2016Annual Report Stock Code: 1597 Mechatronics in Linear Motion Technology CHIEFTEK PRECISION CO., LTD. Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw/mops/web/index cpc Annual Report is available at: http://www.chieftek.com Printed on May 22, 2017 1. NAME, POSITION, CONTACT NUMBER AND E-MAIL ADDRESS OF SPOKESPERSON AND DEPUTY SPOKESPERSON IN OUR COMPANY: Spokesperson Name: LI PAI-TSANG Position: Financial officer Tel: (06)505-5858 E-mail: [email protected] Deputy Spokesperson Name: TSAI YI-YING Position: Special assistant for chairman Tel: (06)505-5858 E-mail: [email protected] 2. ADDRESS AND CONTACT NUMBER OF HEADQUARTERS, BRANCH AND FACTORY: Headquarters Add: No. 3, Dali 1st Rd., Xinshi Dist., Southern Taiwan Science Park, Tainan City, 741-45, Taiwan ( R.O.C.) Tel: (06)505-5858 Factory Add: No. 3, Dali 1st Rd., Xinshi Dist., Southern Taiwan Science Park, Tainan City, 741-45, Taiwan ( R.O.C.) Tel: (06)505-5858 3. NAME, ADDRESS, WEBSITE AND CONTACT NUMBER OF SHARE TRANSFER AGENCY Name: Service agency of Fubon Securities Co., Ltd Add: 2 F, No. 17, Xuchang St., Zhongzheng Dist., Taipei City 100 Web: http: //www.fubon.com.tw Tel: (02)2361-1300 4. CPA’S NAME, NAME, ADDRESS, WEBSITE AND CONTACT NUMBER OF ACCOUNTING FIRM IN 2016 FINANCIAL REPORT Accountant’s name: Accountant LIN TZU-SHU, accountant LIU TZU-MENG Firm name: PricewaterhouseCoopers (PwC) Taiwan Add: 12 F, No. 395, Sec. 1, Linsen Rd., East Dist., Tainan City Web: http: //www.pwc.com/tw Tel: (06) 234-3111 5. TRADING PLACES OF OVERSEAS NEGOTIABLE SECURITIES FLOTATION AND MODE OF INQUIRY INFORMATION ON OVERSEAS NEGOTIABLE SECURITIES: NONE. 6. COMPANY WEBSITE: http: //www.chieftek.com CHIEFTEK PRECISION CO., LTD. Contents of Annual Report in 2016 I. LETTER TO SHAREHOLDERS ............................................................................................................. 1 II. COMPANY PROFILE ............................................................................................................................. 6 I. DATE OF ESTABLISHMENT ....................................................................................................................... 6 II. COMPANY HISTORY ................................................................................................................................................................. 6 III. CORPORATE GOVERNANCE REPORT ........................................................................................ 10 I. ORGANIZATION SYSTEM ......................................................................................................................................................... 10 II. DATA OF BOARD DIRECTORS, SUPERVISORS, GENERAL MANAGER, VICE-GENERAL MANAGER, ASSISTANT MANAGER AND DIRECTORS OF EACH DEPARTMENT AND EACH BRANCH ............................................................................................... 15 III. COMPANY MANAGEMENT AND OPERATION SITUATION ........................................................................................................ 27 IV. INFORMATION OF THE ACCOUNTANT’S PUBLIC EXPENSE ....................................................................................................... 66 V. INFORMATION OF CHANGE OF ACCOUNTANT .......................................................................................................................... 67 VI. INFORMATION OF THE COMPANY’S CHAIRMAN, GENERAL MANAGER, MANAGER IN CHARGE OF FINANCE OR ACCOUNTING AFFAIRS WORKING IN THE CERTIFIED ACCOUNTANT AFFILIATED FIRM OR ITS ASSOCIATED ENTERPRISE IN THE RECENT ONE YEAR: NO SUCH SITUATION.. ......................................................................................................................................... 67 VII. FROM THE NEAREST YEAR TO THE PRINT DATE OF ANNUAL REPORT, CIRCUMSTANCE OF CHANGES IN EQUITY TRANSFER AND EQUITY CHANGE OF THE DIRECTORS, SUPERVISORS, MANAGERS AND SHAREHOLDERS WHO HOLD MORE THAN 10% SHARES: .............................................................................................................................................................................. 68 VIII. INFORMATION OF THE SHAREHOLDER WHOSE SHAREHOLDING RATIO RANKS TOP 10, MUTUAL RELATION OF RELATED PERSON OR SPOUSE, DOMESTIC RELATION OF PARENTS OR CLOSER ................................................................................... 69 IX. NUMBER OF SHARES HELD FOR THE SAME REINVESTMENT BUSINESS BY THE COMPANY’S DIRECTOR, SUPERVISOR, MANAGER AND THE COMPANY’S DIRECTLY OR INDIRECTLY CONTROLLED BUSINESS, AND COMBINED CALCULATION OF THE COMPREHENSIVE SHAREHOLDING RATIO: ...................................................................................................................... 