Largan Precision Co., Ltd
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Stock Code: 3008TT http://mops.twse.com.tw http://www.largan.com.tw Largan Precision Co., Ltd 2019 Annual Report (Translation) ----Disclaimer---- This is a translation of the 2019 Annual Report of Largan Precision Co., Ltd. The translation is for reference only. If there is any discrepancy between the English version and Chinese version, the Chinese version shall prevail. nd Printed April 22 , 2020 Largan Precision Co., Ltd. Company Spokesperson Adam Lin CEO 04-36002345 [email protected] Deputy Spokesperson Josephine Huang Deputy Manager 04-36002345 [email protected] Corporate Headquarters and Factories Head office: No. 11, Jingke Road, Nantun District, Taichung City, Taiwan Telephone: 04-36002345 Factories: No. 4, Gongyequ 16th Road, Taichung City, Taiwan Telephone: 04-36002345 No. 14, Gongyequ 23rd Road, Nantun District, Taichung City, Taiwan Telephone: 04-36002345 No. 11, Jingke Road, Nantun District, Taichung City, Taiwan Telephone: 04-36002345 No. 13, Jingke Road, Nantun District, Taichung City, Taiwan Telephone: 04-36002345 No. 7, Jingke 2nd Road, Nantun District, Taichung City, Taiwan Telephone: 04-36001825 Stock Affairs Agent Company: Stock-Affairs Agency Department of Taishin International Bank Address: B1, No.96, Sec.1, Jianguo N. Rd., Taipei City Website: www.taishinbank.com.tw Tel: (02) 2504-8125 Certified Public Accountant (CPA) and accounting firm for the financial statements of the most recent year: CPA: Tzu-Hsin Chang & Shyhhuar Kuo Company: KPMG Certificated Public Accountants Address: 68F, No.7, Sec.5, Xinyi Rd., Taipei Website: www.kpmg.com/tw Tel: (02) 8101-6666 Offshore secondary exchange and disclosure information: Not Applicable Company Website: http://www.largan.com.tw Largan Precision Co., Ltd. Annual Report Contents Page Number 1. Letter to Shareholders...................................................................................................... 1 2. Company Profile .............................................................................................................. 2 3. Corporate Governance Report ......................................................................................... 4 3.1. Company organization ..................................................................................................... 4 3.2. Information on Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and heads of departments and divisions ........................................................ 6 3.3. Implementation of Corporate Governance ...................................................................... 21 3.4. Information on CPA fees ................................................................................................. 40 3.5. Replacement of CPAs ...................................................................................................... 41 3.6. Company's Chairman, President, or any managerial officer in charge of finance or accounting matters who has, in the most recent year, held a position at the accounting firm of its CPA or at an affiliated company ..................................................................... 42 3.7. Equity transfer or changes in equity pledged by the Company's Directors, Supervisors, managerial officers or shareholders with shareholding percentage exceeding 10% in the most recent fiscal year up to the publication date of the Annual Report .............................................................................................................................. 43 3.8. Information on the relationship between the top 10 shareholders of the Company ........ 44 3.9. Information on the number of shares of the companies invested by the Company, its Directors, Supervisors and managerial officers or a company directly or indirectly controlled by the Company and consolidated percentage of shareholding ..................... 45 4. Funding Status ................................................................................................................. 46 4.1. Company capital and issuance of shares ......................................................................... 46 4.2. Issuance of corporate bonds ............................................................................................ 50 4.3. Preferred shares ............................................................................................................... 50 4.4. Overseas depository receipt ............................................................................................. 50 4.5. Issuance of employee stock options ................................................................................ 50 4.6. Restrictions on employee shares and mergers, acquisitions or issuance of new shares for the acquisition of shares of other companies ............................................................. 50 4.7. Implementation status of the capital utilization plan ....................................................... 50 5. Operational Highlights .................................................................................................... 51 5.1. Business activities ........................................................................................................... 51 5.2. Overview of market, production and sales ...................................................................... 55 5.3. Number of employees during the two most recent years ................................................ 59 5.4. Environmental protection expenditures ........................................................................... 60 5.5. Labor relations ................................................................................................................. 60 5.6. Important contracts .......................................................................................................... 65 6. Financial Highlights ........................................................................................................ 66 6.1. Condensed Balance Sheet and Condensed Consolidated Income Statement for the Last Five Years ................................................................................................................ 66 6.2. Financial Analysis for the Last Five Years ...................................................................... 70 6.3. 2018 Supervisors' Review Report for the Financial Report ............................................ 73 6.4. Consolidated Financial Statements of the Most Recent Year with Independent Auditors’ Report and Notes ............................................................................................. 74 6.5. Parent Company Only Financial Statements of the Most Recent Year with Independent Auditors’ Report and Notes ......................................................................... 147 6.6. Impact on the Company's financial status due to financial difficulties experienced by the Company and its affiliate companies in the most recent year and as of the publication date of this Annual Report ............................................................................ 226 7. Review and Analysis of Financial Position and Financial Performance, and Risk Management .................................................................................................................... 227 7.1. Financial position analysis .............................................................................................. 227 7.2. Financial performance ..................................................................................................... 227 7.3. Cash flow ......................................................................................................................... 228 7.4. Impact of major capital expenditures on the Company’s financial operations for the most recent fiscal year ..................................................................................................... 228 7.5. Reinvestment policies, main reasons for profits/losses generated thereby, improvement plans, and investment plans for the coming year ...................................... 228 7.6. Risk management and assessment ................................................................................... 228 7.7. Other material matters ..................................................................................................... 230 8. Special Notes ................................................................................................................... 231 8.1. Information on affiliate companies .................................................................................. 231 8.2. Private placement of securities of the past year as of the publication date of this Annual Report ................................................................................................................. 237 8.3. Holding or disposal of the Company's shares by the subsidiaries of the most recent year as of the publication date of this Annual Report ...................................................... 237 8.4. Other necessary supplementary items to be included ...................................................... 237 9. Any event which has a material impact on the shareholders' equity or securities prices as prescribed in Subparagraph 2, Paragraph 2, Article 36 of the Securities and Exchange Act that has occurred in the most recent year as of the publication date of this Annual Report ..........................................................................................................