Post on 03-Sep-2020
Cathay Financial Holding Co., Ltd.
GENERAL SHAREHOLDERS MEETING 2017
Meeting Minutes
Time: 09:00 AM, 16 June 2017 (Friday)
Place: 1F, No. 9, Songren Road, Taipei, Taiwan, R.O.C.
Cathay Financial Conference Hall
Attendance: The shareholders and proxies of shareholders present in the
meeting represented 10,248,458,801 shares (including
9,267,229,896 shares represented by shareholders participating in
the meeting through electronic means). The presence of the
shareholders and proxies of shareholders accounted for 76.5% of
the total of 13,396,510,128 shares entitled to attend the meeting.
Attendance list of the Board of Directors:Hong-Tu Tsai, Chairman of the Board
of Directors、Director Cheng-Chiu Tsai、Director Chi-Wei Joong、
Director Tsu-Pei Chen、Director Tiao-Kuei Huang、Director Chang-
Ken Lee、Director Ming-Ho Hsiung
Attendance list of Audit Committee:Independent Director Tsing-Yuan Hwang
Observers: Joseph C.S.Fu, Attorney-at-Law from Baker & McKenzie, Taipei
Bob Chang, CPA and Andrew Fuh, CPA, from Ernst & Young Global
Limited, Taiwan
Chairperson: Hong-Tu Tsai, Chairman of the Board of Directors
Minutes taken down by Chu-Chun Ou-Yang
Ⅰ.Announcement for the meeting in session:
The Company has 13,396,510,128 outstanding shares and shareholders
representing the 13,396,510,128 shares. As of 09:00 AM, the meeting was
attended by 10,234,037,467 shares (including 9,267,229,896 shares
represented by shareholders participating in the meeting through electronic
means), which constituted 76.39% of the shares entitled to the meeting,
which qualified for a quorum. The chairman hereby announced this meeting
is in session.
The Chairman elects to revise the mode of balloting pursuant to Article 10 of
the General Meeting Procedure:
All points of matters for acknowledgement, matters for discussion and
election shall be subject to discussion one by one and balloting would be held
at the same time after the discussion and election.
Ⅱ. The opening address of the chairman: (skipped)
Ⅲ. Matters for report
1. Business Report for 2016. (Refer to the General Meeting Agenda
Handbook)
2. Annual Statements Report audited by the Audit Committee for 2016.
(Refer to the General Meeting Agenda Handbook)
3. 2016 report on compensation to Employees and Directors of the
Company. (Refer to the General Meeting Agenda Handbook)
Shareholder Account No. 1126631 requested the explanation about the
economic and politic effect produced by the recent drastic revaluation of NTD
and Panama Diplomatic Break to the Company. The Chairperson and
designated officer provided the explanation later.
IV.Matters for acknowledgement
Agenda 1:Acknowledgement of Business Operations Report and Financial
Statements for 2016
Proposed by the Board of Directors
Explanation:
(1) The 2016 financial statements of the Company were completed by the
Board of Directors and audited by Bob Chang, CPA, and James Wang,
CPA, both of Ernst & Young.
(2) The aforementioned financial statements and the business report were
ex-amended by the audit committee. (Refer to Appendix I for financial
statements)
RESOLVED:
The result of balloting indicated that votes representing 8,641,034,471 rights
were cast in favor of the motion (of which 7,689,573,740 rights were exercised
through electronic balloting), while votes representing 955,706 rights were cast
in objection to the motion (of which 947,706 rights were exercised through
electronic balloting),while votes representing 1,261,662,504 rights were
abstention votes/no votes to the motion (of which 1,246,805,407 rights were
exercised through electronic balloting).The votes in favor of the motion
accounted for 87.25% of the total votes and favorable action has been taken in
favor of the motion.
Agenda 2:Acknowledgement of earnings distribution for 2016(Refer to
Appendix II)
Proposed by the Board of Directors
Explanation:
(1) The paid-in capital of the Company is NT$133,965,101,280, divided into
13,396,510,128 shares. Among all shares, there are 12,563,210,128
common stocks and 833,300,000 preferred stocks. After distributing
NT$124,585,180 in dividends for preferred stocks, we plan to distribute
NT$2 of dividends, all in cash, for common stocks, and the total amount
is NT$25,126,420,256.
(2) If, after the proposed dividend has been approved, there is a change in
the number of shares outstanding on the dividend record date as a
result of any buyback, transfer, conversion, or cancellation by the
Company in accordance with Article 28-2 of the Securities and
Exchange Act, any issuance of global depository receipts, or other
causes to issue new shares, the payout ratios for the cash dividends will
be adjusted by the actual
number of shares outstanding on the dividend record date.
(3) Once the proposal is approved at the shareholders meeting, the Board
and/ or the Chairman will be authorized to determine the ex-dividend
date and adjust the payout ratio based on actual conditions. We hereby
propose for acknowledgement.
RESOLVED:
The result of balloting indicated that votes representing 8,665,227,428 rights
were cast in favor of the motion (of which 7,713,807,035 rights were exercised
through electronic balloting), while votes representing 1,277,606 rights were cast
in objection to the motion (of which 1,269,606 rights were exercised through
electronic balloting),while votes representing 1,237,147,647 rights were
abstention votes/no votes to/Invalid votes the motion (of which 1,222,250,212
rights were exercised through electronic balloting). The votes in favor of the
motion accounted for 87.5% of the total votes and favorable action has been
taken in favor of the motion.
V. Matters for Discussion and Election
Agenda1:Discussion on the amendments to the Company’s Procedures for the
Acquisition or Disposal of Assets
Proposed by the Board of Directors
Explanation:
(1) In response to the amendments made to the Regulations Governing the
Acquisition and Disposal of Assets by Public Companies by the
competent authority, we propose to amend the corresponding articles to
the Company’s Procedures for the Acquisition or Disposal of Assets.
(2) The contents of the amendment in comparison with the contents before
amendment are provided as Appendix III .
RESOLVED:
The result of balloting indicated that votes representing 8,657,822,299 rights
were cast in favor of the motion (of which 7,706,361,568 rights were exercised
through electronic balloting), while votes representing 4,154,336 rights were cast
in objection to the motion (of which 4,146,336 rights were exercised through
electronic balloting),while votes representing 1,241,676,046 rights were
abstention votes/no votes to the motion (of which 1,226,818,949 rights were
exercised through electronic balloting). The votes in favor of the motion
accounted for 87.42% of the total votes and favorable action has been taken in
favor of the motion.
Agenda 2:Discussion on the Corporation’s proposal to raise long-term capital
Proposed by the Board of Directors
Explanation:
(1) In response to the future capital needs for the Company's long-term
strategic development and business growth (including but not limited to
increasing working capital, raising capital adequacy ratio, repaying
loans or one or more purposes for the development of long-term
strategies) as well as the large variety of capital-raising avenues with
global characteristics, we ask that the shareholders' meeting authorize
the Board of Directors to raise the Company's long-term capital by
Domestic cash capital increase for issuance of common shares or
preferred shares; cash capital increase for issuance of common shares
in participation of Global Depositary Receipts (choose one or more than
two for combination), at an appropriate time in accordance with the
Company's Articles of Incorporation and relevant laws and regulations
(hereinafter collectively referred to as the "cash capital increase
proposal").
(2) This cash capital increase proposal authorizes the raising of up to
NT$50 billion in long-term capital. The number of common shares and
preferred shares issued by cash capital increase (including common
shares from GDR ) will be limited to a maximum of 100Mn shares.
(3) We ask that shareholders' meeting authorize the Board of Directors
and/or the Chairman of the Board to consider the content of the cash
capital increase proposal (including but not limited to the actual issue
price, offering terms, project items, amount of capital raised, schedule of
completion, expected benefits and other matters relevant to the
proposal), make all necessary adjustments based on market conditions
and regulatory requirements, work out the final details and implement
the proposal. If the cash capital increase proposal must be changed as
ordered by the regulatory authority or required by the circumstances, we
also ask that the Board of Directors and/or the Chairman be given full
authorization to carry out the corresponding changes.
(4) Please discuss the related details of the long-term fund raising proposal
as Appendix IV.
RESOLVED:
All of the shareholders of common stock and Class-A preferred stock are entitled
to vote for the Motion.The result of balloting indicated that votes representing
8,974,081,419 rights were cast in favor of the motion (of which 8,015,536,098
rights were exercised through electronic balloting), while votes representing
4,390,017 rights were cast in objection to the motion (of which 4,390,017 rights
were exercised through electronic balloting),while votes representing
1,268,847,737 rights were abstention votes/no votes to the motion (of which
1,247,303,781 rights were exercised through electronic balloting). The votes in
favor of the motion accounted for 87.57% of the total votes and favorable action
has been taken in favor of the motion.
