure
the s
afet
y of
the p
erso
nnel
durin
g ope
ratio
ns.
Alth
ough
the C
ompa
ny d
oes n
ot fa
ll und
er th
e ca
tego
ries o
f the
indu
stries
requ
ired
to co
nduc
t gr
eenh
ouse
gas i
nspe
ctio
ns, a
s ann
ounc
ed b
y the
En
viron
men
tal P
rote
ctio
n Ad
min
istra
tion,
the
Com
pany
volu
ntar
ily co
nduc
ts in
spec
tions
and
colle
cts
and
reta
ins d
ata f
rom
annu
al in
spec
tions
. In 20
16, t
he
Com
pany
volu
ntar
ily co
nduc
ted
the 2
015
Gree
nhou
se
Gas I
nspe
ctio
n, an
d en
tere
d th
e res
ults
on th
e we
bsite
s of t
he En
viron
men
tal P
rote
ctio
n Ad
min
istra
tion
and
Indu
strial
Dev
elopm
ent B
urea
u in
Au
gust.
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
3. P
rese
rvin
g pub
lic w
elfar
e (1
) Has
the C
ompa
ny es
tabl
ished
appr
opria
te
man
agem
ent p
olici
es an
d pr
oced
ures
acco
rdin
g to
relev
ant r
egul
atio
ns an
d th
e Int
erna
tiona
l Bill
of
Hum
an R
ights?
(2
) Has
the C
ompa
ny se
t up
an em
ploy
ee gr
ievan
ce
mec
hani
sm o
r cha
nnel
to h
andl
e com
plain
ts in
an
appr
opria
te m
anne
r?
(3) D
oes t
he C
ompa
ny p
rovid
e a h
ealth
y and
safe
wor
k en
viron
men
t and
org
anize
train
ing o
n he
alth
and
safe
ty fo
r its
empl
oyee
s on
a reg
ular
bas
is?
√ √ √
(1) T
he C
ompa
ny co
mpl
ies w
ith la
bor-r
elate
d re
gulat
ions
, plac
es im
porta
nce o
n th
e int
erna
tiona
lly
acce
pted
prin
ciples
for f
unda
men
tal la
bor r
ights,
and
has e
nter
ed in
to a
colle
ctive
agre
emen
t with
the
corp
orat
e lab
or u
nion
. Mor
eove
r, th
e Com
pany
has
es
tabl
ished
wor
k rul
es an
d va
rious
man
agem
ent
regu
latio
ns w
hich
expl
icitly
stip
ulat
e the
righ
ts,
oblig
atio
ns, a
nd b
enef
its o
f em
ploy
ees i
n ac
cord
ance
wi
th la
bor-r
elate
d law
s and
regu
latio
ns, a
nd h
as
esta
blish
ed a
corp
orat
e lab
or u
nion
and
conv
ened
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
57
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om th
e Cor
pora
te
Socia
l Res
pons
ibilit
y Be
st-Pr
actic
e Prin
ciples
for
TWSE
/TPE
x List
ed C
ompa
nies
an
d Re
ason
s Ye
sNo
Abstr
act E
xplan
atio
n 2
(4) D
oes t
he C
ompa
ny p
rovid
e a co
mm
unica
tion
chan
nel w
ith em
ploy
ees o
n a r
egul
ar b
asis,
as w
ell
as re
ason
ably
info
rm em
ploy
ees o
f any
chan
ges i
n op
erat
ions
that
may
hav
e a si
gnifi
cant
impa
ct o
n th
em?
(5) D
oes t
he C
ompa
ny p
rovid
e its
empl
oyee
s with
ef
fect
ive ca
reer
com
pete
ncy d
evelo
pmen
t and
tra
inin
g pro
gram
s?
(6) H
as th
e Com
pany
esta
blish
ed an
y con
sum
er
prot
ectio
n po
licies
and
com
plain
t pro
cedu
res
rega
rdin
g its
rese
arch
, dev
elopm
ent,
proc
urem
ent,
prod
uctio
n, o
pera
tion,
and
serv
ice
proc
esse
s?
(7) D
oes t
he C
ompa
ny m
arke
t and
labe
l its p
rodu
cts
and
serv
ices a
ccor
ding
to re
levan
t reg
ulat
ions
and
inte
rnat
iona
l sta
ndar
ds?
(8) D
oes t
he C
ompa
ny ev
aluat
e the
reco
rds o
f su
pplie
rs’ im
pact
on
the e
nviro
nmen
t and
socie
ty
befo
re st
artin
g a b
usin
ess w
ith su
ch su
pplie
rs?
(9) D
o th
e con
tract
s bet
ween
the C
ompa
ny an
d its
m
ajor s
uppl
iers i
nclu
de te
rmin
atio
n or
diss
olut
ion
claus
es w
hich
com
e int
o fo
rce o
nce t
he su
pplie
rs br
each
the C
ompa
ny’s
corp
orat
e soc
ial
resp
onsib
ility p
olicy
and
caus
e a si
gnifi
cant
impa
ct
on th
e env
ironm
ent a
nd so
ciety
?
√ √ √ √ √ √
mee
tings
with
empl
oyee
s in
acco
rdan
ce w
ith th
e law
to
suffi
cient
ly pr
otec
t the
lega
l righ
ts an
d in
tere
sts o
f em
ploy
ees.
The r
ecru
itmen
t, se
lectio
n, p
rom
otio
n,
pay,
holid
ays,
pens
ion,
and
othe
r ben
efits
of
empl
oyee
s of b
oth
gend
ers n
ot o
nly c
onfo
rm to
the
regu
latio
ns an
d th
e prin
ciple
of eq
ualit
y, bu
t eve
n go
be
yond
the r
equi
rem
ents
and
stand
ards
. The
bas
ic sa
lary a
nd re
mun
erat
ion
for f
emale
empl
oyee
s are
the
sam
e as t
hose
for m
ale em
ploy
ees i
n sp
ite o
f the
di
ffere
nces
in ge
nder
, dut
ies, a
nd p
lace o
f wor
k. Be
sides
, fem
ale em
ploy
ees a
re en
titled
to m
enstr
ual
leave
as w
ell as
mat
erni
ty an
d pa
rent
al lea
ve fo
r un
limite
d tim
es an
d pe
riods
. (2
) In
addi
tion
to th
e Gui
delin
es fo
r Han
dlin
g Co
mpl
aints
of Em
ploy
ees a
nd th
e Org
aniza
tiona
l Rul
es
for t
he Em
ploy
ee C
ompl
aint H
andl
ing C
omm
ittee
, the
Co
mpa
ny h
as se
t up
a grie
vanc
e com
mitt
ee to
han
dle
empl
oyee
com
plain
ts. Th
e grie
vanc
e com
mitt
ee
cons
ists o
f five
empl
oyer
repr
esen
tativ
es an
d tw
o em
ploy
ee re
pres
enta
tives
, tot
aling
seve
n m
embe
rs.
Whe
n ne
cess
ary,
the g
rieva
nce c
omm
ittee
may
re
ques
t the
com
plain
ants
or th
eir su
perv
isors
and
othe
r per
sonn
el re
lated
to th
e com
plain
t cas
es to
at
tend
mee
tings
and
prov
ide e
xplan
atio
ns in
ord
er to
ha
ndle
the c
ompl
aints
in an
appr
opria
te m
anne
r. Th
e Com
pany
has
also
esta
blish
ed th
e Gui
delin
es fo
r Se
xual
Hara
ssm
ent P
reve
ntio
n, C
ompl
aint
Inve
stiga
tion,
and
Impo
sitio
n of
Pun
ishm
ent a
nd se
t
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
58
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om th
e Cor
pora
te
Socia
l Res
pons
ibilit
y Be
st-Pr
actic
e Prin
ciples
for
TWSE
/TPE
x List
ed C
ompa
nies
an
d Re
ason
s Ye
sNo
Abstr
act E
xplan
atio
n 2
up a
com
plain
t rev
iew co
mm
ittee
. Con
sistin
g of s
even
to
fifte
en m
embe
rs, th
e com
plain
t rev
iew co
mm
ittee
is
resp
onsib
le fo
r han
dlin
g sex
ual h
aras
smen
t co
mpl
aints.
(3
) The
colle
ctive
agre
emen
t of t
he C
ompa
ny
stipu
lates
mat
ters
conc
erni
ng sa
fety
and
healt
h, as
fo
llows
, in ac
cord
ance
with
labo
r reg
ulat
ions
to o
ffer
its em
ploy
ees a
hea
lthy a
nd sa
fe w
ork e
nviro
nmen
t: A.
Con
duct
ing g
ener
al ph
ysica
l exa
min
atio
ns fo
r its
empl
oyee
s on
a reg
ular
bas
is an
d ph
ysica
l ex
amin
atio
ns fo
r the
per
sonn
el wh
o wo
rk in
spec
ial
envir
onm
ents
on an
annu
al ba
sis;
B. Es
tabl
ishin
g clin
ics an
d em
ploy
ing q
ualif
ied m
edica
l pe
rsonn
el to
pro
vide m
edica
l adv
ice an
d tre
atm
ent
to em
ploy
ees a
nd th
eir sp
ouse
s and
oth
er
imm
ediat
e fam
ily m
embe
rs;
C. O
rgan
izing
pro
fess
iona
l tra
inin
g and
safe
ty an
d he
alth
train
ing f
or it
s em
ploy
ees;
D. P
rovid
ing s
afet
y equ
ipm
ent a
nd p
rote
ctive
gear
and
regu
larly
insp
ectin
g suc
h eq
uipm
ent a
nd ge
ar to
en
sure
the s
afet
y of e
mpl
oyee
s at w
ork;
E. Es
tabl
ishin
g the
Occ
upat
iona
l Saf
ety a
nd H
ealth
Co
mm
ittee
and
the D
epar
tmen
t of O
ccup
atio
nal
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
59
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om th
e Cor
pora
te
Socia
l Res
pons
ibilit
y Be
st-Pr
actic
e Prin
ciples
for
TWSE
/TPE
x List
ed C
ompa
nies
an
d Re
ason
s Ye
sNo
Abstr
act E
xplan
atio
n 2
Safe
ty an
d He
alth
to ca
rry o
ut m
anag
emen
t tas
ks
rega
rdin
g the
safe
ty an
d he
alth
of em
ploy
ees;
F. Pr
opos
ing r
emed
ies at
mee
tings
of t
he O
ccup
atio
nal
Safe
ty an
d He
alth
Com
mitt
ee o
r mee
tings
with
em
ploy
ees i
n th
e eve
nt th
at th
e wor
kplac
e and
pr
oduc
tion
equi
pmen
t affe
ct th
e hea
lth an
d sa
fety
of
empl
oyee
s. (4
) The
Com
pany
pro
vides
the f
ollo
wing
co
mm
unica
tion
chan
nels
with
empl
oyee
s on
a re
gular
bas
is:
A. C
onve
ning
regu
lar m
eetin
gs w
ith em
ploy
ees a
s a
com
mon
com
mun
icatio
n ch
anne
l bet
ween
em
ploy
ers a
nd em
ploy
ees;
B. R
eque
sting
the p
artic
ipat
ion
of to
p-lev
el m
anag
ers
and
depa
rtmen
t hea
ds in
the m
eetin
gs o
f mem
ber
repr
esen
tativ
es o
f the
corp
orat
e lab
or u
nion
, in
orde
r to
facil
itate
com
mun
icatio
n wi
th em
ploy
ees;
C. A
ppoi
ntin
g fou
r em
ploy
ees a
s dire
ctor
s of t
he
Com
pany
to ta
ke p
art i
n de
cisio
n m
akin
g and
op
erat
ion
of th
e boa
rd o
f dire
ctor
s. (5
) To
deve
lop
effe
ctive
care
er co
mpe
tenc
y de
velo
pmen
t and
train
ing p
rogr
ams f
or it
s em
ploy
ees,
the C
ompa
ny b
egan
to d
esign
the C
ompe
tenc
y De
velo
pmen
t and
Man
agem
ent S
yste
m fo
r em
ploy
ees
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
60
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om th
e Cor
pora
te
Socia
l Res
pons
ibilit
y Be
st-Pr
actic
e Prin
ciples
for
TWSE
/TPE
x List
ed C
ompa
nies
an
d Re
ason
s Ye
sNo
Abstr
act E
xplan
atio
n 2
in N
ovem
ber 2
014.
The f
irst p
hase
of t
he d
esign
fo
cuse
d on
seco
nd-le
vel m
anag
ers f
or w
hom
a co
mpe
tenc
y mod
el wa
s cre
ated
. A co
mpe
tenc
y en
hanc
emen
t pro
gram
and
a car
eer d
evelo
pmen
t and
tra
inin
g pro
gram
wer
e des
igned
and
orga
nize
d fo
r se
cond
-leve
l man
ager
s bas
ed o
n th
e gap
s obs
erve
d in
th
eir co
mpe
tenc
y ass
essm
ents.
Fo
llowi
ng th
e cre
atio
n of
the c
ompe
tenc
y mod
el fo
r se
cond
-leve
l man
ager
s, th
e com
pete
ncy m
odels
for
indu
strial
man
agem
ent p
ositi
ons a
nd te
chni
cal
posit
ions
(for
emen
) wer
e bui
lt in
2016
as p
art o
f the
de
velo
pmen
t of m
odels
to m
anag
e the
com
pete
ncy o
f m
anpo
wer. M
oreo
ver,
indi
vidua
l car
eer d
evelo
pmen
t an
d tra
inin
g pro
gram
s wer
e des
igned
one
by o
ne
acco
rdin
g to
the c
ompe
tenc
y gap
s of e
mpl
oyee
s. (6
) The
Com
pany
has
dev
elope
d a s
poke
sman
syste
m,
set u
p an
inde
pend
ent d
irect
or m
ailbo
x, an
d es
tabl
ished
cons
umer
pro
tect
ion
polic
ies an
d co
mpl
aints
proc
edur
es re
gard
ing i
ts re
sear
ch,
deve
lopm
ent,
proc
urem
ent,
prod
uctio
n, o
pera
tion,
an
d se
rvice
pro
cess
es.
(7) T
he C
ompa
ny m
arke
ts its
pro
duct
s and
serv
ices
acco
rdin
g to
relev
ant r
egul
atio
ns o
f the
Rep
ublic
of
Chin
a and
inte
rnat
iona
l sta
ndar
ds.
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
61
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om th
e Cor
pora
te
Socia
l Res
pons
ibilit
y Be
st-Pr
actic
e Prin
ciples
for
TWSE
/TPE
x List
ed C
ompa
nies
an
d Re
ason
s Ye
sNo
Abstr
act E
xplan
atio
n 2
(8) T
he C
ompa
ny ev
aluat
es al
l sup
plier
s and
mak
es
sure
that
they
do
not h
ave r
ecor
ds o
f cau
sing m
ajor
impa
ct o
n th
e env
ironm
ent a
nd so
ciety
bef
ore s
tarti
ng
a bus
ines
s with
them
. (9
) The
Com
pany
evalu
ates
all s
uppl
iers t
o m
ake s
ure
that
they
do
not h
ave r
ecor
ds o
f cau
sing m
ajor i
mpa
ct
on th
e env
ironm
ent a
nd so
ciety,
and
ente
rs in
to a
supp
ly ag
reem
ent w
hich
cont
ains c
lause
s tha
t allo
w te
rmin
atio
n or
diss
olut
ion
of th
e agr
eem
ent a
t any
tim
e with
them
bef
ore s
tarti
ng a
busin
ess w
ith th
em.
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
4. En
hanc
ing i
nfor
mat
ion
disc
losu
re
(1) D
oes t
he C
ompa
ny d
isclo
se re
levan
t and
relia
ble
info
rmat
ion
rega
rdin
g its
corp
orat
e soc
ial
resp
onsib
ility o
n its
web
site a
nd th
e Mar
ket
Obse
rvat
ion
Post
Syste
m?
√
The C
ompa
ny d
isclo
ses i
n its
annu
al re
port
and
on th
e ex
tern
al we
bsite
the f
inan
cial r
epor
ts, d
etail
s re
gard
ing t
he sh
areh
olde
rs’ m
eetin
gs, b
asic
info
rmat
ion
of th
e Com
pany
, acq
uisit
ion
and
disp
osal
of as
sets,
corp
orat
e soc
ial re
spon
sibilit
y rep
orts,
and
othe
r inf
orm
atio
n re
gard
ing t
he fu
lfillm
ent o
f co
rpor
ate s
ocial
resp
onsib
ility,
so as
to cr
eate
a pl
atfo
rm fo
r exc
hang
es an
d co
mm
unica
tion
with
sta
keho
lder
s. (W
ebsit
e: h
ttp://
www.
csbc
net.c
om.tw
/ Se
rvice
/Inve
stor)
Base
d on
the C
orpo
rate
Socia
l Re
spon
sibilit
y Bes
t-Pra
ctice
Pr
incip
les fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
and
com
pany
ch
arac
teris
tics
5. If
the C
ompa
ny h
as es
tabl
ished
its c
orpo
rate
socia
l res
pons
ibilit
y prin
ciples
bas
ed o
n th
e Cor
pora
te So
cial R
espo
nsib
ility B
est-P
ract
ice P
rincip
les fo
r TW
SE/T
PEx L
isted
Com
pani
es, p
lease
des
crib
e any
disc
repa
ncy b
etwe
en th
e prin
ciples
and
their
impl
emen
tatio
n:
The C
ompa
ny h
as es
tabl
ished
the P
rincip
les o
f Cor
pora
te So
cial R
espo
nsib
ility b
ased
on
the C
orpo
rate
Socia
l Res
pons
ibilit
y Bes
t-Pra
ctice
Prin
ciples
for
TWSE
/TPE
x List
ed C
ompa
nies
for i
mpl
emen
tatio
n pu
rpos
es.
62
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om th
e Cor
pora
te
Socia
l Res
pons
ibilit
y Be
st-Pr
actic
e Prin
ciples
for
TWSE
/TPE
x List
ed C
ompa
nies
an
d Re
ason
s Ye
sNo
Abstr
act E
xplan
atio
n 2
6. O
ther
impo
rtant
info
rmat
ion
to fa
cilita
te b
ette
r und
ersta
ndin
g of t
he C
ompa
ny’s
corp
orat
e soc
ial re
spon
sibilit
y pra
ctice
s: ▲
See b
elow
for m
ore d
etail
s. 7.
A cl
ear s
tate
men
t sha
ll be m
ade i
f the
corp
orat
e soc
ial re
spon
sibilit
y rep
orts
of th
e Com
pany
hav
e pas
sed
the v
erifi
catio
n sta
ndar
ds se
t by r
eleva
nt
certi
ficat
ion
bodi
es:
CSBC
201
6 Co
rpor
ate S
ocial
Res
pons
ibilit
y Rep
ort h
as n
ot b
een
verif
ied b
y a th
ird p
arty,
but
mee
ts th
e req
uire
men
ts of
the G
RI/G
4 co
re
optio
ns, a
s well
as th
e AA1
000 g
uara
ntee
Stan
dard
type
1 m
ediu
m gu
aran
tee r
atin
g.
Note
s: Th
e Co
mpa
ny st
rives
to p
rom
ote
(1) e
nviro
nmen
tal p
rote
ctio
n, e
nerg
y con
serv
atio
n, a
nd ca
rbon
redu
ctio
n (2
) soc
ial a
nd co
mm
unity
serv
ices (
3) sa
fety
and
hea
lth a
ctivi
ties a
nd (4
) ind
ustry
-aca
dem
ia co
llabo
ratio
n an
d ta
lent t
rain
ing.
Whi
le ta
king
into
cons
ider
atio
n
the
oper
atin
g pr
ofits
, the
Com
pany
plac
es e
qual
emph
asis
on so
cial b
enef
its a
nd fu
lfills
its c
orpo
rate
socia
l res
pons
ibilit
y ba
sed
on
the
philo
soph
y “g
iving
bac
k to
soc
iety”
. The
des
crip
tions
of t
he m
echa
nism
s an
d m
easu
res
adop
ted
for t
he fo
ur m
ajor a
ctivi
ties
men
tione
d ab
ove a
nd th
eir im
plem
enta
tion
statu
s are
as fo
llows
:
(1) E
nviro
nmen
tal p
rote
ctio
n, e
nerg
y co
nser
vatio
n, a
nd c
arbo
n re
duct
ion:
See
“2.
Sus
tain
able
envir
onm
ent d
evelo
pmen
t” in
the
tabl
e abo
ve.
63
(2)
Socia
l and
com
mun
ity s
ervic
es:
The
Com
pany
is c
omm
itted
to
socia
l and
com
mun
ity e
ngag
emen
t. Ha
ving
esta
blish
ed t
he
Dire
ctio
ns G
over
ning
the
Use
and
Revie
w of
Neig
hbor
hood
Ser
vice
Fund
s, th
e Co
mpa
ny p
repa
res a
bud
get o
n an
ann
ual b
asis
to
enga
ge in
neig
hbor
hood
ser
vices
. In
2016
, the
Com
pany
spe
nt a
tot
al of
$1,
580,
000
on s
pons
orin
g ne
ighbo
rhoo
d ac
tiviti
es
(inclu
ding
spor
ts an
d re
crea
tiona
l act
ivitie
s of d
iffer
ent a
genc
ies a
nd sc
hool
s, ac
tiviti
es fo
r villa
ge a
nd co
mm
unity
resid
ents,
the
Salva
tion
Cere
mon
ies fo
r the
Gho
st Fe
stiva
l, vo
lunt
eer m
eet-u
ps, e
nerg
y co
nser
vatio
n an
d en
viron
men
tal p
rote
ctio
n ev
ents,
and
club
activ
ities
) in
the
Siaog
ang
area
in K
aohs
iung
and
on
Hopi
ng Is
land
in K
eelu
ng ($
1,18
0,00
0 fo
r th
e Ka
ohsiu
ng Y
ard
and
$400
,000
for t
he K
eelu
ng Ya
rd).
For t
he m
ajor c
ultu
ral a
nd so
cial c
are
activ
ities
cond
ucte
d in
201
6, p
lease
refe
r to
Page
00
of th
e
Chin
ese v
ersio
n of
the A
nnua
l Rep
ort.
(3) S
afet
y and
hea
lth ac
tiviti
es:
To p
reve
nt o
ccup
atio
nal a
ccid
ents
and
haza
rds a
s well
as p
rote
ct th
e saf
ety o
f em
ploy
ees a
t wor
k, th
e Com
pany
mak
es ev
ery
effo
rt to
im
prov
e th
e wo
rk e
nviro
nmen
t. Th
e Co
mpa
ny h
as a
lso p
asse
d th
e OH
SAS
1800
1 ce
rtific
atio
n au
dits
and
the
inte
rnat
iona
l and
dom
estic
accr
edita
tion
for t
he Ta
iwan
Occ
upat
iona
l Saf
ety a
nd H
ealth
Man
agem
ent S
yste
m (T
OSHM
S) as
a wa
y
to d
emon
strat
e its
com
preh
ensiv
e im
plem
enta
tion
of an
occ
upat
iona
l saf
ety a
nd h
ealth
man
agem
ent s
yste
m.
In ad
ditio
n, th
e Co
mpa
ny h
as id
entif
ied p
oten
tial r
isk fa
ctor
s in
the
work
plac
e, su
ch a
s fall
s fro
m h
eight
, col
lapse
, tum
blin
g,
flyin
g or f
allin
g obj
ects,
elec
tric s
hock
, gas
expl
osio
ns, f
ires,
poiso
ning
, oxy
gen
depl
etio
n, cr
ush,
clam
ping
inju
ries,
lacer
atio
n, fa
lls,
brui
ses,
collis
ions
, and
bum
ps. T
he R
egul
atio
ns G
over
ning
Poss
ible
Haza
rds i
n th
e Shi
pbui
ldin
g Ind
ustry
and
Prev
entiv
e Mea
sure
s
64
stipu
late s
pecif
ic pr
even
tive
actio
ns ag
ainst
vario
us ri
sk fa
ctor
s in
the
work
plac
e an
d pr
ovid
e a b
asis
for a
ll uni
ts, es
pecia
lly th
ose
in ch
arge
of o
n-sit
e occ
upat
iona
l saf
ety s
uper
visio
n.
To e
fficie
ntly
carry
out
a v
ariet
y of
labo
r saf
ety
and
healt
h pr
actic
es, i
ncre
ase
the
inte
nsity
of i
nspe
ctin
g ho
w ea
ch u
nit
carri
es o
ut s
uch
prac
tices
, pro
pose
rem
edies
, fol
low
up o
n th
e im
plem
enta
tion
of t
he r
emed
ies, a
nd u
ltim
ately
pre
vent
occu
patio
nal h
azar
ds, t
he C
ompa
ny h
as fo
rmed
the
Occu
patio
nal S
afet
y In
spec
tion
Team
, in
which
the
Pres
iden
t ser
ves a
s the
conv
ener
, and
has
esta
blish
ed a
nnua
l wor
k plan
s for
the
team
. The
team
cond
ucts
mon
thly
insp
ectio
ns w
hich
cons
ist o
f fift
een
crite
ria, a
nd co
nven
es m
onth
ly m
eetin
gs to
revie
w ho
w th
e in
spec
tions
hav
e go
ne. I
n ad
ditio
n to
the
insp
ectio
ns co
nduc
ted
by
the
Occu
patio
nal S
afet
y Ins
pect
ion
Team
, the
Com
pany
has
set u
p fo
ur in
spec
tion
mec
hani
sms,
as fo
llows
, to
elim
inat
e pot
entia
l
risk f
acto
rs an
d pr
even
t occ
upat
iona
l acc
iden
ts:
1. A
n oc
cupa
tiona
l saf
ety p
atro
l tea
m u
nder
the D
epar
tmen
t of O
ccup
atio
nal S
afet
y and
Hea
lth;
2. A
join
t pat
rol t
eam
;
3. O
ccup
atio
nal s
afet
y pat
rol a
t the
site
s out
side t
he ya
rds;
4. M
anag
emen
t by w
alkin
g ar
ound
the
sites
, as p
ract
iced
by th
e to
p-lev
el an
d se
cond
-leve
l man
ager
s at t
he si
tes i
n ac
cord
ance
with
the D
irect
ions
for M
anag
emen
t by W
alkin
g Aro
und
by D
iffer
ent L
evels
of M
anag
emen
t.
The
repo
rts o
n th
e ab
ovem
entio
ned
insp
ectio
ns a
re p
roce
ssed
by
the
Occu
patio
nal S
afet
y In
spec
tion
Team
usin
g th
e
com
pute
r-bas
ed O
ccup
atio
nal
Safe
ty I
nspe
ctio
n Sy
stem
, an
d th
e re
med
ies p
ropo
sed
and
actu
al im
plem
enta
tion
of s
uch
rem
edies
are e
nter
ed in
to th
e sys
tem
for e
ach
unit
to ac
cess
onl
ine a
nd m
ake i
mpr
ovem
ents.
