IBF — AGM Information 2018

Jun 26, 2018

==> picture [393 x 82] intentionally omitted <==

Handbook for the 2018 Annual Meeting of Shareholders

Time: June 15, 2018 (Friday)

Place:2F., No.113, Sec.7, Jhongshan N. Rd., Shihlin Dist., Taipei City, Taiwan, R.O.C.(National Training Institute For Farmers' Organizations TIEN-MOU Convention Center)

This English version handbook is a summary translation of the Chinese version and is for reference only. If there is any discrepancy between the English version and Chinese version, the Chinese version shall prevail.

1

Table of Contents

Table of Contents	Table of Contents	Table of Contents
I. Meeting Procedure		P3
II. Meeting Agenda		P4
	Report items	P5~ P6
	(A)2017 Business Report (B)Audit Committee's Review Report on the 2017 Financial Statements (C)Report on distribution of employees' compensation and directors' remuneration of 2017 (D)Implementation of Share Buyback Program
	Recognition items	P6~ P7
	(A)Adoption of the 2017 Business Report and Financial
	Statements
	(B)Adoption of the Proposal for Distribution of 2017 Profits
	Discussion items
	Proposal for a new share issue through capitalization of earnings.	P8
	Questions and Motions

2

Waterland Financial Holdings Co., Ltd.

Procedure for the 2018 Annual Meeting of Shareholders

1. Call the Meeting to Order.

2. Chairperson Remarks

3. Report items

4. Recognition items

5. Discussion items

6. Questions and Motions

7. Adjournment

3

Waterland Financial Holdings Co., Ltd.

Year 2018

Agenda of Annual Meeting of Shareholders

1. Call the Meeting to Order.(Report the number of shares present )

2. Chairperson Remarks

3. Report items

(A)2017 Business Report

• (B)Audit Committee's Review Report on the 2017 Financial Statements

(C)Report on distribution of employees' compensation and directors' remuneration of 2017

(D)Implementation of Share Buyback Program

4. Recognition items

(A)Adoption of the 2017 Business Report and Financial Statements

(B)Adoption of the Proposal for Distribution of 2017 Profits

5. Discussion items

(A)Proposal for a new share issue through capitalization of earnings.

6. Questions and Motions

7. Adjournment

4

Report Items

Report No.1

2017 Business Report.

Report No.2

Audit Committee's Review Report on the 2017 Financial Statements.

Report No.3

Report on distribution of employees' compensation and directors' remuneration of 2017.

Explanation:

• A. This matter was to conform to Article 235-1of the Company Act and Article 32 of the Articles of Incorporation of Company.

• B. The Company’s Profit before tax which has not deducted employees' compensation and directors' remuneration in 2017 was NT$2,408,402,863 , from which the Company planned to allocate NT$26,492,431(1.10%) as employees’ remuneration and NT$36,126,043(1.5%) as directors’ remuneration in cash.

• C. The motion has been approved at 3th meeting of Remuneration Committee of 3th term on March 15, 2018, and also approved by 8th meeting of the board of 6th term on March 27, 2017.

Report No.4

Implementation of Share Buyback Program.

Explanation:

• A. This matter was to conform to Article 28-2(7)of the Securities and Exchange Act.

• B. Results of the 5th Batch of share Buyback Program are listed below

5

Date of Board of Directors	2016/3/28
Legal basis	Article 28-2(1)of the Securities and Exchange Act
Purpose of buy-back	Transfer to employees
Buybackperiod	2016/3/29~2016/5/28
repurchase price per share	5.52~11.78
Number of shares bought back	40,000,000
Total value of shares bought back (The average buyback price per share)	NT$316,245,320 (per share NT$7.91)

• C. The company executed the first “2018 Treasury Stock Transfer to Employees Program” in April 2018, the outstanding shares repurchased and the employee subscription price are detailed as follows: 20 million shares were repurchased in the 5th batch of share buy-back program, with a cost per share at NT$ 7.91, which is exactly the same as employee subscription price.

• D. The aforementioned 20 million shares of treasury stock are not yet transferred to the employees by now. The company shall transfer these shares to the employees once or in subordinated terms within three years from the date of the repurchase of the shares.

Recognition Items

Proposal No.1

Adoption of the 2017 Business Report and Financial Statements. (Proposed by the Board)

Explanation:

• A. The Business Report and the Company’s Consolidated Financial Statements of 2017 have been examined by the Audit Committee,as well as approved by the 8th board meeting of the 6th term of the Board of Directors.