Agenda 3:The by-election for the independent director of the 6th-term of the
Company.
Proposed by the Board of Directors
Explanation:
(1) When an independent director is dismissed for any reason, resulting in a
number of independent directors lower than 3, a by-election for independent
director shall be held at the next following shareholders meeting in
accordance with Paragraph 5, Article 14-2 of the Securities and Exchange
Act and the Articles of Incorporation of the Company. The election for
independent directors adopts candidate nomination system.
(2) Mr. Min-Houng Hong, the independent director of the 6th term of the
Company, resigned on February 23, 2017, and the resignation took effect on
June 16, 2017. To maintain the effective operation of the corporate
governance system, we hereby propose to the regular shareholders’
meeting for a by-election of an independent director. The term of service
shall begin from the elected date until the expiration of the term of the
independent directors of the 6th term (from June 16, 2017 to June 7, 2019).
(3) The Company would like to call for the by-election of the 6th Term
Independent Director. The candidate list has been reviewed by Board of
Directors and documented. For candidate’s information, The candidate's
information is as follows.We hereby propose for the election.
Election results:
The by-election electoral list: of the 6th-term independent director :
Shareholder or ID No. Elected Directors Shares in Favor
A10214**** EDWARD YUNG DO WAY 7,058,620,225
Agenda 4: Discussion on the relief of certain directors from their non-
competition obligations
Proposed by the Board of Directors
Explanation:
(1) In accordance with Article 209 of the Company Act, a director who does
anything for him/herself or on behalf of another person that is within the
scope of the company’s business shall secure permission from the
shareholders’ meeting.
(2) After the release of the prohibition on the participation in competitive
business by the regular shareholders’ meeting on June 8, 2016, Mr.
CHANG-KEN LEE and Mr. MATTHEW MIAU, the directors of the 6th term
of the Company, have newly participated in other companies with the
same or similar business scope of the Company. In addition, Mr.
EDWARD YUNG DO WAY, the candidate for re-election as an
independent director for a 6th term may have the act of participating in the
corporate operation that is as the same or similar to the business scope of
the Company. Therefore, we hereby propose to approve the releasing of
the prohibition on directors from participation in competitive business
(details are provided in table below) to the shareholders’ meeting in
accordance with Article 209 of the Company Act, and we also propose to
release the prohibition on the earnings of such act not being regarded as
earnings of the Company.
Director Company Concurrent
Post
CHANG-KEN LEE The Bankers Association of Taipei Supervisor
MATTHEW MIAU
Harbinger II Venture Capital Corp.
Harbinger V Venture Capital Corp.
Harbinger Venture Management Company, Ltd.
Union Venture Capital Corp.
Mei-Feng Investments Corporation
Chairman
Chairman
Chairman
Chairman
Chairman
EDWARD YUNG
DO WAY
YCSY Co., Ltd.
MiTAC Holdings Corp. Chairman
Director
RESOLVED:
The result of balloting indicated that votes representing 8,153,462,734 rights
were cast in favor of the motion (of which 7,236,717,104 rights were exercised
through electronic balloting), while votes representing 7,354,176 rights were cast
in objection to the motion (of which7,346,176 rights were exercised through
electronic balloting),while votes representing 1,708,120,670 rights were
abstention votes/no votes to the motion (of which 1,693,263,573 rights were
exercised through electronic balloting). The votes in favor of the motion
accounted for 82.62% of the total votes and favorable action has been taken in
favor of the motion.
VI. Provisional motions
Shareholder Account No. 1126631 showed his concerns about the capital
adequacy ratio and investment issues.
Shareholder Account No. 1463 recognized the management team’s work.
Shareholder Account No. 580612 proposed his suggestions about preservation
of the Corporate Group’s building in the old town (formerly known as the office
premises of Cathay United Bank, Taiwan Branch).
Shareholder Account No. 1139764 showed his concerns about the ETF product
series of the subsidiary, Cathay Securities Investment Trust, and proposed his
suggestions about the business lines of Cathay Life Insurance.
Shareholder Account No. 310309 showed his concerns about the Company’s
development and layout of Fintech.
After responding to each suggestion/comment, and seeing no other provisional
motions, the Chairman announced that the meeting be adjourned.
VII. Meeting adjourned (at about 10:30 AM the same day.)
Chairperson: Hong-Tu Tsai, Chairman of the Board of Directors
Minutes taken down by Chu-Chun Ou-Yang
According to article 183 paragraph IV in Company Act that the Meeting Minutes
shall record a summary of the essential points of the proceedings and the results
of the meeting;In which the meeting’s content, procedures and shareholders'
speech were recorded the video conferences.
Independent Auditors’ Report English Translation of a Report Originally Issued in Chinese
To Cathay Financial Holding Co., Ltd. Opinion We have audited the accompanying consolidated balance sheets of Cathay Financial Holding Co., Ltd. (the “Company”) and its subsidiaries as of 31 December 2016 and 2015, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended 31 December 2016 and 2015, and notes to the consolidated financial statements, including the summary of significant accounting policies (together “the consolidated financial statements”). In our opinion, based on our audits, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of 31 December 2016 and 2015, and their consolidated financial performance and cash flows for the years ended 31 December 2016 and 2015, in conformity with the requirements of the “Regulations Governing the Preparation of Financial Reports by Financial Holding Companies”, “Regulation Governing the Preparation of Financial Reports by Securities Issuers” and “International Financial Reporting Standards”, “International Accounting Standards”, “Interpretations developed by the International Financial Reporting Interpretations Committee” as endorsed by Financial Supervisory Commission of the Republic of China.
Basis for Opinion We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statement by Certified Public Accountants” and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of Cathay Financial Holding Co., Ltd. and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2016 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Valuation of financial instruments - financial instrument investments for which no active market exists
Where the fair value of financial instrument investments for which no active market exists cannot be derived from an active market or a quoted price, it is determined using a valuation technique. The Company and its subsidiaries partially use internal model valuation for fair value, and the assumptions used in the valuation will impact the fair value of the reported financial instruments. Thus we conclude that the valuation of financial instruments- debt instrument investments for which no active market exists is a key audit matter of our audit. Our audit procedures include but not limited to assessing and testing the effectiveness of internal controls related to financial instruments valuation, including how management decides and approves the valuation model and its assumptions, the controls related to the valuation model and change of assumptions, and how management reviews the valuation. We use internal valuation experts on a sampling basis to assist in reviewing the valuation techniques adopted by the Company and its subsidiaries, understanding and assessing the rationality of key valuation assumptions, performing independent valuation calculation, and determining whether the valuation differences are acceptable. Meanwhile, we review the disclosures of financial instruments valuations, including the fair value hierarchy of assets, to determine whether they complied with the related regulatory and accounting standards requirements. Please refer to Notes 4, 5. (2) and 38. (2) for information about the Company and its subsidiaries’ financial instruments valuation. Measurement of insurance liabilities The measurement of the Company and its subsidiaries’ insurance liabilities is dependent on the calculations based on assumptions of current period or the assumptions established in the contracts to reflect the best estimates at that time. Nevertheless, these assumptions were set based on the relevant regulations and the professional judgements of internal specialists. With the high complexity, changes in assumptions adopted by the Company may affect the results when measuring the insurance liabilities. Therefore, we considered this a key audit matter. Our audit procedures included, but not limited to, evaluating and testing the effectiveness of internal controls around insurance liabilities, including management’s decision and approval of the methods and assumptions used in setting aside various reserves and controls for changing the methods and assumptions; examining the data of calculating insurance liabilities; assessing the reasonableness of the Company and its subsidiaries’ actuarial judgements and actuarial assumptions used in the model with the assistance of our internal specialist performing audit procedures for insurance liabilities. We also considered whether the Company’s disclosures in the financial statements in relation to insurance liabilities are compliant with the relevant regulations and principles. Please refer to Notes 4, 5. (2) and 22 for details of the Company and its subsidiaries’ insurance liabilities. Investment properties measured at fair value The Company and its subsidiaries’ investment properties are measured at fair value. Due to inaccessible market prices, the Company and its subsidiaries evaluate the fair value of investment properties based on external real estate appraisers firm’s valuation reports,