65
(4) I
ndus
try-a
cade
mia
colla
bora
tion
and
talen
t tra
inin
g:
1. Tr
ainin
g for
talen
t in
engin
eerin
g man
agem
ent
The
Com
pany
attr
acts
and
enga
ges
youn
g ta
lent
thro
ugh
work
stu
dy p
rogr
ams
cond
ucte
d wi
th s
choo
ls an
d
indu
stry-
acad
emia
colla
bora
tion
proj
ects,
so a
s to
cont
inuo
usly
achi
eve
inno
vatio
n an
d ad
vanc
emen
t. To
cul
tivat
e an
d re
crui
t
talen
ts in
the
ship
build
ing-
relat
ed fi
elds a
nd a
ttrac
t out
stand
ing
stude
nts w
ho a
re in
tere
sted
to th
e sh
ipbu
ildin
g in
dustr
y, th
e
Com
pany
offe
rs sc
holar
ship
s to
stude
nts c
urre
ntly
enro
lled
in th
e m
aste
r’s p
rogr
ams i
n na
val a
rchi
tect
ure,
mar
ine
engin
eerin
g,
elect
rical
engin
eerin
g, oc
ean
engin
eerin
g, sh
ippi
ng a
nd tr
ansp
orta
tion
man
agem
ent,
trans
porta
tion
scien
ce, a
nd o
ther
relat
ed
field
s at t
he Ta
iwan
Uni
versi
ty, C
heng
Kung
Uni
versi
ty, Ta
iwan
Oce
an U
nive
rsity,
and
Kaoh
siung
Mar
ine U
nive
rsity.
In 2
016,
the
Com
pany
sele
cted
six
stude
nts
enro
lled
in th
e m
aste
r’s p
rogr
ams
in v
esse
l or m
arin
e-re
lated
field
s at
the
Taiw
an U
nive
rsity,
Che
ng K
ung
Unive
rsity,
and
Kao
hsiu
ng M
arin
e Un
iversi
ty th
roug
h a
scre
enin
g pr
oces
s and
awa
rded
eac
h of
them
with
NT$
60,0
00 p
er s
emes
ter,
as a
way
to
enco
urag
e stu
dent
s to
stri
ve f
or p
rogr
ess
and
enga
ge in
res
earc
h an
d
deve
lopm
ent.
Thes
e aw
arde
es ar
e ob
ligat
ed to
wor
k for
the
Com
pany
afte
r gra
duat
ion,
and
the
perio
d of
their
serv
ice m
ust n
ot
be sh
orte
r tha
n th
e per
iod
durin
g whi
ch th
ey re
ceive
the s
chol
arsh
ips.
66
2. Tr
ainin
g for
talen
t in
tech
nolo
gy
To d
evelo
p an
d im
prov
e te
chno
logie
s an
d en
hanc
e th
e ex
perti
se o
f em
ploy
ees,
the
Com
pany
fol
lowe
d pr
evio
us e
xam
ples
and
too
k pa
rt in
the
wor
k stu
dy p
rogr
ams
unde
r th
e 1+
3 Cu
ltiva
tion
Prog
ram
thr
ough
Col
labor
atio
n am
ong
I
ndus
try,
Acad
emia,
and
Tra
inin
g In
stitu
tions
, wh
ich w
as j
oint
ly or
gani
zed
by F
ortu
ne I
nstit
ute
of T
echn
olog
y an
d th
e K
aohs
iung
-Pin
gtun
g-Pe
nghu
-Taitu
ng R
egio
nal
Bran
ch o
f W
orkf
orce
Dev
elopm
ent
Agen
cy,
Min
istry
of
Labo
r, in
201
6. T
he
Com
pany
offe
red
inte
rnsh
ips
and
mon
thly
inte
rnsh
ip a
llowa
nces
to
15 o
f th
e stu
dent
s in
the
pro
gram
. Th
ese
stude
nts
are
req
uire
d to
rec
eive
prac
tical
train
ing
in r
egar
d to
weld
ing
and
cold
wor
k fro
m A
ugus
t 1,
201
6 to
Jun
e 30
, 20
19.
At
pres
ent,
29 s
tude
nts
are
rece
iving
suc
h tra
inin
g in
the
yar
ds.
Mor
eove
r, an
othe
r 25
stu
dent
s in
the
ind
ustry
-aca
d
emia
colla
bora
tion
prog
ram
con
duct
ed w
ith t
he C
hiat
ung
Agric
ultu
ral
Voca
tiona
l Se
nior
High
Sch
ool
and
Kaoh
siung
Ma
rine
Unive
rsity
hav
e be
en u
nder
goin
g in
tern
ship
s th
at w
ill en
d on
Jun
e 30
, 20
17 in
the
yar
ds.
3. Tr
ainin
g for
talen
t in
mar
ine t
echn
olog
y
To c
ultiv
ate
talen
ts in
ship
build
ing,
the
Com
pany
wor
ks w
ith th
e Ta
iwan
Uni
versi
ty, C
heng
Kun
g Un
iversi
ty, T
aiwan
Oce
an
Unive
rsity,
and
Kao
hsiu
ng M
arin
e Un
iversi
ty a
nd o
ffers
the
prac
tical
train
ing
prog
ram
, Em
ergin
g M
arin
e Af
fluen
t, to
stud
ents
of
relev
ant d
epar
tmen
ts du
ring w
inte
r and
sum
mer
vaca
tions
. The
Inte
rmed
iate
Leve
l Em
ergin
g Mar
ine
Afflu
ent P
rogr
am la
sts fo
ur
week
s, wh
ile th
e Ad
vanc
ed L
evel
Emer
ging
Mar
ine
Afflu
ent P
rogr
am la
sts s
ix we
eks.
In 2
016,
57
stude
nts p
artic
ipat
ed in
the
inte
rmed
iate l
evel
prog
ram
, and
13 st
uden
ts in
the a
dvan
ced
level
prog
ram
, at t
he ya
rds.
67
3.3.
6 Eth
ical C
orpo
rate
Man
agem
ent
Evalu
atio
n Ite
m
Impl
emen
tatio
n St
atus
1 De
viatio
ns fr
om “t
he
Ethi
cal C
orpo
rate
M
anag
emen
t Be
st-Pr
actic
e Prin
ciples
fo
r TW
SE/T
PEx L
isted
Co
mpa
nies
” and
Rea
sons
Yes
NoAb
strac
t Illu
strat
ion
1. E
stabl
ishm
ent o
f eth
ical c
orpo
rate
man
agem
ent
polic
ies an
d pr
ogra
ms
(1) D
oes t
he co
mpa
ny d
eclar
e its
ethi
cal c
orpo
rate
m
anag
emen
t pol
icies
and
proc
edur
es in
its
guid
eline
s and
exte
rnal
docu
men
ts, as
well
as
the c
omm
itmen
t fro
m it
s boa
rd to
impl
emen
t th
e pol
icies
?
(2
) Doe
s the
com
pany
esta
blish
pol
icies
to p
reve
nt
unet
hica
l con
duct
with
clea
r sta
tem
ents
rega
rdin
g rele
vant
pro
cedu
res,
guid
eline
s of
cond
uct,
puni
shm
ent f
or vi
olat
ion,
rules
of
appe
al, an
d th
e com
mitm
ent t
o im
plem
ent t
he
polic
ies?
V V
(1)W
e hav
e esta
blish
ed C
ode o
f Eth
ics to
dec
lare
et
hica
l cor
pora
te m
anag
emen
t pol
icies
,and
also
esta
blish
ed C
ode o
f Eth
ics an
d Co
nduc
t fo
r Dire
ctor
s and
Firs
t-Lev
el or
High
er
Man
agem
ent,
Code
of E
thics
for E
mpl
oyee
s of
CSB,
Pro
cedu
res f
or Et
hica
l Man
agem
ent a
nd
Guid
eline
s for
Con
duct
.The
qu
ery w
ebsit
e is
avail
able
at: h
ttp://
www.
csbc
net.c
om.tw
In
vesto
r Zon
e.
(2) W
e hav
e esta
blish
ed P
roce
dure
s for
Ethi
cal
Man
agem
ent a
nd G
uide
lines
for C
ondu
ct to
pr
even
t une
thica
l con
duct
with
clea
r sta
tem
ents
rega
rdin
g rele
vant
pro
cedu
res,
guid
eline
s of c
ondu
ct, p
unish
men
t for
vio
latio
n, ru
les o
f app
eal, a
nd th
e
Re
fere
nce t
o th
e list
ing
and
OTC
Code
of E
thica
l Co
rpor
ate P
ract
ice an
d CS
BC ch
arac
teris
tics.
Refe
renc
e to
the l
istin
g an
d OT
C Co
de o
f Eth
ical
Corp
orat
e Pra
ctice
and
CSBC
char
acte
ristic
s.
68
(3
) Doe
s the
com
pany
esta
blish
appr
opria
te
prec
autio
ns ag
ainst
high
-pot
entia
l une
thica
l co
nduc
ts or
liste
d ac
tiviti
es st
ated
in A
rticle
2,
Para
grap
h 7
of th
e Eth
ical C
orpo
rate
M
anag
emen
t Bes
t-Pra
ctice
Prin
ciples
for
TWSE
/TPE
x List
ed C
ompa
nies
?
V
com
mitm
ent t
o im
plem
ent t
he p
olici
es. T
he
quer
y web
site i
s ava
ilabl
e at:
http
://ww
w.cs
bcne
t.com
.tw In
vesto
r Zon
e.
(3)W
e hav
e esta
blish
ed C
ode o
f Eth
ics to
pre
vent
ag
ainst
the f
ollo
wing
: (I)
Offe
r an
d ac
cept
ance
of
brib
ery.
(II
) Pr
ovisi
on o
f ille
gal p
oliti
cal d
onat
ions
.
(III)I
mpr
oper
cha
ritab
le do
natio
n or
spo
nsor
ship
.
(IV)
Prov
ision
or
acce
ptan
ce o
f un
reas
onab
le
gift,
ente
rtain
men
t or
oth
er u
ndue
int
eres
ts.
(V)In
fring
emen
t of
bus
ines
s se
cret
s, tra
dem
ark
, pa
tent
s, co
pyrig
hts,
and
othe
r in
tell
ectu
al pr
oper
ty r
ights.
(V
I) En
gage
men
t in
unf
air c
ompe
titio
n.
(VII)
Dire
ct o
r in
dire
ct h
arm
to
the
right
s, he
alth,
and
saf
ety
of c
onsu
mer
s or
oth
er s
take
hold
ers
durin
g th
e re
sear
ch a
nd
deve
lopm
ent,
proc
urem
ent,
prod
uctio
n, p
rovis
ion
or s
ale o
f pr
oduc
ts an
d se
rvice
s.
Refe
renc
e to
the l
istin
g an
d OT
C Co
de o
f Eth
ical
Corp
orat
e Pra
ctice
and
CSBC
char
acte
ristic
s.
2. Fu
lfill o
pera
tions
inte
grity
pol
icy
(1)D
oes t
he co
mpa
ny ev
aluat
e bus
ines
s par
tner
s’ et
hica
l rec
ords
and
inclu
de et
hics
-relat
ed
claus
es in
bus
ines
s con
tract
s?
V
(1)W
e hol
ds an
nual
busin
ess m
eetin
gs, c
onve
ying
our i
nteg
rity r
equi
rem
ents
to al
l our
bus
ines
s pa
rtner
s. In
addi
tion,
an et
hic-r
elate
dcla
use i
s
Re
fere
nce t
o th
e list
ing
and
OTC
Code
of E
thica
l Co
rpor
ate P
ract
ice an
d
69
(2
)Doe
s the
com
pany
esta
blish
an ex
clusiv
ely (o
r co
ncur
rent
ly) d
edica
ted
unit
supe
rvise
d by
the
Boar
d to
be i
n ch
arge
of c
orpo
rate
inte
grity
?
inclu
ded
in ev
ery b
usin
ess c
ontra
ct.
(2
)To
perfe
ct
the
man
agem
ent
of
ethi
cal
oper
atio
n,
vario
us
inte
rnal
units
of
th
e Co
mpa
ny s
hall
unde
rtake
the
follo
wing
task
s, wh
ile t
he A
udit
Offic
e sh
all s
uper
vise
the
exec
utio
n of
suc
h ta
sks
and
mak
e re
gular
re
ports
to th
e boa
rd o
f dire
ctor
s. (I)
Plan
ning
Dep
artm
ent:
1. H
elp i
ncor
pora
te e
thics
and
mor
al va
lue
into
th
e Co
mpa
ny’s
busin
ess
strat
egy.
2. R
ecom
men
d on
the
adj
ustm
ent
of
inte
rnal
orga
niza
tion
and
resp
onsib
ilities
; es
tabl
ish
mut
ual
supe
rvisi
on,
chec
k an
d ba
lance
m
echa
nism
for b
usin
ess a
ctivi
ties w
ith
relat
ively
high
er
risk
of
unet
hica
l be
havio
rs in
the
Com
pany
’s sc
ope
of
busin
ess.
(II) L
egal
Affa
irs O
ffice
: In
coo
rdin
atio
n wi
th t
he la
ws,
ensu
re
the
effe
ctive
ex
ecut
ion
of
the
Prec
autio
nary
So
lutio
ns
for
ethi
cal
man
agem
ent a
nd th
e re
levan
t sta
ndar
d op
erat
ing p
roce
dure
s in
each
solu
tion.
(II
I) M
anag
emen
t Dep
artm
ent:
CSBC
char
acte
ristic
s.
Refe
renc
e to
the l
istin
g an
d OT
C Co
de o
f Eth
ical
Corp
orat
e Pra
ctice
and
CSBC
char
acte
ristic
s.
70
(3)D
oes t
he co
mpa
ny es
tabl
ish p
olici
es to
pre
vent
co
nflic
ts of
inte
rest
and
prov
ide a
ppro
priat
e co
mm
unica
tion
chan
nels,
and
impl
emen
t it?
(4)H
as th
e com
pany
esta
blish
ed ef
fect
ive sy
stem
s fo
r bot
h ac
coun
ting a
nd in
tern
al co
ntro
l to
facil
itate
ethi
cal c
orpo
rate
man
agem
ent,
and
are t
hey a
udite
d by
eith
er in
tern
al au
dito
rs or
CP
As o
n a r
egul
ar b
asis?
V
1. S
et d
own
the
“Eth
ical
Man
agem
ent
Ope
ratin
g Pr
oced
ures
and
Beh
avio
ral
Guid
elin
es”
(inclu
ding
the
Pre
caut
iona
ry S
olut
ions
and
the
rep
ortin
g s
yste
m,
whist
lebl
ower
(re
porte
r) pr
otec
tion
proc
edur
es a
nd b
ehav
iora
l gu
ideli
nes).
2.
Pro
mot
ion
and
coor
dina
tion
of t
he
ethi
cal m
anag
emen
t po
licy
publ
icity
an
d tra
inin
g. (IV
) Au
dit
Offic
e:
1. A
ccep
t re
ports
and
und
erta
ke r
epor
ter
prot
ectio
n af
fairs
, en
surin
g th
e ef
fect
ive e
xecu
tion.
2.
Ass
ist t
he b
oard
of
dire
ctor
s an
d t
he m
anag
emen
t in
inv
estig
atin
g an
d e
valu
atin
g th
e ef
fect
ive o
pera
tion
of t
he p
reca
utio
nary
mea
sure
s es
tab
lishe
d fo
r th
e pr
actic
al im
plem
enta
tion
of
ethi
cal
man
agem
ent,
and
con
duct
reg
ular
com
plian
ce a
sses
smen
t o
n th
e re
levan
t bu
sines
s wo
rkflo
ws a
nd c
ompi
le re
ports
on
that
. (3
) We h
ave e
stabl
ished
Cod
e of E
thics
, Cod
e of
Ethi
cs an
d Co
nduc
t for
Dire
ctor
s , Fi
rst-Le
vel o
r Hi
gher
Man
agem
ent,
Code
of E
thics
for
Empl
oyee
s of C
SB, P
roce
dure
s for
Ethi
cal
Man
agem
ent a
nd G
uide
lines
for C
ondu
ct , t
o pr
even
t con
flict
s of i
nter
est a
nd p
rovid
e ap
prop
riate
com
mun
icatio
n ch
anne
ls, an
d im
plem
ent i
t. (4
)We h
ave e
stabl
ished
acco
untin
g and
inte
rnal
cont
rol s
yste
ms t
o en
sure
inte
grity
in o
ur
oper
atio
ns.
Re
fere
nce t
o th
e list
ing
and
OTC
Code
of E
thica
l Co
rpor
ate P
ract
ice an
d
71
(5)D
oes t
he co
mpa
ny re
gular
ly ho
ld in
tern
al an
d ex
tern
al ed
ucat
iona
l tra
inin
gs o
n op
erat
iona
l in
tegr
ity?
V V
(5) F
or n
ew em
ploy
ees,
train
ing o
n et
hica
l rul
es,
conf
licts
of in
tere
st, b
usin
ess m
orals
, and
all
othe
r rela
ted
subj
ects
are c
arrie
d ou
t dur
ing
their
first
wee
k of w
ork.E
mpl
oyee
s are
requ
ired
to re
ceive
inte
grity
train
ing .
CSBC
char
acte
ristic
s. Re
fere
nce t
o th
e list
ing
and
OTC
Code
of E
thica
l Co
rpor
ate P
ract
ice an
d CS
BC ch
arac
teris
tics.
Refe
renc
e to
the l
istin
g an
d OT
C Co
de o
f Eth
ical
Corp
orat
e Pra
ctice
and
CSBC
char
acte
ristic
s.
3. O
pera
tion
of th
e int
egrit
y cha
nnel
(1)D
oes t
he co
mpa
ny es
tabl
ish b
oth
a re
ward
/pun
ishm
ent s
yste
m an
d an
inte
grity
ho
tline
? Can
the a
ccus
ed b
e rea
ched
by a
n ap
prop
riate
per
son
for f
ollo
w-up
?
V
(1)W
e hav
e esta
blish
ed va
rious
repo
rting
chan
nels
so th
at em
ploy
ees a
nd re
levan
t peo
ple c
an
repo
rt im
prop
er b
usin
ess b
ehav
iors
thro
ugh
the
syste
m. A
fter a
conf
iden
tial in
vesti
gatio
n,
anyo
ne w
ho vi
olat
es th
e reg
ulat
ions
on
oper
atio
nal in
tegr
ity w
ill be
pun
ished
acco
rdin
g to
the C
ompa
ny’s
regu
latio
ns o
n re
ward
and
puni
shm
ent.
In ca
ses o
f ille
gal c
ondu
ct, le
gal
actio
ns w
ill be
take
n as
well
.
Re
fere
nce t
o th
e list
ing
and
OTC
Code
of E
thica
l Co
rpor
ate P
ract
ice an
d CS
BC ch
arac
teris
tics.
72
(2)D
oes t
he co
mpa
ny es
tabl
ish st
anda
rd
oper
atin
g pro
cedu
res f
or co
nfid
entia
l rep
ortin
g on
inve
stiga
ting a
ccus
atio
n ca
ses?
(3
)Doe
s the
com
pany
pro
vide p
rope
r wh
istleb
lowe
r pro
tect
ion?
v v
(2)W
e hav
e esta
blish
Pro
cedu
res f
or Et
hica
l M
anag
emen
t and
Gui
delin
es fo
r Con
duct
au
thor
ized
by th
e Boa
rd w
hich
coul
d be
appl
ied
on an
y con
fiden
tial in
vesti
gatio
ns .
(3
) We h
ave e
stabl
ish C
ode o
f Eth
ics ,P
roce
dure
s fo
r Eth
ical M
anag
emen
t and
Gui
delin
es fo
r Co
nduc
t to
take
whi
stleb
lowe
r pro
tect
ion
serio
usly
since
the c
ore p
urpo
se is
pro
tect
ion
from
unl
awfu
l rep
risal
for d
iligen
t em
ploy
ees
who
step
forw
ard
to id
entif
y pot
entia
l wr
ongd
oing
. We h
as a
dedi
cate
d ho
tline
for
whist
leblo
wer p
rote
ctio
n wh
ethe
r firs
t-lin
e m
anag
ers a
nd th
e Boa
rd if
nec
essa
ry, ca
n di
rect
ly re
view
and
dete
rmin
e app
ropr
iate
actio
ns ag
ainst
repr
isal o
f com
plain
ts.
Re
fere
nce t
o th
e list
ing
and
OTC
Code
of E
thica
l Co
rpor
ate P
ract
ice an
d CS
BC ch
arac
teris
tics.
Re
fere
nce t
o th
e list
ing
and
OTC
Code
of E
thica
l Co
rpor
ate P
ract
ice an
d CS
BC ch
arac
teris
tics.
4. S
treng
then
ing i
nfor
mat
ion
disc
losu
re
(1) D
oes t
he co
mpa
ny d
isclo
se it
s eth
ical c
orpo
rate
m
anag
emen
t pol
icies
and
the r
esul
ts of
its
impl
emen
tatio
n on
the c
ompa
ny’s
webs
ite an
d M
OPS?
v (1
) We h
ave e
stabl
ished
Cod
e of E
thics
, Cod
e of
Ethi
cs an
d Co
nduc
t for
Dire
ctor
s , Fi
rst-Le
vel o
r Hi
gher
Man
agem
ent,
Code
of E
thics
for
Empl
oyee
s of C
SB, P
roce
dure
s for
Ethi
cal
Man
agem
ent a
nd G
uide
lines
for C
ondu
ct h
ave
been
pos
ted
on th
e Com
pany
’s Ch
ines
e /
Engli
sh w
ebsit
e and
MOP
S.
Re
fere
nce t
o th
e list
ing
and
OTC
Code
of E
thica
l Co
rpor
ate P
ract
ice an
d CS
BC ch
arac
teris
tics.
73
5. If
the c
ompa
ny h
as es
tabl
ished
the e
thica
l cor
pora
te m
anag
emen
t pol
icies
bas
ed o
n th
e Eth
ical C
orpo
rate
Man
agem
ent B
est-P
ract
ice
Prin
ciples
for T
WSE
/TPE
x List
ed C
ompa
nies
, plea
se d
escr
ibe a
ny d
iscre
panc
y bet
ween
the p
olici
es an
d th
eir im
plem
enta
tion.
Ther
e hav
e bee
n no
diff
eren
ces.
6. O
ther
impo
rtant
info
rmat
ion
to fa
cilita
te a
bette
r und
ersta
ndin
g of t
he co
mpa
ny’s
ethi
cal c
orpo
rate
man
agem
ent p
olici
es (e
.g., r
eview
and
amen
d its
pol
icies
). (a
) To
impl
emen
t the
bas
ics o
f eth
ical c
orpo
rate
man
agem
ent p
olici
es, W
e ope
rate
und
er th
e Com
pany
Act
, Sec
uriti
es an
d Ex
chan
ge A
ct,
Busin
esse
s Ent
ity A
ccou
ntin
g Act
, rela
ted
regu
latio
ns fo
r TW
SE/T
PEx-L
isted
Com
pani
es, a
nd o
ther
laws
and
decr
ees c
once
rnin
g bus
ines
s tra
nsac
tions
. (b
) Fo
r mor
e det
ailed
info
rmat
ion,
plea
se re
fer t
o th
e Com
pany
’s of
ficial
web
site:
//ww
w.cs
bcne
t.com
.tw In
vesto
r Zon
e..
74
3.3.7 Corporate Governance Guidelines and Regulations Please refer to the Company’s website at http://www.csbcnet.com.tw /English/ServiceEng/InvestorEng.htm.
3.3.8 Other Important Information Regarding Corporate Governance：None 3.3.9 Internal Control Systems
Please refer to page 65 of the Chinese annual report. 3.3.10 Major Resolutions of Shareholders’ Meeting and Board Meetings
Item Date Major resolutions Board meeting 05,10,2016 1.Approval of review of shareholders nominees
director and independent directors candidates. 2.Approval of update agenda of the 2016
shareholders' meeting. 3.Approved the revision of tenth point of
"performance bonus management approach". 4.Approval of change contract expiration date.
Board meeting 06,23,2016 1.Approval of Ministryof Economic Affairs Representative of CHENG, WEN-LON was elected as the 16th chairman of the Company.
Shareholders’ meeting
06, 23, 2016 1.Approval of the amendments to the Articles of Incorporation and complete the change registration at 2016.07.04.
2.Approval of the 2015 business report and financial statements for the year 2015 and to announce the information at 2016.03.15 and to complete the declaration at 105.3.25.
3.Approval of the 2015 surplus distribution case, 2016.06.23 issued a major message decision dividend basis date, 2016.06.23 announcement dividend payment date, 2016.08.05 cash dividend of 0.5 yuan per share, the total amount of 371,782,590 yuan.
4.Aapproval of the "Endorsement or Guarantee Practice for Others" and revise it in 2016.07.04.
Board meeting 08,09,2016 1.Approval of revised the 2016 Operating Plan. 2.Approval of the member of third Remuneration
Committee group by LIN HUI-JENG, FU HO-CHUNG and LIEU DER-MING three independent directors.
3.Approval of chairman CHENG, WEN-LON to hold a concurrent post as a director and chairman of CSBC Coating Solutions Co., Ltd.
4.Approval of Deputy General Manager WU RAY-DAN to hold a concurrent post as a President of CSBC Coating Solutions Co., Ltd.
5.Approval of Mr. Shen Huarong to served as a supervisor of CSBC Coating Solutions Co., Ltd.
6.Approved the job transfer of eight first-level supervisor.
7.Approval of revised "Directions for Procurement operations of CSBC Corporation Taiwan".
75
8.Approval of revised "Directions forSupervision and management to subsidiaries".
9.Approval of the establishment of a clear-cut reward and punishment system.
10.Approval of research and discussion the promotion of foreman grad level 14 rose to 15.
11.Approval of to research and discussion set the supervisor exit mechanism.
12.Approval of research and discussion that "one fixed day off and one flexible rest day" for resulting in operating shock.
13.Approved the investment Fuhai offshore wind farm.
14.Approval of change contract expiration date. Board meeting 11,08,2016 1.Approval of "2017 Annual Audit Plan".
2.Approval of prepare "Research and Development Department".
3.Approval of Deputy General Manager Wang Hai-tao to hold a concurrent post as a President of CSBC Coating Solutions Co., Ltd.
4.Approval of Deputy General Manager Wang Hai-tao to hold a concurrent post as a director of Blue Ocean Wind Power Engineering (Hong Kong) Limited.
5.Approval of Deputy General Manager Wang Hai-tao to hold a concurrent post as a director of LANJIE CO., LTD.
6.Approval of Machinery factory director Yan Zhi-ming resign the deputy general manager of CSBC Coating Solutions Co., Ltd.
7.Approval of revised the "Internal Control System-Salary cycle".
8.Approval of revised the "Corporate Governance principles".
9.Approval of revised the "Risk Management principles".
10.Approval of revised the "Procedures for handling of Upload important information to Market Observation Post System".
11.Approval of to propose all the details、improvements and necessary disposal for significant losses.
12.Approval of authorization to change the contract expiration date of H1051 and H1052.
Board meeting (extraordinary)
12,27,2016 1.Approval of the Company's 2017 Annual Operating Plan.