70 IV. FUNDRAISING CIRCUMSTANCE .................................................................................................... 71 I. CAPITAL AND SHARES ............................................................................................................................................................. 71 II. CORPORATE BONDS HANDLING CIRCUMSTANCE. ................................................................................................................... 77 III. SPECIAL STOCK HANDLING CIRCUMSTANCE. ........................................................................................................................ 77 IV. HANDLING CIRCUMSTANCE OF GLOBAL DEPOSITARY RECEIPTS (GDR). .............................................................................. 77 V. EMPLOYEE SUBSCRIPTION RIGHT VOUCHER AND CIRCUMSTANCE OF RESTRICTION ON HANDLING THE ................................ EMPLOYEE RIGHT OFFERING: ................................................................................................................................................. 77 VI. CIRCUMSTANCE OF HANDLING OF NEW ISSUE OF SHARES WITH MERGER OR ASSIGNEE OF OTHER CORPORATE ..................... 78 VI. FUNDS APPLICATION PLAN PERFORMANCE CIRCUMSTANCE .................................................................................................. 78 V. OPERATIONAL HIGHLIGHTS I. BUSINESS CONTENT ................................................................................................................................................................ 79 II. MARKET AND SALES OVERVIEW ........................................................................................................................................... 88 III. NUMBER OF EMPLOYEES OF RECENT TWO YEARS AS OF PRINTING DATE .......................................................................... 96 IV. ENVIRONMENTAL PROTECTION EXPENDITURE ..................................................................................................................... 96 V. LABOR RELATIONS ................................................................................................................................................................ 97 VI. IMPORTANT CONTRACTS .................................................................................................................................................... 100 VI. FINANCIAL INFORMATION .......................................................................................................... 101 I. FIVE-YEAR FINANCIAL SUMMARY OF CONDENSED BALANCE SHEET CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME II.FIVE-YEAR FINANCIAL ANALYSIS ........................................................................................................................................ 107 III. AUDITING REPORT FOR RECENT ANNUAL FINANCIAL STATEMENT PREPARED BY SUPERVISOR ............................................. 112 IV. RECENT ANNUAL FINANCIAL STATEMENT. .......................................................................................................................... 112 V. THE MOST RECENT ANNUAL FINANCIAL STATEMENT OF CORPORATE ENTITY AUDITED AND CERTIFIED BY ACCOUNTANT. ..................................................................................................................................................................... 112 VI. IF ANY FINANCIAL DIFFICULTIES HAPPEN TO THE COMPANY AND ITS AFFILIATE ENTERPRISES BY THE DEADLINE OF ANNUAL REPORT PRINTING, THEN ITS IMPACT ON THE COMPANY’S FINANCIAL CONDITION IS. ............................................. 112 VII. REVIEW OF FINANCIAL CONDITIONS, FINANCIAL PERFORMANCE, AND RISK MANAGEMENT ............................................................................................................................... 113 I. ANALYSIS OF FINANCIAL STATUS .......................................................................................................................................... 113 II. ANALYSIS OF FINANCIAL PERFORMANCE ............................................................................................................................ 114 III. CASH FLOW ........................................................................................................................................................................ 115 IV. IMPACT OF MAJOR CAPITAL EXPENDITURE ITEMS ON FINANCIAL BUSINESS ...................................................................... 116 V. MAIN CAUSES FOR PROFITS OR LOSSES, IMPROVEMENT PLANS AND INVESTMENT PLANS FOR THE COMING YEAR ............ 116 VI. ANALYSIS OF RISK MANAGEMENT ..................................................................................................................................... 117