• B. The 2017 Business Report and Consolidated Financial Statements are attached as Attachment (omitted).

6

Resolution:

Proposal No.2

Adoption of the Proposal for Distribution of 2017 Profits. (Proposed by the Board)

Explanation:

• A. The motion has been approved by 8th meeting of the board of 6th term.

• B. 2017 net profit after tax is NT$ 2,370,784,389. After setting aside the legal reserve of NT$ 237,023,140, the unappropriated retained earnings are NT$ 2,133,208,258

• C. The proposed cash dividends to shareholders is NT$1,798,332,864 (NT$ 0.65 per share).The proposed stock dividends to shareholders is NT$331,999,920 (NT$ 0.12 per share). It is proposed that the Board of Directors be authorized to make relevant adjustment, if any, based on the total number of shares outstanding on the record date.

• D. Cash dividends shall be calculated and rounded down to dollar in proportion to stakeholding. The total amount of odd fraction will be counted as other income of Company.

• E. The 2017 Profit Distribution Table is attached as below.

Waterland Financial Holding CO., Ltd

Profit Distribution Table

Year 2017

(Expressed in New Taiwan dollars)

Beginning retained earnings Add(Less): Actuarial adjustment on defined benefit plans Adjusted unappropriated earnings Add(Less): Profit of the year Less: Legal reserve (10%) Distributable profit Distributable items: Cash dividends to ordinary shares Stock dividends to ordinary shares Unappropriated earnings	$10,900,403 -11,453,394 -552,991 2,370,784,389 -237,023,140 2,133,208,258 -1,798,332,864 -331,999,920 $2,875,474

Resolution:

7

Discussion

Proposal No.1

Proposal for a new share issue through capitalization of earnings (Proposed by the Board)

Explanation:

• A. In order to increase the company working capital and strengthen operational capacity, it is proposed to appropriate NT$331,999,920 from the 2017 distributable earnings as stock dividends.The par value of the shares to be issued is NT$10 and the total number of the common shares to be issued is 33,199,992 shares .

• B. The distribution of the new shares should be made to the shareholders with no consideration at the ratio of 12 new shares for every 1,000 shares held by shareholders. Odd lots less than one share thus collected by the Company will be placed at its par value with specific parties as determined by the Chairman of the Board of Directors.

• C. The rights and obligations on the new shares issued through the capitalization of earnings are the same as those of the existing shares.

• D. After this proposal is approved by the Annual General Meeting and the governing agency, the Board of Directors will determine the ex-right date for the capital increase and distribution of shares.

• E. If due to the amendment to laws or regulations or upon the approval of the governing agency, the board of directors is to be authorized to be in full charge of relevant matters of this case.

Resolution:

8

Appendix

List of the Shares Held by Each Director and All Directors

• A. The total number of the issued shares of the Company is 2,786,665,944 and the minimum number of shares required to be held by all directors is 188,529,957.(shareholding ratio 6.77%)

• B. As the Company has already set up the audit Committee by law, the legal requirement on the minimum share held by supervisor shall be no loger applied.

Book closure date: April 17,2018

				Book closure date: April 17,2018
Position	Name	Shareholding		Corporate shareholder
		share	ratio
Chairman	Chi-Lin Wea	54,632,359	1.96％	Ren WangCo., Ltd.
Vice Chairman	Ying Wu	84,123,433	3.02％	First Commercial Bank
Director	Steven Hung	54,632,359	1.96％	Ren Wang Co., Ltd.
Director	Chin-Yuan Kung	54,632,359	1.96％	Ren WangCo., Ltd.
Director	Michael Chen	54,632,359	1.96％	Ren WangCo., Ltd.
Director	Chih-ChiangHo	54,632,359	1.96％	Ren WangCo., Ltd.
Director	Cheng-Lin,Chen	200,601	0.01％	Hua Ji International Development Corp.
Director	Teng-Shan Tai	49,372,963	1.77％	Taiwan Cooperative Bank
Director	James Y. L. Wei	200,601	0.01％	Hua-Kang International Asset Management Corp.
Independent Director	Joanna Lei	0	--
Independent Director	Yeong-Chyan Wu	0	--
Independent Director	Ching-Sung Wu	0	--
Independent Director		0	--
Total		188,529,957	6.77％