2.Approval of revised "Organizational Highlights". 3.Approved the job transfer of 11 first-level
supervisor. 4.Approved the job transfer of 2 first-level
supervisor of Outfitting Works. 5.Approved of "Regulations Governing the Payment
of Remuneration to Chairman and General
76
Manager".6.Approved of revised the "Directions for
Procurement operations". 7.Approved of revised "Directions for Consultant
hires". 8.Approval of authorization to process termination
of contract H1051 and subsequent process. Board meeting 22,03,2017 1.Approval of the 2016 Financial Statements and
Consolidated Financial Statements. 2.Approval of the 2016 business report. 3.Because no Pre - tax benefits,the 2016 Directors
remuneration and Employee reward will not be paid.
4.Approval of the proposal for 2016 Deficit Compensation.
5.Approval of amendment to the ”Procedures for Acquisition or Disposal of Assets”.
6.Approval of held 2017 annual meeting of shareholders on 2017/6/21.
7.Approval of issue a notice to accept the written proposal of the shareholder.
8.Approval of the 2016 Statement of Internal Control Systems.
9.Approval of the 2016 financial statements(include consolidated financial statements) and filing returns assessed and certified by PwC Taiwan.
10.The first quarter of 2017 accountants of Governing Auditing and Certification of Financial Statement be changed from Liu, Tzu-Meng and Lin, Tzu-Shu to Wang,kuo-hua and Wu,chien-chih.
11.For Improve the financial ratio、increase Working capital、Capital expenditure plan and re-investment plan，raising funds used in 3-5 years.
12.Approval of that LIN,FOUNG-TANG promoted from Business Supervision to Vice General Manager.
13.Approved the job transfer of Wang Hai-tao Vice General Manager and WEI,CHENG-TZU General Manager.
14.Approved the units and duties change of seven first-level supervisor.
15.Approved Change Keelung yard Acting General Manager TANG,JUNG-KUEI to hold a concurrent post as a director of LANJIE CO., LTD.
16.Approved Change Machinery Works Deputy General Manager GUO,KUEN-CHERNG to hold a concurrent post as a director of Blue Ocean Wind Power Engineering (Hong Kong) Limited.
17.Approval of Executive Vice President TSENG,KUO-CHENG to hold a concurrent post as
77
3.3.11 Major Issues of Record or Written Statements Made by Any Director or
Supervisor Dissenting to Important Resolutions Passed by the Board of Directors：None
a CEO of SDCC(Submarine Development Center of CSBC).
18.For Improve the LLC6 crane replacement upgrade investment plan in Kaohsiung Yard.
19.For improve the 350 tons GOC crane replacement upgrade investment plan in Kaohsiung Yard. Approved of revised "Directions of commission payment for attract business".
20.Approved of revised "Directions of commission payment for attract business".
78
3.3.12 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit and R&D.
03, 31, 2017
3.4 Information Regarding the Company’s Audit Fee and Independence 3.4.1 Audit Fee
Note: If the Company has changed CPA or Accounting Firm during the current fiscal year, the company shall report the information regarding the audit period covered by each CPA and the replacement reason.
Unit: NT$ thousands
Title Name Date of Appointment
Date of Termination
Reasons for Resignation or
Dismissal
Chairman LAI, SUN-QUAE 07, 04, 2012 06, 24, 2016 resignation
Director of Department of Planning (Served as Heads of R&D)
YU,MAO-HUA 01, 01, 2016 01, 01, 2017 Transferred to General Manager of Hull Works
Accounting Firm Name of CPA Period Covered by CPA’s Audit Remarks
PriceWaterHouseCoopers Liu,Tzu-Meng/ Lin, Tzu-Shu 2016.01.01~2016.12.31 -
Accounting Firm
Name of CPA
Audit Fee
Non-audit Fee Period Covered by CPA’s Audit
RemarksSystem of Design
Company Registration
Human Resource Others Subtotal
PriceWater HouseCoopers
Liu,Tzu-Meng
1,800 - - - - - 2016.1.1~ 2016.12.31 -
Lin, Tzu-Shu
79
3.4.2 Replacement of CPA: Not Applicable. 3.4.3 Audit Independence CSBC Chairman, Chief Executive Officer, Chief Financial Officer, and managers in charge of its finance and accounting operations did not hold any positions in the Company’s independent auditing firm or its affiliates during 2016. 3.5 Changes in Shareholding of Directors, Supervisors, Managers and Major
Shareholders Unit: Shares
Title Name
2016 As of Mar. 31, 2017
Holding Increase
(Decrease)
Pledged Holding Increase
(Decrease)
Holding Increase
(Decrease)
Pledged Holding Increase
(Decrease)
Director Ministry of Economic Affairs 0 0 0 0
Representative LAI, SUN-QUAE 0 0 - -
Representative CHENG, WEN-LON (Note2) 0 0 0 0
Director Ministry of Economic Affairs 0 0 0 0
Representative CHEN, YUNG-TSUNG 0 0 0 0
Director Ministry of Economic Affairs 0 0 0 0
Representative WU,FONG-SHENG (Note 3) 0 0 - -
Representative Huang, Ying-Fang (Note3) 0 0 0 0
Director Ministry of Economic Affairs 0 0 0 0
Representative FANG, MING-CHUNG 0 0 0 0
Director Ministry of Economic Affairs 0 0 0 0
Representative Su, Wei-Jin (Note 1) 0 0 - -Representative CHEN, LIE-LIN (Note 1) 0 0 0 0
Director Ministry of Economic Affairs 0 0 0 0
Representative HUANG, JIH-CHIN 0 0 0 0
Director Ministry of Economic Affairs 0 0 0 0
80
Title Name
2016 As of Mar. 31, 2017
Holding Increase
(Decrease)
Pledged Holding Increase
(Decrease)
Holding Increase
(Decrease)
Pledged Holding Increase
(Decrease)
Representative LAN, SYU-CING 0 0 0 0
Director CPC Corporation, Taiwan 0 0 0 0
Representative LEE, SHAO-YI 0 0 0 0
Director China Steel Representative 0 0 0 0
Representative LIU, JIH-GANG 0 0 - -
Representative Lee Xin-Min (Note 4) 0 0 0 0
Director Yue-Li Investment Corporation 0 0 0 0
Director
Kaohsiung City Representative of Industrial Labor Union of CSBC
0 0 0 0
Representative HOU, DE-LONG 0 0 0 0
Director
Kaohsiung City Representative of Industrial Labor Union of CSBC
0 0 0 0
Representative HSIEH, KUO-JUNG 0 0 0 0
Independent Director WANG, CHIA-NAN (Note1) 0 0 - -
Independent Director LO, CHUNG-MIN (Note1) 0 0 - -
Independent Director KU, CHIA-HUNG (Note 1) 0 0 - -
Independent Director LIN, HUI-JENG (Note 1) 0 0 0 0
Independent Director FU, HO-CHUNG (Note 1) 0 0 0 0
Independent Director LIEU, DER-MING (Note 1) 0 0 0 0
81
Title Name
2016 As of Mar. 31, 2017
Holding Increase
(Decrease)
Pledged Holding Increase
(Decrease)
Holding Increase
(Decrease)
Pledged Holding Increase
(Decrease)Chairman of the board of directors
LAI, SUN-QUAE (Note 2) 0 0 - -
Chairman of the board of directors
CHENG, WEN-LON (Note 2) 0 0 0 0
Manager CHEN, LIE-LIN 0 0 0 0Manager WANG, HAI-TAW 0 0 0 0Manager TSENG,KUO-CHENG 0 0 0 0Manager WU, RAY-DAN(Note 5) 0 0 - -Manager CHANG,CHIEH-TE 0 0 0 0Manager LIN,FOUNG-TANG
(Note6) -- 0 0
Manager WEI,CHENG-TZU (Note6)
- - 0 0
Manager SU,CHEN-AN 0 0 0 0Manager HSIEH,LING-LING 0 0 0 0
Major shareholder Ministry of Economic Affairs 0 0 0 0
Note 1： On 2016/6/23, CHEN, LIE-LIN; LIN, HUI-JENG; FU, HO-CHUNG; LIEU, DER-MING were elected as Director in the 16th Shareholders' General Meeting.
Note 2： On 2016/6/23, the Ministry of Economic Affairs reappointed CHENG, WEN-LON as a director.
Note 3： Wu,Fong-Shen resigned on 2016/7/21. Ministry of Economic Affairs reappointed Director Representative Huang, Ying-Fang on 2016/9/23.
Note 4： On 2016/11/17, China Steel Corporation (CSC) was reappointed Director Representative Lee Xin-Min
Note 5： On 2016/11/1, the manager WU, RAY-DAN was retired. Note 6： On 2017/3/23, the manager LIN,FOUNG-TANG and WEI,CHENG-TZU
assumed the position. 3.5.1 Shares Trading with Related Parties: None 3.5.2 Shares Pledge with Related Parties: None
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3.6 Relationship among the Top Ten Shareholders
Name Current Shareholding Spouse’s/ minor’s
Shareholding
Shareholding by Nominee
Arrangement
Name and Relationship Between the Company’s Top Ten Shareholders, or
Spouses or Relatives Within Two Degrees
Remarks
Shares % Shares % Shares % Name Relationship
Ministry of Economic Affairs
249,612,540 33.57% 0 0 0 0CPC
Corporation, Taiwan
Holding 100% shares of CPC Corporation,
Taiwan
Yuanta Commercial Bank Trust Account
50,532,111 6.80% 0 0 0 0 None None
Representative: Chu, Che-Yi
The shareholder doesn’t provide.
CPC Corporation, Taiwan 47,030,687 6.33% 0 0 0 0Ministry of Economic
Affairs
Ministry of Economic
Affairs is the only
shareholder.
Representative: Chen, Chin-Te
The shareholder doesn’t provide.
China Steel Corporation 18,414,641 2.48% 0 0
China Steel Express Corporation 11,162
0.0015%
Ministry of Economic
Affairs
Ministry of Economic
Affairs is the major
shareholder.
Representative: Lee, Shin-Min
The shareholder doesn’t provide.
FINI Dimensional Emerging Markets Value Fund
5,403,653 0.73% 0 0 0 0 None None
Yue-Li Investment Corporation
5,246,336 0.71% 0 0 0 0 None None
Norges Bank 4,794,949 0.64% 0 0 0 0 None None JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds
3,838,100 0.52% 0 0 0 0 None None
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Name Current Shareholding Spouse’s/ minor’s
Shareholding
Shareholding by Nominee
Arrangement
Name and Relationship Between the Company’s Top Ten Shareholders, or
Spouses or Relatives Within Two Degrees
Remarks
Shares % Shares % Shares % Name Relationship VANGUARD EMERGING MARKETS STOCK INDEX FUND, A SERIES OF VANGUARD INTERNATIONAL EQUITY INDEX FUNDS
3,187,000 0.43% 0 0 0 0 None None
Shin Kong Life Insurance Co.,Ltd
3,006,089 0.40% 0 0 0 0 None None
Representative: Wu, Tung Chin
0 0 0 0 0 0 None None
3.7 Ownership of Shares in Affiliated Enterprises
Date：105.12.31
Name of Subsidiary
CSBC directors, supervisors,
managers, directly or indirectly controlled by the Company
Comprehensive investment
No. of shares held Stockholding (%) No. of shares held Stockholding (%) No. of shares held Stockholding (%)
CSBC Coating
Solution Corporation 8,750,000 70% 0 0% 8,750,000 70%
Blue Ocean Wind Power Engineering (H.K.) Ltd.
USD7,000 70% 0 0% USD7,000 70%
Blue Ace Corporation 2,100,000 70% 0 0% 2,100,000 70%
TOWSC 400,000 40% 0 0% 400,000 40%
Fuhai Wind Farm
Corporation 15,000,000 37.97% 0 0% 15,000,000 37.97%
Note: The company uses long-term equity investment method。
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IV. Capital Overview 4.1 Capital and Shares 4.1.1 Source of Capital A. Issued Shares
Year Par
Value (NT$)
Authorized Capital Paid-in Capital Remark
Shares Amount
(NT$ thousands)
Shares Amount
(NT$ thousands)
Sources of Capital
Capital Increased byAssets Other
than Cash
Other
1976 10 220,000 2,200,000 220,000 2,200,000 cash capital increase 2,200,000
None -
1977 10 320,003 3,200,032 320,003 3,200,032 cash capital increase 1,000,032
None -
1978 10 428,510 4,285,108 428,510 4,285,108 cash capital increase 1,085,076
None -
1979 10 561,507 5,615,075 561,507 5,615,075 cash capital increase 1,329,967
None -
1980 10 679,174 6,791,740 679,174 6,791,740 cash capital increase 1,176,665
None -
1981 10 809,174 8,091,740 809,174 8,091,740 cash capital increase 1,300,000
None -
1982 10 826,174 8,261,740 826,174 8,261,740 cash capital increase 170,000
None -
1983 10 866,174 8,661,740 866,174 8,661,740 cash capital increase 400,000
None -
1984 10 929,174 9,291,740 929,174 9,291,740 cash capital increase 630,000
None -
1985 10 979,174 9,791,740 979,174 9,791,740 cash capital increase 500,000
None -
1986 10 1,029,174 10,291,740 1,029,174 10,291,740 cash capital increase 500,000
None -
1987 10 1,055,174 10,551,740 1,055,174 10,551,740 cash capital increase 260,000
None -
1988 10 1,105,174 11,051,740 1,105,174 11,051,740 cash capital increase 500,000
None -
1989 10 1,280,174 12,801,740 1,280,174 12,801,740 cash capital increase 1,750,000
None -
1990 10 1,695,233 16,952,335 1,695,233 16,952,335 cash capital increase 4,150,595
None -
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B. Type of Stock
C. Information for Shelf Registration 4.1.2 Status of Shareholders
As of 7/13/2016
1998 10 1,113,900 11,138,997 1,113,900 11,138,997 capital reduction 5,813,338
None -
2003 10 1,113,900 11,138,997 1,113,900 11,138,997 cash capital increase 5,000,000
capital reduction 5,000,000
None
2007 10 1,113,900 11,138,997 666,133 6,661,326 capital reduction 4,477,671
None
2009 10 1,113,900 11,138,997 672,793 6,727,939 capitalization of retained earnings
66,613
None
2010 10 1,113,900 11,138,997 721,908 7,219,079 capitalization of retained earnings
491,140
None
2012 10 1,113,900 11,138,997 743,565 7,435,652 capitalization of retained earnings
216,572
None
Share Type Authorized Capital
Remarks Issued Shares Un-issued Shares Total Shares Common Stock 743,565,179 370,334,538 1,113,899,717 －
Item Government Agencies
Financial Institutions
Other Juridical Persons
Domestic Natural Persons
Foreign Institutions &
Natural Persons
Total
Number of Shareholders 1 0 82 39,731 120 39,934 Shareholding (shares) 249,612,540 0 139,672,104 313,533,660 40,746,875 743,565,179
Percentage 33.57% 0 18.78% 42.17% 5.48% 100.00%
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4.1.3 Shareholding Distribution Status A. Common Shares
As of 7/13/2016
B. Preferred Shares：None 4.1.4 List of Major Shareholders
As of 7/13/2016
Class of Shareholding (Unit: Share)
Number of Shareholders
Shareholding (Shares) Percentage
1- 999 10,057 1,722,102 0.23 1,000- 5,000 18,667 40,313,220 5.42 5,001- 10,000 4,808 33,858,554 4.55 10,001- 15,000 2,350 27,481,633 3.70 15,001- 20,000 959 17,107,629 2.30 20,001- 30,000 1,091 26,213,060 3.53 30,001- 50,000 864 33,042,372 4.44 50,001- 100,000 665 46,231,617 6.22 100,001- 200,000 294 39,300,147 5.29 200,001- 400,000 117 32,026,985 4.31 400,001- 600,000 25 12,139,191 1.63 600,001- 800,000 5 3,448,450 0.46 800,001- 1,000,000 6 5,311,170 0.71
1,000,001 or over 26 425,369,049 57.21Total 39,934 743,565,179 100.000
Shareholder's Name Shareholding
Shares Percentage Ministry of Economic Affairs 249,612,540 33.57%Yuanta Commercial Bank Trust Account 50,532,111 6.80%CPC Corporation, Taiwan 47,030,687 6.33%China Steel Corporation 18,414,641 2.48%FINI Dimensional Emerging Markets Value Fund 5,403,653 0.73%Yue-Li Investment Corporation 5,246,336 0.71%Norges Bank 4,794,949 0.64%JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds
3,838,100 0.52%
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4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share
Unit: NT$
Note 1: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 2: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 3: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price Note 4: The dividend distribution haven’t been resolved by Annual General
Shareholders’ Meeting.
VANGUARD EMERGING MARKETS STOCK INDEX FUND, A SERIES OF VANGUARD INTERNATIONALEQUITY INDEX FUNDS
3,187,000 0.43%
Shin Kong Life Insurance Co.,Ltd 3,006,089 0.40%
Items 2015 2016 01/01/2017- 03/31/2017
Market Price per Share Highest Market Price 16.90 16.60 16.05Lowest Market Price 10.80 12.60 13.45Average Market Price 14.65 14.82 14.49
Net Worth per Share Before Distribution 18.58 16.38 14.37After Distribution 18.08 Note4 -
Earnings per Share Weighted Average Shares 743,565,179 743,565,179 743,565,179Adjusted Weighted Average Shares 743,565,179 Note4 -Diluted Earnings Per Share 0.63 (1.73) (2.01)Adjusted Diluted Earnings Per Share 0.63 Note4 -
Dividends per Share Cash Dividends 0.50 Note4 -Stock Dividends
Dividends from Retained Earnings 0.00 Note4 - Dividends from Capital Surplus 0.00 Note4 -
Accumulated Undistributed Dividends 0.00 0.00 -Return on Investment
Price / Earnings Ratio (Note 1) 23.33 (8.42) (7.02)Adjusted Price / Earnings Ratio 23.33 Note4 -Price / Dividend Ratio (Note 2) 29.40 Note4 -Cash Dividend Yield Rate (Note 3) 3.40% Note4 -
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4.1.6 Dividend Policy and Implementation Status A. Dividend Policy
If the Company has earnings in the current fiscal year after annual audit, it shall first pay the profit-seeking enterprise income tax and cover its accumulated losses in previous years. If there is a balance, the Company shall set aside 10% as legal reserves. However, the provision does not apply when the legal reserves have reached the toal amount of capital. Moreover, a special reserve shall be set aside in accordance with Article 41 of the Securities and Exchange Act. If there is still a balance, the Board of Directors shall propose an allocation plan in the shareholders’ meeting for resolution before allocation. Considering the business environment and growth of the Company, the Company may allocate 10% or more of the distributable earnings referred to in the preceding Paragraph as dividends and bonuses depending on the Company’s future demand for funds and its long-term financial planning, and satisfying shareholders’ demand for cash. Cash dividends shall not be less than 10% of the total dividends.
B. Proposed Distribution of Dividend It would not distribute dividend of 2016, and it will be discuss at the Annual General Shareholders’ Meeting.
4.1.7 Employee Bonus and Directors' and Supervisors' Remuneration A. Information Relating to Employee Bonus and Directors’ and Supervisors’
Remuneration in the Articles of Incorporation. The company charter prescribes the following for the employee bonus and compensation for directors : (a)1% ~ 5% as a bonus for employees; (b)Not exceeding 1% as compensation for directors ;
B. The Estimated Basis for Calculating the Employee Bonus and Directors’ and Supervisors’ Remuneration
No Employee Bonus and Directors’ Remuneration for 2016 because of no retained earnings before tax.
C. Profit Distribution for Employee Bonus and Directors’ and Supervisors’ Remuneration for 2017 Approved in Board of Directors Meeting
No Employee Bonus and Directors’ Remuneration for 2016 because of no retained earnings before tax.
4.1.8 Buyback of Treasury Stock：None 4.2 Bonds：None 4.3 Global Depository Receipts：None 4.4 Employee Stock Options：None 4.5 Status of New Shares Issuance in Connection with Mergers and Acquisitions：
None
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4.6 Financing Plans and Implementation CSBC has not issued or the private placement has not yet been completed or has been completed within the last three years and the project benefits have not yet been revealed.
V. Operational Highlights 5.1 Business Activities 5.1.1 Business Scope A. Main areas of business operations
Customers are mainly distributed in Europe, Asia and Africa and the Americas
region. B. Revenue distribution
Unit：NT$ One hundred million
C. Main products Unit：NT$ thousands
D. New products development Submarine design and construction, marine engineering, business ships, offshore
wind power components assembly and installation and operation and
maintenance, marine engineering, rail vehicles, underwater welding, painting and
corrosion.
Major Divisions Total Sales in Year 2016 (%) of Total Sales Domestic 40.57 25.76Export 116.91 74.24Total 157.48 100.00
Major Products Total Sales in Year 2016 (%) of Total Sales Commercial ships 15,085,251 95.79Military ships - -Commercial and military ship maintenance
524,855 3.33
Machinery manufacturing 87,900 0.56Other business projects 49,693 0.32Total 15,747,699 100.00
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5.1.2 Industry Overview A. Macroeconomic Environment The International Monetary Fund (IMF) on Monday released the latest World Economic Outlook report, the report pointed out that the global economy after last year's sluggish growth pace is expected to accelerate this year and next year. So it is for this, the next two years of global economic growth forecast, and still maintain the same valuation in October last year, respectively, 3.4% and 3.6%. International Monetary Fund (IMF) mentioned that the global economy is still facing some negative risks, including the more compelling, including the US policy may shift to internal-oriented, and lead to rising protectionism; Making the euro area and some emerging economies, the economy is becoming weak; geopolitical risk increases; and China's economic growth is expected to significantly slow down and so on. Clarkson recently released a new shipbuilding market analysis report, the new shipbuilding market in 2016 were reviewed. The report shows that the downturn in the shipping market in 2016 and has not been eased, is experiencing the most difficult period since the financial crisis. The Clarkson Maritime Index fell 10 per cent compared with the beginning of 2016, the report said. The report pointed out that the market outlook is still limited by the world economy and maritime trade development; the global economy in 2016 is still in chaos. Many important market segments are very low, operators are under severe financial pressure, excess capacity and slowing demand growth is still the market is full of challenges. In 2016 the world's new orders continued to decline, the first 11 months to deadweight tons fell 75%. 2016 almost all segments of the ship market, the new signing orders have declined. In addition, the reduction in new orders was partially influenced by environmental regulations: IMO Tier III rules were enforced at the beginning of 2016, and in order to avoid the extra cost of compliance, some new shipbuilding requirements were already in place by 2015 freed. Container ship orders fell 72% year-on-year in volume terms, and the market's appetite for large container ships weakened significantly. At the same time, the widening of the Panama Canal, the bankruptcy of Hanjin Shipping, the Consolidation and Consolidation of the Cargo Consortium and so on, have increased the uncertainty of the container ship market.
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New ship deliveries in 2016 will remain at similar levels to 2015, with a total of 1537 vessels in the first 11 months, totaling 94.93 million deadweight tons of new capacity put into global fleets. Among them, about 1/3 of the delivery of ships for the tanker, more than 2015, an increase of 64%. However, the undelivered rate for major ship types increased to varying degrees in 2016 compared to the expected deliveries at the beginning of the year, with the total undelivered rate reaching 39% and expected full year Of the undelivered rate may be high. Obviously, there is an increased risk of delayed delivery and cancellation of orders in the event of a low market rate for bulk carriers and container ships. While the relatively stable yield level of the tanker market helps to control the undelivered rate of the ship in a relatively low range to a certain extent. In the new signing of a substantial reduction in volume and stability of the combined effect of delivery, the global handheld orders to accelerate shrinking: in early December 2016 hand-held orders for 3713, 230 million dwt, down 27% compared with the beginning. Bulk carriers still account for 27% of shipments by hand and 23% and 11% for tankers and container ships, respectively. Had a rough estimate based on capacity in 2015, current hand-held orders would only average shipyard production for the next 2.4 years. B. Current Status and Future Development of CSBC CSBC product positioning as a container ship professional shipyards, operating accounted for more than 90%, and with the defense needs to undertake naval vessels and official ships. In addition to shipbuilding, CSBC will be the future direction of offshore wind power, marine groups, consultants and services in four major areas of development. The proportion of operating the future will be special ships and warships built, the marine industry and the land machine engineering, merchant ship building three blocks each 1/3 development, the annual revenue of 40 billion target to achieve and build the vision of excellence Marine Group.
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C. Relationship with Up-, Middle- and Downstream Companies Shipbuilding industry, the middle and lower reaches of the supply of many manufacturers, shipbuilding supply chain construction and efficiency of the relationship between shipbuilding industry competitiveness, all the upper supply of shipbuilding plate, the middle of the ship main equipment (host, auxiliary, etc.) and paint and downstream East of the end user. CSBC has various types of ships independent design, installation, manufacturing capacity and a professional ship R & D design talent, and the upper, middle and lower reaches of the supply of manufacturers and owners to maintain good relations of supply and marketing to ensure product quality and delivery. In the middle and upper reaches of the supply chain manufacturers supply chain building, CSBC has strict supplier evaluation system, and to diversify supply sources, in order to establish a complete supply chain system. On the downstream owners of services, in addition to timely delivery to meet the owner's demand, pay more attention to the use of the product after-sales service and satisfaction. To ensure product quality and delivery, shipbuilding industry, the middle and lower reaches of the relationship between the closely related, any link problems will affect the downstream owners of services. D. Product Trends and Competition (1) Product Trends At present, the shipbuilding market in the world has formed the development trend of oil tanker, bulk wheel, container wheel, special vessel and offshore engineering equipment ship, etc. In 2015, the turnover of oil tanker, bulk wheel, container wheel and offshore project Structure, the proportion of 21.28%, 40.88%, 28.04% and 9.8%, compared to the 2014 shipbuilding market, which in 19.36% of tanker demand growth, container and bulk round 2.82% and 0.79% , The offshore project is declining 31.66%.
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(2) Product Competition By analyzing the strategic development of the major shipbuilding countries by competition strategy, the Republic of Korea, through the economic scale, technology, management and related peripheral industry support, achieved various competitive advantages of low-cost shipbuilding, and gradually increased the proportion of products such as LNG and Offshore. In the past, Japan had made a difference in its strategy to maintain its competitive edge through the change of industrial structure (strategic alliance, merger or division of labor) and specialization (each shipyard focused on a certain type of ship), while cost leadership and professional differentiation . Continental Shipyard is currently in a low labor cost to gain a competitive advantage in the future through capacity expansion, equipment upgrades, technology improvement and efficiency improvement, cost leadership strategy development. Western European countries are still professional differentiation strategy, in the passenger ships, special ships firmly in the lead. CSBC are mainly container ship professional shipyards, and timely according to market demand with the bulk cargo ship or tanker business. Considering the critical success factors of container ships, it is compared with Japan, Korea and mainland China shipyards. Overall, CSBC has advantages in quality, design and specification, material cost is mainly imported, and the industry scale is small. Bargaining power is weak, more Habitat disadvantage. 5.1.3 Research and Development A. Research and Development Expenses in the Past Three Years
Unit；NT$ thousands
Year
Item 2014 2015 2016
R&D funding(A) 134,296 155,667 102,196
Company turnover(B) 25,497,653 21,457,697 15,747,699
(A)／(B)% 0.53% 0.73% 0.65%
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B. Education distribution of R&D personnel. The department unit responsible for research and development is「Innovation and Research Center, IRC」in CSBC. And the「Department of Design」and「Submarine Development Center, SDCC」are responsible for research and development of the ship. And another major work of 「Machinery Works」 is responsible for promotion the marine engineering. The R&D personnel education distribution as follows.
