DELPHA — AGM Information 2018

Jul 19, 2018

Table of Contents

．．．．．．．．．．．．．．．．．．． Meeting Procedures 1 ．．．．．．．．．．．．．．．．．．．．．．．．． Agenda 2 ．．．．．．．．．．．．．．．．．． Matters to Be Reported 3 ．．．．．．．．．．．．．．．．．． Matters for Recogniton 9 ．．．．．．．．．．．．．．．．．．． Temporary Motions 33 ．．．．．．．．．．．．．．．．．．．．．．．． Appendix 1. Individual and total number of shares held by the Directors as of April ．．．．．．．．．．．．．．．．．．．．．．．．． 17th, 2018 34 2. Effect of bonus shares on the Company's operating performance, ．．．． earnings per share and shareholder’s return on investment 35 ．．．．．．．．．． 3. Rules of procedure for shareholders’ meetings 37

Delpha Construction Co., Ltd. Procedures of 2018 General Shareholders’ Meeting

I. Call Meeting to Order II. Chairman's Speech III. Matters to Be Reported

IV. Matters for Recogniton

V. Temporary Motions

VI. Meeting Adjournment

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Delpha Construction Co., Ltd. Agenda of 2018 General Shareholders’ Meeting

Time: 9:00 am, June 15 (Friday), 2018

Venue: B1, No. 28, Lane 420, Section 5, Chenggong Road, Neihu District, Taipei City

• I. Call meeting to order

• II. Chairman's speech

• III. Management Presentations

• 2017 Business Report.

• Audit Committee’s Review Report on the 2017 Financial Statements.

• The Status of Endorsement and Guarantee.

• IV. Matters for Recogniton

• Adoption of the 2017 Business Report and Financial

  • Statements.

• Adoption of the Proposal for 2017 Deficit Compensation.

• V. Other proposals

• VI. Temporary Motions

VII. Adjournment

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III. Matters to Be Reported

1. 2017 Individual Business Status Report

In 2017, operating income fell due to a lack of completed buildings posted to the accounts, and the loss per share was NT$0.43. Apart from continuing our efforts in selling the remaining units of Reading green life, we expect to launch The urban green case at an appropriate time in the second half of the year. For the joint-construction The urben green case, we will also strive to have the construction contract signed with the landlord in the second half of the year; the design will be completed as soon as possible after the signing of the contract, and the pre-sale of the case will be launched after the construction license is obtained. For the urban renewal case in the Huaisheng section, the negotiations with the landlord for the joint construction as well as with the tenants of unlicensed buildings within the range of the urban renewal case have been progressing. Currently we are working on the product positioning and design for the case, and plan to complete the integration and product design within this year, for submission of the urban renewal business plan to the competent authority for review. The Taiyuan Road urban renewal case of the Company’s subsidiary Huachien Developement was also officially submitted in June 2017 for the urban renewal plan review by the competent authority; the public exhibition and public hearing of the urban renewal business plan was already completed on September 14, 2017, and the case will formally enter the urban renewal review process. It is hoped that the review process can be completed and the construction license be applied for within two years.

Thank you for your support.

The Company’s 2017 business status and 2018 business plan are as follows:

(1) 2017 Business Report

A. 2017 Business Plan Implementation Results

The Company’s 2017 operating income was NT$62.761 million, a decrease of NT$2,286.854 million from the 2016 operating income of NT$2,349.615 million, and the growth rate was a negative 97.33%. The 2017 net loss before tax was NT$108.656 million, a decrease of NT$589.059 million from the 2016 net income before tax of NT$480.403 million.

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B. 2017 Annual Operating Income Details

Unit: NT$’000

Case	No. ofpings	Amount
Xinyi B case (Xinyi Xiangxie)	42.93	6,449
Shitan Section B case (Huyue Tianyun)	89.55	55,228
Rental income	－	1,084
Total	132.48	62,761

C. Budget implementation status

The Company did not publish its 2017 financial forecast, so there is no need to disclose the budget implementation status.

