Rising Demand for Electric Vehicles and Lithium
Leads to Revenue Growth of 4%
With the rise of clean energy industry, the demand for electric vehicles, lithium batteries and cloud servers has remained strong. Revenues from our sophisticated electronic measuring instruments and system products have been steadily growing at 4%. In 2015 Chroma recorded a revenue of NT$ 4.539 billion and a consolidated revenue of NT$ 9.692 billion. Net income after taxes stands at NT$ 1.194 billion, which amounts to an earnings per share (EPS) of NT$ 3.28. Looking ahead, we intend to keep working on meeting market demands for electric vehicles and alternative energy. Staying up-to-date on opportunities in the field of green energy will in turn generate more revenue and profit for all investors.
New Opportunities from Climate Change
More than 93% of R&D Projects Effectively Help Clients Achieve Green Products and Processes
The results from the 21st session of the Conference of the Parties (COP 21) under the UN Framework Convention on Climate Change (UNFCCC) have indicated that the key to dealing with climate change from increasing CO2 concentration lies in the promotion of 2 green technologies: 1. efficiency in use of electrical energy and 2. development and use of clean energy. IPCC was established in 1988 under the auspices of the UN, and is responsible for research and assessment of climate change. IPCC with hundreds of scientists dedicated to its research efforts and substantial amount of data is one of the most important sources on climate change. Every 5 to 7 years IPCC publishes an assessment report that serves as a synthesis of all other reports on climate change. The most recent report, the 5th assessment report (AR5), was published in 2014.
Our 2015 R&D spending had exceeded NT$ 872,966 million. This accounts for 9% of annual net revenue and represents a growth of 1% on a year-on-year basis. We have achieved a total of 27 tangible R&D results during the reported period, 25 of which (93%) deal directly or indirectly with green production processes and products in different industries. In addition, 22 of the R&D results have assisted the clients in raising electrical energy efficiency and 3 are involved in the development and use of clean energy. These R&D projects have served the monitor industry, LED industry, power supply industry, solar industry, electric vehicle industry, semiconductor industry, passive component industry and IC testing industry, among others. It is fair to say that we have been instrumental in the development of green products in different industries worldwide.
25 R&D Projects from 2015 (93%) Deal Directly or Indirectly with Green Production Processes and Products ►CSR Report Download◄
High Standards of Corporate Governance Ensures a Functioning Board of Directors
The directors exercise their powers with the long-term interests of the shareholders and corporation in mind. We also conscientious of the fact that more investment entities and stakeholders, at home and abroad, are looking at the presence of independent directors in corporate governance as an important factor in their decision to invest or not. For this reason, we continue to follow the principles of corporate governance. The board of directors is formed by shareholder votes, and committees of various functions are set up under the board to strengthen its performance. High standards of corporate governance ensure a functioning board of directors that safeguards the interests of shareholders.
Upgrades in Board of Directors
A total of 5 seats are allocated to directors in the reported year, including 2 occupied by independent directors. The latter accounts for 40% of the board. Strengthening the board’s independence and diversity enhances its role in strategic guidance. The board of directors meeting is held once every quarter at a minimum. A total of 6 were held in 2015 with the average attendance rate of nearly 90%. Leo Huang continues to occupy the position of the chairman, responsible for corporate governance and functioning of the board of directors. Based on Chroma’s own regulations and Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, the arrangement of the board of directors shall be taken into account in the election of independent directors. The criteria used for arranging Chroma’s board of directors include: business judgment and management, accounting and financial analysis, crisis management, industry knowledge, knowledge of foreign markets, leadership, decision-making, etc...
In accordance with the Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies, external studies are also arranged for our directors. Subjects from 2015 are: (1) business integrity and risk control (2) standard practice of board of directors and supervisors (3) sound corporate governance, etc...
The board of directors follows the principles of corporate governance during its audit of business performance and discussion of strategic topics such as economics, environmental and social impact, risks and opportunities, etc. Important resolutions of the board of directors are immediately published on the Market Observation Post System of Taiwan Stock Exchange. In addition, we also publish articles of association, rules of procedure of the board of directors, directors’ earnings, operation status and status of recusal in relationships of interest to keep all investors informed.