Statistics as of December 31, 2016 Year Item 2013 2014 2015 2016
Education distribution
Doctor 4 5 5 6 Master 56 54 68 79
Bachelor 52 40 49 42 Others 26 12 17 17
Total 138 111 139 144 Average working years 21.13 19.28 17.61 14.42
5.1.4 Long-term and Short-term Development A. Long-term Development a. Shipbuilding industry moderate expansion CSBC has formulated a modest expansion strategy for the shipbuilding industry. The main objective of the CSBC is to enhance the shipbuilding capacity and competitiveness of the shipbuilding industry through modest investment. The planned investment in the Kaohsiung Plant Bending Area Project will be completed in the year 2016, As well as the "Kaohsiung plant new LLC-50 t crane a project investment project," the two project investment plan, has been approved by the Board, the implementation period to 2017 March and June. b. Knowledge and technology heritage, thick human resources In addition to the organization review and adjustment, CSBC is also engaged in long-term strategy and organizational structure planning, including diversified pipeline access, to attract multi-talent; full-time staff career Planning and systems; promotion of on-the-job training programs; implementation of the rotation system; development of multiple assessment methods. The other is to strengthen the competitiveness of shipbuilding, accelerate the transmission of knowledge and technology, simultaneous planning and establishment of KM platform and system.
95
c. Development of new business, towards multi-angle development CSBC has established CSBC Anticorrosive Subsidiary, a subsidiary of CSBC in the field of painting and anti-corrosion. The future start-ups and diversified operations are still part of the company's expansion of its business scope, including the development of offshore wind power engineering business and the assessment or establishment of offshore wind power Operation and maintenance companies, will ship-related technology to promote the main shipbuilding industry to get the professional support to the establishment of marine engineering-related technologies and services.
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d. To energy saving, carbon reduction and environmental protection as the mainstay, continuous innovation and development Ship energy saving, carbon reduction and environmental protection strategy, will be the main consideration of future shipbuilding competition, CSBC will be listed as the future innovation and development of the spindle. CSBC has been promoting the development and application of ES 10% (energy saving 10%), ES 20% and ES 30% in ship energy saving technologies and installations, as well as research and development of energy saving, carbon reduction and marine renewable energy. At the same time, the integration of domestic shipbuilding R & D resources, accelerate cooperation and innovation research and development. In order to enhance the competitiveness of the shipbuilding industry, the Company will actively develop new ship models or improve the existing ship types to meet the EEDI standard of 2025 as the goal. Technical sophistication and design platform upgrades, as well as sophisticated E-oriented, expanding M-based applications, towards the U-goal. e. Planning new production lines With the aluminum manufacturing of cross-strait rapid passenger liner and FRP shell of the official business development needs, planning a professional production line. Another plan of plant monitoring and production process of intelligent and systematic, with a view to get rid of the mainland and emerging shipbuilding countries to the full development of container wheels, bulk carriers and oil tankers and other traditional three categories of fierce competition in the ship, and part of the transition to high-tech production capacity Products and warships of the construction and application, in order to amplify the diversity of products to meet the needs of the market. B. Short-term Development a. Actively seek new ship orders, improve hand-held orders Shipbuilding and business ships, etc. At the same time, strengthening shipowner relationship and service, building the customer relationship management information system, as well as building shipbuilding leasing financing and business ship business contract model. In addition, the contractor management information system, the implementation of the contractor management, and the construction of shipbuilding industry O-Team alliance to assist the equipment and equipment suppliers to upgrade the physical fitness and promote the domestic shipbuilding industry chain.
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b. Strengthen production capacity control, reduce costs The international shipping economy is still in the doldrums, seriously affecting the shipbuilding market, coupled with the exchange rate and raw material prices will continue to fluctuate, the challenge remains. Therefore, in addition to actively strive for the new business, the output also meet the upgrade, shipbuilding production (cgt) and the combination of the amount will be higher than the target for the year 2012; another 168 program, 2016 years in addition to stable production, Cost 10%, and improve the process, so that the upstream and downstream can fully cooperate with, while doing a good job of human heritage work and the implementation of relevant training, in order to reduce indirect costs to maintain profitability. c. Ongoing internal transformation of the company to enhance competitiveness Promotion of health promotion activities and management, continuous 8S campaign, internal reform of personnel system, work safety and work processes, creating a safe and comfortable working environment and improving employee welfare to enhance work morale, as well as the implementation of smoking control and fire control, Labor safety and health management, and "integrity, innovation, growth," the concept of high-quality business, so that CSBC has become a modern, international companies. d. Enhance the design energy, accelerate the development of new ship In recent years, with the increasing public attention to the maintenance of marine safety, environmental protection and life safety, various international conventions, standards, norms and rules have been continuously introduced. With the new regulations, will accelerate the development of new ship, sophisticated CAD / CAM technology and design platform upgrades to meet customer requirements, in order to maintain design advantages. In line with the Company's modest expansion strategy, CSBC will enhance the design energy in an appropriate manner so as to expedite product development and technology research and development, and continue to improve the design and production of ships. The Company is committed to the improvement of production processes and equipment renewal, thus expanding the brand's internationalization, In order to survive in the international market.
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e. Strengthen the corporate governance system, and fulfill corporate social respon -sibility In order to enhance the performance of the Company's capital market performance, board of directors, corporate social responsibility and the company's risk management mechanism to a model for good business, CSBC annual acceptance of the company's corporate governance system evaluation, evaluation The results listed as 6% to 20% blue chip companies. CSBC also publishes CSR reports every year to unveil the management and effectiveness of corporate social responsibility, and will continue to improve corporate social responsibility systems and practices in the future. 5.2 Market and Sales Overview 5.2.1 Market Analysis A. Sales (Service) Region
Unit；NT$ One hundred million
B. Market Share (%) of Major Product Categories in the Last Two Years CSBC market positioning as a professional container shipyard, if not divided ship, ship to a single ship analysis of the ship, Taiwan shipping companies about the world's total shipments (CGT) 0.98%. C. Market Analysis of Major Product Categories As the shipping market and the shipbuilding market climate is closely related to the following points on the container shipping and bulk shipping market status and development analysis to illustrate. In the container shipping sector, according to Alphaliner, the leading shipping consultancy in France, the total capacity of container shipping will increase by 7.4% in 2015 and the global container shipping capacity will increase at least 6.2% in 2016, and the structure of overcapacity will increase. The more intense. Therefore, based on the overall global economic outlook is still unknown, 2016 container shipping industry performance is still not optimistic. In the bulk shipping sector, the Clarkson survey noted that shipments increased by 10.5% in 2015 beyond the 5.0% growth rate of demand for goods, said the bulk shipping industry will continue to oversupply situation, to be resolved still depends on the global economic growth rate, Shipping supply and demand balance is expected to fall before and after 2018, and the overall economic recovery picked up at least until 2020.
Major Divisions Total Sales in Year 2016 (%) of Total Sales Domestic 40.57 25.76 Export 116.91 74.24 Total 157.48 100.00
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D. Favorable and Unfavorable Factors in the Long Term ●Favorable Factors
a. Container ship growth and stability, the company's annual business needs only a dozen, relatively stable source of business.
b. Can focus on operating customer relationships, such as Evergreen, Yangming, Wanhai are based Container ship-based, and the list of the world's top 19 business list.
c. Focus on container ship design, quality, cost, delivery, service at all levels Improve and enhance the competitiveness of container ships.
●Unfavorable Factors a. Container ships into the low threshold, the mainland shipyard capacity and
energy capacity of the container ship will be rapidly upgrading, resulting in market prices fall.
b. Product over-concentration, reduced ability to respond. c. Raw material prices, a substantial increase in production costs. d. Shipbuilding grass-roots technical labor shortage, rising wage costs.
5.2.2 Production Procedures of Main Products A. Major Products and Their Main Uses a. Container ship: The container carries the container to carry.
b. Bulk ship: grain, ore, coal carrying. c. Tankers: crude oil and petroleum products to carry. d. Special Boat: semi-submersible load, cement, cold storage, floating dock. e. Official ships: the Navy and the Coast Guard patrol operations, logistics ships
and the official mission of the ship. B. Major Products and Their Production Processes
Signing → Design → Lofting → Cutting → Bending → Initial Combination → Large Combination →
Launching → Painting and Finishing → Delivery → Post-sale Service 5.2.3 Supply Status of Main Materials
Main raw materials / equipment SuppliersHost HYUNDAI、DIESEL UNITED、HUDONG、
DOOSAN、MITSUI、HITACHI、KHI、STX、CMD、MITSUBISHI、YUCHI
generator YANMAR、STX ENGINE、DAIHATSU、 HYUNDAI、WARTSILA、DOOSAN、CUMMINS、ACD
Steel plate CSC, POSCO
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.41
-
Chin
a
Stee
l
Corp
orat
i
on
2,28
8,28
218
.98
Corp
orat
e
dire
ctor
HITA
CHI
ZOSE
N
CORP
ORA
TION
501,
762
17.4
8-
2
Chin
a
Stee
l
Corp
orat
i
on
2,13
8,74
9 16
.90
Corp
orat
e
dire
ctor
Ot
hers
9,76
5,88
681
.02
-
Chin
a
Stee
l
Corp
orat
i
on
335,
231
11.6
8Co
rpor
ate
dire
ctor
3 Ot
hers
8,31
4,04
1 65
.69
-
Ot
hers
2,03
3,17
870
.84
-
Ne
t Tot
al
Supp
lies
12,6
55,6
08
100.
00
Net
Tota
l
Supp
lies
12,0
54,1
6810
0.00
Ne
t To
tal
Supp
lies
2,87
0,17
110
0.00
101
B. M
ajor C
lient
s in
the L
ast T
wo C
alend
ar Ye
ars
Un
it: N
T$ th
ousa
nds
No
te: M
ajor c
lient
s ref
er to
thos
e com
man
ding
10%
-plu
s sha
re o
f ann
ual o
rder
volu
me.
Ite
m
2015
20
16
2017
(As o
f Mar
ch 3
1)
Com
pan
y Nam
e Am
ount
Pe
rcen
t Re
latio
n wi
th
Issue
r
Com
pany
Na
me
Amou
nt
Perc
ent
Relat
ion
with
Iss
uer
Com
pany
Na
me
Amou
nt
Perc
ent
Relat
ion
with
Iss
uer
1
SEAS
PAN
CORP
ORAT
ION
9,72
6,60
0 45
.33
-
SEAS
PAN
CORP
ORA
TION
6,
673,
401
42.3
8 -
EVER
GREE
N M
ARIN
E CO
RP.
(TAIW
AN)
LTD.
1,36
1,61
642
.15
-
2
SITC
SHIP
OWNI
NG
GROU
P CO
. LTD
5,36
7,86
3 25
.02
-
GPO
GRAC
E LIM
ITED
3,
739,
180
23.74
-
GPO
GRAC
E LIM
ITED
1,
056,
887
32.7
0-
3
EVER
GREE
N M
ARIN
E CO
RP.
(TAIW
AN) L
TD.
2,98
8,00
9 13
.93
-
CPC
CORP
ORA
TION,
TA
IWAN
2,
524,
409
16.0
3 Co
rpor
ate
dire
ctor
T.S.
Lines
Co
., L
TD.
490,
181
15.1
7-
Ot
hers
3,37
5,22
4 15
.72-
Othe
rs 2,
810,
709
17.8
5 -
Othe
rs 32
2,06
79.
98
Ne
t Sa
les
21,4
57,6
96
100.
00
Net S
ales
15,7
47,6
9910
0.00
Net S
ales
3,23
0,75
110
0.00
102
5.2.
5 Pro
ducti
on in
the L
ast T
wo Ye
ars
U
nit:
NT$ t
hous
ands
Y
ear
Outp
ut
Majo
r Pro
duct
s
20
15
2016
Un
it
Quan
tity
Amou
nt
Quan
tity
Amou
nt
Reve
nues
from
cons
truct
ion
of sh
ips a
nd
vess
els
CGT
354,
339
19,2
92,2
6523
8,83
416
,197
,705
Reve
nues
from
cons
truct
ion
of n
aval
ship
s DI
SP83
65,4
270
4,42
1
Reve
nues
from
mac
hine
man
ufac
turin
g M
T26
,169
209,
859
1,33
258
,747
Serv
ice re
venu
e
65
8,10
153
0,30
8
Othe
r rev
enue
237,
600
16,74
6
Tota
l
20,4
63,2
5216
,807
,927
103
5.2.
6 Shi
pmen
ts an
d Sale
s in t
he La
st Tw
o Yea
rs
Unit:
NT$
thou
sand
s
Y
ear
Ship
men
ts
& Sa
les
Majo
r Pro
duct
s
20
15
2016
Un
it
Quan
tity
Amou
nt
Quan
tity
Amou
nt
Reve
nues
from
cons
truct
ion
of sh
ips a
nd
vess
els
CGT
354,
339
20,2
45,4
8923
8,83
415
,085
,251
Reve
nues
from
cons
truct
ion
of n
aval
ship
s DI
SP83
15,8
32-
-
Reve
nues
from
mac
hine
man
ufac
turin
g M
T26
,169
166,
430
1,33
287
,900
Serv
ice re
venu
e
753,
410
524,
855
Othe
r rev
enue
276,
535
49,6
93
Tota
l
21,4
57,6
9615
,747,
699
104
5.3 Human Resources
Note: Average Years of Service of employees was after privatization. 5.4 Environmental Protection Expenditure 5.4.1 Total Losses and Penalties The loss or penalty caused by environmental pollution during the latest year and up to the printing date of this annual report: None 5.4.2 Countermeasures CSBC takes the following measures to protect the environment: (1) Prevention of water pollution: in order to keep from pollution, CSBC’s wastewater is collected from recycling pipes, purified by wastewater treatment plants, and released into the water. The effluent water quality must conform with the water quality standard to obey the government regulations.
Year 2015 2016 Data as of ending data in the current year
Number of Employees
Management personnel 173 170 171 Engineering personnel 553 552 549 Technical personnel 2,192 2,213 2,260
Service personnel 4 4 4 Total 2,922 2,939 2,984
Average Age 48.5 48.3 47.9 Average Years of Service 6 6.8 6.6
Education
Ph.D. 7 11 11 Masters 237 243 246
Bachelor’s Degree 600 655 706 Senior High School 518 507 507 Below Senior High
School 1,560 1,523 1,514
Total 2,922 2,939 2,984
105
(2) Prevention of stationary pollution source: CSBC’s air control equipment is RTO system (Regenerative Thermal Oxidizer system), which can preheat the inflow gas by captured heat and increase the removal efficiency of air pollutants. 5.5 Labor Relations Please refer to page 114 of the Chinese annual report.
5.6 Important Contracts
Counterparty Period Major Contents Restrictions
Properties: merchant shipbuilding contract
Seaspan Corporation 2013.08.22~2016.03.01 14,000TEU Class Container
Carrier(N6036) None
Seaspan Corporation 2013.08.22~2016.03.15 14,000TEU Class Container
Carrier (N6037) None
Seaspan Corporation 2013.08.22~2016.05.31 14,000TEU Class Container
Carrier (N6038) None
Seaspan Corporation 2013.08.22~2016.07.31 14,000TEU Class Container
Carrier (N6039) None
Seaspan Corporation 2013.08.22~2016.09.15 14,000TEU Class Container
Carrier (N6040) None SITC Shipowning Group Company Limited
2013.12.31~2016.01.31 1,800TEU Container Vessel(N2049) None
SITC Shipowning Group Company Limited
2013.12.31~2016.03.31 1,800TEU Container Vessel (N2050) None
Hydra Shipping Limited 2014.01.16~2016.12.15 1,800TEU Container Vessel
(N2051) None
Syra Shipping Limited 2014.01.16~2017.02.16 1,800TEU Container Vessel
(N2052) None
CPC Corporation, Taiwan 2014.06.23~2016.12.31 40,000 DWT Class Product
Carrier (N6053) None
CPC Corporation, Taiwan 2014.06.23~2016.12.31 40,000 DWT Class Product
Carrier (N6054) None
GPO Grace Limited 2014.10.06~2017.01.1565,000DWT Semi-submersible Deck Cargo Carrier/Heavy Lift Carrier(N6057)
None
GPO Amethyst Limited 2014.10.06~2017.04.15
65,000DWT Semi-submersible Deck Cargo Carrier/Heavy Lift Carrier (N6058)
None
GPO Sapphire Limited 2014.10.06~2017.07.15
65,000DWT Semi-submersible Deck Cargo Carrier/Heavy Lift Carrier (N6059)
None
106
GPO Emerald Limited 2014.10.06~2017.10.15
65,000DWT Semi-submersible Deck Cargo Carrier/Heavy Lift Carrier (N6060)
None
T.S. Empire Holding Limited 2015.07.24~2017.03.15 1,800TEU Container Vessel
(N2061) None
T.S. Kingdom Holding Limited 2015.07.24~2017.04.30 1,800TEU Container Vessel
(N2062) None
T.S. Empire Holding Limited 2016.05.31~2017.08.31 1,800TEU Container Vessel
(N2063) None
T.S. Kingdom Holding Limited 2016.05.31~2017.11.15 1,800TEU Container Vessel
(N2064) None
GREEN COMPASS MARINE S. A. 2015.08.10~2017.06.30 2,800TEU Class Container
Vessel (N6065) None EVERGREEN MARINE CORP. (TAIWAN) LTD.
2015.08.10~2017.07.31 2,800TEU Class Container Vessel (N6066) None
GREEN COMPASS MARINE S. A. 2015.08.10~2017.09.30 2,800TEU Class Container
Vessel (N6067) None EVERGREEN MARINE CORP. (TAIWAN) LTD.
2015.08.10~2017.10.31 2,800TEU Class Container Vessel (N6068) None
GREEN COMPASS MARINE S. A. 2015.08.10~2017.12.31 2,800TEU Class Container
Vessel (N6069) None EVERGREEN MARINE CORP. (TAIWAN) LTD.
2015.08.10~2017.12.31 2,800TEU Class Container Vessel (N6070) None
GREEN COMPASS MARINE S. A. 2015.08.10~107.01.31 2,800TEU Class Container
Vessel (N6071) None
EVERGREEN MARINE CORP. (TAIWAN) LTD.
2015.08.10~107.02.28 2,800TEU Class Container Vessel (N6072) None
GREEN COMPASS MARINE S. A. 2015.08.10~107.02.28 2,800TEU Class Container
Vessel (N6073) None
EVERGREEN MARINE CORP. (TAIWAN) LTD.
2015.08.10~107.03.31 2,800TEU Class Container Vessel (N6074) None
Properties: official vessels and naval construction contract
Ministry of Science and Technology, ROC
2016.11.02-2019.02.15 500 gross tonnage class research vessel(N2088) None
Ministry of Science and Technology, ROC
2016.11.02-2019.03.29 500 gross tonnage class research vessel(N2089) None
Ministry of Science and Technology, ROC
2016.11.02-2019.06.14 1000 gross tonnage class research vessel(N2090) None
Ministry of National Defence,ROC
2016.12.22-2019.12.23Indigenous Defense Submarine Planning and Design(N6098)
None
107
Industry: Engineering Contract
Owner - TPC Customer - New Asia Cons- truction Company
1998.09.10~2017.03.31
Longmen nuclear four plan No. 1, No. 2 nuclear island area plant structure enclosing enclosures and a block body steel structure and other projects
N-STAMP
Owner - TPC 1998.09.10~2017.12.31 Longmen nuclear four plan of the first and second turbines generator and auxiliary equipment installation works
None
Owner - Fuhai Wind Power Company Preparatory Office
2014.04.01~2018.12.31 Offshore Wind Turbine Transport and Installation None
Ministry of National Defence,ROC
2016.12.08-2018.05.31Guppy class submarine pressure hull part of the repair and other 12 commissions
None
Properties: Long-term lease
Taiwan Port (shares) company Kaohsiung branch
2006.01.01~2025.12.31 Land leasing None
Taiwan Port (shares) company Kaohsiung branch
2017.01.01~2017.12.31 90/91 terminal rental None
State - owned Property Agency 2011.10.1~2019.12.31 Land lease × 6 / Keelung None
Taiwan Port (shares) company Keelung branch
2008.01.01~2027.12.31 Land lease x 5; building lease x 23 None
108
VI. Financial Information 6.1 Five-Year Financial Summary 6.1.1 Condensed Balance Sheet A. Condensed Consolidated Balance Sheet – Based on IFRS
Unit: NT$ thousands Year
Item
Financial Summary for The Last Five Years As of
March 31, 2017 2012 2013 2014 2015 2016
Current assets 15,711,593 14,915,755 17,420,313 11,745,033 15,557,809 16,277,124
Held-to-maturity financial assets-noncurrent 99,000 99,000 99,000 － － －
Investments accounted for using equity method
－ － 3,907 3,051 166,616 156,971
Property, Plant and Equipment 10,190,229 10,369,432 11,126,753 10,999,508 10,709,596 10,611,642
Intangible assets 29,866 31,442 38,910 36,945 28,847 27,360
Other assets 933,520 853,725 1,116,507 955,029 1,208,074 1,492,418
Total assets 26,964,208 26,269,354 29,805,390 23,739,566 27,670,942 28,565,515
Current liabilities
Before distribution 9,618,619 9,252,310 13,443,979 6,928,795 13,127,490 15,371,765
After distribution 10,213,471 9,630,874 13,819,540 7,304,908 － －
Non-current liabilities 3,563,761 3,352,011 2,603,327 2,946,399 2,313,794 2,459,199
Total liabilities
Before distribution 13,182,380 12,604,321 16,047,306 9,875,194 15,441,284 17,830,964
After distribution 13,777,232 12,982,885 16,422,867 10,251,307 － －
Equity attributable to shareholders of the parent 13,731,359 13,611,665 13,707,901 13,813,337 12,182,663 10,688,737
Capital stock 7,435,652 7,435,652 7,435,652 7,435,652 7,435,652 7,435,652
Capital surplus 1,965 1,965 1,965 1,965 1,965 1,965
Retained earnings
Before distribution 6,293,742 6,174,048 6,270,284 6,375,720 4,745,046 3,251,120
After distribution 5,698,890 5,802,265 5,898,501 6,003,938 － －
Other equity interest － － － －－ －
Treasury stock － － － －－ －
Non-controlling interest 50,469 53,368 50,183 51,035 46,995 45,814
109
B. Condensed Non-consolidated Balance Sheet – Based on IFRS
Unit: NT$ thousands
Total equity
Before distribution 13,781,828 13,665,033 13,758,084 13,864,372 12,229,658 10,734,551
After distribution 13,186,976 13,286,469 13,382,523 13,488,259 － －
Year
Item
Financial Summary for The Last Five Years
2012 2013 2014 2015 2016
Current assets 15,548,012 14,714,683 17,217,134 11,512,244 15,385,437
Held-to-maturity financial assets-noncurrent 99,000 99,000 99,000 － －
Investments accounted for using equity method 117,761 124,526 121,001 122,133 276,272
Property, Plant and Equipment 10,154,898 10,340,851 11,103,343 10,992,866 10,707,945
Intangible assets 29,043 30,843 38,519 36,783 28,761
Other assets 924,087 839,090 1,130,558 949,532 1,203,651
Total assets 26,872,801 26,148,993 29,709,555 23,613,558 27,602,066
Current liabilities
Before distribution 9,603,769 9,216,091 13,424,860 6,872,565 13,116,484
After distribution 10,198,621 9,587,874 13,796,643 7,244,347 －
Non-current liabilities 3,537,673 3,321,237 2,576,794 2,927,656 2,302,919
Total liabilities Before distribution 13,141,442 12,537,328 16,001,654 9,800,221 15,419,403
After distribution 13,736,294 12,909,111 16,373,437 10,172,003 －
Capital stock 7,219,079 7,435,652 7,435,652 7,435,652 7,435,652
Capital surplus 1,965 1,965 1,965 1,965 1,965
Retained earnings
Before distribution 6,293,742 6,174,048 6,270,284 6,375,720 4,745,046
After distribution 5,698,890 5,802,265 5,898,501 6,003,938 －
Other equity interest － － － － －
Treasury stock － － － － －
Total equity Before distribution 13,731,359 13,611,665 13,707,901 13,813,337 12,182,663
After distribution 13,136,507 13,239,882 13,336,118 13,441,555 －
110
C. Condensed Consolidated balance sheet – Based on ROC GAAP
Unit: NT$ thousands
Year
Item
Financial Summary for The Last Five Years
2012
Current assets 16,003,380
Funds & Long-term investments
99,000
Fixed assets 9,971,713
Intangible assets －
Other assets 819,321
Total assets 26,893,414
Current liabilities
Before distribution
9,372,861
After distribution
9,967,713
Long-term liabilities 1,886,340
Other liabilities 1,506,740
Total liabilities
Before distribution
12,765,941
After distribution
13,360,793
Capital stock 7,435,652
Capital surplus 1,965
Retained earnings
Before distribution
3,438,022
After distribution
2,843,170
Unrealized revaluation increment
3,201,365
Non-controlling interest 50,469
Total equity
Before distribution
14,127,473
After distribution
13,532,621
111
D. Condensed Non-Consolidated balance sheet – Based on ROC GAAP Unit: NT$ thousands
Year
Item
Financial Summary for The Last Five Years
2012
Current assets 15,839,762
Funds & Long-term investments
216,761
Fixed assets 9,936,383
Intangible assets －
Other assets 809,100
Total assets 26,802,006
Current liabilities
Before distribution
9,358,010
After distribution
9,952,862
Long-term liabilities 1,886,340
Other liabilities 1,480,652
Total liabilities
Before distribution
12,725,002
After distribution
13,319,854
Capital stock 7,435,652
Capital surplus 1,965
Retained earnings
Before distribution
3,438,022
After distribution
2,843,170
Unrealized gain from financial products －
Unrealized revaluation increment
3,201,365
Total equity
Before distribution
14,077,004
After distribution
13,482,152
112
6.1.2 Condensed Statement of Comprehensive Income/Condensed Statement of Income
A. Condensed Consolidated Statement of Comprehensive Income – Based on IFRS Unit: NT$ thousands
Year Item
Financial Summary for The Last Five Years As of March
31, 2017 2012 2013 2014 2015 2016
Operating revenue 30,945,055 24,892,573 25,497,653 21,457,696 15,747,699 3,230,751
Gross profit(loss) 1,219,621 858,694 1,017,057 994,444 -1,060,228 -1,691,297
Income(loss) from operations 699,096 341,923 506,354 436,634 -1,565,030 -1,806,581
Non-operating income and expenses
142,287 160,480 23,161 142,391 29,628 7,855
Income(loss) before tax 841,383 502,403 529,515 579,025 -1,535,402 -1,798,726
Net income (Loss) 684,486 439,801 454,378 472,784 -1,286,809 -1,495,107
Other comprehensive income (income after tax)
3,953 38,256 17,237 9,065 28,208 －
Total comprehensive income(loss)
688,439 478,057 471,615 481,849 -1,258,601 -1,495,107
Net income(loss) attributable to shareholders of the parent
680,142 436,902 450,782 468,154 -1,287,100 -1,493,926
Net income attributable to non-controlling interest
4,344 2,899 3,596 4,630 291 -1,181
Comprehensive income(loss) attributable to Shareholders of the parent
684,095 475,158 468,019 477,219 -1,258,892 -1,493,926
Comprehensive income attributable to non-controlling interest
4,344 2,899 3,596 4,630 291 -1,181
Earnings per share 0.91 0.59 0.61 0.63 -1.73 -2.01
113
B. Condensed Non-consolidated Statement of Comprehensive Income – Based on IFRS
Unit: NT$ thousands
C. Condensed Consolidated Statement of Income – Based on ROC GAAP
Unit: NT$ thousands
Year Item
Financial Summary for The Last Five Years
2012 2013 2014 2015 2016
Operating revenue 30,813,255 24,810,144 25,377,982 21,398,829 15,739,331
Gross profit(loss) 1,190,662 838,035 994,765 967,014 -1,071,215
Income(loss) from operations 679,414 329,283 493,996 426,248 -1,5674,067
Non-operating income and expenses
151,528 166,478 29,588 144,997 27,943
Income(loss) before tax 830,942 495,761 523,584 571,245 -1,536,124
Net income (Loss) 680,142 436,902 450,782 468,154 -1,287,100
Other comprehensive income (income after tax)
3,953 38,256 17,237 9,065 28,208
Total comprehensive income(loss)
684,095 475,158 468,019 477,219 -1,258,892
Earnings per share 0.91 0.59 0.61 0.63 -1.73
Year
Item
Financial Summary for The Last Five Years
2012
Operating revenue 30,945,055
Gross profit 996,246
Income from operations 474,331
Non-operating income 424,348
Non-operating expenses 25,404
Income before tax 873,275
Income from operations of continued segments - after tax 710,956
Income from discontinued operations
－
Extraordinary gain or loss －
Cumulative effect of accounting principle changes －
Consolidated Net income 710,956
Earnings per share 0.96
114
D. Condensed Non-consolidated Statement of Income – Based on ROC GAAP Unit: NT$ thousands
6.1.3 Auditors’ Opinions from 2012 to 2016
Year Item
Financial Summary for The Last Five Years
2012
Operating revenue 30,813,255
Gross profit 967,416
Income from operations 454,776
Non-operating income 433,506
Non-operating expenses 25,395
Income before tax 862,887
Income from operations of continued segments - after tax 706,644
Income from discontinued operations
－
Extraordinary gain or loss －
Cumulative effect of accounting principle changes －
Net income 706,644
Earnings per share 0.95
Year Accounting Firm Auditors’ Opinion 2012 Pricewaterhouse Coopers Modified Unqualified 2013 Pricewaterhouse Coopers Unqualified 2014 Pricewaterhouse Coopers Unqualified 2015 Pricewaterhouse Coopers Unqualified 2016 Pricewaterhouse Coopers Unqualified
115
6.2 Five-Year Financial Analysis A. Consolidated Financial Analysis – Based on IFRS
Year Item
Financial Analysis for the Last Five Years As of March
31, 2017
2012 2013 2014 2015 2016
Financial structure (%)
Debt Ratio 48.89 47.98 53.84 41.60 55.80 62.42Ratio of long-term capital to property, plant and equipment
170.22 164.11 147.05 152.83 135.80 124.33
Solvency (%) Current ratio 163.35 161.21 129.58 169.51 118.51 105.89Quick ratio 48.30 6.49 6.30 18.69 7.99 8.80Interest earned ratio (times) 23.37 22.62 18.56 23.69 -22.20 -79.09
Operating performance
Accounts receivable turnover (times) 60.83 65.01 90.43 64.20 29.24 16.28
Average collection period 6.00 5.61 4.04 5.69 12.48 22.42
Inventory turnover (times) 10.85 9.70 10.04 8.46
4.69 3.97
Accounts payable turnover (times) 19.98 16.10 15.32 14.59 12.90 13.09
Average days in sales 33.64 37.63 36.35 43.14 77.83 91.94Property, plant and equipment turnover (times) 3.01 2.42 2.37 1.94 1.45 1.21
Total assets turnover (times) 1.11 0.94 0.91 0.80 0.61 0.46
Profitability
Return on total assets (%) 2.57 1.72 1.71 1.85 -4.79 -5.25Return on stockholders' equity (%) 4.96 3.20 3.31 3.42 -9.86 -13.02
Pre-tax income to paid-in capital (%) 11.32 6.76 7.12 7.79 -20.65 -24.19
Profit ratio (%) 2.21 1.77 1.78 2.20 -8.17 -46.28Earnings per share (NT$) 0.91 0.59 0.61 0.63 -1.73 -2.01
Cash flow Cash flow ratio (%) 47.47 ─ ─ 74.92 ─ ─
Cash flow adequacy ratio (%) ─ ─ ─ ─ 138.25 79.62
Cash reinvestment ratio (%) 11.87 -1.84 -1.20 14.85 -1.27 ─
Leverage Operating leverage 6.88 10.15 8.32 5.67 ─ ─
Financial leverage 1.06 1.07 1.06 1.06 0.96 0.99
116
B. Non-consolidated Financial Analysis – Based on IFRS
YearItem
Financial Analysis for the Past Five Years 2012 2013 2014 2015 2016
Financial structure (%)
Debt Ratio 48.90 47.95 53.86 41.50 55.86 Ratio of long-term capital to fixed assets 170.06 163.75 146.66 152.29 135.28
Solvency (%) Current ratio 161.89 159.66 128.25 167.51 117.30 Quick ratio 46.67 4.80 4.89 15.46 6.70 Interest earned ratio (times) 23.09 22.33 18.36 23.39 -22.21
Operating performance
Accounts receivable turnover (times) 70.07 71.58 120.41 85.54 30.90 Average collection period 5.21 5.10 3.03 4.27 11.81 Inventory turnover (times) 10.82 9.67 10.00 8.45 4.69 Accounts payable turnover (times) 20.21 16.25 15.45 14.87 13.16 Average days in sales 33.73 37.75 36.50 43.20 77.83 Fixed assets turnover (times) 3.00 2.42 2.37 1.94 1.45 Total assets turnover (times) 1.11 0.94 0.91 0.80 0.61
Profitability
Return on total assets (%) 2.57 1.72 1.70 1.84 -4.81 Return on stockholders' equity (%) 4.95 3.20 3.30 3.40 -9.90 Pre-tax income to paid-in capital (%) 11.18 6.67 7.04 7.68 -20.66 Profit ratio (%) 2.21 1.76 1.78 2.19 -8.18 Earnings per share (NT$) 0.91 0.59 0.61 0.63 -1.73
Cash flow
Cash flow ratio (%) 47.55 ─ ─ 73.80 ─
Cash flow adequacy ratio (%)
─ ─ ─ ─ 137.29
Cash reinvestment ratio (%) 11.90 -1.85 -1.18 14.55 -1.22
Leverage Operating leverage 7.01 10.43 8.44 5.72 ─
Financial leverage 1.06 1.08 1.07 1.06 0.96
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6.3 Supervisors’ /Audit Committee’s Report in the Most Recent Year
Audit Committee's Review report
This proposal is the presentation by the Board of Directors of the Company's 2016 Business Report, Financial Statements, and the Deficit Compensation Proposal. Of these items, the Financial Statements have been audited by external auditors of PricewaterhouseCoopers(PwC) Taiwan, and an opinion and report have been issued on the Financial Statements.The aforementioned proposal regarding Business Report, Financial Statements, and the Deficit Compensation Proposal have been reviewed and determined to be correct and accurate by the Audit Committee. Per the regulations in Article 14-4 of Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report. To: 2017 General Shareholders' Meeting of CSBC Corporation.