D. Financial Revenue and Profitability Analysis

D. Financial Revenue and ProfitabilityAnalysis	D. Financial Revenue and ProfitabilityAnalysis
Item		2017	2016
Financial structure ％	Debt to assets ratio	33.30	33.64
	Long-term funds to property, plant and equipment ratio	5,289.38	5,597.43
Solvency ％	Current ratio	275.32	271.74
	Quick ratio	34.98	59.53
	Times interest earned ratio (times)	(3.5)	35.02
Profitabilit y ％	Return on Assets	(1.86)	7.24
	Return on equity	(3.39)	11.88
	Ratio of pre-tax net profit to paid-in capital	(4.01)	17.74
	Net profit (loss) rate	(181.99)	17.93
	Earnings per share (NT$)	(0.43)	1.57

A decreased operating income from last year resulted in a lower net income ratio and earnings per share.

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(2) Overview of the 2018 Business Plan

A. Business Strategy

From land development to design and construction, the Company has always been upholding the spirit of "cultivating space and caring for the earth", and pursuing the goal of "providing a high-quality and diversified construction and living space, and caring about the social environment to help create a beautiful and orderly environment". The Company also adopts an honest and responsible attitude to meet the needs of the general public and home buyers in the living environment and space.

In order to improve its competitiveness and business strength, the Company strives to achieve the following four goals:

• (1) Actively dispose of the unsold housing units and land to reduce the debt ratio.

• (2) Improve business strength and stabilize the financial structure.

• (3) Meet market trends and formulate strategies and response plans accordingly.

• (4) Effectively integrate resources and improve competitiveness.

• B. Business Goals

This year the Company will focus on:

• (1) the sale of the completed " Reading green life" shops and housing units.

• (2) the plan, design and sale of the " The urban green" pre-sale case.

• (3) the plan, design and sale of the “Wuchang Street ” pre-sale case.

• C. Important Production and Sales Policies

• Production Strategies:

The Company is committed to the construction of high-quality and intelligent high-quality residential and office buildings.

The production strategies are:

• (a) Business area: The elite area of Greater Taipei.

• (b) Development method:

• i. The land in the Greater Taipei area with convenient traffic routes will continue to be developed and promoted by means of joint construction and purchase.

• ii. Comply with the government's efforts in urban renewal, and actively participate in the urban renewal cases of the Greater Taipei area with economic effect.

• (c) Product type: high-tech office buildings and high-class residential buildings.

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Sales strategies:

• i. Commissioned sales:

Select good sales agencies to cooperate with, so as to allow the Company to focus on development, planning and construction.

  - ii. Sales by the Company itself:

     - Regardless of cooperating with distributors or agencies or selling on its own, the Company will play an active role and take the initiative so as to gain a first-comer advantage and achieve results in the context of the buyer’s market.

• (3) Future Company Development Strategies, External Competition Environment, Regulatory Environment and Overall Business Environment:

• A. The acquisition and integration of land in the Greater Taipei area has become increasingly difficult, and the cost of land and construction costs have risen. These factors are disadvantageous for the development of construction projects.

• B. Although the government has been vigorously promoting urban renewal, a lot of difficulties have been encountered and the schedule is delayed due to a lack of related decrees.

• C. The government has successively implemented "actual-price registration", "raising the standard housing price", "restricting housing loans" and "combining real-estate taxes on housing and land" which have limited the development of the construction and the investment industry.

• D. The economy of the overall construction industry is poor and there is a large amount of unsold housing units. At present, “concession” is the prevailing trend in the real estate industry for both pre-sale cases and the sale of constructed houses. Therefore, in the short-term the slowdown of the sale of residential units in the Greater Taipei area is difficult to change.

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2. Audit Committee’s Review of the Company's 2017 Final Account Report

Explanation:

1. The Company's 2017 final account book and individual and consolidated financial statements have been audited by certified public accountants Chen-Yu Kuo and Kuang-Hui Chen of Moore Stephens International has reviewed the documents above including the business report and loss provision table, and issued a review report.

2. The Audit Committee convener reads the review report.

Audit Committee’s Review Report

The Board of Directors has prepared to the Committee the Company's 2017 business report, financial statements (including consolidated and individual statements) and loss provision proposal. Among the documents, the financial statements have been audited by Moore Stephens International and an audit report has been issued accordingly. The Committed has completed the review of the above-mentioned 2017 business report, financial statements (including consolidated and individual statements) and loss provision proposal, and is of the opinion that there were no discrepancies contained therein. A report is therefore issued as above in accordance with the provisions of Article 14-4 of the Securities Exchange Act and Article 219 of the Company Law for your review and verification.