which highly relied on the valuation approach chosen (including but not limited to income approach and market approach) and the assumptions. The approach chosen and the changes to the assumptions will impact the result of the investment properties valuation. Therefore, we determined investment properties measured at fair value as a key audit matter. We conducted audit procedures for investment properties valuation, including but not limited to the following: evaluating the independence and qualification of external real estate appraisers, and enlisting the internal valuation specialist’s assistance to evaluate the external real estate appraisers firm’s valuation reports to understand the valuation approach adopted and ensure the reasonableness in the valuation approach adopted and key valuation assumptions so that we could verify whether the difference between the internal valuation specialist’s work and external valuation reports is acceptable. Please refer to Notes 4, 5. (2) and 14 for information about the Company and its subsidiaries’ investment properties measured at fair value. The Provision of Allowance for Loans In accordance with IAS 39 “Financial Instruments: Recognition and Measurement” and “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans” of the ROC, the Company and its subsidiaries developed their own systems to perform both individual and collective assessments of impairment loss on loans and receivables . The systems assess the amount of an impairment loss based on parameters from historical experience or future cash flows on a case-by-case basis. The estimates of discount factors, including effective interest rate, incidence of impairment and recoverable rates, and the classification to assess whether there is any objective evidence that a loan is impaired, require professional judgment and uses of estimates and assumptions. Moreover, net of discounts and loans as of 31 December 2016 have a significant impact on the Company’s financial statements. Consequently, we regard this as key audit matters. We assessed and tested the effectiveness of internal control relating to calculations of impairment, including the underlying data and systems with respect to impairment calculation. For loan loss provisions calculated on an individual basis, we tested the assumptions which were used to identify and quantify the impairments, including estimates of future cash flows, valuation of guarantee and estimates of recovery on default. For loan loss provisions calculated on a collective basis, we reviewed whether the models of impairment were approved by management and relied on our specialists to verify the effectiveness of those models. We also tested the appropriateness and accuracy of the inputs used in those models, such as recovery rates and historical loss rates. We reviewed whether management of the Company and its subsidiaries complied with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans” of the ROC, including assessing appropriateness of the classification of loans and testing accuracy of impairment calculations. Please refer to Notes 4, 5. (2) and 10 for information about the Company and its subsidiaries’ the provision of allowance for loans. Assessment of goodwill impairment
IAS 36 requires entities to perform an impairment test annually. However the calculation made by management of the Company and its subsidiaries is complex and involves major subjective judgments and assumptions. Thus we conclude that assessment of goodwill impairment is a key audit matter of our audit. Our audit procedures included but not limited to assessing the rationality of the Company and its subsidiaries’ financial forecasts and using internal experts to assist in assessing the rationality of the assumptions made by the Company and its subsidiaries’ management. Please refer to Notes 4, 5. (2) and 16 for information about the Company and its subsidiaries’ goodwill impairment assessment. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the requirements of the “Regulations Governing the Preparation of Financial Reports by Financial Holding Companies”, “Regulation Governing the Preparation of Financial Reports by Securities Issuers” and “International Financial Reporting Standards”, “International Accounting Standards”, “Interpretations developed by the International Financial Reporting Interpretations Committee” as endorsed by Financial Supervisory Commission of the Republic of China and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the ability to continue as a going concern of the Company and its subsidiaries, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company and its subsidiaries or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including audit committee or supervisors, are responsible for overseeing the financial reporting process of the Company and its subsidiaries. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Company and its subsidiaries.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management. 4. Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability to continue as a going concern of the Company and its subsidiaries. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and its subsidiaries to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the accompanying notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Company and its subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2016 consolidated financial statements and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Ernst & Young Taipei, Taiwan The Republic of China 8 March 2017
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdiction. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.
(About the Notes in the Independent Auditors’Report, please refer to 2016 Annual Report Appendix 1:2016
Consolidated Financial Statement)
2016.12.31 2015.12.31
Assets
Cash and cash equivalents $196,549,185 $191,780,120
Due from the Central Bank and call loans to banks 71,940,935 100,169,436
Financial assets at fair value through profit or loss 244,529,264 296,117,926
Available-for-sale financial assets - net 1,591,359,657 1,486,393,125
Derivative financial assets for hedging 232,269 447,326
Securities purchased under agreements to resell 49,524,682 55,880,471
Receivables - net 154,212,060 141,649,869
Current income tax assets 4,215,323 4,339,061
Loans - net 2,045,532,795 1,766,476,353
Reinsurance assets - net 8,767,841 7,000,785
Held-to-maturity financial assets - net 81,826,739 81,708,446
Investments accounted for using the equity method - net 35,209,790 25,500,488
Other financial assets - net 3,036,381,213 2,790,400,892
Investment properties - net 311,014,127 381,149,809
Property and equipment - net 164,114,231 97,488,736
Intangible assets - net 58,597,243 56,943,768
Deferred tax assets - net 14,729,993 14,425,707
Other assets - net 66,400,120 71,102,715
Total assets $8,135,137,467 $7,568,975,033
English Translation of Financial Statements Originally Issued in Chinese
Cathay Financial Holding Co., Ltd. and Subsidiaries
Consolidated Balance Sheets
As of 31 December 2016 and 31 December 2015
(Expressed in thousands of New Taiwan Dollars)
Liabilities & equity 2016.12.31 2015.12.31
Liabilities
Due to the Central Bank and call loans from banks $77,493,795 $41,226,909
Financial liabilities at fair value through profit or loss 115,014,826 137,471,418
Securities sold under agreements to repurchase 59,139,059 55,523,982
Commercial paper payable - net 41,578,838 35,677,634
Payables 55,295,781 43,402,650
Current income tax liabilities 3,512,350 1,641,020
Deposits 1,999,943,172 1,854,495,831
Bonds payable 51,900,000 71,800,000
Provisions 4,596,525,084 4,262,002,527
Other financial liabilities 561,224,829 549,564,053