CSBC CORPORATION,TAIWAN
Audit Committee Convenor: LIEU, DER-MING March 22, 2017
6.4 Financial Statements for the Years Ended December 31, 2016 and 2015, and
Independent Auditors’ Report. Please refer to page APPENDIX 2 of the Chinese annual report.
6.5 Consolidated Financial Statements for the Years Ended December 31, 2016 and 2015. As Appendix 1.
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VII. Review of Financial Conditions, Financial Performance, and Risk Management 7.1 Analysis of Financial Status
Unit: NT$ thousands
Year Item
2016 2015 Difference
Amount %
Current Assets 15,557,809 11,745,033 3,812,776 32.46
Funds & Long-term investments 166,616 3,051 163,565 5361.03
Fixed Assets 10,709,596 10,999,508 -289,912 -2.64
Intangible assets 28,847 36,945 -8,098 -21.92Other Assets 1,208,074 955,029 253,045 26.50
Total Assets 27,670,942 23,739,566 3,931,376 16.56
Current Liabilities 13,127,490 6,928,795 6,198,695 89.46
Long-term Liabilities 2,313,794 2,946,399 -632,605 -21.47
Total Liabilities 15,441,284 9,875,194 5,566,090 56.36
Capital stock 7,435,652 7,435,652 － －
Capital surplus 1,965 1,965 － －
Retained Earnings 4,745,046 6,375,720 -1,630,674 -25.58
Non-controlling interest 46,995 51,035 -4,040 -7.92Total Stockholders' Equity 12,229,658 13,864,372 -1,634,714 -11.79
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7.2 Analysis of Operation Results
Unit: NT$ thousands
7.3 Analysis of Cash Flow 7.3.1 Cash Flow Analysis for the Current Year
Unit: NT$ thousands
Year Item
2016 2015 Difference
Amount %
Gross Sales 15,747,699 21,457,696 -5,709,997 -26.61Cost of Sales 16,807,927 20,463,252 -3,655,325 -17.86Gross Profit(loss) -1,060,228 994,444 -2,054,672 -206.62Operating Expenses 504,802 557,810 -53,008 -9.50Operating Income(loss) -1,565,030 436,634 -2,001,664 -458.43Non-operating Income and Expenses 29,628 142,391 -112,763 -79.19Income(loss) Before Tax -1,535,402 579,025 -2,114,427 -365.17Tax Benefit (Expense) -248,593 106,241 -354,834 -333.99
Net income(loss) -1,286,809 472,784 -1,759,593 -372.18
Other comprehensive income (income after tax)
28,208 9,065 19,143 211.17
Total comprehensive income(loss) -1,258,601 481,849 -1,740,450 -361.20
Cash and Cash Equivalents, Beginning of
Year (1)
Net Cash Flow from Operating
Activities (2)
Cash Outflow
(3)
Cash Surplus (Deficit)
(1)+(2)-(3)
Leverage of Cash Deficit
Investment Plans Financing Plans 191,133 3,434,541 8,285,858 (4,660,184) 0 5,000,000
Analysis of change in cash flow in the current year:
The main change is about the operating activities, depreciation, acquiring fixed assets, and payingshort-term loan. The company will make a long-term loan to supplement the deficit.
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7.3.2 Remedy for Cash Deficit and Liquidity Analysis
7.3.3 Cash Flow Analysis for the Coming Year：None
Year Item 2016 2015 Variance (%)
Cash Flow Ratio (%) - 74.92 -Cash Flow Adequacy Ratio (%) 138.25 - -Cash Reinvestment Ratio (%) -1.27 14.85 -108.55Analysis of financial ratio change: Decrease in Cash Flow Ratio (%) and Cash Reinvestment Ratio (%) is mainly due to decreasein Cash Flow from Operating Activities.
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7.4 The impact of the recent major capital expenditure on the financial business 7.4.1 Real estate, plant and equipment project investment plan
Plan name Kaohsiung Plant Bending Area Project Resettlement Project
Kaohsiung plant new LLC-50 tons crane 1 project invest- ment plan
property New investment: Enhance Shipbuilding Energy and Efficiency in Hull Factory of Kaohsiung Plant.
New investment: Enhance Shipbuilding Energy and Efficiency in Hull Factory of Kaohsiung Plant.
Plan period January 2014~ August 2017 January 2015~ May 2017 Investment $ 200 mil l ion $ 185 mil l ion
7.4.2 General investment plans for real estate, plant and equipment in 2016 2016 general investment budget implementation, the budget of 593,778 thousand dollars, the actual number of 403,260 thousand, the annual budget implementation rate of 67.91%. Important project: 1. 35M high-altitude platform 2, 12M high-altitude platform 2. 2. 69KV UHV equipment improvement and replacement. 3. Keelung factory area combination field activity room. 4. Keelung plant air compressor system to improve the project 7.5 Financial impact on the Company for the year: No significant effect. 7.6 Analysis of Risk Management 7.6.1 Effects of Changes in Interest Rates and Foreign Exchange Rates on Corporate Finance, and Future Response Measures (1) Interest rate CSBC will continue to carefully monitor interest rate movements and make use of capital markets financing instruments to ensure that our financing costs are at a comparatively low level. (2) Foreign exchange rates The income/loss from foreign exchange transactions in 2016 was an amount equivalent to -4.5% of total operating income. CSBC has a clear operating strategy and risk control procedure to respond to changes in the spot exchange rate, stays in close contact with financial institutions, and adjusts its foreign exchange strategy to minimize the risk of exchange rate accordingly.
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7.6.2 Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions A.CSBC did not engage in high-risk or high-leveraged investments, and lending to others. B.Derivative transactions follow CSBC’s “Directions for Asset Acquisition or Disposal”. As of Dec. 31, 2016, the forward foreign exchange contract amount is none. The Group unrecognized net loss is none on financial liabilities held for trading for the year ended Dec.31, 2016. C.The transactions and procedures related to endorsement are based on CSBC’s “Guidelines Governing Management of Endorsement or Guarantee for Others”. As of Dec. 31, 2016, the balance of endorsement is NTD$1,323,938 thousand dollars. Actual using amount is NTD$75,000 thousand dollars. 7.6.3 Future Research & Development Projects and Corresponding Budget A. R&D plan progress (as of March 31, 2017)l.
R&D plan R&D Progress
Reenter the cost
(Thousand)
Finish date
The main factor of success
1. Research for increasing effectiveness of Ship model basin test (3/3)
22% 3,200 20180201
The resistance test of the ship model must be able to correctly reflect result.
2. Development for the Key Technologies of a Pilot Floating Kuroshio Turbine Design (3/3)
12% 400 20180131
To complete the test of the Floating Kuroshio Turbine model.
3. Study of ship noise simulation and measurement analysis (2/2)
18% 1,310 20171231
To complete vibration and noise analysis and to build 3D FEM analysis system.
4. Study on ice strengthening of a propulsive shafting system (2/3)
17% 1,560 20171231To complete the development of analytical software.
5. The Research on Fluid-Structure Interaction of Energy-Saving Fins and Hull Structure (2/2)
22% 1,390 20171231
To complete the information transmission with cooperative unit.
6. Development of intelligent unmanned environment supervisory control system Based on Embedded System (2/2)
12% 880 20171231
To complete Raspberry pi.NET of communication technology training.
7. Study on Application of FH36 Ship Plate Welding Process (2/2)
25% 1,125 20171231To grasp the welding condition of FH36 ship plate.
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8. Study on Underwater Welding Defects, Corrosion and Improvement of Offshore Wind Turbine Foundation (2/3)
6% 2,820 20171231
Simulated underwater environment is completed.
9. Capacity Development of Engineering Design for Marine Operations (2/2)
20% 2,640 20171231
To enhance the professional competence of marine engineering researchers.
10. The development of new warship and government ship (1/2)
20% 40,730 20171231
Get guidance from technical assistance units and find suppliers of special equipment
11. The Study and Development of Potential Vessel Projects (106)
25% 33,420 20171231Master the changes in the market demand for ships.
12. Study and Analysis on Shipbuilding Market (106) 24% 1,065 20171231 To collect plenty of
market information.
13. Study on calculation of short-circuit currents in naval ship closed-loop power systems
20% 785 20171231
To analyze and test for closed-loop power systems of naval ship.
14. The Application of Smart Ship Technology and System – To Build Up and Analyze the Routing Database (1/2)
23% 1,925 20171231
To complete big data analysis and to build the data base in CSBC.
15. Research and construction for the capacity and ability of rolling stock manufacturing
18% 1,190 20171231
To find the technical assistance units and to build the base knowledge of rolling stock.
16. Study on Application of HSLA-80 Steel Plate Welding Process (1/2)
21% 1,200 20171231To grasp the welding condition of HSLA-80 steel plate.
17. Offshore Wind Farm Marine Warranty Survey Training (1/2)
23% 2,310 20171231To build the Marine Warranty Survey competence.
18. The Study of Marine Construction Technologies and Appliances (1/3)
28% 2,400 20171231
Completion of marine engineering construction equipment development.
19. Development for the interface of 3D hull block geometry to FE model and used for the assessment of hull block lifting
30% 600 20171231
1. AM XML file read and judge.
2. The transfer program was successfully developed.
20. Discussion on the Optimal Manpower Structure and Business Model of Keelung Shipyard
40% 360 20171231
To build the most appropriate manpower arrangements and business model.
124
B. R&D plans and estimated expenses in the future. CSBC’s Research and development plans can be divided into self-research, cooperative research and commissioned research in 2017. There are 7 plans belonging to self-research, 12 plans belonging to cooperative research, and one belong commissioned research. Totally are 20 plans for research and development and expect to spend NTD133 million in CSBC. 7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales CSBC usually has a high degree of attention and proper ability to respond to the development of domestic and foreign political and economic situation and the legal changes. In recent years and as of the date of publication, important policies and legal changes at home and abroad have not had a significant impact on the Company's financial business. 7.6.5 Effects of and Response to Changes in Technology and the Industry Relating to Corporate Finance and Sales In addition to participating in foreign shipbuilding technical seminars or annual meetings, shipbuilding and shipping exhibitions, CSBC has also organized seminars through the domestic shipbuilding industry consortium, the Joint Ship Design Center, and related surveying societies, schools and research institutes, Obtaining industry information and grasping recent market news to innovate the design of ships to meet the needs of the airlines, in addition to increase the company's profits, but also to enhance the development of shipbuilding and management technology. 7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures CSBC in the industry's image has always been good, listed on December 22, 2008 listed, the company each year to accept the stock exchange corporate governance system assessment, evaluation results as 6% to 20% blue chip companies, the company's corporate image has a positive 7.6.7 Expected Benefits from, Risks Relating to and Response to Merger and
Acquisition Plans： None 7.6.8 Expected Benefits from, Risks Relating to and Response to Factory Expansion
Plans：None
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7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration The main suppliers of steel products in the steel company focused on the steel, mainly in the steel company for the company's long supply of marine steel suppliers, the supply is good, and the steel near the company, steel plate through the company's steel plate storage, The only domestic can provide marine steel company, with the company to develop the required marine steel plate, so the main purchase of steel suppliers have focused on the phenomenon. As for the sales customers focus, mainly due to the company's market positioning in the container round, the order to the container wheel-based, as the container round order with the same boat composed of fleet characteristics, that is, each order to undertake 5 to 10 ships, and the company In order to reduce production costs, increase profits, but also a single design a large number of orders for the business direction, so a single year easy to focus on customer phenomenon. Future sales continue to move towards diversification in order to avoid possible operational risks. 7.6.10 Effects of, Risks Relating to and Response to Large Share Transfers or
Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10%：None
7.6.11 Effects of, Risks Relating to and Response to the Changes in Management Rights：
CSBC on December 22, 2008 to complete the listing and privatization of shares, to July 13, 2016 government agencies holding about 33.57% stake, the remaining shares scattered, there is no centralized fiscal situation, and listed companies based on legal norms Business, not because of the privatization of the company have a significant impact and risk. 7.6.12 Litigation or Non-litigation Matters (1) Major ongoing lawsuits, non-lawsuits or administrative lawsuit: None. (2) Major ongoing lawsuits, non-lawsuits or administrative lawsuits caused by directors, supervisors or shareholders with over 10% shareholdings: None. 7.6.13 Other Major Risks：None
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VIII. Special Disclosure 8.1 Summary of Affiliated Companies A.Subsidiaries Relationship
B.Subsidiaries Profile
Name of Subsidiary
Date of Incorporation Address Paid-In
Capital Business Area
CCSC 2010.09.13 No.3, Jhonggang Rd., Siaogang District, Kaohsiung City 81234, Taiwan (R.O.C.)
NT$125,000 thousand
Ship Painting Engineering & Steel Structure Painting Engineering
Blue Ocean Wind Power Engineering (H.K.) Ltd.
2014.07.11 RM 2401,24/F 101 KING’S RD FORTRESS HILL HONG KONG
US$10,000 Engineering consultants & mechanical installation
TOWSC 2014.09.10 7F., No.6, Sec. 4, Xinyi Rd., Da'an Dist., Taipei City 106, Taiwan (R.O.C.)
NT$10,000 thousand
Operation and maintenance of offshore wind farm
Blue Ace Corporation 2016.07.28
No.224, He 1st Rd., Zhongzheng Dist., Keelung City 202, Taiwan (R.O.C.)
NT$30,000 thousand
Metal processing, painting engineering & manpower dispatch
Fuhai Wind Farm
Corporation 2015.06.30
7F., No.6, Sec. 4, Xinyi Rd., Da'an Dist., Taipei City 106, Taiwan (R.O.C.)
NT$395,001 thousand Power generation
CSBC
CCSC
70%
Blue Ocean Wind Power Engineering (H.K.) Ltd.
100%
TOWSC
40%
Blue AceCorporation
100%
Fuhai
37.97%
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C.Operation Performance of Subsidiaries 2016.12.31, NT$ thousand
Name of Subsidiary
paid-in capital
Total Assets
Total Liabilities
Net Worth Revenue
Operation Profit
Net income EPS
CCSC 125,000 249,759 93,222 156,537 538,151 (2,304) 907 0.07
Blue Ocean Wind Power
Engineering (H.K.) Ltd.
300 2,443 358 2,085 1,143 (222) 1,273 42.43
TOWSC 10,000 6,214 268 5,946 1,507 97 (1,691) (1.69)
Blue Ace Corporation 30,000 29,972 641 29,332 1,213 (817) (668) (0.22)
Fuhai Wind Farm
Corporation 395,001 366,733 290,669 76,064 0 0 (128,795) (3.26)
D.Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year
CCSC was established on September 13, 2010, the main business is from CSBC’s ship coating business accounting for about 80% of the overall revenue. In the year of 2016, net income of CCSC after the year is NT$907 thousands. In that, CSBC recognizes NT$634.9 thousands of investment interest due to CSBC holds 70% of CCSC shares.
TOWSC was established on September 10, 2014, the main business is from operation and maintenance of offshore wind farm. In the year of 2016, net income of TOWSC after the year is NT$ -1,691 thousands. In that, CSBC recognizes NT$ -676.4 thousands of investment interest due to CSBC holds 40% of TOWSC shares. The negative profit was caused by the delay of Fuhai offshore wind farm construction. The profit may become positive after 2018.
128
Fuhai was established on June 30, 2015, the main business is from power generation which was caused by offshore wind. In the year of 2016, net income of Fuhai after the year is NT$ -128,795 thousands. In that, CSBC recognizes NT$ -33,106 thousands of investment interest due to CSBC holds 37.97% of Fuhai shares. The negative profit was caused by the delay of Fuhai offshore wind farm construction. The profit may become positive after 2018.
CSBC will continue to strengthen its investment management in the coming year to enhance its investment income, and will also continue to invest in the development of the related industries beyond the core of the shipbuilding industry. 8.2 Private Placement Securities in the Most Recent Years：None 8.3 Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent
Years：None
CSBC CORPORATION, TAIWAN AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT ACCOUNTANTS
DECEMBER 31, 2016 AND 2015
------------------------------------------------------------------------------------------------------------------------------------ For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.
Appendixl
~1~
CSBC CORPORATION, TAIWAN AND SUBSIDIARIES
Declaration of Consolidated Financial Statements of Affiliated Enterprises
Year ended December 31, 2016, pursuant to “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises,” the company that is required to be included in the consolidated financial statements of affiliates, is the same as the company required to be included in the consolidated financial statements of parent and subsidiary companies under IFRS 10. And if relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies, it shall not be required to prepare separate consolidated financial statements of affiliates.
Hereby declare,
CSBC CORPORATION, TAIWAN
WEN-LON CHENG
March 22, 2017
~2~
REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE
PWCR 16003198
To the Board of Directors and Shareholders of CSBC CORPORATION, TAIWAN
Opinion We have audited the accompanying consolidated balance sheets of CSBC CORPORATION, TAIWAN and its subsidiaries (the “Group”) as at December 31, 2016 and 2015, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2016 and 2015, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparations 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. Basis for opinion We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
~3~
Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.
Key audit matter – Accounting estimates and assumptions for total cost of construction contract
Description
Please refer to Note 4(13) for description of accounting policy on construction contracts. Please refer to Note 5 for critical accounting estimates and assumptions for total cost of construction contracts.
The Group is engaged in in the business of designing and building of various ships and cruisers. Assumptions for estimated construction cost include cost for equipment, material, labor and etc. Data used for assumptions involves subjective judgement and accounting estimates are highly uncertain. As a result, assumptions used are material to the total construction cost and further affects the calculation of construction profit. As the data used for assumptions involves subjective judgement and accounting estimates are highly uncertain, this may affect the completeness and relevance assertions. Considering that the estimated total cost of construction contracts is material to the financial statements, therefore, we assessed that these accounting estimates and assumptions as one of the key audit matters for this year. How our audit addressed the matter The scope of our audit responded to the risk as follows: 1. Obtaining and assessing the effectiveness of CSBC Group’s internal control regarding the estimation
process of total cost of construction contract. This includes: (1) Whether the data used by management for estimates and assumptions is complete, relevant and
accurate. (2) Whether accounting estimates and assumptions have been reviewed and approved by proper
management level. (3) Whether the segregation of duties is appropriate.
~4~
2. Obtaining the Estimate at Completion Reports, selecting sample reports and verifying the accuracy, completeness and relevance of the data that was used for assumptions and estimations. Checking whether the use of estimates and assumptions in the Estimate at Completion Reports are appropriate.
3. Comparing cost at completion for the same or similar ships and then assessing the reasonableness of the Estimate at Completion Report.
Key audit matter – Assessment of construction loss Description Please refer to Note 4(13) for description of accounting policy on construction contracts.
There is a concern regarding the oversupply in the shipbuilding industry worldwide. Customers tend to behave conservatively which causes a decline in ship prices. Thus, there is a high possibility of total construction cost exceeding total construction revenue. In accordance with the Group’s accounting policy on construction contracts, when there is a high possibility of total construction cost exceeding total construction revenue, estimated loss shall be recognised immediately.
The aforementioned estimated loss shall include constructions that have not yet been initiated. As the estimated loss is material to the financial statements, therefore, we assessed that the estimated loss as one of the key audit matters for this year.