To 2018 General Shareholders’ Meeting of Delpha Construction Co., Ltd.

Audit Committee Convener: Ping-Joung Tseng

March 23, 2018

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3. The Status of Endorsement and Guarantee.

Explanation:

The maximum amount of the Company’s endorsement guarantee is NT$1,604,235,000, and the endorsement guarantee balance as of December 31, 2017 is NT$0. The details are as follows:

Unit: NT$’000

				Unit: NT$’000
Endorsement guarantee object		Maximum balance of theperiod	Period-end balance	Endorsement limit for a single enterprise
Companyname	Relationship
Huachien Development Co., LTD	Subsidiary	$450,000	-	$641,694

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IV. Matters for Recogniton:

1. Adoption of the 2017 Business Report and Financial Statements.

Explanation:

The Company's 2017 individual and consolidated financial statements have been audited by certified public accountants Chen-Yu Kuo and Guang-Hui Chen of Moore Stephens International. The Audit Committed has completed the review of the business report and loss provision proposal, and is of the opinion that there were no discrepancies contained therein. Please recognize.

Resolution:

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2. Adoption of the Proposal for 2017 Deficit Compensation.

(proposed by the board meeting).

Explanation:

The Company’s 2017 net loss after tax was NT$114,219,150. Therefore, no dividend will be distributed. A loss provision table is herewith attached. Please recognize.

Delpha Construction Co., Ld.

Statements of deficit compensated

2017

Unit: NT$

			Unit: NT$
Item		Amount	Remarks
Undistributed earnings at the beginning of the period		391,058,278
Plus: 2017 actuarial profits included in retained earnings		1,892
Plus: Change of booking of special surplus reserves appropriated accordingto law		2,655,548
Plus: After-tax loss of the year		(114,219,150)
Undistributed earnings at the end of the period		279,496,568

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V. Temporary Motions

VI. Meeting Adjournment

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Appendix 1

Shareholdings of individual and all Directors in the shareholders’ register as of April 17, 2018

Title	Name	Date elected	Term	Shareholdings when elected		Shareholdings on the shareholders’ register as of book-close date
				No. of shares	%	No. of shares	%
Chairman	Chin-Yi Lee	May 31, 2017	3 years	257	0.00%	257	0.00%
Director	Wen-Liang Lin	May 31, 2017	3 years	7,173,941	2.65%	7,073,941	2.61%
Director	Po-Fong Lin	May 31, 2017	3 years	11,875,008	4.39%	11,245,008	4.15%
Director	Rongzhi Investment Co., Ltd. Representative: Chao-JungLin	May 31, 2017	3 years	8,183,499	3.02%	10,132,499	3.74%
Independent Director	Ping-Joung Tseng	May 31, 2017	3 years	0	0.00%	0	0.00%
Independent Director	Zong-Ren Jhan	May 31, 2017	3 years	0	0.00%	0	0.00%
Independent Director	Chang-Ter Chang	May 31, 2017	3 years	0	0.00%	0	0.00%
Total shareholdings of all Directors: 28,451,705 shares

Total shares issued as of May 31, 2017: 270,752,466 shares Total shares issued as of April 17, 2018: 270,752,466 shares

• Note: 1. Statutory shareholding of all Directors of the Company: 12,000,000 shares. As of April 17, 2018 the shareholding of all Directors is 28,451,705 shares.

• The Company has set up an Audit Committee, and the statutory shareholding of supervisors therefore does not apply.

• Shareholding of Independent Directors is not included in the shareholding of Directors.