Deferred tax liabilities 26,362,443 34,775,271
Other liabilities 17,323,269 20,331,536
Total liabilities 7,605,313,446 7,107,912,831
Equity attributable to owners of parent
Capital stock
Common stock 125,632,102 125,632,102
Preferred stock 8,333,000 -
Capital surplus 130,448,697 88,781,174
Retained earnings
Legal reserve 30,577,724 24,820,095
Special reserve 149,108,336 140,185,120
Undistributed earnings 73,001,761 65,190,213
Other equity 6,222,952 10,448,290
Non-controlling interests 6,499,449 6,005,208
Total equity 529,824,021 461,062,202
Total liabilities and equity $8,135,137,467 $7,568,975,033
Cathay Financial Holding Co., Ltd. and Subsidiaries
Consolidated Balance Sheets - (continued)
As of 31 December 2016 and 31 December 2015
(Expressed in thousands of New Taiwan Dollars)
English Translation of Financial Statements Originally Issued in Chinese
2016.1.1~2016.12.31 2015.1.1~2015.12.31
Interest income $168,883,110 $157,079,850
Less: Interest expenses (15,405,207) (17,081,656)
Net interest income 153,477,903 139,998,194
Net income other than interest
Net commission and handling fee (7,912,706) (4,479,828)
Net premiums from insurance business 314,219,387 226,753,764
Gains (losses) on financial assets and liabilities at fair value through profit or loss 19,582,308 (61,256,966)
Gains from investment properties 12,964,367 19,914,745
Realized gains on available-for-sale financial assets 48,169,789 55,126,954
Realized gains (losses) on held-to-maturity financial assets 57,608 (46,383)
(Losses) gains on foreign exchange (42,817,155) 50,027,860
Impairment losses on assets (175,164) (32,160)
Share of profit of associates and joint ventures accounted for using the equity method 1,202,103 1,107,708
Net other non-interest gains 40,511,744 14,151,151
Total income 539,280,184 441,265,039
Bad debt expenses and provision for premiums reserve (5,231,640) (2,467,452)
Changes in insurance liabilities and provisions (408,613,955) (306,598,275)
Operating expenses
Employee benefits expenses (46,194,777) (39,148,233)
Depreciation and amortizations expenses (5,189,148) (3,641,309)
Other general and administration expenses (23,866,159) (22,277,568)
Subtotal (75,250,084) (65,067,110)
Profit before income tax from continuing operations 50,184,505 67,132,202
Income tax expense (2,145,305) (9,249,831)
Net income 48,039,200 57,882,371
Other comprehensive income
Not to be reclassified to profit or loss in subsequent periods:
Remeasurements of defined benefit plans 753,518 (2,824,773)
Revaluation surplus - 92,744
Share of other comprehensive income of associates and joint ventures
accounted for using the equity method - not to be reclassified
to profit or loss in subsequent periods (9,343) (164,196)
Changes of designated financial liabilities
at fair value through profit or loss resulting from credit risk 44,408 42,544
Income tax relating to the components not to be reclassified
to profit or loss in subsequent periods (133,885) 499,804
To be reclassified to profit or loss in subsequent periods:
Exchange differences resulting from translating the financial statements
of a foreign operation (8,920,171) 1,488,694
Unrealized gain (loss) from available-for-sale financial assets 985,063 (47,035,243)
(Loss) gain on cash flow hedges (216,856) 230,973
Share of other comprehensive income of associates and joint ventures
accounted for using the equity method - to be reclassified
to profit or loss in subsequent periods (722,914) 346,975
Income tax relating to the components to be reclassified
to profit or loss in subsequent periods 3,567,798 1,964,114
Other comprehensive income, net of tax (4,652,382) (45,358,364)
Total comprehensive income $43,386,818 $12,524,007
Net income attributable to:
Owners of parent $47,618,813 $57,513,572
Non-controlling interests 420,387 368,799
Subtotal $48,039,200 $57,882,371
Total comprehensive income attributable to:
Owners of parent $43,393,475 $11,939,628
Non-controlling interests (6,657) 584,379
Subtotal $43,386,818 $12,524,007
Earnings per share (expressed in dollars) :
Basic earnings per share:
Net income $3.79 $4.58
English Translation of Financial Statements Originally Issued in Chinese
Cathay Financial Holding Co., Ltd. and Subsidiaries
Consolidated Statements of Comprehensive Income
For the years ended 31 December 2016 and 2015
(Expressed in thousands of New Taiwan Dollars, except earnings per share)
Balance on 1 January 2015 $125,632,102 $- $88,782,304 $19,784,401 $82,305,614 $60,939,777 $601,786 $44,257,646 $180,453 $48,151 $918,332 $10,030,820 $(781) $433,480,605 $5,639,845 $439,120,450
Appropriations and distribution for 2014
Legal reserve 5,035,694 (5,035,694) - -
Special reserve 23,148,991 (23,148,991) - -
Cash dividends (25,126,420) (25,126,420) (25,126,420)
Reversal of special reserve (33,796) 33,796 - -
Other additional paid-in capital
Share of changes in net assets of associates and joint ventures accounted
for using the equity method (1,130) (1,130) (1,130)
Net income for the year ended 31 December 2015 (Note 1) 57,513,572 57,513,572 368,799 57,882,371
Other comprehensive income for the year ended 31 December 2015 1,263,580 (44,674,719) 191,071 35,311 (2,481,087) 92,136 (236) (45,573,944) 215,580 (45,358,364)
Comprehensive income for the year ended 31 December 2015 - - - - - 57,513,572 1,263,580 (44,674,719) 191,071 35,311 (2,481,087) 92,136 (236) 11,939,628 584,379 12,524,007
Decrease in non-controlling interests (219,016) (219,016)
Others 34,764,311 14,173 (14,173) 34,764,311 34,764,311
Balance on 31 December 2015 $125,632,102 $- $88,781,174 $24,820,095 $140,185,120 $65,190,213 $1,865,366 $(417,073) $371,524 $83,462 $(1,562,755) $10,108,783 $(1,017) $455,056,994 $6,005,208 $461,062,202
Appropriations and distribution for 2015
Legal reserve 5,757,629 (5,757,629) - -
Special reserve 8,923,216 (8,923,216) - -
Cash dividends (25,126,420) (25,126,420) (25,126,420)
Reversal of special reserve
Other additional paid-in capital
Share of changes in net assets of associates and joint ventures accounted
for using the equity method 2,523 2,523 2,523
Net income for the year ended 31 December 2016 (Note 2) 47,618,813 47,618,813 420,387 48,039,200
Other comprehensive income for the year ended 31 December 2016 (9,140,278) 4,440,232 (179,990) 36,859 616,822 - 1,017 (4,225,338) (427,044) (4,652,382)
Comprehensive income for the year ended 31 December 2016 - - - - - 47,618,813 (9,140,278) 4,440,232 (179,990) 36,859 616,822 - 1,017 43,393,475 (6,657) 43,386,818
Issue of preferred stock 8,333,000 41,665,000 49,998,000 49,998,000
Increase in non-controlling interests 500,898 500,898
Balance on 31 December 2016 $125,632,102 $8,333,000 $130,448,697 $30,577,724 $149,108,336 $73,001,761 $(7,274,912) $4,023,159 $191,534 $120,321 $(945,933) $10,108,783 $- $523,324,572 $6,499,449 $529,824,021
Equity attributable to owners of parent
Note1: For the year ended 2015, the remuneration to directors and supervisors in the amount of $2,100 thousand and employees' compensation in the amount of $5,903 thousand have been deducted from the Statement of Comprehensive Income.
Note2: For the year ended 2016, the remuneration to directors and supervisors in the amount of $1,800 thousand and employees' compensation in the amount of $4,920 thousand have been deducted from the Statement of Comprehensive Income.
Retained earnings
Exchange
differences
resulting from
translating the
financial
statements of a
foreign operation
Unrealized gains
(losses) from
available-for-sale
financial assets
Other equity
Legal reserve OthersSpecial reserveItems Common stock Capital surplusPreferred stock
Remeasurements
of defined benefit
plans
TotalNon-controlling
interestsTotal equity
Undistributed
earnings
Capital stock
Gains (losses) on
cash flow hedges
Revaluaiton
Surplus
Changes of
designated
financial liabilities
at fair value
through profit or
loss resulting from
credit risk
English Translation of Financial Statements Originally Issued in Chinese
Cathay Financial Holding Co., Ltd. and Subsidiaries
Consolidated Statements of Changes in Equity
For the years ended 31 December 2016 and 2015
(Expressed in thousands of New Taiwan Dollars)
English Translation of Financial Statements Originally Issued in Chinese
Cathay Financial Holding Co., Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended 31 December 2016 and 2015
(Expressed in thousands of New Taiwan Dollars)
2016.1.1~2016.12.31 2015.1.1~2015.12.31 2016.1.1~2016.12.31 2015.1.1~2015.12.31Cash flows from operating activities Cash generated from operations (203,067,048) (369,271,962)
Profit before income tax from continuing operations $50,184,505 $67,132,202 Interest received 164,523,945 151,683,427
Adjustments : Dividends received 24,352,712 21,713,620
Income and other adjustments with no cash flow effects Interest paid (15,141,591) (13,698,505)
Depreciation expenses 2,295,745 2,184,189 Income taxes (paid) received (2,735,091) 597,697
Amortizations expenses 2,893,403 1,457,120 Net cash flows used in operating activities (32,067,073) (208,975,723) Bad debt expense 5,231,640 2,467,452