How our audit addressed the matter The scope of our audit responded to the risk as follows: 1. Obtaining calculation table of construction in progress – construction income / loss. Checking
whether it includes all the construction contracts including those contracts that have not yet been initiated.
2. Testing the accuracy of calculation table by selecting samples and performing the following audit procedures: (1) Reviewing construction contracts and checking the contractual price and foreign exchange rates
in order to verify the accuracy of calculation.
~5~
(2) Verifying estimated total construction cost to management’s calculation in order to check the consistency of estimates and assumptions used.
Other matter – Parent company only financial reports We have audited and expressed an unmodified opinion on the parent company only financial statements of CSBC CORPORATION TAIWAN, as at and for the years ended December 31, 2016 and 2015. Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparations 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, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process. Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
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As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 1. Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Liu, Tzu-Meng Lin, Tzu-Shu
For and on behalf of PricewaterhouseCoopers, Taiwan March 22, 2017 ------------------------------------------------------------------------------------------------------------------------------------------------- The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.
CSBC CORPORATION, TAIWAN AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2016 AND 2015 (Expressed in thousands of New Taiwan dollars)
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December 31, 2016 December 31, 2015 Assets Notes AMOUNT % AMOUNT %
Current assets 1100 Cash and cash equivalents 6(1) 1130 Held-to-maturity financial assets -
current 6(2)
1150 Notes receivable, net 1170 Accounts receivable, net 6(3)(22) 1180 Accounts receivable - related
parties 6(22) and 7
1190 Receivables from customers on
construction contracts 6(4)(22)
1195 Receivables from customers on
construction contracts - related
parties
6(4)(22) and 7
1200 Other receivables 1210 Other receivables - related parties 7 130X Inventory 6(5)(22) 1410 Prepayments 6(6) and 7 1479 Other current assets, others 11XX Total current Assets Non-current assets 1550 Investments accounted for using
equity method 6(8)
1600 Property, plant and equipment,
net 6(9) and 10
1760 Investment property, net 6(10) 1780 Intangible assets, net 6(11) 1840 Deferred income tax assets 6(29) 1920 Refundable deposits 7 15XX Total non-current assets 1XXX Total assets
(Continued)
CSBC CORPORATION, TAIWAN AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2016 AND 2015 (Expressed in thousands of New Taiwan dollars)
The accompanying notes are an integral part of these consolidated financial statements.
~9~
December 31, 2016 December 31, 2015 Liabilities and Equity Notes AMOUNT % AMOUNT %
Current liabilities 2100 Short-term borrowings 6(12) 2110 Short-term notes and bills payable 6(13) 2160 Notes payable - related parties 6(22) and 7 2170 Accounts payable 6(22) and 7 2190 Payables to customers on
construction contracts 6(4)(22)
2195 Payables to customers on construction contracts - related parties
6(4)(22) and 7
2200 Other payables 6(14) 2230 Current income tax liabilities 2250 Provisions for liabilities - current 6(18)(22) 2305 Other current financial liabilities -
current 6(16)
2310 Unearned receipts 21XX Total current Liabilities Non-current liabilities 2570 Deferred income tax liabilities 6(29) 2610 Long-term notes, accounts and
overdue payable 6(16)
2630 Long-term deferred revenue 6(15)(16) 2640 Net defined benefit liability, non-
current 6(17)
2645 Guarantee deposits received 2670 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total Liabilities Equity attributable to owners of
parent
Share capital 3110 Common stock 6(19) Capital surplus 3200 Capital surplus 6(20) Retained earnings 6(21)(29) 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 31XX Total equity attributable to
owners of the parent
36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities
and unrecognized contract commitments
6(31), 7 and 9
Significant disaster loss 10 3X2X Total liabilities and equity
CSBC CORPORATION, TAIWAN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2016 AND 2015 (Expressed in thousands of New Taiwan dollars, except (loss) earnings per share)
The accompanying notes are an integral part of these consolidated financial statements.
~10~
2016 2015
Items Notes AMOUNT % AMOUNT % 4000 Operating revenue 6(23) and 7 5000 Operating costs 6(5)(11)(26)(27)
and 7 5900 Net operating (loss) profit Operating expenses 6(11)(26)(27) 6100 Selling expenses 6200 General and administrative
expenses
6300 Research and development expenses
6000 Total operating expenses 6900 Operating (loss) profit Non-operating income and
expenses
7010 Other income 6(2)(10)(16)(24) and 10
7020 Other gains and losses 6(25) and 10 7050 Finance costs 6(16)(28) 7060 Share of loss (profit) of
associates and joint ventures accounted for under equity method
6(8)
7000 Total non-operating income and expenses
7900 (Loss) profit before income tax 7950 Income tax benefit (expense) 6(29) 8200 (Loss) profit for the year Other comprehensive income Components of other
comprehensive income that will not be reclassified to profit or loss
8311 Gains on remeasurements of defined benefit plans
6(17)
8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss
6(29)
8300 Other comprehensive income 8500 Total comprehensive income for
the year
(Loss) profit, attributable to: 8610 Equity holders of the company 8620 Non-controlling interest Total Comprehensive income
attributable to:
8710 Equity holders of the company 8720 Non-controlling interest Total (Loss) earnings per share 9750 Basic (loss) earnings per share 6(30) 9850 Diluted (loss) earnings per
share 6(30)
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CSBC CORPORATION, TAIWAN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2016 AND 2015 (Expressed in thousands of New Taiwan dollars)
Notes 2016 2015
~12~
CASH FLOWS FROM OPERATING ACTIVITIES (Loss) profit before tax Adjustments Adjustments to reconcile profit (loss) Depreciation of property, plant and equipment 6(9)(26) Depreciation of investment property 6(10)(26) Amortization of intangible and other assets 6(11)(26) Provision (reversal of allowance) for doubtful accounts 6(3) Loss on investments accounted for using equity method 6(8) (Profit) loss on valuation of financial assets and liabilities 6(25) Interest income 6(24) Interest expense 6(28) Disaster loss 6(25) and 10 Loss on disposal of property, plant and equipment 6(25) Changes in operating assets and liabilities Changes in operating assets Decrease (increase) in notes receivable (Increase)decrease in accounts receivable Decrease (increase) in accounts receivable - related parties (Increase) decrease in receivables from customers on construction
contracts
Increase in receivables from customers on construction contracts -
related parties
Decrease in other receivables Decrease (increase) in other receivables - related parties (Increase) decrease in inventories Decrease in prepayments Decrease in other current assets Changes in operating liabilities Increase (decrease) in financial liabilities at fair value through profit
or loss
Increase in notes payable - related parties Increase (decrease) in accounts payable Decrease in payables to customers on construction contracts Decrease in payables to customers on contruction contracts - related
parties
(Decrease) increase in other payables Decrease in provisions for liabilities - current Increased (decrease) in unearned receipts Increase in long-term deferred revenue - advance construction
receipts
Increase in net defined benefit liability - non-current Cash (outflow) inflow generated from operations Interest received Payment of interest Income tax paid Net cash flows (used in) from operating activities
(Continued)
CSBC CORPORATION, TAIWAN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2016 AND 2015 (Expressed in thousands of New Taiwan dollars)
Notes 2016 2015
The accompanying notes are an integral part of these consolidated financial statements.
~13~
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of held-to-maturity financial assets
Acquisition of investments accounted for using equity method 6(32)
Acquisition of property, plant and equipment 6(32)
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets 6(11)
Increase in refundable deposits
Decrease in refundable deposits
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings
Increase (decrease) in short-term notes and bills payable
Decrease in other financial liabilities - government grants
Increase in guarantee deposit received
Decrease in guarantee deposit received
Increase in other non-current liabilities
Cash dividends paid to non-controlling interests
Cash dividends paid 6(21)
Net cash flows from (used in) financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year 6(1)
Cash and cash equivalents at end of year 6(1)
~14~
CSBC CORPORATION, TAIWAN AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED)
1. HISTORY AND ORGANIZATION
(1) On May 1, 1946, Taiwan Machinery and Shipbuilding Company was established by merging Taiwan Dockyard Company with Taiwan Steel Works and Tong Kuang Company in Kaohsiung. The Headquarters is located in Kaohsiung.
(2) In July, 1973, China Shipbuilding Corporation (the “Company”) was established and reverted to being a state–owned company. In January, 1978, China Shipbuilding Corporation merged with Taiwan Machinery and Shipbuilding Company resulting in the formation of China Shipbuilding Corporation. The Group is engaged in the business of building, manufacturing and repair of various ships and onshore equipment, ship coating, anti-corrosion coating on large steel structure, surface treatment and professional coating.
(3) On March 1, 2007, China Shipbuilding Corporation changed its name to CSBC Corporation, Taiwan.
(4) The Company is a listed company since December 22, 2008.
2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION
These consolidated financial statements were authorized for issuance by the management on March 22, 2017.
3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)
None.
(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group
New standards, interpretations and amendments endorsed by FSC effective from 2017 are as follows:
Effective date byInternational Accounting
New Standards, Interpretations and Amendments Standards BoardInvestment entities: applying the consolidation exception(amendments to IFRS 10, IFRS 12 and IAS 28)
January 1, 2016
Accounting for acquisition of interests in joint operations(amendments to IFRS 11)
January 1, 2016
~15~
The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.
(3) IFRSs issued by IASB but not yet endorsed by the FSC
New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs endorsed by the FSC effective from 2017 are as follows:
Effective date byInternational Accounting
New Standards, Interpretations and Amendments Standards Board
IFRS 14,‘Regulatory deferral accounts’ January 1, 2016Disclosure initiative (amendments to IAS 1) January 1, 2016Clarification of acceptable methods of depreciation and amortisation(amendments to IAS 16 and IAS 38)
January 1, 2016
Agriculture: bearer plants (amendments to IAS 16 and IAS 41) January 1, 2016Defined benefit plans: employee contributions (amendments to IAS19R) July 1, 2014
Equity method in separate financial statements (amendments to IAS27) January 1, 2016
Recoverable amount disclosures for non-financial assets(amendments to IAS 36)
January 1, 2014
Novation of derivatives and continuation of hedge accounting(amendments to IAS 39)
January 1, 2014
IFRIC 21, ‘Levies’ January 1, 2014Improvements to IFRSs 2010-2012 July 1, 2014Improvements to IFRSs 2011-2013 July 1, 2014Improvements to IFRSs 2012-2014 January 1, 2016
Effective date byInternational Accounting
New Standards, Interpretations and Amendments Standards BoardClassification and measurement of share-based payment transactions(amendments to IFRS 2)
January 1, 2018
Applying IFRS 9 ‘Financial instruments’ with IFRS 4 ‘Insurancecontracts’ (amendments to IFRS 4)
January 1, 2018
IFRS 9, ‘Financial instruments’ January 1, 2018
Sale or contribution of assets between an investor and its associate orjoint venture (amendments to IFRS 10 and IAS 28)
To be determined byInternational Accounting
Standards BoardIFRS 15, ‘Revenue from contracts with customers’ January 1, 2018Clarifications to IFRS 15, ‘Revenue from contracts with customers’(amendments to IFRS 15)
January 1, 2018
~16~
Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete.
A. IFRS 9, ‘Financial instruments’
(a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.
(b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.
Effective date byInternational Accounting
New Standards, Interpretations and Amendments Standards Board
IFRS 16, ‘Leases’ January 1, 2019Disclosure initiative (amendments to IAS 7) January 1, 2017Recognition of deferred tax assets for unrealised losses (amendmentsto IAS 12)
January 1, 2017
Transfers of investment property (amendments to IAS 40) January 1, 2018IFRIC 22, ‘Foreign currency transactions and advance consideration’ January 1, 2018Annual improvements to IFRSs 2014-2016 cycle- Amendments toIFRS 1, ‘First-time adoption of International Financial ReportingStandards’
January 1, 2018
Annual improvements to IFRSs 2014-2016 cycle- Amendments toIFRS 12, ‘Disclosure of interests in other entities’
January 1, 2017
Annual improvements to IFRSs 2014-2016 cycle- Amendments toIAS 28, ‘Investments in associates and joint ventures’
January 1, 2018
~17~
B. IFRS 15, ‘Revenue from contracts with customers’
IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11 ‘Construction contracts’, IAS 18 ‘Revenue’ and relevant interpretations. According to IFRS 15, revenue is recognised when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.
The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps:
Step 1: Identify contracts with customer.
Step 2: Identify separate performance obligations in the contract(s).
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price.
Step 5: Recognise revenue when the performance obligation is satisfied.
Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
C. IFRS 16, ‘Leases’
IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a ‘right-of-use asset’ and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.
D. Amendments to IAS 7, ‘Disclosure initiative’
This amendment requires that an entity shall provide more disclosures related to changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.
E. IFRIC 22, ‘Foreign currency transactions and advance consideration’
The Interpretation states that the date of the transaction for a foreign currency-denominated contract should be the date of initial recognition of the non-monetary asset or non-monetary liability arising from the receipt or payment of the advance consideration.
~18~
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
(1) Compliance statement
The consolidated financial statements of the Group have been prepared in accordance 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 FSC (collectively referred herein as the “IFRSs”).
(2) Basis of preparation
A. Except for the following items, these consolidated financial statements have been prepared under the historical cost convention:
a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
b) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in compliance with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
(3) Basis of consolidation
A. Basis for preparation of consolidated financial statements:
a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
~19~
d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.
e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.
B. Subsidiaries included in the consolidated financial statements:
Note: The subsidiary was established in July 2016.
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group:
The non-controlling interests are not material to the Group.
Name of Investor Name of Subsidiary Main business activities 2016 2015 NoteCSBC
CORPORATION,TAIWAN
CSBC CoatingSolutions Co., Ltd.
Marine coating,steel structure painting
works,surface treatment, and high-
tech anti-corrosion
70 70
CSBC CoatingSolutions Co., Ltd.
Blue Ocean Wind PowerEngineering (Hong
Kong) Limited
Marine works services 100 100
CSBC CoatingSolutions Co., Ltd.
BLUE ACECORPORATION
Marine coating,steel structure painting
works, surface treatment,and high-tech anti-corrosion
100 - Note
% of shares held as of December 31,
~20~
(4) Foreign currency translation
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollar, which is the Company’s functional and the Group’s presentation currency.
A. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
B. Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.
C. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
D. All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.
(5) Classification of current and non-current items
A. The Company is engaged in the business of shipbuilding, vessel building, major machinery building and ship repairing such that the contractual periods of these projects are usually over one year. Therefore, the assets and liabilities of these projects are classified as current assets or liabilities if the period of the project is shorter than the operating cycle; otherwise they are classified as non-current assets or liabilities. The classification criteria of assets and liabilities that are not project related are as follows Current assets include cash, the assets held for trading or the assets arising from operating activities that are expected to be consumed or to be realized within twelve months from the balance sheet date; fixed assets and other assets that are not classified as current assets are non-current assets. Current liabilities include the liabilities arising mainly from trading activities and are expected to be settled within twelve months from the balance sheet date. The liabilities that are not classified as current liabilities are non-current liabilities.
~21~
B. Classification of current and non-current items of the Company’s subsidiaries is as follows:
a) Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
i. Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
ii. Assets held mainly for trading purposes;
iii. Assets that are expected to be realised within twelve months from the balance sheet date;
iv. Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
b) Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
i. Liabilities that are expected to be settled within the normal operating cycle;
ii. Liabilities arising mainly from trading activities;
iii. Liabilities that are to be settled within twelve months from the balance sheet date;
iv. Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. 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.
(6) Cash equivalents Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.
(7) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets held for trading or financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:
a) Hybrid (combined) contracts; or
b) They eliminate or significantly reduce a measurement or recognition inconsistency; or
~22~
c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using settlement date accounting.
C. Financial assets at fair value through profit or loss are initially recognised at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognised in profit or loss.
(8) Held-to-maturity financial assets
A. Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturity date that the Group has the positive intention and ability to hold to maturity other than those that meet the definition of loans and receivables and those that are designated as at fair value through profit or loss or as available-for-sale on initial recognition.
B. If the Group has sold or reclassified more than an insignificant amount of held-to-maturity investments before the maturity date during the current or the two preceding financial years, then any financial assets should not be classified as held-to-maturity financial assets and all of its remaining held-to-maturity investments must be reclassified as available-for-sale.
C. On a regular way purchase or sale basis, held-to-maturity financial assets are recognised and derecognised using trade date accounting.
D. Held-to-maturity financial assets are initially recognised at fair value on the trade date plus transaction costs and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Amortisation of a premium or a discount on such assets is recognised in profit or loss.
(9) Accounts receivable Accounts receivable are claims resulting from undertaking construction projects or providing services. Receivables arising from transactions other than undertaking construction projects or providing services are classified as other receivables. Notes, accounts and other receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment.
(10) Impairment of financial assets
A. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
~23~
B. The criteria that the Group uses to determine whether there is objective evidence of an impairment loss is as follows:
(a)Significant financial difficulty of the issuer or debtor;
(b)A breach of contract, such as a default or delinquency in interest or principal payments;
(c)The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granted the borrower a concession that a lender would not otherwise consider;
(d)It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
(e)The disappearance of an active market for that financial asset because of financial difficulties;
(f)Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;
(g)Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered;
(h)A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
C. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
(a) Financial assets measured at amortised cost
The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortised cost that would have been at the date of reversal had the impairment loss not been recognised previously. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.
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(b) Financial assets measured at cost
The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at current market return rate of similar financial asset, and is recognised in profit or loss. Impairment loss recognised for this category shall not be reversed subsequently. Impairment loss is recognised by adjusting the carrying amount of the asset directly.
(11) Derecognition of financial assets
The Group derecognises a financial asset when one of the following conditions is met:
A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.
(12) Inventories
The perpetual inventory system is adopted for inventory recognition. Inventories are stated at cost. The cost is determined using the weighted-average method. At the end of period, inventories are evaluated at the lower of cost or net realizable value, and the individual item approach is used in the comparison of cost and net realizable value. The calculation of net realizable value is based on the estimated selling price in the normal course of business, net of estimated costs of completion and estimated selling expenses.
(13) Construction contracts
A. IAS 11, ‘Construction Contracts’, defines a construction contract as a contract specifically negotiated for the construction of an asset. If the outcome of a construction contract can be estimated reliably and it is probable that this contract would make a profit, contract revenue should be recognised by reference to the stage of completion of the contract activity, using the percentage-of-completion method of accounting, over the contract term. Contract costs are expensed as incurred. The stage of completion of a contract is measured by the proportion of contract costs incurred for work performed to date to the estimated total costs for the contract. An expected loss where total contract costs will exceed total contract revenue on a construction contract should be recognised as an expense as soon as such loss is probable. If the outcome of a construction contract cannot be estimated reliably, contract revenue should be recognised only to the extent of contract costs incurred that it is probable will be recoverable.
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B. Contract revenue should include the revenue arising from variations from the original contract work, claims and incentive payments that are agreed by the customer and can be measured reliably.
C. The excess of the cumulative costs incurred plus recognised profits (less recognised losses) over the progress billings on each construction contract is presented as an asset within ‘receivables from customers on construction contracts’. While, the excess of the progress billings over the cumulative costs incurred plus recognised profits (less recognised losses) on each construction contract is presented as a liability within ‘payables to customers on construction contracts’.
(14) Investments accounted for under the equity method / associates
A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity are not recognised in profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognises the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.
D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E. When the Group disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it still retains significant influence over this associate, then the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
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(15) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. 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 must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:
(16) Leased assets/ leases (lessee)
A. Based on the terms of a lease contract, a lease is classified as a finance lease if the Group assumes substantially all the risks and rewards incidental to ownership of the leased asset.
(a) A finance lease is recognised as an asset and a liability at the lease’s commencement at the lower of the fair value of the leased asset or the present value of the minimum lease payments.
(b) The minimum lease payments are apportioned between the finance charges and the reduction of the outstanding liability. The finance charges are allocated to each period over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Land improvements 5 50 yearsBuildings and structures 5 65 yearsMachinery and equipment 3 58 yearsTransportation equipment 3 40 yearsLeasehold improvements 29 yearsOther equipment 3 14 years
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(c) Property, plant and equipment held under finance leases are depreciated over their estimated useful lives. If there is no reasonable certainty that the Group will obtain ownership at the end of the lease, the asset shall be depreciated over the shorter of the lease term and its useful life.
B. Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.
(17) Investment property
An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 60 years.
(18) Intangible assets
Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 2 to 7 years.
(19) Impairment of non-financial assets
The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.
(20) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
(21) Notes and accounts payable
Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as effect of discounting is immaterial.
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(22) Financial liabilities at fair value through profit or loss
A. Financial liabilities at fair value through profit or loss are financial liabilities held for trading or financial liabilities designated as at fair value through profit or loss on initial recognition. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges. Financial liabilities that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:
(a)Hybrid (combined) contracts; or
(b)They eliminate or significantly reduce a measurement or recognition inconsistency; or
(c)They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management policy.
B. Financial liabilities at fair value through profit or loss are initially recognised at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognised in profit or loss. Derivative liabilities that are linked to equity instruments which do not have a quoted market price in an active market and whose fair value cannot be reliably measured at fair value, and that must be settled by delivery of such unquoted equity instruments are presented in ‘financial liabilities measured at cost’.
(23) Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability specified in the contract is discharged or cancelled or expires.
(24) Offsetting financial instruments
Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
(25) Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Any changes in the fair value are recognised in profit or loss.
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(26) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.
(27) Employee benefits
A. Short-term employee benefits
Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service.
B. Pensions
(a) Defined contribution plans
For defined contribution plans, the contributions are recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.
(b) Defined benefit plans
i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.
ii. Remeasurement arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.
iii. Past service costs are recognised immediately in profit or loss.
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C. Termination benefits
Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognises expense as it can no longer withdraw an offer of termination benefits or it recognises relating restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.
D. Employees’ compensation and directors’ and supervisors’ remuneration
Employees’ remuneration and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal obligation or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.
(28) Income tax
A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
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D. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures, employees’ training costs and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.
(29) Dividends
Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.
(30) Revenue recognition
A. The Company’s revenue recognition:
(a) Details of revenue recognition of construction contract are provided in Note 4(13).
(b) Service revenue (ship-repair revenue) is recognised when owners of the ship completes inspection.
B. Consolidated subsidiary’s revenues are recognized as follows:
(a) Revenue from delivering services is recognised under the percentage-of-completion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the percentage of the actual services performed as of the financial reporting date to the total services to be performed. When the estimated contract costs are higher than the contract prices, the estimated loss is recognized immediately. However, when the estimated loss subsequently decreases, the loss reduction which was previously recognized in profit or loss shall be reversed and recognized as gain in current period.
(b) If a reliable estimate of gain or loss from contracts for providing services cannot be made, and it is probable that contract costs incurred will be recoverable, then contract revenue should be recognized only to the extent of contract costs incurred that is probable to be recoverable; however, if it is improbable that contract costs incurred will be recoverable, then no revenue should be recognized. Contract costs should be expensed as incurred.
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(31) Government grants
Government grants are recognised at their fair value only when there is reasonable assurance that the Group will comply with any conditions attached to the grants and the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises expenses for the related costs for which the grants are intended to compensate.
(32) Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker. The Chief Operating Decision-Maker is responsible for allocating resources and assessing performance of the operating segments.
5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY
The preparation of these consolidated financial statements requires management to make critical judgments in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:
(1) Critical judgements in applying the Group’s accounting policies
None.
(2) Critical accounting estimates and assumptions
Construction contracts
The Group recognises construction contract revenue and costs using the percentage-of-completion method, wherein the revenue to be recognised is equal to the percentage of completed work out of the total estimated work.
Assumptions for estimated construction cost include cost for equipment, material, labor and etc. Data used for assumptions involves subjective judgement and accounting estimates are highly uncertain. As a result, assumptions used are material to the total construction cost and further affects the calculation of construction profit.
If the estimated total contract costs had increased/ decreased by 1% with all other variables held constant, construction profit for the year ended December 31, 2016 would have decreased by $363,997 or increased by $363,997 (the construction profit for the year ended December 31, 2015 would have decreased by $534,420 or would have increased by $480,444).
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6. DETAILS OF SIGNIFICANT ACCOUNTS
(1) Cash and cash equivalents
A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The Group has no cash and cash equivalents pledged to others.
(2) Held-to-maturity financial assets - non-current
A. The counterparties of the Group’s investments have good credit quality.
B. The Group recognised interest income of $369 and $1,851 for amortised cost in profit or loss for the years ended December 31, 2016 and 2015, respectively.
C. The Group classified the financial assets with maturity within 1 year as current items.
D. As of December 31, 2016 and 2015, no held-to-maturity financial assets held by the Group were pledged to others.
(3) Accounts receivable, net
A. The counterparties to the above accounts receivable are government (including government-run entities) and private enterprises. In order to maintain the quality of accounts receivable, the Group has established procedures to manage operation-related credit risk. The Group assesses the customers’ credit quality based on several factors, such as the customers’ financial condition, historical transaction records and current economic situation that have influences on the customers’ capacity to meet financial commitments. Customers’ credit quality are assessed routinely and receivables that are neither overdue nor impaired are assessed to be in good credit qualities.
B. The Group does not hold any individual accounts receivable that are significantly impaired.
December 31, 2016 December 31, 2015Cash on hand and revolving funds 320$ 452$ Checking accounts and demand deposits 118,962 265,453 Time deposits 71,851 457,819
191,133$ 723,724$
December 31, 2016 December 31, 2015Corporate bonds -$ 99,000$
December 31, 2016 December 31, 2015Construction receivables 673,406$ 129,300$ Repair receivables 80,043 166,336 Less: Allowance for doubtful accounts 8,176)( 5,565)(
745,273$ 290,071$
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C. Movement analysis of financial assets that were impaired is as follows:
D. The Group does not hold any collateral as security.
(4) Construction contract
A. As of December 31, 2016 and 2015, there has been no construction retentions related to construction contracts.
B. The Group has collected the down payment in accordance with the terms of the shipbuilding construction related service contract. The construction is estimated to begin one year later; please refer to Note 6(15) ‘Long-term deferred revenue‘ for more details.
Individual provision Group provision TotalAt January 1 -$ 5,565$ 5,565$
Provision for impairment - 2,611 2,611
At December 31 -$ 8,176$ 8,176$
Individual provision Group provision TotalAt January 1 -$ 6,833$ 6,833$
Reversal for impairment - 1,268)( 1,268)(
At December 31 -$ 5,565$ 5,565$
2016
2015
December 31, 2016 December 31, 2015Aggregate costs incurred plus 16,291,984$ 11,605,726$ recognised profits (less recognised losses)Less: progress billings 9,367,760)( 8,748,226)( Net balance sheet position for construction in progress 6,924,224$ 2,857,500$ Presented as:Receivables from customers on construction 7,743,504$ 6,485,113$ Receivables from customers on construction-related parties 1,793,119 - Payables to customers on construction 2,612,399)( 3,264,848)( Payables to customers on construction-related parties - 362,765)(
6,924,224$ 2,857,500$
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C. Please refer to Note 6(23) ‘Operating revenue’ for the information about construction contract revenue for the years ended December 31, 2016 and 2015.
