Csbc Corporation, Taiwan
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Stock Code: 2208 CSBC CORPORATION, TAIWAN. 2018 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 10, 2019 Spokesperson Headquarters and Plant Name: Chou, Chih-MingL Headquarters Title: Vice President Address: No. 3, Jhonggang Rd. Tel: 886-7-8059888 Siaogang Dist. Kaohsiung 81234, E-mail: Taiwan (R.O.C.) [email protected] Tel: 886-7-8059888 Deputy Spokesperson Plant-1 Name: Chen, Hui-Shan Address: No. 3, Jhonggang Rd. Title: Vice President Siaogang Dist. Kaohsiung 81234, Tel: 886-7-8059888 Taiwan (R.O.C.) E-mail: Tel: 886-7-8059888 [email protected] Plant-2 Stock Transfer Agent Address: No. 224, Ho-1 Rd. Ho-Ping Fubon Securities Co., Ltd. Island. Keelung 20203, Taiwan (R.O.C.) Address:169 Section 4 Jen Ai Rd. Tel: 886-2-24631021 Taipei 10686 Taiwan (R.O.C.) Tel: 886-2-23611300 Website: http//www.fbs.com.tw Auditors PricewaterhouseCoopers Taiwan Auditors: Wang, Guo-Hua, Wu, Chien-Chih. 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 Contents I. Letter to Shareholders .................................................................................................................. 3 II. Company Profile 2.1 Date of Incorporation ................................................................................................................... 6 2.2 Company History .......................................................................................................................... 6 III. Corporate Governance Report 3.1 Organization ................................................................................................................................. 7 3.2 Directors, Supervisors and Management Team .......................................................................... 8 3.3 Implementation of Corporate Governance ............................................................................. 29 3.4 Information Regarding the Company’s Audit Fee and Independence ...................................... 76 3.5 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders ......... 77 3.6 Relationship among the Top Ten Shareholders ......................................................................... 79 3.7 Ownership of Shares in Affiliated Enterprises ........................................................................... 80 IV. Capital Overview 4.1 Capital and Shares ...................................................................................................................... 81 4.2 Bonds .......................................................................................................................................... 85 4.3 Global Depository Receipts ........................................................................................................ 85 4.4 Employee Stock Options ............................................................................................................ 85 4.5 Status of New Shares Issuance in Connection with Mergers and Acquisitions ......................... 85 4.6 Financing Plans and Implementation ......................................................................................... 85 V. Operational Highlights 5.1 Business Activities ...................................................................................................................... 86 5.2 Market and Sales Overview ....................................................................................................... 95 5.3 Human Resources .................................................................................................................... 102 5.4 Environmental Protection Expenditure ................................................................................... 102 5.5 Labor Relations......................................................................................................................... 103 5.6 Important Contracts ................................................................................................................. 104 VI. Financial Information 6.1 Five-Year Financial Summary ................................................................................................... 110 6.2 Five-Year Financial Analysis ..................................................................................................... 110 6.3 Supervisors’ /Audit Committee’s Report in the Most Recent Year ......................................... 114 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 ...................................................................... 121 7.6 Analysis of Risk Management .................................................................................................. 121 1 VIII. Special Disclosure 8.1 Summary of Affiliated Companies ........................................................................................... 128 8.2 Private Placement Securities in the Most Recent Years .......................................................... 130 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years ......................................................................................................... 131 2 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 for 2018 was NT$13,012,326 thousands, a 20.68% decrease compared with NT$16,404,344 thousands in 2017. Net loss decreased to NT$3,100,085 thousands, compared with 2017 net loss of NT$5,883,199 thousands. The results of our operating performance in 2018 and business plan for 2019 are illustrated as follows: Operating Performance in 2018 1. Consolidated financial results Unit: NT$ thousands Percent Change 2018 2017 (%) Net sales 13,012,326 16,404,344 -20.68% Gross profit(loss) -2,593,864 -5,721,888 54.67% Operating -3,417,597 -6,228,965 45.13% income(loss) Pre-tax income(loss) -3,338,941 -6,353,042 47.44% Net income(loss) -3,100,085 -5,883,199 47.31% Net sales amounted to NT$13,012,326 thousands and gross loss came in at NT$2,593,864 thousands in 2018. Net loss decreased by more than 47.31% from 2017. 2. The description of Orderbook (1) The orderbook of CSBC As of the end of December, 2018 we had 18 merchant-ship orders (18 in Kaohsiung) and 23 official-ship orders (5 in Kaohsiung plus 18 in Keelung). The orderbook in Kaohsiung factory is already planned to delivery in September of 2025, and that in the Keelung factory is in October of 2023. And in October of 2018 CSBC signed 60 underwater pin-piles of offshore wind power. (2) Ship deliveried There are 8 vessels in Kaohsiung factory (one semi-submersible vessel and seven 2,800TEU container vessels) and one is in Keelung factory (1,800 TEU container vessel). 3 3. Research and development status In 2018, CSBC invested a total of NT$117,000 thousands in R&D for the ship researches as well as the development of new products. Having successfully 17 developed projects in 2018, it goes into application for CSBC. CSBC is committed to investing in long-term growth by delivering continuous innovations. 4. Major investment status In 2018, CSBC invested a total of NT$40.32 billions in major investments including the replacement of GOC& LLC-6, the enhancement of capacity of the RS31 area of the pier, the construction of 140-meter barge, multi-purpose steel production line. Business Plan for 2019 According to journal reports, the shipping and shipbuilding market in 2019 will gradually balance between supply and demand, and the data of various indicators are tending to be optimistic and conservative. The production volume in 2019 is 244,873 CGT, which is about 36.2% higher than in 2018. CSBC will follow the national shipbuilding policy and actively strive for the IDS business and the patrol frigate business; CSBC is expected to undertake the business of offshore wind farm turnkey project and anti-corrosion engineering, in addition to the barge and underwater basic structure business. In the 2019 Annual Outlook Meeting, CSBC formulates the EP10 plan, and develops the company's nine major foci under the belief "inheriting shipbuilding,