Net (gains) losses on financial assets and liabilities at fair value through profit or loss (15,117,537) 64,467,092 Cash flows from investing activities
Interest expenses 15,405,207 17,081,656 Acquisition of financial assets at fair value through profit or loss (1,523,051) (4,137,871)
Interest revenue (168,883,110) (157,079,850) Disposal of financial assets at fair value through profit or loss 3,019,067 3,940,176
Dividend income (23,847,539) (21,327,538) Acquisition of financial assets available for sale (1,389,511) (1,795,459)
Net changes in insurance liabilities and provisions 347,690,617 334,637,365 Disposal of financial assets available for sale 843,738 1,500,642
Net changes of other liabilities and provisions (6,154,971) (1,068,276) Acquisition of financial assets carried at cost (5,745) -
Share of gains of associates and joint ventures accounted for using the equity method (1,202,103) (1,107,708) Acquisition of investments accounted for using the equity method (6,670,889) (20,147,622)
(Gains) losses on disposal or scrapping of property and equipment (225,342) 9,485 Acquisition of subsidiary (4,708,708) (6,994,994)
(Gains) losses on disposal of investment properties (1,028,782) 137,004 Disposal of subsidiaries (4,609,822)
Losses on disposal of intangible assets 391 35,492 Cash returned by capital deduction from investments accounted for using equity method 70,299 86,501
Gains on disposal of investments (48,017,674) (43,408,125) Acquisition of property and equipment (4,325,933) (1,287,488)
Impairment losses on financial assets 117,002 32,160 Disposal of property and equipment 319,802 16,017
Impairment losses on non-financial assets 58,162 - Increase in clearing and settlement funds (4,458) (2,703)
Unrealized foreign exchange (gains) losses (71,422) 48,609 Decrease in clearing and settlement funds 15,884 -
Revaluation gains on investment properties (1,847,034) (11,236,452) Increase in guarantee deposits paid (1,126) (2,348)
Others (2,730,769) (8,346) Decrease in guarantee deposits paid 23,030 -
Subtotal 104,565,884 187,321,329 Acquisition of intangible assets (415,279) (350,822)
Changes in operating assets and liabilities Generalized foreclosed collects net cash from other company - 16,157,186
Changes in operating assets Generalized foreclosed collects compensation from other company - 30,300,000
Increase in due from the Central Bank and call loans to banks (2,636,468) (4,996,676) Acquisition of investment properties (3,254,915) (34,643,780)
Decrease (increase) in financial assets at fair value through profit or loss 150,814,074 (24,811,830) Disposal of investment properties 2,146,998 291,927
Increase in available-for-sale financial assets (83,009,152) (87,477,240) Increase in other assets (134,176) (22,035,719)
(Increase) decrease in derivative financial assets for hedging (1,798) 449,037 Decrease in other assets 7,135,933 80,373
Increase in accounts receivable (11,544,098) (1,386,901) Dividends received 96,607 73,692
(Increase) decrease in loans (283,277,168) 55,380,486 Net cash used in investing activities (13,372,255) (38,952,292)
Increase in reinsurance contract assets (2,322,525) (502,663) Cash flows from financing activities
Decrease in financial assets held to maturity 283,195 7,332 Increase (decrease) in short-term borrowings 87,229 (900,000)
Increase in other financial assets (200,653,210) (573,530,812) Decrease in funds borrowed from Central Bank and banks - (1,585,900)
Increase in other assets (4,785,493) (23,256,988) Increase in commercial paper payable 5,900,000 8,890,000
Subtotal (437,132,643) (660,126,255) Decrease in bonds payable (20,000,000) (20,000,000)
Changes in operating liabilities Decrease in bank debentures - (15,713,949)
Increase (decrease) in due to the Central Bank and call loans from banks 36,402,468 (17,797,575) Decrease in securities sold under agreements to repurchase (14,660) (171,511)
Decrease in financial liabilities at fair value through profit or loss (107,752,312) (68,995,003) Increase in other liabilities 1,108,978 1,516,069
Increase (decrease) in securities sold under agreements to repurchase 3,629,737 (6,326,428) Payment of cash dividend (25,223,449) (25,659,094)
Increase (decrease) in payables 10,152,404 (13,185,305) Increase in cash capital 49,998,000 -
Increase in deposits 146,256,116 151,147,103 Net cash flows from (used in) financing activities 11,856,098 (53,624,385)
(Decrease) increase in provisions for the liabilities of employee benefits (3,415,115) 3,105 Effects of exchange rate changes on cash and cash equivalents 1,245,500 1,479,269
Decrease in reserves for the operations and liabilities (136,830) (16,427) Decrease in cash and cash equivalents (32,337,730) (300,073,131)
Decrease in other financial liabilities (5,660,297) (12,615,246) Cash and cash equivalents at the beginning of periods 296,935,688 597,008,819
(Decrease) increase in other liabilities (160,965) 4,186,538 Cash and cash equivalents at the end of periods $264,597,958 $296,935,688
Subtotal 79,315,206 36,400,762
Subtotal of Changes in operating assets and liabilities (357,817,437) (623,725,493) The components of cash and cash equivalents
Subtotal of Adjustment (253,251,553) (436,404,164) Cash and cash equivalents presented in balance sheet $196,549,185 $191,780,120
Due from the Central Bank and call loans to banks satisfied the definition of cash and
cash equivalents under IAS No.7 18,524,091 49,275,097
Bills sold under agreements to resell satisfied the definition of cash and cash equivalents Securities purchased under agreements to resell satisfied the definition of cash and
under IAS No.7 cash equivalents under IAS No.7 49,524,682 55,880,471
Cash and cash equivalents at the end of periods $264,597,958 $296,935,688
ItemsItems
2016.12.31 2015.12.31Assets Cash and cash equivalents $14,822,959 $4,143,951 Available-for-sale financial assets - net 85,689 79,451 Securities purchased under agreements to resell 79,968 499,422 Receivables - net 537,085 822,620 Current income tax assets 4,215,323 4,323,586 Held-to-maturity financial assets 41,000,000 16,000,000 Investments accounted for using the equity method - net 507,608,375 487,136,590 Other financial assets - net 430,111 - Property and equipment - net 7,699 7,249 Intangible assets - net 11,968 17,288 Deferred tax assets - net 482,657 875,454 Other assets - net 10,998 8,340 Total assets $569,292,832 $513,913,951
Liabilities & EquityLiabilities Commercial paper payable $35,980,000 $28,820,000 Payables 5,625,178 8,278,845 Current income tax liabilities 3,031,746 946,549 Bonds payable - 20,000,000 Provisions 918,764 726,597 Deferred tax liabilities 226,707 2,915 Other liabilities 185,865 82,051Total liabilities 45,968,260 58,856,957
Equity Capital stock Common stock 125,632,102 125,632,102 Perferred stock 8,333,000 - Capital surplus 130,448,697 88,781,174 Retained earnings Legal reserve 30,577,724 24,820,095 Special reserve 149,108,336 140,185,120 Undistributed earnings 73,001,761 65,190,213 Other equity 6,222,952 10,448,290Total equity 523,324,572 455,056,994Total liabilities and equity $569,292,832 $513,913,951
English Translation of Financial Statements Originally Issued in ChineseCathay Financial Holding Co., Ltd.
Balance sheetAs of 31 December 2016 and 31 December 2015
(Expressed in thousands of New Taiwan Dollars)
2016.1.1~2016.12.31 2015.1.1~2015.12.31
Income
Gains on investment - equity method $48,764,631 $59,789,114
Other operating income 1,800,203 1,206,780
50,564,834 60,995,894
Expenses and loss
Operating expenses (772,271) (648,992)
Other expenses and losses (599,464) (1,328,856)
(1,371,735) (1,977,848)
Profit before income tax from continuing operations 49,193,099 59,018,046
Income tax expense (1,574,286) (1,504,474)
Profit after income tax from continuing operations 47,618,813 57,513,572
Net Income 47,618,813 57,513,572
Other comprehensive income
Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans (8,793) (10,334)
Share of other comprehensive income of associates and joint ventures
accounted for using the equity method - not to be reclassified
to profit or loss in subsequent periods 661,996 (2,345,300)
Income tax relating to the components not to be reclassified
to profit or loss in subsequent periods 1,495 1,757
To be reclassified to profit or loss in subsequent periods:
Unrealized gains (losses) from available-for-sale financial assets 6,238 (141,335)
Share of other comprehensive income of associates and joint ventures
accounted for using the equity method - to be reclassified
to profit or loss in subsequent periods (4,886,274) (43,102,881)
Income tax relating to the components to be reclassified
to profit or loss in subsequent periods - 24,149
Other comprehensive income, net of tax (4,225,338) (45,573,944)
Total comprehensive income $43,393,475 $11,939,628
Earnings per share (expressed in dollars)
Basic earnings per share:
Net income $3.79 $4.58
English Translation of Financial Statements Originally Issued in Chinese
Cathay Financial Holding Co., Ltd.