D. Information for the Group’s capitalisation of interest from the financing of construction-in-progress is as follows:
(5) Inventories
The amount of inventories recognised as expense for the years ended December 31, 2016 and 2015 is as follows:
The Group reversed a previous inventory write-down and accounted this transaction as a reduction of expenses because the related inventory items were scrapped or sold in 2015.
2016 2015Amount capitalised (including in construction in progress) 30,130$ 11,667$ Interest rate 0.24%~0.98% 0.14%~1.28%
Years ended December 31,
Cost Allowance forvaluation loss Book value
Raw materials 2,730,873$ 31,005)($ 2,699,868$ Work in process and repair of goods 2,017,900 864,902)( 1,152,998
4,748,773$ 895,907)($ 3,852,866$
Cost Allowance forvaluation loss Book value
Raw materials 1,846,653$ 31,379)($ 1,815,274$ Work in process and repair of goods 568,332 - 568,332
2,414,985$ 31,379)($ 2,383,606$
December 31, 2016
December 31, 2015
2016 2015Raw materials costs 11,468,666$ 13,101,613$ Loss on obsolete (gain from reversal of) inventories 864,528 600)(
12,333,194$ 13,101,013$
Years ended December 31,
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(6) Prepayments
(7) Financial assets measured at cost
A. The Group has obtained 1.33% of the shares of Welland Shipping Agency Co., Ltd. and 3.13% of the shares of Yi Di Shipping Agency Co., Ltd., which were both formerly held by the Group’s debtors, through the compulsory enforcement of the court in the year 2007.
B. As the shares held by the Group in Welland Shipping Agency Co., Ltd and Yi Di Shipping Agency Co., Ltd. are not traded in active markets, and no sufficient industry information of companies similar to Welland Shipping Agency Co., Ltd. and Yi Di Shipping Agency Co., Ltd.’s financial information can be obtained, the fair value of the stock warrants cannot be measured reliably. The Group classified those stock warrants as ‘financial assets measured at cost’.
C. The carrying value of the Group’s shares held in Welland Shipping Agency Co., Ltd. and Yi Di Shipping Agency Co., Ltd. are assessed to be $0 by the Group.
(8) Investments accounted for under equity method
A. Details of investments accounted for under equity method are as follows:
Note 1: On August 9, 2016, the Board of Directors resolved to invest in Fuhai Wind Farm
Corporation and obtained 37.97% of ownership shares.
Note 2: On March 21, 2014, the Board of Directors has resolved that the Company and Taiwan Generations Corporation will jointly establish Taiwan Offshore Wind Farm Services Corporation. The Company has acquired 40% of share capital in September 2014.
December 31, 2016 December 31, 2015Prepayments of suppliers 870,419$ 1,520,990$ Excess VAT paid 237,397 34,693 Other prepayments 11,113 25,507
1,118,929$ 1,581,190$
2016 2015At January 1 3,051$ 3,907$ Additional investments accounted for using the equity method 197,344 - Share of profit or loss of investments accounted for using the equity method 33,779)( 856)( At December 31 166,616$ 3,051$
December 31, 2016 December 31, 2015Fuhai Wind Farm Corporation 164,238$ -$
Taiwan Offshore Wind Farm ServicesCorporation (Note)
2,378 3,051
Yi Zhuyin Transocean Co., Ltd. - - 166,616$ 3,051$
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B. The Group’s share of the operating results in all individually immaterial associates are summarized below:
C. The Group has obtained 41.69% of the Yi Zhuyin Transocean Co., Ltd. shares, which was formerly
held by the Group’s debtors, through the compulsory enforcement of the court in the year 2010. The carrying value of the Group’s shares held in Yi Zhuyin Transocean Co., Ltd. is assessed to be $0 by the Group. There is no subsequent loss recognised by the Group.
(9) Property, plant and equipment
2016 2015Profit or loss for the year from continuing operations 130,477)($ 1,740)($ Other comprehensive income- net of tax - -
Total comprehensive loss 130,477)($ 1,740)($
Years ended December 31,
Book value December 31, 2016 December 31, 2015Land 6,096,033$ 6,096,033$ Land improvements 347,971 360,065 Buildings and structures 946,784 1,068,610 Machinery and equipment 2,011,752 2,117,602 Transportation equipment 454,755 497,744 Leasehold improvements 438,816 487,438 Other equipment 55,113 69,585 Construction in progress 358,372 302,431
10,709,596$ 10,999,508$
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Opening net Closing net Cost book amount Additions Disposals Reclassifications book amount
Land $ 6,096,033 $ - -$ -$ 6,096,033$
Land improvements 981,391 - - 16,607 997,998
Buildings and structures 7,402,890 - 14,295)( 34,320 7,422,915
Machinery and equipment 9,610,397 301 253,317)( 213,110 9,570,491
Transportation equipment 951,989 36 9,061)( 4,290 947,254
Leasehold improvements 1,072,631 - - - 1,072,631
Other equipment 151,030 77 14,965)( 536 136,678
Construction in progress 302,431 324,804 - 268,863)( 358,372
Total 26,568,792 325,218$ 291,638)($ -$ 26,602,372
Accumulated depreciation and impairment
Land improvements ( 621,326) ($ 28,701) -$ -$ ( 650,027)
Buildings and structures ( 6,334,280) 149,925)( 8,074 - 6,476,131)(
Machinery and equipment ( 7,492,795) 275,746)( 210,729 927)( 7,558,739)(
Transportation equipment ( 454,245) 47,296)( 9,042 - 492,499)(
Leasehold improvements 585,193)( 48,622)( - - 633,815)(
Other equipment 81,445)( 11,099)( 10,052 927 81,565)(
Total 15,569,284)( 561,389)($ 237,897$ -$ 15,892,776)(
Book value 10,999,508$ 10,709,596$
Year ended December 31, 2016
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A. Amount of borrowing costs capitalised as part of property, plant and equipment and the range of the interest rates for such capitalisation are as follows:
B. Significant components and the useful lives of land improvements, buildings, and machinery
equipment of the Group are as follows:
(a) The significant components of land improvements include construction expenses for wharf, which are depreciated over 45 years.
(b) The significant components of buildings include shipyard, plants and warehouse, and office buildings, which are depreciated over 40, 45 and 60 years, respectively.
Opening net Closing net Cost book amount Additions Disposals Reclassifications book amount
Land $ 6,096,033 $ - -$ -$ 6,096,033$
Land improvements 765,464 - - 215,927 981,391
Buildings and structures 7,397,513 - 3,377)( 8,754 7,402,890
Machinery and equipment 9,533,848 350 128,921)( 205,120 9,610,397
Transportation equipment 720,381 - 19,314)( 250,922 951,989
Leasehold improvements 740,555 - - 332,076 1,072,631
Other equipment 177,376 - 44,572)( 18,226 151,030
Construction in progress 854,126 479,330 - 1,031,025)( 302,431
Total 26,285,296 479,680$ 196,184)($ -$ 26,568,792
Accumulated depreciation and impairment
Land improvements ( 598,173) ($ 23,153) -$ -$ 621,326)(
Buildings and structures ( 6,156,710) 180,947)( 3,377 - 6,334,280)(
Machinery and equipment ( 7,330,102) 288,415)( 125,722 - 7,492,795)(
Transportation equipment ( 430,364) 43,175)( 19,294 - 454,245)(
Leasehold improvements 544,339)( 40,854)( - - 585,193)(
Other equipment 98,855)( 12,326)( 29,736 - 81,445)(
Total 15,158,543)( 588,870)($ 178,129$ -$ 15,569,284)(
Book value 11,126,753$ 10,999,508$
Year ended December 31, 2015
2016 2015Amount capitalised -$ 195$ Interest rate - 0.14%~1.28%
Years ended December 31,
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(c) The significant components of machinery equipment include hoisting machine, crane and substation, carriers and welding machine as well as working platform, which are depreciated over 25, 20 and 10 years, respectively.
C. The Group does not pledge any property, plant and equipment to others as collaterals.
D. A portion of the Group’s property, plant and equipment has been seriously damaged by Typhoon Meranti on September 14, 2016. Please refer to Note 10 for details of significant disaster loss.
(10) Investment property, net
Carrying amounts of each category December 31, 2016 December 31, 2015Land 226,918$ 226,918$ Buildings 7,464 7,839
234,382$ 234,757$
Cost At January 1 Additions Disposals Reclassifications At December 31Land $ 226,918 $ - $ - -$ 226,918$ Buildings 22,811 - - - 22,811 Total 249,729 -$ -$ -$ 249,729
Accumulateddepreciation and
impairmentBuildings 14,972)( 375)($ -$ -$ 15,347)( Book value 234,757$ 234,382$
Cost At January 1 Additions Disposals Reclassifications At December 31Land $ 226,918 $ - $ - -$ 226,918$ Buildings 22,811 - - - 22,811 Total 249,729 -$ -$ -$ 249,729
Accumulateddepreciation and
impairmentBuildings 14,597)( 375)($ -$ -$ 14,972)( Book value 235,132$ 234,757$
Year ended December 31, 2016
Year ended December 31, 2015
~41~
A. Rental income from the lease of the investment property and direct operating expenses arising from the investment property are shown below:
The fair value of the investment property held by the Group as at December 31, 2016 and 2015 were $665,979 and $528,291, respectively, which was revalued by independent valuers. Valuations were made using the comparison method, cost method for land development analysis and the income approach.
(11) Intangible assets
2016 2015Rental income from the lease of the investment property 7,844$ 7,534$ Direct operating expenses arising from the investment property that generate rental income in the period 1,410$ 930$ Direct operating expenses arising from the investment property that did not generate rental income in the period -$ -$
Years ended December 31,
Additions-Opening net acquired Amortisation Closing net
Cost book amount separately charge Disposals book amountSoftware 64,375$ 5,250$ -$ 10,142)($ 59,483$ Accumulated amortisation
and impairmentSoftware 27,430)( - 13,348)( 10,142 30,636)( Book value 36,945$ 5,250$ 13,348)($ -$ 28,847$
Year ended December 31, 2016
Additions-Opening net acquired Amortisation Closing net
Cost book amount separately charge Disposals book amountSoftware 69,312$ 13,004$ -$ 17,941)($ 64,375$ Accumulated amortisation
and impairmentSoftware 30,402)( - 14,969)( 17,941 27,430)( Book value 38,910$ 13,004$ 14,969)($ -$ 36,945$
Year ended December 31, 2015
~42~
Details of amortisation on intangible assets are as follows:
(12) Short-term loans
Note: Please refer to Note 8 for details of pledged assets.
(13) Short-term notes and bills payable
The above commercial paper payables are guaranteed and issued by China Bills Finance Corporation, International Bill Finance Corporation and Taiwan Cooperative Bills Finance Corporation.
(14) Other payables
2016 2015Operating costs 13,342$ 13,980$ Research and development expenses 6 989
13,348$ 14,969$
Years ended December 31,
Type of loans December 31, 2016 Interest rate range Collateral Unsecured loans 6,345,358$ 0.77% 1.40% None Unsecured loans 49,767 0.39% 2.14% None
6,395,125$
Type of loans December 31, 2015 Interest rate range Collateral Unsecured loans 458,066$ 0.98% 1.50% None Unsecured loans 58,530 0.21% 1.50% None
516,596$
December 31, 2016 December 31, 2015 Commercial papers payable 1,000,000$ -$ Less: Unamortized discount 265)( -
999,735$ -$ Annual interest rates 0.57% 0.65% -
December 31, 2016 December 31, 2015Accrued expenses 1,043,508$ 1,276,271$ Payables on equipment 235,625 - Construction payment refund 110,485 64,593 Others 22,537 23,135
1,412,155$ 1,363,999$
~43~
(15) Long-term deferred revenue
A. Long-term advance construction receipts represent the down payment for the construction contracts that began after 2013, and are listed under “Advance Construction Receipts.”
B. Please refer to Note 6(16) for details of deferred revenue.
(16) Government grants
A. The Company started to promote privatization starting from 2008. The Privatization Fund, Executive Yuan, would provide a loan in the amount of $1,500,000 to cover a portion of the shortfall to settle the pension and severance obligation as a result of the privatization. The Company was required to repay the loan to the Privatization Fund in a period of ten years, under the condition that the Company is profitable.
The Company uses the average long-term loan interest rate on the loan for discounting. The discounted values are recorded under “long-term notes payable and payables”, the difference between the discounted value and the amount received is listed in “deferred revenue”. The amounts that are payable within one year are listed in “other financial liabilities-current”. The unamortised amounts are shown below:
B. Government grants and interest expenses that should be amortised are recognised under ‘other revenue’ and ‘finance costs’, respectively, for the years 2016 and 2015. For more information, please refer to Notes 6(24) and (28).
December 31, 2016 December 31, 2015Advance construction receipts -$ 373,046$ Deferred revenue 26,897 42,583
26,897$ 415,629$
December 31, 2016 December 31, 2015Other financial liabilities-current 150,000$ 40,000$ Long-term notes and accounts receivable 564,603 808,917 Long-term deferred revenue - deferred revenue 26,897 42,583
741,500$ 891,500$
~44~
(17) Pension
A. (a)The Group has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Group contributes monthly an amount equal to 15% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. The Company has assessed that the balance is sufficient to pay the pension calculated by the aforementioned method, to the employees expected to be qualified for retirement next year.
(b)The amounts recognised in the balance sheet are as follows:
(c) Movements in net defined benefit liabilities are as follows:
December 31, 2016 December 31, 2015Present value of funded 1,396,332)($ 1,258,771)($ obligationsFair value of plan assets 1,215,818 1,078,072 Net defined benefit 180,514)($ 180,699)($ liability
Present value ofdefined benefit
obligations Fair value of plan
assets Net defined
benefit liabilityYear ended December 31, 2016 Balance at January 1 1,258,771)($ 1,078,072$ 180,699)($ Current service cost 179,147)( - 179,147)( Interest (expense) income 21,882)( 20,028 1,854)(
1,459,800)( 1,098,100 361,700)( Remeasurements:Return on plan assets - 11,917)( 11,917)( Experience adjustments 45,903 - 45,903
45,903 11,917)( 33,986 Pension fund contribution - 147,200 147,200 Paid pension 17,565 17,565)( - Balance at December 31 1,396,332)($ 1,215,818$ 180,514)($
~45~
(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic
subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2016 and 2015 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.
(e) The principal actuarial assumptions used were as follows:
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory.
Present value ofdefined benefit
obligations Fair value of plan
assets Net defined
benefit liabilityYear ended December 31, 2015 Balance at January 1 1,069,075)($ 904,011$ 165,064)($ Current service cost 178,503)( - 178,503)( Interest (expense) income 18,667)( 14,614 4,053)(
1,266,245)( 918,625 347,620)( Remeasurements:Return on plan assets - 9,008 9,008 Experience adjustments 1,913 - 1,913
1,913 9,008 10,921 Pension fund contribution - 156,000 156,000 Paid pension 5,561 5,561)( - Balance at December 31 1,258,771)($ 1,078,072$ 180,699)($
2016 2015Discount rate 1.75% 1.75%Future salary increases 3.5% 3.5%
Years ended December 31,
~46~
Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:
The sensitivity analysis above is based on other conditions thate are unchanged but only one assumption is changed. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.
(f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2017 amounts to $144,222.
(g) As of December 31, 2016 the weighted average duration of that retirement plan is 12 years. The analysis of timing of the future pension payment was as follows:
B. Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined
contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2016 and 2015 were $105,228 and $100,174, respectively.
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%December 31, 2016Effect on present value of defined benefit obligation 41,649)($ 36,948$ 32,918$ 38,023)($ December 31, 2015Effect on present value of defined benefit obligation 37,059)($ 38,544$ 34,872$ 33,778)($
Discount rate Future salary increases
Within 1 year 43,440$ 1-2 year(s) 57,226 2-5 years 62,905 Over 5 years 1,811,953
~47~
(18) Provisions
The analysis of change in warranty liabilities are as follows:
The analysis of provisions is as follows:
The Group gives warranties on construction contracts revenue. Provision for warranty is estimated based on historical warranty data of products.
(19) Common stock
As of December 31, 2016, the Company’s authorized capital was $11,138,997 and the paid-in capital was $7,435,652, consisting of 743,565 thousand shares of ordinary stock with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.
The number of the Company’s ordinary shares outstanding at January 1 and December 31, 2016 and 2015 was the same.
(20) Capital reserve
Pursuant to the R.O.C. Company Law, capital reserve arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital reserve to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital reserve should not be used to cover accumulated deficit unless the legal reserve is insufficient.
(21) Retained earnings
A. Under the Company's Articles of Incorporation, the current year's earnings, if any, shall first be used to pay all taxes and offset prior years' operating losses and then 10% of the remaining amount shall be set aside as legal reserve until the legal reserve equals the total capital stock balance. Appropriation of the remainder shall be proposed by the Board of Directors and resolved by the stockholders.
Unused amountsAt January 1, 2016 Additions Used reversed At December 31, 2016
167,391$ 43,745$ 63,340)($ 8,109)($ 139,687$
December 31, 2016 December 31, 2015Realised in one year 41,568$ 55,702$ Realised after one year 98,119 111,689
139,687$ 167,391$
~48~
B. The Company’s dividend policy is summarized below:
As the Company operates in a volatile business environment and is in the stable growth stage, the residual dividend policy is adopted taking into consideration the Company’s financial structure, operating results and future expansion plans. According to the dividend policy adopted by the Board of Directors, at least 10% of the Company’s distributable earnings shall be appropriated as dividends, and cash dividends shall account for at least 10% of the total dividends distributed.
C. Except for covering accumulated deficit or increasing capital, the legal reserve shall not be used for any other purpose. Capitalization of the legal reserve is permitted, provided that the balance of the reserve exceeds 50% of the Company’s paid-in capital and the amount capitalized does not exceed 25% of the balance of the reserve.
D. a)In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
b)The amounts previously set aside by the Company as special reserve amounting to $3,201,365 on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.
c)The Company disposed land in 2013. Therefore, the Company reversed special reserve of $11,016 to undistributed earnings.
E. On June 23, 2016 and June 29, 2015, the stockholders resolved that total dividends for the distribution of earnings for the years 2015 and 2014 were $371,782 and $371,783 at $0.5 (in dollars) per share, respectively. On March 22, 2017, the Board of Directors has proposed the deficit compensation for year 2016.
(22) Analysis of assets and liabilities
Assets and liabilities of the Group related to the business of shipbuilding, vessel building, major machinery and ship repair, are classified as current or non-current based on the operating cycle. However, such assets and liabilities were analyzed on "one year" basis as follows:
~49~
Less than More than December 31, 2016 12 months 12 months Total
Assets Accounts receivable, net (including related parties)
743,704$ -$ 743,704$
Receivables from customers on construction contracts (including related parties)
9,326,840 209,783 9,536,623
Inventories, net 3,852,866 - 3,852,866 13,923,410$ 209,783$ 14,133,193$
Liabilities Notes payable (including related parties)
324,457$ -$ 324,457$
Accounts payable (including related parties)
1,003,061 - 1,003,061
Payables to customers on construction contracts (including related parties)
1,330,525 1,281,874 2,612,399
Provision for liabilities 41,568 98,119 139,687 2,699,611$ 1,379,993$ 4,079,604$
Less than More than December 31, 2015 12 months 12 months Total
Assets Accounts receivable, net (including related parties)
261,384$ -$ 261,384$
Receivables from customers on construction contracts (including related parties)
6,267,992 217,121 6,485,113
Inventories, net 2,383,606 - 2,383,606 8,912,982$ 217,121$ 9,130,103$
Liabilities Notes payable (including related parties)
198,399$ -$ 198,399$
Accounts payable (including related parties)
905,563 - 905,563
Payables to customers on construction contracts (including related parties)
770,030 2,857,583 3,627,613
Provision for liabilities 55,702 111,689 167,391 1,929,694$ 2,969,272$ 4,898,966$
~50~
(23) Operating revenue
(24) Other income
(25) Other gains and losses
Note: Details of disaster loss are provided in Note 10, ‘Significant disaster loss’.
2016 2015Construction contract revenue 15,173,151$ 20,427,751$ Service revenue 533,079 810,145 Others 41,469 219,800
15,747,699$ 21,457,696$
Years ended December 31,
2016 2015Rental revenue 7,844$ 7,534$ Interest income: Interest income from bank deposits 1,603 3,309 Other interest income 369 2,609 Government grant revenue 14,452 14,943 Indemnity revenue 4,706 52,078 Others 21,010 26,244
49,984$ 106,717$
Years ended December 31,
2016 2015Net gains (losses) on financial assets 824$ 3,273)($ and liabilities at fair value through profit or lossNet currency exchange gains 70,418 56,858 Disaster loss (Note) 17,379)( - Losses on disposal of 2,369)( 286)( property, plant and equipmentOther losses 2,019)( 3,112)(
49,475$ 50,187$
Years ended December 31,
~51~
(26) Expenses by nature
(27) Employee benefit expense
A. According to the Articles of Incorporation of the Company, the Company shall distribute
employees’ compensation, based on the distributable profit of the current year, in a ratio of profit. Employees’ compensation can be distributed in the form of shares or in cash. If a company has accumulated deficit, earnings should first be channeled to cover losses. Employees’ compensation shall account for 1% to 5%, directors’ remuneration shall account for less than 5%, of the amount of current year’s pre-tax profit but excluding the employees’ compensation and directors’ remuneration.
B. For the years ended December 31, 2016 and 2015, employees’ compensation was accrued at $0 and $28,562, respectively; directors’ and supervisors’ remuneration was accrued at $0 and $2,856, respectively. The aforementioned amounts were recognised in salary expenses. Due to the operating loss incurred in 2016, the Board of Directors resolved not to distribute employees’ compensation and directors’ remuneration. Employees’ compensation and directors’ and supervisors’ remuneration of 2015 as resolved by the meeting of Board of Directors were $24,107 and $2,411 in agreement with those amounts recognised in the 2015 financial statements. For 2015, the employees’ compensation and directors’ and supervisors’ remuneration resolved by the meeting of Board of Directors amounted $28,562 and $2,856, respectively. The difference of $4,900 between the amounts resolved by the Board meeting and the amounts recognised in the 2015 financial statements, mainly resulted from calculation difference, had been adjusted in the profit or loss of 2016.
2016 2015Change in inventory of finished goods and work in process
2,986,899)($ 1,346,476)($
Direct materials 11,468,666 13,101,613 Employee benefit expense 3,986,375 4,107,529 Depreciation and amortisation charges 575,112 604,214 Outsourcing fees 2,690,225 3,063,062 Other expenses 1,579,250 1,491,120 Operating costs and expenses 17,312,729$ 21,021,062$
Years ended December 31,
2016 2015Wages and salaries 3,369,775$ 3,472,494$ Labor and health insurance fees 269,104 259,446 Pension cost 286,229 282,730 Other personnel expenses 61,267 92,859
3,986,375$ 4,107,529$
Years ended December 31,
~52~
Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved by the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.
(28) Finance costs
(29) Income tax expense
A. Income tax (benefit) expense
(a) Components of income tax (benefit) expense:
(b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:
2016 2015Interest expense:Bank loans 30,076$ 10,576$ Others 21,654 -$ Expenses amortised from government 14,452 14,943 grants payableLess: capitalisation of qualifying assets 30,130)( 11,862)(
36,052$ 13,657$
Years ended December 31,
2016 2015Current tax: Current tax on profits for the period 369$ 3,124$ Additional 10% tax on undistributed earnings - 5,116 Under provision of income tax in prior year 5,064 9,213 Total current tax 5,433 17,453 Net change of deferred tax asset 254,026)( 88,788 Income tax (benefit) expense 248,593)($ 106,241$
Years ended December 31,
2016 2015Remeasurement of defined benefit obligations 5,778$ 1,856$
Years ended December 31,
~53~
B. Reconciliation between income tax (benefit) expense and accounting profit:
C. Amounts of deferred tax assets or liabilities as a result of temporary difference and loss carryforward are as follows:
2016 2015Tax calculated based on profit (loss) before tax and statutory tax rate 261,018)($ 98,968$ Effects from items disallowed by tax regulation 7,361 7,056)( Additional 10% tax on undistributed earnings - 5,116 Under provision of income tax in prior year 5,064 9,213 Income tax (benefit) expense 248,593)($ 106,241$
Years ended December 31,
Recognised Recognised in otherin profit or comprehensive
January 1 loss income December 31Deferred tax assets:Temporary differences: Estimation of construction loss 411,479$ 96,496)($ -$ 314,983$ Unused compensated absences payable 52,353 27)( - 52,326 Unrealized warranty liability 28,301 4,555)( - 23,746 Accrued pension liabilities 30,717 5,748 5,778)( 30,687 Unrealised investments gains - 50)( - 50)( Unrealised exchange (gains) loss 332)( 363 - 31 Provision for loss on slow- moving inventories 2,861 146,970 - 149,831 Allowance for doubtful accounts 492 - - 492 Loss carryforward 114,441 202,073 - 316,514
640,312$ 254,026$ 5,778)($ 888,560$ Deferred tax liabilities: Unrealised land value incremental reserve 1,324,910)($ -$ -$ 1,324,910)($
Year ended December 31, 2016
~54~
D. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as follows:
E. The Company’s income tax returns through 2014 have been assessed and approved by the Tax Authority. As of March 22, 2017, there was no administrative remedies.
Recognised in Recognised otherin profit or comprehensive
January 1 loss income December 31Deferred tax assets:Temporary differences: Estimation of construction loss 610,635$ 199,156)($ -$ 411,479$
Unused compensated absences payable 53,152 799)( - 52,353 Unrealized warranty liability 28,616 315)( - 28,301 Accrued pension liabilities 28,059 4,514 1,856)( 30,717 Unrealised exchange loss (gains)
6,143 6,475)( - 332)(
Provision for loss on slow- moving inventories 2,861 - - 2,861 Allowance for doubtful accounts 1,490 998)( 492
Loss carryforward - 114,441 - 114,441 730,956$ 88,788)($ 1,856)($ 640,312$
Deferred tax liabilities: Unrealised land value incremental reserve 1,324,910)($ -$ -$ 1,324,910)($
Year ended December 31, 2015
Year incurred Amount filed/ assessed Unused amount
Unrecogniseddeferredtax assets Expiry year
2015 Amount filed 671,021$ $ - 2025
2016 Estimated filing amount 1,190,829 - 2026
Year incurred Amount filed/ assessed Unused amount
Unrecogniseddeferredtax assets Expiry year
2015 Estimated filing amount 673,184$ $ - 2025
December 31, 2016
December 31, 2015
~55~
F. Unappropriated retained earnings:
G. As of December 31, 2016 and 2015, the balance of the imputation tax credit account was
$759,208 and $898,877, respectively. The creditable tax rate was 35.47% for 2015 and is estimated to be 48.15% for 2016.