9

Consolidated Financial Statements Balance Sheet

Accounting Title	2017/12/31	2016/12/31
Balance Sheet
Assets
Cash and cash equivalents	2,562,952	1,993,195
Due from the central bank and call loans to banks	7,373	177,492
Financial assets at fair value throughprofit or loss	127,834,741	123,200,250
Available-for-sale financial assets,net	106,886,402	103,914,636
Securitiespurchased under resell agreements	124,908	589,962
Receivables,net
Receivables,net	21,756,556	15,073,595
Current tax assets
Total current tax assets	488,533	488,767
Held-to-maturityfinancial assets,net	0	988,462
Investments accounted for usingequitymethod,net	1,689,547	1,618,287
Other financial assets,net
Other financial assets,net	5,248,103	4,552,218
Propertyand equipment,net	1,865,985	1,903,896
Intangible assets,net	220,263	364,019
Deferred income tax assets	116,048	96,821
Other assets,net
Other assets,net	1,071,320	1,210,981
Total assets	269,872,731	256,172,581
Liabilities and equity
Liabilities
Due to the central bank and banks	37,745,689	18,505,752
Financial liabilities at fair value throughprofit or loss	340,581	235,128
Securities sold under repurchase agreements	170,581,478	183,998,860
Commercialpapers issued,net	11,231,353	8,211,458
Payables
Totalpayables	9,720,550	6,706,110
Current tax liabilities	230,155	177,103
Provisions

10

Provisions for employee benefits	191,955	178,969
Provisions forguarantee liabilities	1,276,508	1,172,064
Otherprovisions
Total otherprovisions	6,914	48,377
Totalprovisions	1,475,377	1,399,410
Other financial liabilities
Total other financial liabilities	1,713,829	1,453,999
Deferred tax liabilities
Total deferred tax liabilities	58,104	21,081
Other liabilities
Total other liabilities	847,040	431,166
Total liabilities	233,944,156	221,140,067
Stockholders' equity
Equityattributable to owners ofparent
Capital
Common stock	27,866,659	27,460,748
Total capital	27,866,659	27,460,748
Capital surplus	122,240	100,068
Retained earnings
Legal reserve	1,403,011	1,191,990
Special reserve	234,587	234,587
Unappropriated earnings	2,370,231	2,116,174
Total retained earnings	4,007,829	3,542,751
Other equityinterest
Exchange differences on translation of foreign financial statements	-69,288	-24,477
Unrealizedgains(losses)on valuation of available-for-sale financial assets	539,105	171,858
Total other equityinterest	469,817	147,381
Treasuryshares	-158,123	-316,245
Total equityattributable to owners ofparent	32,308,422	30,934,703
Non-controllinginterests	3,620,153	4,097,811
Total equity	35,928,575	35,032,514
Total liabilities and equity	269,872,731	256,172,581
Equivalent issued shares of advance receipts for common stock(unit: share)	0	0
Number of treasuryshare acquired bythe companyand subsidiaries(unit: share)	20,000,000	40,000,000

11

Statement of comprehensive income

Accounting Title	2017/4th	2016/4th
Statement of comprehensive income
Net income(loss)
Net interest income(expense)
Interest income	2,870,269	2,929,092
Interest expenses	1,012,522	889,159
Net interest income(expense)	1,857,747	2,039,933
Net income(loss)except interest
Net service fee(charge)and commissions income(loss)
Net service fee(charge)and commissions income(loss)	2,520,349	2,214,597
Gain(loss)on financial assets(liabilities)at fair value throughprofit or loss
Gain(loss)on financial assets(liabilities)at fair value throughprofit or loss	843,445	642,658
Realizedgain(loss)on available-for-sale financial assets
Realizedgain(loss)on available-for-sale financial assets	335,930	24,307
Realizedgain(loss)on held-to-maturityfinancial assets
Realizedgain(loss)on held-to-maturityfinancial assets	5,315	0
Foreign exchangegains(losses)
Foreign exchangegains(losses)	675	-102,992
Impairment loss on assets(reversal of impairment loss on assets)
Impairment loss on assets(reversal of impairment loss on assets)	-203,627	-60,894
Share ofprofit(loss)of associates andjoint ventures accounted for usingequitymethod
Total share ofprofit(loss)of associates andjoint ventures accounted for usingequitymethod	101,670	86,034
Net other non-interest incomes(losses)