Statements of Comprehensive Income
For the years ended 31 December 2016 and 2015
(Expressed in thousands of New Taiwan Dollars , except earning per share)
Items
Balance on 1 January 2015 $125,632,102 $- $88,782,304 $19,784,401 $82,305,614 $60,939,777 $601,786 $44,257,646 $180,453 $48,151 $918,332 $10,030,820 $(781) $433,480,605
Appropriations and distribution for 2014 Legal reserve 5,035,694 (5,035,694) - Cash dividends 23,148,991 (23,148,991) - Stock dividends (25,126,420) (25,126,420) Reversal of special reserve (33,796) 33,796 -
Other additional paid-in capital
Share of changes in net assets of associates and joint ventures accounted for using the equity method (1,130) (1,130)
Net income for the year ended 31 December 2015 (Note 1) 57,513,572 57,513,572Other comprehensive income for the year ended 31 Dectember 2015 1,263,580 (44,674,719) 191,071 35,311 (2,481,087) 92,136 (236) (45,573,944)Comprehensive income for the year ended 31 December 2015 - - - - - 57,513,572 1,263,580 (44,674,719) 191,071 35,311 (2,481,087) 92,136 (236) 11,939,628
Others 34,764,311 14,173 (14,173) 34,764,311Balance on 31 December 2015 $125,632,102 $- $88,781,174 $24,820,095 $140,185,120 $65,190,213 $1,865,366 $(417,073) $371,524 $83,462 $(1,562,755) $10,108,783 $(1,017) $455,056,994
Appropriations and distribution for 2015 Legal reserve 5,757,629 (5,757,629) - Special reserve 8,923,216 (8,923,216) - Cash dividends (25,126,420) (25,126,420)
Other additional paid-in capital Share of changes in net assets of associates and joint ventures accounted for using the equity method 2,523 2,523
Net income for the year ended 31 December 2016 (Note 2) 47,618,813 47,618,813Other comprehensive income for the year ended 31 December 2016 (9,140,278) 4,440,232 (179,990) 36,859 616,822 - 1,017 (4,225,338)Comprehensive income for the year ended 31 December 2016 - - - - - 47,618,813 (9,140,278) 4,440,232 (179,990) 36,859 616,822 - 1,017 43,393,475
Issue of preferred stock 8,333,000 41,665,000 49,998,000 Balance on 31 December 2016 $125,632,102 $8,333,000 $130,448,697 $30,577,724 $149,108,336 $73,001,761 $(7,274,912) $4,023,159 $191,534 $120,321 $(945,933) $10,108,783 $- $523,324,572
Note2: For the year ended 2016, the remuneration to directors and supervisors in the amount of $1,800 thousand and employees' compensation in the amount of $4,920 thousand have been deducted from the Statement of Comprehensive Income.
Changes ofdesignatedfinancial
liabilities atfair value
through profitor loss
resulting fromcredit risk
Remeasurements ofdefined benefit plans
RevaluaitonSurplus Others Total
Note1: For the year ended 2015, the remuneration to directors and supervisors in the amount of $2,100 thousand and employees' compensation in the amount of $5,903 thousand have been deducted from the Statement of Comprehensive Income.
Preferred stock
Retained earnings Other equity
Common stock Capital Surplus Legal reserve Special reserve Undistributedearnings
Exchangedifferences
resulting fromtranslating the
financialstatements of a
foreignoperation
Unrealizedgains (losses)
fromavailable-for-sale financial
assets
Gains (losses)on cash flow
hedges
Capital stockEquity attributable to owners of parent
English Translation of Financial Statements Originally Issued in ChineseCathay Financial Holding Co., Ltd.
Statements of Changes in EquityFor the years ended 31 December 2016 and 2015(Expressed in thousands of New Taiwan Dollars)
Items 2016.1.1~2016.12.31 2015.1.1~2015.12.31Cash flows from operating activities Profit before income tax from continuing operations $49,193,099 $59,018,046 Adjustments : Income and other adjustments with no cash flow effects Depreciation 1,777 1,561 Amortization 5,319 5,319 Interest expenses 544,652 1,286,390 Interest income (424,407) (944,072) Share of profit of associates and joint ventures accounted for using the equity method (48,764,631) (59,789,114) Losses on disposal of property and equipment - 285 Gains on disposal of investments - (220,298) Unrealized foreign exchange losses (gains) 20,173 (8,748) Others (1,325,222) (8,346) Changes in operating assets and liabilities Decrease in available-for-sale financial assets - 705,548 Decrease (increase) in accounts receivable 62,527 (198,585) Decrease in held-to-maturity financial assets 10,000,000 15,000,000 Increase in held-to-maturity financial assets (35,000,000) - Increase in other financial assets (430,111) - (Increase) decrease in other assets (2,658) 137,793 Decrease in payables (2,530,242) (2,556,772) Increase (decrease) in provisions 183,374 (1,792)
Increase in other liabilities 103,814 72,511 Cash generated from operations Interest received 647,415 4,946,663 Interest paid (668,076) (1,299,979) Income taxes received 1,237,259 2,719,431Net cash flows (used in) from operating activities (27,145,938) 18,865,841Cash flows from investing activities Acquisition of property and equipment (2,227) (2,366) Dividends received 25,953,687 18,505,732Net cash from investing activities 25,951,460 18,503,366Cash flows from financing activities Increase in commercial paper payable 7,160,000 8,470,000 Decrease in bonds payable (20,000,000) (20,000,000) Dividends paid (25,126,420) (25,126,420) Increase in cash capital 49,998,000 Acquisition of subsidiary (557,375) -
11,474,205 (36,656,420)(20,173) 8,748
10,259,554 721,5354,643,373 3,921,838
Net cash flows from (used in) financing activitiesEffects of exchange rate changes on cash and cash equivalents Increase in cash and cash equivalentsCash and cash equivalents at the beginning of periodsCash and cash equivalents at the end of periods $14,902,927 $4,643,373
The components of cash and cash equivalents Cash and cash equivalents presented in balance sheet $14,822,959 $4,143,951 Securities purchased under agreements to resell satisfied the definition of cash and cash equivalents under IAS No.7 79,968 499,422Cash and cash equivalents at the end of periods $14,902,927 $4,643,373
English Translation of Financial Statements Originally Issued in ChineseCathay Financial Holding Co., Ltd.
Statements of Cash FlowsFor the years ended 31 December 2016 and 2015(Expressed in thousands of New Taiwan Dollars)
-
Cathay Financial Holding Co., Ltd.
Earnings Distribution Plan of the year 2016
Unit:NT Dollar
Item Amount
(I) Net income 47,618,813,972
Add: Undistributed retained earnings 25,382,947,082
Add: Reversal of fair value for the disposal of investment
real estate(Note 1) 1,364,813
(II) Distributable earnings 73,003,125,867
Less: Legal reserves (4,762,117,276)
Less: Cash Dividends on Preferred dividends (124,585,180)
Less: Cash Dividends on Common Stock (25,126,420,256)
Balance 42,990,003,155
Note1: Pursuant to Banking Bureau, Financial Supervisory Commission Letter No. 10310000140;
Securities & Futures Bureau, Financial Supervisory Commission Letter No.1030006415, if a
company uses the fair value model to value investment real estate, the company should
appropriate a special reserve on the increase in retained earnings generated in such a way.
Subsequently, when the fair value of the investment real estate declines, or when the
investment real estate is disposed of, the company may reverse the increase.
The disposition of investment real estate in 2016 may be reversed to special reserve with
the amount of NT$1,364,813 in accordance with the provision.
Note2: The cash dividend is calculated to the nearest NT dollar based on the distribution ratio. The
remainder is rounded up. The difference is paid as an expense of the company.
【Appendix II】
Cathay Financial Holdings
Comparison Table of the Amendments to the Company’s
Procedures for the Acquisition or Disposal of Assets
Amended Articles Current Articles Reason for Amendment
Article 7
In acquiring or disposing of real
property or equipment, unless
transacting with a government
organization, engaging others to
build on its own land, engaging
others to build on rented land, or
acquiring or disposing of
equipment for business use,
(omitted)
Article 7
In acquiring or disposing of real
property or equipment, unless
transacting with a government
agency, engaging others to build on
its own land, engaging others to
build on rented land, or acquiring or
disposing of equipment for business
use, (omitted)
Relevant provisions are amended in accordance with Ordinance No. 10600012965 issued by Financial Supervisory Commission on February 9, 2017
Article 9
Where the Company acquires or
disposes of memberships or
intangible assets and the
transaction amount reaches 20
percent or more of paid-in capital or
NT$300 million or more, except in
transactions with a government
organization, (omitted)
Article 9
Where the Company acquires or
disposes of memberships or
intangible assets and the transaction
amount reaches 20 percent or more
of paid-in capital or NT$300 million
or more, except in transactions with
a government agency, (omitted)
Article 13
When the Company intends to
acquire or dispose of real property
from or to a related party, or when it
intends to acquire or dispose of
assets other than real property
from or to a related party and the
transaction amount reaches 20
percent or more of paid-in capital,
10 percent or more of the
company’s total assets, or NT$300
million or more, except in the
trading of government bonds or
bonds under repurchase and
resale agreements, or subscription
or redemption of money market
funds issued by domestic securities
investment trust firms, the company
may not proceed to enter into a
transaction contract or make a
Article 13
When the Company intends to
acquire or dispose of real property
from or to a related party, or when it
intends to acquire or dispose of
assets other than real property from
or to a related party and the
transaction amount reaches 20
percent or more of paid-in capital, 10
percent or more of the company’s
total assets, or NT$300 million or
more, except in the trading of
government bonds or bonds under
repurchase and resale agreements,
or subscription or redemption of
domestic money market funds, the
company may not proceed to enter
into a transaction contract or make a
payment until the following matters
have been approved by the board of
【Appendix III】
Amended Articles Current Articles Reason for Amendment
payment until the following matters
have been approved by the board
of directors and recognized by the
supervisors:
(omitted)
directors and recognized by the
supervisors:
(omitted)
Article 25
Where the company conducts a
merger, demerger, acquisition, or
transfer of shares, prior to
convening the board of directors to
resolve the matter, the Company
shall engage a CPA, attorney, or
securities underwriter to give an
opinion on the reasonableness of
the share exchange ratio,
acquisition price, or distribution of
cash or other property to
shareholders, and submit it to the
board of directors for deliberation
and passage. However, if a public
company conducts a merger
against a subsidiary of 100%
directly or indirectly owned equities
or total capital, or conducts a
merger between two subsidiaries
of 100% directly or indirectly
owned equities or total capital, the
public company is not required to
engage the aforesaid professionals
to give an opinion on the
reasonableness.
