Ff035806-F0b9-4331-B362-441355562Df5 Worldreginfo - Ff035806-F0b9-4331-B362-441355562Df5
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WorldReginfo - ff035806-f0b9-4331-b362-441355562df5 WorldReginfo - ff035806-f0b9-4331-b362-441355562df5 Contents I Letter to Shareholders 1 II Company Profile 6 1. Date of Incorporation 7 2. Company History! 7 ! III Corporate Governance! 11 1. Organization Structure 12 2. Directors, Supervisors and Executive Management 14 3. Corporate Governance Executive Status 27 4. CPA Service Fee 42 5. Information for change of CPA 43 6. The Company's Chairman, President and Managers Responsible for Finance or Accounting Who Have Held a Post in the CPA Office or its Affiliations in the Last Year 43 7. Shares Transferred or Pledged by Directors, Supervisors, and Management or Major Shareholders in the Recent Years until the Annual Report being Published 44 8. The Relationship between Top Ten Shareholders (With Major Institutional Shareholders) 45 9. Shares of the Company, Directors, Supervisors, Managements, and Direct and Indirect Investments of the Company in Affiliated Companies 47 IV Fund Utilization Status 48 1. Capital and Shares 49 2. Issuance of Corporate Bonds 52 3. Preferred Shares 53 4. Issuance of Depository Receipt 53 5. Employee Stock Options 53 6. New Restricted Employee Shares 53 7. Share Issued for Merger or Acquisition 54 8. Fund Utilization Plans and Status 54 V Operational Highlights 55 1. Business Activities 56 2. Markets and Sales Overview 65 3. Employee Information in Recent 2 Years until the Annual Report being Published 74 4. Environmental Protection Expenditure 74 5. Employee Relations 74 6. Major Contracts 78 WorldReginfo - ff035806-f0b9-4331-b362-441355562df5 VI Review and Analysis of the Financial Condition, Operating Performance 79 and Risk Issues 1. Financial Condition 80 2. Financial Performance 80 3. Cash Flow 81 4. Key Performance Indicator, KPI 81 5. Analysis of Major Capital Expenditure and Sources of Funding 82 6. Investment Policies, Reasons for Profit/Loss, Plans for Improvement, and Future Investment Plan 82 7. Risk Issues 83 8. Impact of the Financial Distress Occurred to the Company and Affiliates in the Recent Years until the Annual Report being Published 91 9. Others 91 VII Special Notes 92 1. Affiliates Information 93 2. Private Placement Securities in the Recent Year until the Annual Report being Published 104 3. The Company's Shares Held or Disposed by Subsidiaries in the Recent Year until the Annual Report being Published 105 4. Other Supplementary Information 105 5. Material Event Impact on Shareholders' Equity or Share Price in the Recent Year until the Annual Report being Published 105 VIII Financial Information 106 1. Condensed Financial Statement for Recent 5 Years 107 2. Financial Analysis for Recent 5 Years 112 3. 2014 Supervisors' Report 116 4. 2014 Independent Auditors' Report, Consolidated Financial Statements and Notes 117 5. 2014 Independent Auditors' Report, Standalone Financial Statements and Notes 172 WorldReginfo - ff035806-f0b9-4331-b362-441355562df5 Far EasTone Telecommunications.Co., Ltd. Annual Report 2014 I Letter to Shareholders WorldReginfo - ff035806-f0b9-4331-b362-441355562df5 Letter to Shareholders Dear Stakeholders and Investors, Douglas Hsu Chairman As we enter the new year of 2015, it is high time to review the past year of Far EasTone. Despite turbulent economic situations both domestically and abroad, Far EasTone fared remarkably in its operations. The brand campaign "Express your love. Let it be heard." has won the heart of countless viewers and garnered many awards and accolades internationally. Secondly, Far EasTone pioneered in the provision of 4G services in Taiwan. The 4G services of Far EasTone combine both 700MHz and 1800MHz bandwidth, offering penetrating coverage and stable and fast internet connection. Far EasTone also continued to excel in services at the stores. Our achievement has won the first prize of Service Excellence of Next Magazine and Commercial Times. The numerous touching stories in our stores have also been collected and published in the book Warmth Without Distance. Last but not least, we strove to fulfill our corporate social responsibility by continuing to advance in corporate governance, environmental protection, and supply chain management. Far EasTone volunteers have worked to transform the love from our company to the love for the greater society. Far EasTone continued to create values with stable growth prospects for our shareholders in 2014, in which we saw a consolidated revenue of NT$ 94,176 million, an EBITDA of NT$25,601 million, and an NT$11,567 million profit after tax. The EPS in 2014 was NT$3.52. Far EasTone in 2014: Operations and achievements X! World-leading Ideal Dualband 4G network Far EasTone has deployed a dual bandwidth 4G service