A CE ACER INCORPORTED R INCORPORAT ANNUAL REPORT Publication Date: April 13, 2021 http://mops.twse.com.tw TSE: 2353 www.acer-group.com E ANN U AL REP ORT 202 0 Printed on eco-friendly paper with soy ink. 202Work And Study, Anywhere 0 www.acer-group.com Acer Incorporated 2020 Annual Report 1. Name, Title and Contact Details of Company's Spokespersons Principal Meggy Chen CFO +886-2-2696-1234 [email protected] Deputy Wayne Chang Manager +886-2-2719-5000 [email protected] 2. Address and Telephone Numbers of Company's Headquarter and Branches Office Address Tel 8F., No.88, Sec. 1, Xintai 5th Rd., Xizhi Dist., New Acer Inc. +886-2-2696-1234 Taipei City 221, Taiwan Acer Inc. 7F.-5, No.369, Fuxing N. Rd., Songshan Dist., +886-2-2719-5000 (Shareholder Services) Taipei City 105, Taiwan Acer Inc. 3F., No.139, Minzu Rd., East Dist., Hsinchu City +886-3-534-9490 (Hsinchu Branch) 300, Taiwan Acer Inc. 3F., No.371, Sec. 1, Wenxin Rd., Nantun Dist., +886-4-2250-3355 (Taichung Branch) Taichung City 408, Taiwan Acer Inc. 4F.-6, No.38, Xinguang Rd., Lingya Dist., +886-7-338-8386 (Kaohsiung Branch) Kaohsiung City 802, Taiwan Acer Inc. No.28, Neixin Rd., Luzhu Dist., Taoyuan City 338, Acer empowers people with the technology to make their mark and the freedom to live (Shipping & Warehouse +886-3-324-5100 Taiwan Management Center) their desired lifestyle. With the mission of “breaking barriers between people and technology,” Acer seeks to make technology accessible to everyone by providing the tools 3. Address and Contact Details of Acer Shareholders' Services to help educate societies. Acer also invests in designs that consume less resources to Address: 7F.-5, No.369, Fuxing N. Rd., Songshan Dist., Taipei City 105, Taiwan Tel: +886-2-2719-5000 reduce waste in its pursuit to make the world a better place. E-mail: [email protected] 4. Address and Contact Details of Auditing CPAs in the Most Recent Year Name: Huei-Chen Chang and Tzu-Chieh Tang at KPMG Address: 68F., No.7, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City 110, Taiwan Tel: +886-2-8101-6666 2020Website: www.kpmg.com.tw 5. Overseas Securities Exchange Listed Market for GDRs: London Stock Exchange Market For further information, please refer to Website: www.Londonstockexchange.com 6. Acer Group Website: www.acer-group.com At Acer we believe it’s our responsibility to protect the Earth. This report is printed on eco-friendly paper with soy ink. The inner pages featuring our product innovations use black and white printing to reduce the consumption of ink. 1 Acer Incorporated 2020 Annual Report Swift 5 Crafted with the finest materials, the Porsche Design Acer Book RS follows a clear design philosophy of optimizing function via precise engineering. Bringing together only the most essential design elements and advanced technologies, this high-end device stays true to its ideals, bringing together only the most essential design elements and advanced technologies. Acer ENDURO N7 2 3 Acer Incorporated 2020 Annual Report ConceptD devices are made especially for the creative community of designers, engineers, architects, and other creators. Inside and out, they are crafted to cater to every detail of a creator’s work. Built for precision with high color accuracy, powerful components, quiet acoustics and a timeless ConceptD 7 Pro design, the ConceptD brand of devices lets creators be creators. ConceptD 3 Ezel ConceptD 700 4 5 Acer Incorporated 2020 Annual Report Predator, as a brand, has been developed for gamers who demand a premium, perfected experience. Its mission is to provide best-in-class hardware that enhances every element of gameplay while utilizing the latest, innovative technology and cutting-edge designs. Predator is the first gaming brand to capture the coveted Red Dot brand award. PREDATOR HELIOS 700 PLANET9 is a unique community-driven esports platform that nurtures gamers of all skill levels to connect with like-minded peers, learn from gaming courses to improve their skills, and compete in tournaments. MASTER YOUR PLAY PREDATOR X25 PREDATOR ORION 9000 COMMUNITY COURSES GAME STATS TOURNAMENTS 6 7 Acer Incorporated 2020 Annual Report DISCLAIMER This is a translation of the 2020 Annual Report of Acer Incorporated (the "Company”). The translation is intended for reference only and nothing else, the Company hereby disclaims any and all liabilities whatsoever for the translation. The Chinese text of the Annual Report shall govern any and all matters related to the interpretation of the subject matter stated herein. 