CHAINTECH Technology Corporation 2019 Annual Report
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Stock Code: 2425 CHAINTECH Technology Corporation 2019 Annual Report Date of publication: May 10, 2020 Annual Report Website: http://mops.twse.com.tw Company Website: http://www.chaintech.com.tw I. Company Spokesperson, Acting Spokesperson Name of Spokesperson: Chou, Tzu-An Title: Assistant Manager, Marketing and Planning Department Tel.: (02) 2913-8833 Email: [email protected] Name of Acting Spokesperson: Chang, Ya-Ling Title: Chief Auditor Tel.: (02) 2913-8833 Email: [email protected] II. Company Address: 3F, No. 48-3, Minchuan Rd., Xindian Dist., New Taipei City Tel.: (02) 2913-8833 III. Stock Transfer Institution Name: Service Agency Department, Grand Fortune Securities Co., Ltd. Address: 6F, No. 6, Sec. 1, Zhongxiao W. Rd., Zhongzheng Dist., Taipei City 10041 Tel.: (02)2371-1658 Website: http://gfortune.com.tw IV. CPAs for the Financial Report in the Most Recent Fiscal Year Name of Accounting Firm: Pricewaterhouse Coopers Name of CPAs: Hsu, Sheng-Chung, Wu, Han-Chi Address: 27F., No. 333, Sec. 1, Keelung Rd., Taipei City Tel.: (02) 2729-6666 Website: http://www.pwc.tw V. Name of Trading Venues for Overseas Flotation of Marketable Securities and Means of Inquiry into Information Thereof: None. VI. The Company's Website: http://www.chaintech.com.tw/ Table of Contents Page Chapter 1 Letter to Shareholders ................................................................................................... 1 Chapter 2 Company Profile I. Date of Founding ................................................................................................ 3 II. Company History ................................................................................................ 3 Chapter 3 Corporate Governance Report I. Organization ....................................................................................................... 7 II. Directors, Supervisors, General Manager, Deputy General Manager, Assistant Manager, and Managers of Departments and Branches ................................. 10 III. Implementation of Corporate Governance .......................................................... 20 IV. Information on CPA fees .................................................................................... 40 V. Information on the Replacement of CPA ............................................................ 41 VI. If the Company's Chairman, General Manager, or Managers in Charge of Finance and Accounting Operations Held Positions in an Accounting Firm or Its Affiliates in the Most Recent Year, their Names, Positions, and Terms of Office should be disclosed .......................................................................................... 42 VII. Share Transfer and Changes in Equity Pledge by the Chairman, Supervisors, Managers, and Shareholders with Over 10% Shareholdings in the Most Recent Year as of the Publication Date of the Annual Report ....................................... 43 VIII. Information on the Relationships Between the Top Ten Shareholders as Mutual Affiliates Indicated in the Statements of Financial Accounting Standards No. 6 ... .......................................................................................................................... 44 IX. Shares of Investment of Equity Method and the Consolidated Shareholdings Held by the Company, Its Directors, Supervisors, Managers, and Enterprises under Direct or Indirect Control of the Company ............................................. 45 Chapter 4 Funding Overview I. Capital and Shares ........................................................................................... 46 II. Issuance of Corporate Bonds ............................................................................ 53 III. Issuance of Preferred Share .............................................................................. 53 IV. Issuance of Overseas Depository Receipts ....................................................... 53 V. Employee Stock Options .................................................................................. 53 VI. New Employee Shares with Limited Rights ..................................................... 53 VII. Issuance of New Shares in Connection with the Merger or Acquisition of Other Companies ....................................................................................................... 53 VIII. Capital Utilization Plan and Implementation .................................................... 53 Chapter 5 Operational Overview I. Business Activities ........................................................................................... 54 II. Market, Production, and Sales Overview.......................................................... 60 III. Information on Employees ............................................................................... 68 IV. Information on Environmental Protection Expenditure ..................................... 69 V. Labor Relations ............................................................................................... 69 VI. Material Contracts ........................................................................................... 71 Chapter 6 Financial Overview I. Condensed Balance Sheet and Statement of Comprehensive Income and Audit Opinion of the Most Recent Five Years II. Financial Analysis of the Most Recent Five Years ............................................ 72 III. Audit Report of the Financial Report for the Most Recent Year from the Supervisors or Audit Committee ...................................................................... 76 IV. Individual Financial Statements Audited and Attested by CPAs in the Most Recent Year...................................................................................................... 83 V. Consolidated Financial Statements Audited and Attested by CPAs in the Most Recent Year .................................................................................................... 83 VI. Financial Difficulties of the Company and Its Affiliates in the Most Recent Year to the Publication Date of this Annual Report and their Impact on the Company's Financial Conditions ........................................................................................ 83 Chapter 7 Review, Analysis, and Risks of Financial Conditions and Performance I. Comparative Analysis of Financial Conditions ................................................. 84 II. Comparative Analysis of Financial Performance .............................................. 85 III. Cash Flow Analysis ......................................................................................... 85 IV. Impact of Major Capital Expenditures on Corporate Finances and Business in the Most Recent Year ....................................................................................... 86 V. Main Reasons for Profit or Loss Resulting from Investment, Improvement Plan, and Investment Plans for the Following Year ................................................... 86 VI. Risk Management and Assessment ................................................................... 87 VII. Other Important Events .................................................................................... 90 Chapter 8 Special Notes I. Information on Affiliated Companies ............................................................... 91 II. Private Placement Securities in the Most Recent Year to the Publication Date of this Annual Report ........................................................................................... 95 III. Holding or Disposal of the Company's Shares by the Subsidiaries in the Most Recent Year to the Date of Publication of this Annual Report ........................... 95 IV. Other Necessary Supplementary Information ................................................... 95 Chapter 9 Events of Significant Impact on Shareholders’ Equity or on Prices of Securities as Specified in Section 2, Paragraph 2 of Article 36 of the Securities and Exchange Act in the Most Recent Year to the Date of Publication of this Annual Report ....................... 95 Appendix I. Individual Financial Report for the Most Recent Year ...................................... 96 II. Consolidated Financial Report for the Most Recent Year ................................ 153 Chapter 1 Letter to Shareholders Dear Esteemed Shareholders: I. 2019 Business Results The Company's consolidated operating revenue for 2019 was NT$4,738,182,000, an increase of 16.98% from the consolidated operating revenue of NT$4,050,310,000 in 2018. Net profit after tax was NT$106,942,000, net income attributable to owners of parent Company was NT$106,942,000, and net profit after tax was NT$1.06 per share. The Company's business results for 2019 and business plan for 2020 are summarized below: (I) Implementation results of business plans: Unit Unit: NT$1,000, % Increases Increase Items 2019 2018 (decreases) (Decrease) % Operating revenue 4,738,182 4,050,310 687,872 16.98 Gross profit 332,636 372,418 (39,782) (10.68) Operating Margin 132,133 267,295 (135,162) (50.57) Net Profit (Loss) After Tax 128,679 244,304 (115,625) (47.33) Net income attributed to the 106,942 244,304 (137,362) (56.23) shareholders of the company Non-controlling interest Net income 21,737 - 21,737 - Earnings per share (NT$) 1.06 2.39 (1.33) (55.65) (II) Financial income and expenditure and profitability analysis: Year 2019 2018 Items Financial Liability-to-asset ratio 27.77 13.92 structure % Ratio of long-term capital in property, plant and equipment 2774.45