(30) (Losses) earnings per share
December 31, 2016 December 31, 2015Earnings generated in and after 1998 489,400$ 2,166,890$
Weigthted averagenumber of ordinary Losses per
Amount shares outstanding shareafter tax (shares in thousands) (in dollars)
Basic losses per share Loss attributable to ordinary shareholders 1,287,100)($ 743,565 1.73)($ Diluted losses per share Loss attributable to ordinary shareholders 1,287,100)($ 743,565 Assumed conversion of all dilutive potential ordinary shares Employees' compensation - - Loss attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares 1,287,100)($ 743,565 1.73)($
Year ended December 31, 2016
Weigthted averagenumber of ordinary Earnings per
Amount shares outstanding shareafter tax (shares in thousands) (in dollars)
Basic earnings per share Profit attributable to ordinary shareholders 468,154$ 743,565 0.63$ Diluted earnings per share Profit attributable to ordinary shareholders 468,154$ 743,565 Assumed conversion of all dilutive potential ordinary shares Employees' compensation - 2,062 Profit attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares 468,154$ 745,627 0.63$
Year ended December 31, 2015
~56~
(31) Operating leases
A. The Group leases investment property to others under non-cancellable operating lease agreements. These leases will expire on August 31, 2020, and all these lease agreements are not renewable at the end of the lease period. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:
B. The Group leases in assets for places of business under non-cancellable operating lease agreements. The lease terms are between 1996 and 2027 years, and all these lease agreements are renewable at the end of the lease period. Certain leases are charged extra rents following the changes in local price indexes. The Group recognised rental expenses of $262,892 and $182,555 in profit or loss for the years ended December 31, 2016 and 2015, respectively. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
December 31, 2016 December 31, 2015Not later than one year 7,704$ 7,829$
Later than one year but not later than five years 17,121 24,880
Later than five years - - 24,825$ 32,709$
December 31, 2016 December 31, 2015Not later than one year 263,423$ 200,360$
Later than one year but not later than five years 899,745 645,790
Later than five years 1,021,058 956,031 2,184,226$ 1,802,181$
~57~
(32) Supplemental cash flow information
A. Investing activities with partial cash payments:
B. Investment and financing activities with no cash flow effects:
2016 2015Acquisition of investments accounted for using equity method
197,344$ -$
Less ending balance of other payables 19,188)( - Cash paid on acquisition of investments accounted for using equity method during the year 178,156$ -$
Purchase of property, plant and equipment
325,218$ 479,680$
Add: beginning balance of payable on equipment 64,593 101,241 Less: ending balance of payable on equipment 110,485)( 64,593)( Cash paid on purchase of property, plant and equipment during the year 279,326$ 516,328$
Years ended December 31,
2016 2015Long-term receivables current portion being transferred to accounts receivable -$ 85,320$ Long-term notes and accounts payable being transferred to other financial liabilities-current 150,000$ 20,000$ Interest expense amortised from government grants 14,452$ 14,943$
Years ended December 31,
~58~
7. RELATED PARTY TRANSACTIONS
(1) Significant related party transactions and balances
A. Operating revenue
Note: The investment accounted under equity method starts from the end of August, 2016. Thus,
the related party transaction is from September 1 to December 31, 2016 which applies to all the related party transactions for this fiscal year.
The price was based on the contract signed by both parties, and the collection terms were approximately the same as those to third parties.
B. Purchases of goods
The price was based on the contract signed by both parties, and the collection terms were approximately the same as those to third parties.
2016 2015Key management: Corporate Director 2,524,409$ 80,489$ Other related parties: Subsidiaries of the Corporate Director 5,770 47,082 Stockholders with 30% of shares in the Company's subsidiaries
- 2,039
Investee accounted for using equity method (Note) 787 -
2,530,966$ 129,610$
Years ended December 31,
2016 2015Key management: Corporate Director 2,400,867$ 2,253,761$ Other related parties: Stockholders with 30% of shares in the Company's subsidiaries 135 3,025
2,401,002$ 2,256,786$
Years ended December 31,
~59~
C. Accounts receivable
D. Receivables from customers on construction contracts
E. Other receivables
F. Prepaid accounts
December 31, 2016 December 31, 2015Key management:
Corporate Director -$ 20,329$ Other related parties: Investee accounted for using equity method (Note) 2,143 - Stockholders with 30% of shares in the Company's subsidiaries 1,621 1,621
3,764$ 21,950$
December 31, 2016 December 31, 2015Key management:
Corporate Director 1,593,109$ -$ Investee accounted for using equity method (Note) 200,010 -
1,793,119$ -$
December 31, 2016 December 31, 2015Key management: Corporate Director 41,849$ 63,221$ Other related parties: Stockholders with 30% of shares in the Company's subsidiaries 191 190
42,040$ 63,411$
December 31, 2016 December 31, 2015Key management: Corporate Director 155,970$ 125,698$
~60~
G. Refundable deposits
H. Notes payable
I. Accounts payable
J. Payables to customers on construction contracts
K. Endorsements and guarantees provided to related parties
As of December 31, 2016 and 2015, endorsement / guarantees provided by the Group and used amounted to $75,000 and $0, respectively.
December 31, 2016 December 31, 2015Key management: Corporate Director 1,512$ -$ Other related parties: Stockholders with 30% of shares in the Company's subsidiaries 3,921 -
5,433$ -$
December 31, 2016 December 31, 2015
Key management:
Corporate Director 324,457$ 198,399$
December 31, 2016 December 31, 2015Other related parties: Stockholders with 30% of shares in the Company's subsidiaries
466$ -$
December 31, 2016 December 31, 2015Other related parties: Corporate Director -$ 362,765$
December 31, 2016 December 31, 2015Other related parties:Investee accounted for using equity method (Note) 886,000$ -$
~61~
(2) Key management compensation
8. PLEDGED ASSETS
None.
9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS
(1) The balance of the Group’s unused letters of credit for import of materials is as follows:
(2) The balance of the Group’s contracted ship/vessel construction projects to be completed is as follows:
(3) The amount of the contracted services to be delivered by the Group’s subsidiary is as follows:
(4) The guaranteed credit by banks for the Group’s construction projects is as follows:
2016 2015Salaries and other short-term employee benefits
22,766$ 29,517$
Post-employment benefits 3,943 647 26,709$ 30,164$
Years ended December 31,
December 31, 2016 December 31, 2015Balance of unused letters of credit 2,149,195$ 1,738,887$
December 31, 2016 December 31, 2015Contracted projects to be completed 25,038,652$ 37,951,100$
December 31, 2016 December 31, 2015Contracted services to be delivered 3,348$ 21,399$
December 31, 2016 December 31, 2015Guaranteed credit by banks 8,048,499$ 7,869,360$
~62~
(5) The amount of the Group’s purchase contracts and outsourcing construction contracts to be paid is as follows:
(6) The amount of construction performance promissory note issued by the Group for contracted
construction is as follows:
(7) The non-cancellable operating leases with more than one-year lease term for the Group are stated in Note 6 (31).
(8) The Group, Century Iron and Steel Industrial Co., Ltd. and Taiwan Generations Corp. are the joint-originators for Fuhai Wind Farm Corporation (Fuhai Corporation). The joint-originators entered into “the Incentive Program of Offshore Wind Power Demonstration System” (“the Government Grant Scheme”), which was granted by the Ministry of Economic Affairs, and committed to be jointly responsible for Fuhai Corporation. The total amount of endorsement/guarantee provided by the Company amounted to NT$886 million. As of December 31, 2016 and 2015, the amount used is $75,000 and $0, respectively. Please refer to Note 7 for details.
(9) The ships under construction have all been insured with shipbuilding insurance. On September 14, 2016, Typoon Meranti caused some damaged to third party property and claimed for compensation. The case is still ongoing and compensation amount is uncertain. However, according to Group’s designated lawyer, the damage loss is covered by the insurance; thus, no material impact is expected.
10. SIGNIFICANT DISASTER LOSS
The Group’s property, plant and equipment has been insured under typoon insurance. On September 14, 2016, Typoon Meranti caused some damage loss amounting to $40,572 and insurance compensation amounted to $28,800. The remaining amount of $11,772 has been recognised as ‘other losses’.
11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE
None.
December 31, 2016 December 31, 2015Purchase contracts to be paid 8,467,209$ 15,697,792$ Outsourcing construction contracts to be paid 1,439,039 1,934,201
9,906,248$ 17,631,993$
December 31, 2016 December 31, 2015Construction performance promissory note 99,850$ 99,850$
~63~
12. OTHERS
(1) Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Following the industry practices, the Group uses gearing ratio to control capital.
The Group’s policy is to maintain a stable gearing ratio. Ratios are as follows:
(2) Financial instruments
A. Fair value information of financial instruments
The carrying amounts of the Group’s financial instruments not measured at fair value (including cash and cash equivalents, held-to-maturity financial assets-current, notes receivable, accounts receivable, receivables from customers on construction contracts, other receivables, refundable deposits, short-term borrowings, short-term notes and bills payable, notes payable, accounts payable, payables to customers on construction contracts, other payables, other financial liabilities - current, long-term notes, accounts and overdue payables and guarantee deposits received) are approximate to their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(3).
B. Financial risk management policies
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial position and financial performance. The Group uses financial instruments, for example, using forward exchange contracts to control its exposure to specific financial risks.
For supervising management, the Board of Directors has set related rules to authorize the management to perform daily operations within acceptable risk range and requires the internal audit to inspect the management and report on a regular basis. The internal audit must report to the Board of Directors if there is any unusual situation at any time, and respond to the situations adequately.
December 31, 2016 December 31, 2015Total liabilities 15,441,284$ 9,875,194$ Total assets 27,670,942$ 23,739,566$ Gearing ratio 56% 42%
~64~
C. Significant financial risks and degrees of financial risks
(a) Market risk Foreign exchange risk
i. The foreign exchange risk is mainly arising from USD. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The group companies are required to hedge their entire foreign exchange risk exposure with the Group treasury. To manage their foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities in the Group use forward foreign exchange contracts, transacted with Group treasury. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.
ii.The Group’s businesses involve some non-functional currency operations. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:
Foreign Currency (in thousands) Exchange Rate Book Value (NTD)
Financial assets Monetary items
USD:NTD 21,471$ 32.200 691,366$ Financial liabilities
Monetary items
USD:NTD 8,908 32.300 287,728 JPY:NTD 47,719 0.2776 13,247
Foreign Currency (in thousands) Exchange Rate Book Value (NTD)
Financial assets Monetary items
USD:NTD 13,000$ 32.775 426,075$ Financial liabilities
Monetary items
USD:NTD 1,588 32.875 52,206 JPY:NTD 12,480 0.2747 3,428
December 31, 2016
December 31, 2015
~65~
iii.If NTD had appreciated/ depreciated by 1% against USD with all other variables held constant, effect to post-tax profit (loss) is as follows:
iv.The net exchange gain arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2016 and 2015, amounted to $70,418 and $56,858, respectively.
Price risk
The Group is not exposed to significant commodity price risk.
Interest rate risk
The interest rate impact on the Group is insignificant.
(b)Credit risk
Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors.
Cash and cash equivalents and derivative financial instruments
The Group only trades with counterparties with good credit, in accordance with the Group’s transaction policies. There is no recent violation of significant cash and cash equivalents and derivative financial products.
Accounts receivable and other receivables
i.No other receivables were past due (including other receivables, other receivable-related parties and refundable deposits).
ii.Receivables arising from revenue from ship building shall be classified under accounts receivable or construction contracts receivable.
iii.Credit information of accounts receivable is stated in Note 6 (3). When the Group enters into ship building contracts, the Group entrusts external agencies to verify customers’ credit and was informed that the possibility that the customers will default is low. Therefore, the credit risk of accounts receivable on ship building is low.
If NTD had appreciated/depreciated by 1% against tax 2016 2015
Increase (decrease) in net profit (loss) after tax
3,240$ 3,075$
Years ended December 31,
~66~
iv.The ageing and impairment analysis of accounts receivable that were past due but not impaired is stated in Note 6 (3).
Held-to-maturity financial assets - current
For held-to-maturity financial assets, the Group only trades with counterparties with good credit, in accordance with the Group’s transaction policies. Please refer to Note 6 (2) for more information.
(c)Liquidity risk
i. The Group uses cash and cash equivalents, bank borrowings and other contracts to control its liquidity. The table below analyses the Group’s non-derivative financial. Liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.
Non-derivative financial liabilities
Derivative financial liabilities
As of December 31, 2016 and 2015: None.
ii.The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.
December 31, 2016 Less than 1
year Between 1 and
2 years Between 2 and
5 years Over 5 YearsBank borrowings 6,396,856$ -$ -$ -$ Short-term notes and bills payable
999,735 - - -
Payables 3,185,846 418,811 308,324 - 10,582,437$ 418,811$ 308,324$ -$
December 31, 2015 Less than 1
year Between 1 and
2 years Between 2 and
5 years Over 5 YearsBank Borrowings 516,914$ -$ -$ -$ Payables 2,831,337 449,436 610,285 -
3,348,251$ 449,436$ 610,285$ -$
~67~
(3) Fair value estimation
A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value are provided in Note 12(2)A. Details of the fair value of the Group’s investment property measured at cost are provided in Note 6(10).
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in derivative instruments is included in Level 2.
Level 3: Unobservable inputs for the asset or liability.
As of December 31, 2016 and 2015, the Group had no financial assets and liabilities measured at fair value.
13. SUPPLEMENTARY DISCLOSURES
(1) Significant transactions information
A. Loans to others: None.
B. Provision of endorsements and guarantees to others: Please refer to table 1.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): None.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.
E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 2.
H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 3.
~68~
I. Trading in derivative instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to table 4.
(2) Information on investees
Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 5.
(3) Information on investments in Mainland China A. Basic information: None.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.
14. SEGMENT INFORMATION
(1) General information
Management has determined the operating segments based on the reports reviewed by the Chief Operating Decision-Maker that are used to make strategic decisions. The Chief Operating Decision-Maker considers the business from a product perspective. The reportable operating segments derive their revenue primarily from the construction of ships and vessels. As other businesses mainly including machinery engineering, ship/vessel repairs and coating do not meet the quantitative thresholds required by IFRS 8, the results of these operations are included in the ‘all other segments’ column.
(2) Measurement of segment information
The Chief Operating Decision-Maker assesses the performance of the operating segments based on the gross profit of each business category. This measurement basis excludes the effects of operating expenses, non-operating revenue and non-operating expenses from the operating segments.
(3) Information about segment profit or loss, assets and liabilities
The segment information provided to the Chief Operating Decision-Maker for the reportable segments for the years ended December 31, 2016 and 2015 is as follows:
~69~
Construction ofships and vessels
All othersegments
Adjustments and
eliminations (Note 1) Total
Revenue from external 15,085,251$ 662,448$ -$ 15,747,699$ Inter-segment revenue - 534,519 534,519)( - Total segment revenue 15,085,251$ 1,196,967$ 534,519)($ 15,747,699$ Segment profit (loss) 1,116,874)($ 56,646$ -$ 1,060,228)($ Undistributed amount: Operating expenses 492,809)($ Depreciation and 11,993)( Interest income 1,972 Interest expense 51,730)( Income tax benefit 248,593 Loss on investments accounted for using equity method 33,779)( Total undistributed amount 339,746)($ Segment assets (Note 2) 27,670,942$ Investments accounted for under equity method 166,616$ Increase in non-current 330,468$ Segment liabilities (Note 2) 15,441,284$
Year ended December 31, 2016
~70~
Note 1: Refers to the elimination of inter-segment revenue. Note 2: Segment assets and liabilities are regularly provided to the Chief Operating Decision-Maker,
but not distributed to each reportable segment.
Construction ofships and vessels
All othersegments
Adjustmentsand
eliminations(Note 1) Total
Revenue from external customers 20,261,321$ 1,196,375$ -$ 21,457,696$ Inter-segment revenue - 676,839 676,839)( - Total segment revenue 20,261,321$ 1,873,214$ 676,839)($ 21,457,696$ Segment profit 903,630$ 90,814$ -$ 994,444$ Undistributed amount: Operating expenses 544,986)($ Depreciation and amortization 12,824)( Interest income 5,918 Interest expense 10,576)( Income tax expense 106,241)( Loss on investments accounted for using equity method 856)( Total undistributed amount 669,565)($ Segment assets (Note 2) 23,739,566$ Investments accounted for under equity method 3,051$ Increase in non-current assets 492,684$ Segment liabilities (Note 2) 9,875,194$
Year ended December 31, 2015
~71~
(4) Information about segment profit or loss, assets and liabilities
The revenue from external parties reported to the Chief Operating Decision-Maker is measured in a manner consistent with that in the statement of comprehensive income. A reconciliation of segment profit to profit before tax and discontinued operations is provided as follows:
(5) Information on products and services
Revenues from external customers are mainly derived from the construction of ships and vessels. Breakdown of the revenue from all sources is as follows:
2016 2015Segment (loss) profit 1,116,874)($ 903,630$ Other segment profit 56,646 90,814 Total segments 1,060,228)( 994,444 Operating expenses 504,802)( 557,810)( Non-operating income and expenses 29,628 142,391 (Loss) profit before tax and discontinued operations 1,535,402)($ 579,025$
Years ended December 31,
2016 2015Construction contract revenue Revenue from construction of ships and vessels 15,085,251$ 20,261,321$ Revenues from machine manufacturing 87,900 166,430 Service revenue 533,079 810,145 Other revenue 41,469 219,800 Total 15,747,699$ 21,457,696$
Years ended December 31,
~72~
(6) Geographical information
Revenue information by geographic area:
(7) Major customer information
The customers accounting for more than 10% of the Group’s operating revenues are as follows:
Revenue Non-current assets Revenue Non-current assetsHong Kong 6,856,132$ -$ 15,414,848$ -$ Taiwan 4,057,003 10,972,825 2,102,621 11,271,210 Marshall 3,739,045 - 40,577 - Singapore 1,179,619 - 1,787,758 - Panama 32,602 - 35,751 - Japan 2,867 - 57,383 - Britain - - 1,773,074 - Greece 175,539)( - 175,381 - Others 55,970 - 70,303 - Total 15,747,699$ 10,972,825$ 21,457,696$ 11,271,210$
Year ended and as of Year ended and as ofDecember 31, 2016 December 31, 2015
Year ended December 31, 2016Clients Sales amount Department
Client H 6,673,401$ Construction of ships and vessels Client G 3,739,045 Construction of ships and vessels Client J 2,524,409 Construction of ships and vessels
$ 12,936,855
Year ended December 31, 2015Clients Sales amount Department
Client H 9,726,600$ Construction of ships and vessels Client F 5,367,863 Construction of ships and vessels Client B 2,988,009 Construction of ships and vessels
$ 18,082,472
0C
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fD
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CSB
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Yea
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ecem
ber 3
1, 2
016
Tabl
e 1
Expr
esse
d in
thou
sand
s of N
TD(E
xcep
t as o
ther
wis
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dica
ted)
Party
bei
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Out
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endo
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guar
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at
Dec
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2016
Act
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ntdr
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Prov
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endo
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toth
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Mai
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Foot
note
Am
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of
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Rat
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Prov
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Tabl
e 1,
Pag
e 1
Purc
hase
s(s
ales
)A
mou
nt
Perc
enta
ge o
fto
tal p
urch
ases
(sal
es)
Cre
dit t
erm
Uni
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redi
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m B
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Perc
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fto
tal
note
s/ac
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tsre
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(pay
able
)C
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Tai
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CPC
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Tai
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le2,
524,
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($
16)
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11,
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109
$
15
C
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8,28
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19
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132
4,45
7)(
30)
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CSB
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Coa
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530,
926
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3N
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1N
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1N
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172
,595
)(
7)(
CSB
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CSB
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926)
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Not
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72,5
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46,8
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Expr
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thou
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Diff
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tran
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Foot
note
Purc
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Cou
nter
party
Rel
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p w
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eco
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Tran
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Not
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CSB
C C
OR
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N
Purc
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or t
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cap
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Yea
r end
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ecem
ber 3
1, 2
016
Tabl
e 2
Tabl
e 2,
Pag
e 1
Bal
ance
as a
t Dec
embe
r 31,
2016
Turn
over
rate
Am
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Act
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Am
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202,
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N
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-
--
-
Not
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Cou
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party
Rel
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CSB
C C
OR
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ATI
ON
TA
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N
Rec
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rela
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achi
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T$10
0 m
illio
n or
20%
of p
aid-
in c
apita
l or m
ore
Yea
r end
ed D
ecem
ber 3
1, 2
016
Tabl
e 3
Expr
esse
d in
thou
sand
s of N
TD
(Exc
ept a
s oth
erw
ise
indi
cate
d)
Ove
rdue
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les
Purc
hase
r/sel
ler
Tabl
e 3,
Pag
e 1
Gen
eral
ledg
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ccou
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Am
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Tr
ansa
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rms
Perc
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(Not
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g So
lutio
ns C
o., L
td.
Pare
nt c
ompa
ny to
subs
idia
ryO
utso
urci
ng e
xpen
ses
530,
926
$
N
ote
4N
ote
3
0C
SBC
Cor
pora
tion,
Tai
wan
CSB
C C
oatin
g So
lutio
ns C
o., L
td.
Pare
nt c
ompa
ny to
subs
idia
ryA
ccou
nts p
ayab
le72
,595
N
ote
4-
Not
e 1:
The
num
bers
fille
d in
for t
he tr
ansa
ctio
n co
mpa
ny in
resp
ect o
f int
er-c
ompa
ny tr
ansa
ctio
ns a
re a
s fol
low
s:
(1
)Par
ent c
ompa
ny is
‘0’.
(2)T
he su
bsid
iarie
s are
num
bere
d in
ord
er st
artin
g fr
om ‘1
’.N
ote
2:If
trans
actio
ns b
etw
een
pare
nt c
ompa
ny a
nd su
bsid
iarie
s or b
etw
een
subs
idia
ries r
efer
to th
e sa
me
trans
actio
n, it
is n
ot re
quire
d to
dis
clos
e tw
ice.
Fo
r exa
mpl
e, if
the
pare
nt c
ompa
ny h
as a
lread
y di
sclo
sed
its tr
ansa
ctio
n w
ith a
subs
idia
ry, t
hen
the
subs
idia
ry is
not
requ
ired
to d
iscl
ose
the
trans
actio
n; fo
r tra
nsac
tions
bet
wee
n tw
o su
bsid
iarie
s, if
one
of th
e su
bsid
iarie
s has
di
sclo
sed
the
trans
actio
n, th
en th
e ot
her i
s not
requ
ired
to d
iscl
ose
the
trans
actio
n.N
ote
3:R
egar
ding
per
cent
age
of tr
ansa
ctio
n am
ount
to c
onso
lidat
ed to
tal o
pera
ting
reve
nues
or t
otal
ass
ets,
it is
com
pute
d ba
sed
on p
erio
d-en
d ba
lanc
e of
tran
sact
ion
to c
onso
lidat
ed to
tal a
sset
s for
bal
ance
shee
t ac
coun
ts,
base
d on
acc
umul
ated
tran
sact
ion
amou
nt fo
r the
per
iod
to c
onso
lidat
ed to
tal o
pera
ting
reve
nues
for i
ncom
e st
atem
ent a
ccou
nts.
Not
e 4:
Bas
ed o
n th
e co
ntra
ct, t
he p
aym
ent t
erm
s is t
he sa
me
as in
gen
eral
tran
sact
ions
.
Num
ber
(Not
e 1)
Com
pany
nam
eC
ount
erpa
rtyR
elat
ions
hip
(Not
e 2)
Tran
sact
ion
(Exc
ept a
s oth
erw
ise
indi
cate
d)
CSB
C C
OR
POR
ATI
ON
TA
IWA
N
Sign
ifica
nt in
ter-c
ompa
ny tr
ansa
ctio
ns d
urin
g th
e re
porti
ng p
erio
ds
Yea
r end
ed D
ecem
ber 3
1, 2
016
Tabl
e 4
Expr
esse
d in
thou
sand
s of N
TD
Tabl
e 4,
Pag
e 1
Bal
ance
as a
t Dec
embe
r31
, 201
6
Bal
ance
as a
t Dec
embe
r31
, 201
5N
umbe
r of
shar
esO
wne
rshi
p (%
)B
ook
valu
eC
SBC
Cor
pora
tion,
Tai
wan
Fuha
i Win
d Fa
rmC
orpo
ratio
nTa
iwan
Win
d po
wer
indu
stry
197,
344
$
-
15
,000
,000
37
.97
$
164,
238
$
128,
795)
($
33,1
06)
($
CSB
C C
orpo
ratio
n, T
aiw
anC
SBC
Coa
ting
Solu
tions
Co.
, Ltd
.Ta
iwan
Mar
ine
coat
ing,
stee
l stru
ctur
epa
intin
g w
orks
, sur
face
treat
men
t, an
d hi
gh-te
ch a
nti-
corro
sion
etc
.
87,5
00
87
,500
8,75
0,00
0
70
109,
656
907
679
CSB
C C
orpo
ratio
n, T
aiw
anTa
iwan
Gen
erat
ions
Cor
pora
tion
Taiw
anM
anuf
actu
ring
of m
etal
stru
ctur
e, b
uild
ing
com
pone
nt, p
ower
gen
erat
ion
and
othe
rs
4,00
0
40,0
00
40
0,00
0
402,
378
1,
682)
(
67
3)(
CSB
C C
oatin
g So
lutio
ns C
o.,
Ltd
BLU
E A
CE
CO
RPO
RA
TIO
NTa
iwan
Mar
ine
coat
ing,
stee
l stru
ctur
epa
intin
g w
orks
, sur
face
treat
men
t, an
d hi
gh-te
ch a
nti-
corro
sion
etc
.
30,0
00
-
-
100
29,3
32
668)
(
668)
(
Not
e
CSB
C C
oatin
g So
lutio
ns C
o.,
Ltd.
Blu
e O
cean
Win
dPo
wer
Eng
inee
ring
(Hon
g K
ong)
Lim
ited
Hon
g K
ong
Mar
ine
wor
ks se
rvic
es30
4
30
4
10
0
100
2,08
5
1,27
3
1,27
3
Not
e
Not
e: T
he a
mou
nt h
as b
een
incl
uded
in th
e pr
ofit
(loss
) of t
he C
ompa
ny’s
inve
stee
acc
ount
ed fo
r usi
ng e
quity
met
hod
and
has b
een
reco
gnis
ed a
s gai
n (lo
ss) o
n in
vest
men
t.
Info
rmat
ion
on in
vest
ees
Yea
r end
ed D
ecem
ber 3
1, 2
016
Tabl
e 5
CSB
C C
OR
POR
ATI
ON
TA
IWA
N
Expr
esse
d in
thou
sand
s of N
TD(E
xcep
t as o
ther
wis
e in
dica
ted)
Net
pro
fit(lo
ss)
of t
he in
vest
eefo
r the
yea
ren
ded
Dec
embe
r 31,
2016
Inve
stm
ent
inco
me(
loss
)re
cogn
ised
by
the
Com
pany
for t
heye
ar e
nded
Dec
embe
r 31,
201
6Fo
otno
te In
vest
orIn
vest
ee L
ocat
ion
Mai
n bu
sine
ss a
ctiv
ities
Initi
al in
vest
men
t am
ount
Shar
es h
eld
as a
t Dec
embe
r 31,
201
6
Tabl
e 5,
Pag
e 1