8 1 Acer Incorporated 2020 Annual Report Table of Contents Table of Contents 1 Business Report to Shareholders 04 6 Corporate Social Responsibility 95 1.1 2020 Operating Report 07 6.1 Environment, Safety and Health Management 99 1.2 2021 Business Plan 07 6.2 Supply Chain Management 100 6.3 Communication 100 6.4 Information Security and Privacy Protection 101 2 Company In General 10 6.5 Community Involvement 101 6.6 Social Responsibility Implementation Statusas Required by the Taiwan Financial Supervisory 2.1 Founding Date 11 102 Commission 2.2 Brief Account of the Company 11 Financial Standing 106 Corporate Governance Report 15 7 3 7.1 Five-year Consolidated Financial Information 107 3.1 Organization of the Company 16 7.2 Five-year Financial Analysis 111 3.2 Information Regarding Board of Directors and Key Managers 18 7.3 Audit Committee's Review Report 114 3.3 Corporate Governance Status 36 7.4 Consolidated Financial Statements Audited by CPAs of the Past Year 114 3.4 Information Regarding the Company's Audit Fee and Independence 67 7.5 Parent-Company-Only Financial Statements Audited by CPAs of the Past Year 114 3.5 Information on replacement of certified public accountant 68 3.6 The company's chairperson, general manager, or any managerial officer in charge of finance 7.6 Disclosure of the Impact on Company's Financial Status Due to Financial Difficulties 114 or accounting matters has in the most recent year held a position at the accounting firm of its 68 certified public accountant or at an affiliated enterprise of such accounting firm Review of Financial Position, Management Performance and 3.7 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders 69 8 Risk Management 115 3.8 Relationship among the Top Ten Shareholders 71 8.1 Financial position (Consolidated Financial Statements) 116 3.9 Ownership of Shares in Affiliated Enterprises 72 8.2 Financial performance (Consolidated Financial Statements) 117 8.3 Cash flows (Consolidated Financial Statements) 118 Capital and Shares 73 8.4 Major capital expenditures and impact on financial and business in recent years 118 4 8.5 Long-term investment policy and results 119 4.1 Sources of Capital 74 8.6 Risk Management 119 4.2 Corporate Bonds 78 8.7 Other Necessary Supplement 128 4.3 Special Shares 78 4.4 Global Depository Receipts (GDRs) Issuance 78 4.5 Employee Stock Options 79 Special Notes 129 4.6 Restricted Stock Awards 79 1. Information related to the company's affiliates 130 4.7 Issuance of New Shares Due to Company's Mergers and Acquisitions 79 2. Private Placement Securities in the Most Recent Years 172 4.8 Issuance of New Shares for Capital Increase by Cash 79 3. Status of Acer common shares and GDRs acquired, disposed of, and held by subsidiaries 173 4. Other matters that require additional description 173 5 Acer's Business Formula 80 Appendix 174 5.1 Business Content 81 Appendix I 2020 Consolidated Financial Statements 174 5.2 Keys to a Sustainable Future 89 Appendix II 2020 Parent-Company-Only Financial Statements 289 5.3 Employees 89 5.4 Important Contracts 94 2 3 Acer Incorporated 2020 Annual Report Business Report Business Report to Shareholders Acer's strategy to maintain momentum and secure long-term In the gaming field, Acer continued building on its compre- sustainability is to evolve continuously with the industry and hensive ecosystem that now includes hardware/accessories, changing lifestyles by pushing for innovation in existing busi- esports tournaments, esports social platforms, and energy nesses, while expanding to new territories. Our vigilance of the drinks. In hardware, Acer has stood out from the competition market dynamics and the macro economy, and the velocity of by introducing new generations of its advanced thermal cool- critical actions have enabled Acer to sustain during times of ing solutions to enable its gaming notebooks and desktops to uncertainty and demonstrate the resilience of our organiza- run at peak performance. For PLANET9, a community-driven tion. Our focus on securing materials to fulfil the urgent de- esports platform for gamers, Acer released a new in-game live mand for our products, so that people could stay connected AI translator service that’s trained with game jargon to fa- during the pandemic, helped Acer to achieve some success cilitate communication among gamers. The latest addition to and resulted in FY2020 consolidated revenues of NT$277.11 the ecosystem is the distribution of popular gaming consoles billion, operating income of NT$8.94 billion with 190.3% in by Acer subsidiaries in Taiwan. YoY growth, net income of NT$6.03 billion with 3.2% margin, and EPS of NT$2.01. Multiple Growth Engines and New Initiatives The COVID-19 pandemic has been the topic of concern for almost everyone due to its direct impact on people’s lives. In Our multiple business engines also kept their momentum and the ICT industry, it caused delays in global PC shipments and saw viable growth, steadily increasing their contribution to exposed the weaknesses of existing supply chains.