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Appendix 2

The effect of bonus shares on the Company's business performance, earnings per share and shareholders' return on investment:

Unit: NT$’000 except earnings per share which is in

NT$

NT$
Item	Year		2018 (Estimates)
Paid-in capital	at the beginningof theperiod		2,707,525
Stock (cash) dividend of the year	Cash dividendper share		0
	Bonus shares per share due to capital increase from surplus		0
	Bonus shares per share due to capital increase from statuarycapital reserve		0
Change of business performance	Operatingincome		1.The Company did not publish its 2018 financial forecast, so there is no need to disclose the 2018 financial forecast. 2. Due to a net loss in 2017, no dividend will be distributed.
	Ratio of operating profit increase (decrease) over the sameperiod of lastyear
	Post-tax netprofit
	Ratio of post-tax net profit increase (decrease)over the sameperiod of lastyear
	Earningsper share
	Ratio of earnings per share increase (decrease)over the sameperiod of lastyear
	Annual average ROI (annual average P/E ratio)
Earnings per share and P/E ratio to be prepared	If all the capital increase from surplus is paid out in cash dividend	Earnings per share to be prepared
		Annual average ROI to be prepared
	If there is no capital increase from capital reserve	Earnings per share to be prepared
		Annual average ROI to be prepared
	If there is no capital increase	Earnings per share to be prepared

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from capital Annual average ROI to be reserve and the prepared capital increase from surplus is paid out in cash dividend

Note: 1. The Company should state the underlying assumptions on which the estimates or data to

be prepared are based

1. If all the capital increase from surplus is paid out in cash dividend, the earnings per share to be prepared = [net profit after tax - interest expense to be borne by cash dividends × (1-tax rate)] / [total number of shares issued as of the end of the year - number of bonus shares from surplus]

2. Interest expense to be borne by cash dividends = amount of capital increase from surplus × one-year general lending rate

3. Number of bonus shares from surplus: the additional number of shares from the previous year's surplus distribution

4. Annual average P/E = annual average price per share / surplus per share as in the annual financial report

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Appendix 3

Delpha Construction Co., Ltd. Rules of Procedure of Shareholders’ Meeting

Revised on June 21, 2002

• Article 1: Except as otherwise provided in the laws and regulations, the procedure of the shareholders' meetings of Delpha Construction Co., Ld. (hereinafter referred to as the Company) shall be handled in accordance with these Rules.

• Article 2: The attending shareholders and proxies shall sign in personally or submit the attendance card for the purpose of calculating the number of shares represented by the attending shareholders and proxies.

• Article 3: When the attending shareholders represent a majority of the total number of issued shares, the Chairman shall call the meeting to order. If at the meeting time the number of attending shareholders and proxies does not reach the quorum, the Chairman may announce a postponement of the meeting, provided that length of the postponement is no more than 1 hour. If the quorum is still not met after two postponements, but the attending shareholders and proxies represent one third or more of the total number of issued shares, a tentative resolution may be made with the consent of the attending shareholders and proxies representing more than half of the voting rights pursuant to Article 175 of the Company Law. All the shareholders shall be notified of the tentative resolution, and the shareholders’ meeting shall be re-convened within a month.

• Article 4: If the quorum is met after a tentative resolution is made in the shareholders’ meeting, the Chairman may call the meeting to order at any time and submit the tentative resolution that has been made to the shareholders’ meeting for recognition.

• Article 5: If a shareholders’ meeting is convened by the Board of Directors, the meeting agenda shall be set by the Board of Directors. The meeting shall proceed in the order as set in the agenda, which may not be changed without a resolution of the shareholders’ meeting.

• The provisions of the preceding paragraph apply mutatis mutandis to a shareholders’ meeting convened by a party with the power to convene that is not the Board of Directors.

• Unless there is a resolution of the shareholders’ meeting, the Chairman may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda (including extraordinary motions).

• After the meeting is adjourned, the shareholders shall not elect another chairman to continue the meeting at the original site or another place. However, if the Chairman’s declaration of the meeting adjournment violates of the Rules of Procedure, a new chairman may be elected by the attending shareholders with more than half of the voting rights to continue the meeting.

• Article 6: Before speaking, an attending shareholder must write down on a speaker's

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slip the subject of the speech, the shareholder’s account number (or attendance pass number) and the account name. The order in which the shareholders speak shall be set by the Chairman. An attending shareholder who has submitted a speaker's slip but does not speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker's slip, the spoken content shall prevail. At the time a shareholder speaks, the other shareholders shall not speak and interfere except with the consent of the Chairman and the speaking shareholder, otherwise the Chairman shall stop such interfering behavior.