Remuneration Committee Carries out Salary Review
Remuneration Committee Carries out Salary Review
In compliance with the Securities and Exchange Act, a remuneration committee has been set up. 2 independent directors and 1 specialist are appointed in the 3-year term. 3 remuneration committee meetings have been held in 2015 with an attendance rate of 100%. The committee assists the board in assessing the remuneration of its directors, supervisors and managers, as well as the link to business performance. The percentage of profit allocation is then decided, along with recommendations on the managers’ remuneration and overall remuneration policy. The industry environment, business performance and market benchmarks are all taken into consideration. The corporation also regularly takes part in salary surveys from the industry or consulting firms, and examines the link between employee welfare and the market for an incentive-based system. Remuneration information on employees, directors and supervisors are disclosed in shareholder and annual reports.
Supervisors Uphold Standards on Finance, Personnel, and Audit
Under the Securities and Exchange Act, Chroma has set up 2 supervisors. In 6 board of directors meetings in 2015, 1 supervisor had an attendance rate of 100% while the other had an attendance rate of 83%. Supervisors are responsible for the following: 1.perform operational and financial auditing. 2. Audit account books and documents. 3. Supervise employee operations and investigate misconduct or negligence. 4. Review budget and final reports. 5. Review resolutions on earnings distribution or financial loss. 6. Other responsibilities accorded by the law. Lastly, an audit committee is expected to be set up in 2017 to further improve internal audit and risk management.
Managing with Integrity to Safeguard Shareholders’ Interests
We followed Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies and Corporate Governance Evaluation System from Taiwan Stock Exchange in the development of (1) Chroma corporate governance codes (by 2016), (2) Chroma integrity management codes, (3) Chroma insider trading prevention management, and other internal guidelines. The board of directors and management strive to implement management policies based on integrity, and have demonstrated as such in its internal management and business activities. In 2015 no complaints were lodged due to business operation, lack of employee integrity or unlawful activities.
Members of Board of Directors ►CSR Report Download◄
All Operations Strictly Comply with Domestic and International Laws and Regulations
We set up a legal department that reports directly to the general manager. The department ensures that all our activities are in accordance with domestic and international laws and regulations, and form the base of our future operation. During the reporting period we have complied with the Trade Secrets Act and set up internal regulations: Regulations on Confidential Files. In addition, the Information Protection Act is set up internally in compliance with the Personal Information Protection Act. Working overtime for more than 7 consecutive days has been observed during the reporting period, in violation of the Labor Standards Act. A total fine of 50 thousand was levied, and working hours now comply with all regulations. Finally, we inspected all of our operations according to the 3 compliance indices disclosed in GRI G4.
Environmental compliance: no significant amount of fines levied due to non-compliance with laws and regulations concerning environmental laws. Zero non-monetary sanctions.
Social compliance: no significant amount of fines levied due to non-compliance with laws and regulations concerning topics like financial reporting, workplace discrimination, corruption, etc. Zero non-monetary sanctions.
Sales compliance: no significant amount of fines levied due to non-compliance with laws and regulations concerning the provision and use of products and services during sales process.
•No incidents of corruption reported.
•No complaints lodged regarding violation of customer privacy or loss of customer data.
•No incidents reported regarding non-compliance of laws and regulations on marketing communication. These include advertising, promotion and sponsorship.
•No sales of disputed products reported.
•No incidents reported regarding non-compliance of laws and regulations on labeling information of goods and services.
• No incidents reported regarding non-compliance of laws and regulations on safety of products and services during their life cycle.
Customer satisfaction surveys are carried out in 3 language versions in the reported period, including Traditional Chinese, Simplified Chinese and English. Sampling criteria are based on customers whose 2015 trading value is upwards of NT$ 100,000. Product, marketing, operation personnel, after-sales service are the 4 main items in the survey. 421 responses were recorded. Overall, customers had a 4.12 out of 5 satisfaction rating in 2015. Operation personnel received the highest satisfaction rating of 4.25, while marketing recorded a growth of 0.02 points on a year-on-year basis and has been growing for 2 consecutive years.
Main areas of evaluation include: (1) products: early deliveries are a primary focus, without sacrificing quality and usability. Product features remain an important factor that influences customers’ buying decisions (2) marketing: the most popular means of marketing is through industry websites. Since some customers prefer real-time product information, communication software could play a bigger role in customer relationship (3) operation personnel: quality product instructions, along with personnel education and training are desired (4) after-sales service: improvements need be made in maintenance. Suggestions were also made on maintenance costs.
Results of Customer Satisfaction Survey