provision model. As of the end of 2014, Far EasTone 4G network covered 99% of the nation, providing services to over 910,000 users and winning an impressive 27% in market share. Users can enjoy the high penetrating power of 700MHz signals indoor and the wide coverage of 1800MHz signals outdoor. “Worry free” rate plans boasting value, versatility and flexibility, and a huge portfolio of 4G smartphones ensure every user the best product he/she desires. X! Domestic and overseas success of the brand campaign "Express your love. Let it be heard." "Express your love. Let it be heard." campaign received fruitful results in 2014. People in Asia are generally not comfortable with speaking their love out loud. Far EasTone identified this communication challenge and created a series of marketing and advertising campaign to encourage our audience to "Express your love. Let it be heard". Featuring ordinary people from everyday life, our marketing materials deliver powerful messages via different media platforms. This marketing campaign have not only fashioned a unique Far EasTone brand but also added to the happiness and harmony of our society. Numerous awards from domestic and abroad have given high accolades to the campaign. To extend its influence, Far EasTone joined hands with John Tung Foundation to develop an EQ lecture series "Express your love. Listen with your heart." for junior high and elementary school students. This lecture series have been held in twenty schools in Taipei and Kaohsiung. It has also been awarded the first prize in the category of Creative Communication in Taiwan Corporate Sustainability Awards. 2 WorldReginfo - ff035806-f0b9-4331-b362-441355562df5 Yvonne Li President X! Incorporating the theme-based (curation) idea to deliver mobile commerce services Far EasTone always strives to meet consumers' needs and close distance between people. Therefore, we have been proactive in developing creative mobile applications to construct a rich and versatile mobile experience for our customers. In 2014, Far EasTone and Hiiir established a new mobile service brand "friDay". The two companies came together and leveraged our shared advantages in content delivery, mobile commerce, and social media to create "friDay Shopping". This new shopping platform is designed with the concept of theme-based and provides consumers the most comprehensive mobile lifestyle experience. It also marks a new milestone for Far EasTone in mobile commerce, mobile payment, and digital content. X! High accolades for excellence in services Excellent services have always been our top priority. 2014 saw the reception of the third consecutive "Golden Award of The Best Service in Taiwan" by Commercial Times. We also won the second consecutive "Best Service Award" in the category of Telecommunication by Next Magazine, trumping other telecommunication operators by winning over double of their votes in the consumer voting. Not only that, Far EasTone was also awarded the "Best Service Award" across all categories, standing out of more than 200 companies who competed in the same award. Far EasTone is the first telecommunicator who clinched double champions in the Next Magazine award, demonstrating our impressive achievement in FET 360° Store Service since 2012. X! A mobile office supported by mobility, social media, and cloud services Far EasTone have accumulated years of experiences in cloud applications and ICT integration for businesses. With the advent of 4G high speed internet, Far EasTone launched the first BYOD (Bring Your Own Device) experience center in Taiwan to assist businesses in creating their own BYOD policies and management schemes without compromising information security. Far EasTone also launched a brand new business communication platform: EMMA (Enterprise Mobility Messaging Assistant). This platform incorporates social media and mobility to enhance team work. These new solutions will allow businesses to create mobile offices supported by mobility, social media, and cloud capacity. It is going to be a new kind of office environment with better information management, transformed communication model, and stronger competitive advantages. X! Transparent information disclosure that tops all other listed companies 2014 marked the 8th consecutive year in which Far EasTone received the highest rating in the Information Disclosure of Listed Companies Evaluation. Far EasTone have also been bestowed A++ for three consecutive years in this evaluation. There is no doubt that Far EasTone has become a model of excellence in corporate governance in Taiwan. Far EasTone has always taken the initiative to communicate with stakeholders and investors, providing comprehensive information about our operations and prospects. Our efforts have won undeniable affirmation by investors and stakeholders domestic and abroad.