• Article 7: The shareholder's speech is limited to five minutes at a time; however, with the permission of the Chairman, it may be extended by five minutes, with a limit of one extension.

• Article 8: A shareholder may not speak for more than twice on the same motion. The Chairman may terminate the speech if a shareholder's speech exceeds the time limit or the scope of the agenda.

• Article 9: During the discussion of the motion, the Chairman may, at the appropriate time, announce the conclusion of the discussion after obtaining the consent of the attending shareholders. If necessary, the Chairman may declare a termination of the discussion and submit the motion for voting. Non-motions shall not be discussed or voted on.

• Article 10: Except as otherwise provided in the Company Law or in the Articles of Association, a motion is passed with the consent of the attending shareholders with more than half of the voting rights. At the time of voting, a motion is passed if the Chairman does not receive any negative response to his/her inquiry, and this verbal voting has the same validity as physical votes.

• Article 11: During the course of a meeting, the Chairman may announce a break based on time considerations. If the discussion of all the motions can not be completed in a single meeting, a resolution may be adopted at the shareholders’ meeting to defer or resume the meeting within 5 days without any further notices or announcements.

• Article 12: In the event of an air raid warning during the meeting, the Chairman may rule the meeting temporarily suspended for evacuation. The Chairman shall announce a resumption of the meeting one hour after the lifting of the warning.

• Article 13: Where a legal person is entrusted to attend a shareholders' meeting, the legal person shall appoint only one representative to attend. Where a legal-person shareholder appoints two or more representatives to attend a shareholders' meeting, only one of the representatives may speak on the same motion.

• Article 14: When there are incompatible amendments or alternatives to a motion, the Chairman shall decide the order in which they shall be put to a vote. When any of them is passed, the other incompatible motions shall then be deemed rejected and no further voting shall be required.

• Article 15: The Chairman may direct the proctors (or security personnel) to help maintain the order at the meeting. Such proctors (or security personnel) shall wear an identification card or armband bearing the word "Proctor".

• Shareholders shall obey the command of the Chairman and proctors (or security personnel) for the maintenance of order. The Chairman and

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proctors (or security personnel) may expel those who hinder the proceeding of the shareholders’ meeting.

• Article 16: The attendance and voting at the shareholders' meeting shall be based on the number of shares represented by the attending shareholders.

• Article 17: The venue of the shareholders' meeting shall be the county or city where the head office of the Company is located or a place convenient for the shareholders' attendance and suitable for holding the shareholders' meeting. The meeting start time shall not be earlier than 9:00 am or later than 3:00 pm.

• Article 18: Unless as otherwise provided in the Company Law, the meeting shall be chaired by the Chairman of the Board. If the Chairman of the Board is on leave or for any reason unable to exercise the powers of a chairman, the Deputy Chairman shall act in the place of the chairman. If there is no Deputy Chairman in place or the Deputy Chairman is also on leave or for any reason unable to exercise the powers of a chairman, the Chairman shall appoint one of the Managing Directors to act as the chairman for the meeting. If there are no Managing Directors in place, the Chairman shall appoint one of the Directors to act as the chairman for the meeting. If the Chairman does not make such an appointment, then the chairman for the meeting shall be elected among the Managing Directors or Directors. If the shareholders' meeting is convened by a party other than the Board of Directors, the convening party shall be the chairman of the meeting.

• Article 19: The Company may appoint its lawyer, accountant or related persons to attend the shareholders' meeting in a non-voting capacity. The meeting affair staff of the shareholders' meeting shall wear an identity card or an armband.

• Article 20: The Company shall audio-record or video-record the whole process of the shareholders' meeting and shall keep the recording for at least one year.

• Article 21: After an attending shareholder has spoken, the Chairman may either respond in person or appoint a relevant person to respond.

• Article 22: The motion-voting scrutineers and vote-counting personnel shall be designated by the Chairman and approved by the attending shareholders, but the scrutineers shall also be shareholders themselves. The results of the voting shall be announced on the spot and recorded accordingly.

• Article 23: The Rules are established in accordance with the “Key Points for Rules of Procedure for Listed Companies’ Shareholders’ Meetings”, and implemented after the adoption of the resolution in the shareholders’ meeting. The same procedure applies to the amendments to the Rules.

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