Article 25
Where the company conducts a
merger, demerger, acquisition, or
transfer of shares, prior to
convening the board of directors to
resolve the matter, the Company
shall engage a CPA, attorney, or
securities underwriter to give an
opinion on the reasonableness of
the share exchange ratio,
acquisition price, or distribution of
cash or other property to
shareholders, and submit it to the
board of directors for deliberation
and passage.
Article 33
Under any of the following
circumstances, the company
acquiring or disposing of assets
shall publicly announce and
report the relevant information
on the website designated by
the competent authority in the
appropriate format as prescribed
by regulations within two days
commencing immediately from
the date of occurrence of the
event:
1. Acquisition or disposal of
real property from or to a
Article 33
Under any of the following
circumstances, the company
acquiring or disposing of assets
shall publicly announce and report
the relevant information on the
website designated by the
competent authority in the
appropriate format as prescribed
by regulations within two days
commencing immediately from the
date of occurrence of the event:
1. Acquisition or disposal of
real property from or to a
related party, or acquisition
Relevant provisions are amended in accordance with Ordinance No. 10600012965 issued by Financial Supervisory Commission on February 9, 2017
Amended Articles Current Articles Reason for Amendment
related party, or acquisition
or disposal of assets other
than real property from or
to a related party where
the transaction amount
reaches 20 percent or
more of paid-in capital, 10
percent or more of the
company’s total assets, or
NT$300 million or more,
provided this shall not
apply to trading of
government bonds or
bonds under repurchase
and resale agreements, or
subscription or redemption
of money market funds
issued by domestic
securities investment trust
firms.
2. Merger, demerger,
acquisition, or transfer of
shares.
3. Losses from derivatives
trading reaching the limits
on aggregate losses or
losses on individual
contracts set out in the
procedures adopted by the
company.
4. Where the type of asset
acquired or disposed is
equipment/machinery for
business use, the trading
counterparty is not a
related party, and the
transaction amount
reaches one of the
following:
(1) A public company
with the paid-in
capital less than
NT$10 billion, and
the transaction
amount reaches
NT$500 million or
or disposal of assets other
than real property from or to
a related party where the
transaction amount reaches
20 percent or more of paid-
in capital, 10 percent or
more of the company’s total
assets, or NT$300 million or
more, provided this shall not
apply to trading of
government bonds or bonds
under repurchase and resale
agreements, or subscription
or redemption of domestic
money market funds.
2. Merger, demerger,
acquisition, or transfer of
shares.
3. Losses from derivatives
trading reaching the limits on
aggregate losses or losses
on individual contracts set
out in the procedures
adopted by the company.
4. Where an asset transaction
other than any of those
referred to in the preceding
three subparagraphs, a
disposal of receivables by a
financial institution, or an
investment in the mainland
China area reaches 20
percent or more of paid-in
capital or NT$300 million,
provided this shall not apply
to the following
circumstances:
(1) Trading of government
bonds.
(2) Securities trading by
investment
professionals on
foreign or domestic
securities exchanges
or over-the-counter
markets.
Amended Articles Current Articles Reason for Amendment
more.
(2) A public company
with the paid-in
capital more than
NT$10 billion, and
the transaction
amount reaches
NT$1 billion or more.
5. Where land is acquired
under an arrangement on
engaging others to build on
the company's own land,
engaging others to build on
rented land, joint
construction and allocation
of housing units, joint
construction and allocation
of ownership percentages,
or joint construction and
separate sale, and the
amount the company
expects to invest in the
transaction is more than
NT$500 million.
6. Where an asset
transaction other than any
of those referred to in the
preceding five
subparagraphs, a disposal
of receivables by a
financial institution, or an
investment in the mainland
China area reaches 20
percent or more of paid-in
capital or NT$300 million,
provided this shall not
apply to the following
circumstances:
(1) Trading of
government bonds.
(2) Securities trading by
investment
professionals on
foreign or domestic
securities exchanges
or over-the-counter
(3) Trading of government
bonds or bonds under
repurchase and resale
agreements, or
subscription or
redemption of
domestic money
market funds.
(4) Where the type of
asset acquired or
disposed is
equipment/machinery
for business use, the
trading counterparty is
not a related party,
and the transaction
amount does not
reach NT$500 million.
(5) Where land is
acquired under an
arrangement on
engaging others to
build on the
company’s own land,
engaging others to
build on rented land,
joint construction and
allocation of housing
units, joint
construction and
allocation of
ownership
percentages, or joint
construction and
separate sale, and the
amount the company
expects to invest in
the transaction is less
than NT$500 million.
The amount of transactions above
shall be calculated as follows:
1. The amount of any individual
transaction.
2. The cumulative transaction
amount of acquisitions and
disposal of the same type of
Amended Articles Current Articles Reason for Amendment
markets, or ordinary
shares, corporate
bonds, and general
bank debentures not
involved in equities
that are subscribed,
raised and issued in
the primary market.
(3) Trading of
government bonds or
bonds under
repurchase and
resale agreements,
or subscription or
redemption of money
market funds issued
by domestic
securities investment
trust firms.
The amount of transactions
above shall be calculated as
follows:
1. The amount of any
individual transaction.
2. The cumulative transaction
amount of acquisitions and
disposals of the same type
of underlying asset with the
same trading counterparty
within the preceding year.
3. The cumulative transaction
amount of real property
acquisitions and disposals
(cumulative acquisitions and
disposals, respectively)
within the same
development project within
the preceding year.
4. The cumulative transaction
amount of acquisitions and
disposals (cumulative
acquisitions and disposals,
respectively) of the same
security within the preceding
year.
“Within the preceding year” as
underlying asset with the
same trading counterparty
within the preceding year.
3. The cumulative transaction
amount of real property
acquisitions and disposal
(cumulative acquisitions and
disposals, respectively)
within the same
development project within
the preceding year.
4. The cumulative transaction
amount of acquisitions and
disposals (cumulative
acquisitions and disposals,
respectively) of the same
security within the preceding
year.
“Within the preceding year” as
used in the preceding paragraph
refers to the year preceding the
date of occurrence of the current
transaction. Items duly announced
in accordance with these
Procedures need not be counted
toward the transaction amount.
The company shall compile
monthly reports on the status of
derivatives trading engaged in up
to the end of the preceding month
by itself and any subsidiaries and
enter the information in the
prescribed format into the
information reporting website
designated by the competent
authority by the 10th day of each
month.
When the company makes an
error or omission in an item
required by regulations to be
publicly announced at the time of
public announcement and so is
required to correct it, all the items
shall be publicly announced again
and reported in their entirety.
The company acquiring or
Amended Articles Current Articles Reason for Amendment
used in the preceding paragraph
refers to the year preceding the
date of occurrence of the current
transaction. Items duly
announced in accordance with
these Procedures need not be
counted toward the transaction
amount.
The company shall compile
monthly reports on the status of
derivatives trading engaged in
up to the end of the preceding
month by itself and any
subsidiaries and enter the
information in the prescribed
format into the information
reporting website designated by
the competent authority by the
10th day of each month.
When the company makes an
error or omission in an item
required by regulations to be
publicly announced at the time
of public announcement and so
is required to correct it, all the
items shall be publicly
announced again and reported
in their entirety within two days
commencing immediately from
the date of the event.
The company acquiring or
disposing of assets shall keep
all relevant contracts, meeting
minutes, log books, appraisal
reports and CPA, attorney, and
securities underwriter opinions
at the company headquarters,
where they shall be retained for
5 years except where another
act provides otherwise.
disposing of assets shall keep all
relevant contracts, meeting
minutes, log books, appraisal
reports and CPA, attorney, and
securities underwriter opinions at
the company headquarters, where
they shall be retained for 5 years
except where another act provides
otherwise.
Description of the long-term fund raising proposal
I. Issuance of common shares and preferred shares via domestic cash capital increase
A. In this cash capital increase proposal, we plan to issue common shares and preferred
shares either through book building or public subscription.
B. Via book building
1. If book building is adopted, apart from reserving 10% to 15% of the total number of
newly issued shares for subscription by the Company's employees (including
employees of the subsidiaries specified by Article 30 of the Financial Holding Company
Act), as required by Article 267 of the Company Act, the remaining shares shall be
offered publicly via book building with existing shareholders abstaining from exercising
their priority subscription rights with respect to the new shares in accordance with Article
28-1 of the Securities and Exchange Act. The Chairman is authorized to place any
portion of the new issued shares not subscribed to by the Company's employees for
subscription in the full quantity by designated individuals at the issue price.
2. According to provision of law, the issue price of common shares shall be no less than
90% of the simple arithmetic average closing price of the common shares of the
Company for either one, three or five consecutive business days before pricing date,
after adjustment for any distribution of stock dividends, cash dividends or capital
reduction. (If changes in the laws, should be coordinate the pricing adjustments.). The
Board of Directors and/or Chairman of the Board shall determine the actual issue price
based on the pricing principles set out in the paragraphs above, the status of the book
building in consultation with the underwriter, as well as on the conditions of the market
where the securities are issued and regulatory requirements.
3. The determination of issuance price of preferred shares shall be within the variation
scope of 10% of theoretical price pursuant to Article 12 of “Self-Regulation Rules
Governing Underwriter Members of Taiwan Securities Association Guiding Issuance
Companies to Offer and Issue Securities.” The board of directors and/or the chairman is
authorized to determine the price with the underwriter after taking into consideration
book building consolidation, the situation of the issuance market, and the relevant laws
and regulations.
4. Since the preferred shares issued this time may not be transformed into ordinary shares,
if it is conducted by issuing preferred shares, there will be no effect of diluting the equity
of shareholders. If it is conducted by issuing ordinary shares, it will account for 7.96% of
current outstanding shares of the Company calculated with the ordinary issuance limit
of 1Bn shares. Although the equity of shareholders will be partially diluted, it is expected
to enhance the competitiveness and improve the operational efficiency of the Company.
This is because the estimated fund will meet one or more purpose of enhancing the
financial structure of the Company, increasing capital adequacy ratio of the Company,
repaying loans, and coping with the long-term development strategy. It will not cause
【Appendix IV】
significant impacts on the ordinary equity of shareholders.
C. Via public offering
1. If public offering and distribution is adopted, apart from reserving 10% to 15% of the
total number of newly issued shares for subscription by the Company's employees
(including employees of the subsidiaries specified by Article 30 of the Financial Holding
Company Act) and also allocating 10% for subscription by the general public in
accordance with Article 28-1 of the Securities and Exchange Act, the remaining shares
shall be available for subscription by existing shareholders based on their respective
percentages of shareholding in the Company on the subscription reference date. The
Chairman is authorized to place any portion of the newly issued shares not subscribed
to by the Company's employees or existing shareholders for subscription in the full
quantity by designated individuals at the issue price.
2. According to provision of law, the issue price of common shares shall be no less than
70% of the simple arithmetic average closing price of the common shares of the
Company for either one, three or five consecutive business days before pricing date,
after adjustment for any distribution of stock dividends, cash dividends or capital
reduction. (If changes in the laws, should be coordinate the pricing adjustments.). The
Board of Directors is authorized to assign the ex-dividend date as the valuation
reference date.
3. The determination of issuance price of preferred shares shall be within the variation
scope of 10% of theoretical price pursuant to Article 12 of “Self-Regulation Rules
Governing Underwriter Members of Taiwan Securities Association Guiding Issuance
Companies to Offer and Issue Securities.” The board of directors and/or the chairman is
authorized to determine the price with the underwriter after taking into consideration the
situation of the issuance market and the relevant laws and regulations.
D. The capital raised in this cash capital increase plan is expected to be used for the
following: strengthening the Company's financial structure, enhancing the Company's capital
adequacy ratio, repaying loans or one or more purposes for the development of the
Company's long-term strategies. The capital raised is expected to enhance the Company's
competitiveness and improve our operational efficiency, and it will have a positive impact on
shareholders' equity.
E. We ask that shareholders' meeting authorize the Board of Directors and/or the Chairman of
the Board to consider the content of the cash capital increase proposal (including but not
limited to the actual issue price, offering terms, project items, amount of capital raised,
schedule of completion, expected benefits and other matters relevant to the proposal),
make all necessary adjustments based on market conditions and regulatory requirements,
work out the final details and implement the proposal. If the cash capital increase proposal
must be changed as ordered by the regulatory authority or required by the circumstances,
we also ask that the Board of Directors and/or the Chairman be given full authorization to
carry out the corresponding changes.
F. For matters not covered herein, the Board of Directors and/or the Chairman shall proceed
with full authorization and in accordance with relevant laws and regulations.
II. Cash capital increase by issuing common shares and participation in the issuance of GDR
A. If participation in the issuance of GDR is adopted for the cash capital increase and issuance
of common shares, apart from reserving 10% to 15% of the total number of newly issued
shares for subscription by the Company's employees (including employees of the
subsidiaries specified by Article 30 of the Financial Holding Company Act), as required by
Article 267 of the Company Act, the remaining of the newly issued shares shall be allocated
for participation in the issuance of GDR with existing shareholders abstaining from
exercising their priority subscription rights with respect to the new shares in accordance
with Article 28-1 of the Securities and Exchange Act. The Chairman is authorized to place
any portion of the newly issued shares not subscribed to by the Company's employees for
subscription in the full quantity by designated individuals at the issue price, or reallocated it
to the original securities that are participating in the issuance of GDR.
B. Pursuant to relevant domestic laws and regulations, the issue price for the common shares
that are participating in the issuance of GDR for cash capital increase shall be no less than
90% of the simple arithmetic average closing price of the common shares of the Company
for either one, three or five consecutive business days before pricing date, after adjustment
for any distribution of stock dividends, cash dividends or capital reduction. However, in the
event of changes in domestic regulations, corresponding changes to the above formula
shall also be made.
C. The Chairman or a designated person by the Chairman shall be authorized by the Board of
Directors to determine the actual issue price based on actual market conditions, domestic
laws and regulations and common practices in the market where the securities are issued,
as well as in consultation with the underwriter.
D. The above pricing methods are compliant with relevant domestic laws, regulations and
common practices in the market where the securities are issued, and the basis on which
pricing is determined should be reasonable.
E. The issue price for the common shares that are participating in the issuance of GDR for
cash capital increase is determined based on the market price of the Company's common
shares traded in domestic stock exchange market. It remains that the original shareholders
may purchase the Company's common shares in domestic stock exchange market at a
price close to the GDR issuance price. Since the original shareholders don’t bear any
exchange rate or liquidity risk, this arrangement is not expected to have any negative
impact on the interests of the original shareholders. The capital raised in this cash capital
increase plan is expected to be used for the following: strengthening the Company's
financial structure, enhancing the Company's capital adequacy ratio, repaying loans or one
or more purposes for the development of the Company's long-term strategies. The capital
raised is expected to enhance the Company's competitiveness and improve our operational
efficiency, and it will have a positive impact on shareholders' equity.
F. We ask that shareholders' meeting authorize the Board of Directors and/or the Chairman of
the Board to consider the content of the cash capital increase proposal (including but not
limited to the actual issue price, offering terms, project items, amount of capital raised,
schedule of completion, expected benefits and other matters relevant to the proposal),
make all necessary adjustments based on market conditions and regulatory requirements,
work out the final details and implement the proposal. If the cash capital increase proposal
must be changed as ordered by the regulatory authority or required by the circumstances,
we also ask that the Board of Directors and/or the Chairman be given full authorization to
carry out the corresponding changes.
G. In conjunction with the issuance of common shares for capital increase in cash and
participation in GDR issuance, we request that the Board of Directors authorize the
Chairman or a designated people by the Chairman to represent the Company in signing all
documents related to the participation in the issuance of GDR as well as in handling all
required matters related to the participation in the issuance of GDR.
H. For matters not covered herein, the Board of Directors and/or the Chairman shall proceed
with full authorization and in accordance with relevant laws and regulations.