12

Rental incomes
Total rental incomes	78,168	79,829
Net other miscellaneous income(loss)
Net other miscellaneous income(loss)	803,078	391,786
Net other non-interest incomes(losses)	881,246	471,615
Net income(loss)except interest	4,485,003	3,275,325
Incomes	7,355,272	6,204,417
Expenses	4,339,226	3,560,030
Net income(loss)	6,342,750	5,315,258
Bad debt expenses andguarantee liability provisions
Total bad debt expenses andguarantee liability provisions	372,757	51,084
Operatingexpenses
Employee benefits expenses	-2,015,248	-1,735,435
Depreciation and amortization expense	-92,220	-91,556
Othergeneral and administrative expenses	-846,479	-792,796
Total operatingexpenses	-2,953,947	-2,619,787
Profit(loss)from continuingoperations before tax	3,016,046	2,644,387
Tax(expense)income	-472,230	-445,772
Profit(loss)from continuingoperations	2,543,816	2,198,615
Profit(loss)	2,543,816	2,198,615
Other comprehensive income
Components of other comprehensive income that will not be reclassified toprofit or loss,net of tax
Gains(losses)on remeasurements of defined benefitplans	-16,753	-27,049
Income tax related to components of other comprehensive income that will not be reclassified toprofit or loss	2,847	4,597
Components of other comprehensive income that will not be reclassified toprofit or loss,net of tax	-13,906	-22,452
Components of other comprehensive income that will be reclassified toprofit or loss,net of tax

13

Exchange differences on translation	-67,835	-97,027
Unrealisedgains(losses)on valuation of available-for-sale financial assets	421,202	-395,932
Share of other comprehensive income of associates and joint ventures accounted for using equity method, components
	29,353	-28,289
of other comprehensive income that will be reclassified toprofit or loss
Income tax related to components of other comprehensive income that will be reclassified toprofit or loss	-28,329	0
Components of other comprehensive income that will be reclassified toprofit or loss,net of tax	354,391	-521,248
Other comprehensive income	340,485	-543,700
Total comprehensive income	2,884,301	1,654,915
Profit(loss),attributable to
Profit(loss),attributable to owners ofparent	2,370,784	2,110,209
Profit(loss),attributable to non-controllinginterests	173,032	88,406
Comprehensive income attributable to
Comprehensive income,attributable to owners ofparent	2,681,767	1,593,333
Comprehensive income,attributable to non-controllinginterests	202,534	61,582
Basic earningsper share
Basic earnings(loss) per share from continuingoperations,net of income tax	0.86	0.77
Total basic earningsper share	0.86	0.77
Diluted earningsper share
Diluted earnings(loss) per share from continuingoperations,net of income tax	0.86	0.77
Total diluted earningsper share	0.86	0.77

14

Statement of cash flows

Accounting Title	2017/4th	2016/4th
Statement of cash flows
Cash flows from(used in)operatingactivities,indirect method
Profit(loss)from continuingoperations before tax	3,016,046	2,644,387
Profit(loss)before tax	3,016,046	2,644,387
Adjustments
Adjustments to reconcileprofit(loss)
Depreciation expense	63,307	63,517
Amortization expense	28,913	28,039
Provision(reversal ofprovision)for bad debt expense	372,757	51,084
Interest expense	1,012,522	889,159
Interest income	-2,870,269	-2,929,092
Dividend income	-150,880	-129,175
Share-basedpayments	30,573	0
Share of loss (profit) of associates and joint ventures accounted for using
	-101,670	-86,034
equitymethod
Loss(gain)on disposal ofpropertyand equipment	-17,286	206
Impairment loss on financial assets	203,627	60,894
Total adjustments to reconcileprofit(loss)	-1,428,406	-2,051,402
Changes in operatingassets and liabilities
Changes in operatingassets
Decrease(increase)in financial assets at fair value throughprofit or loss	-4,634,491	3,870,444
Decrease(increase)in available-for-sale financial assets	-2,549,304	-2,149,399
Decrease(increase)in securitiespurchased under agreements to resell	465,054	-579,964
Decrease(increase)in receivables	-6,904,838	940,574
Decrease(increase)in held-to-maturityfinancial assets	988,502	-471
Decrease(increase)in other financial assets	-532,032	286,523
Decrease(increase)in other assets	109,948	271,308
Total changes in operatingassets	-13,057,161	2,639,015
Changes in operatingliabilities
Increase(decrease)in financial liabilities at fair value throughprofit or loss	105,453	-34,786
Increase (decrease) in notes and bonds issued under repurchase
	-13,417,382	-9,197,057
agreement
Increase(decrease)inpayable	2,963,142	-1,171,669
Increase(decrease)inprovisions for employee benefits	-3,767	-6,004
Increase(decrease)inprovisions	-41,463	-31,359

15

Increase(decrease)in other financial liabilities	259,830	15,400
Increase(decrease)in other liabilities	415,874	-461,409
Total changes in operatingliabilities	-9,718,313	-10,886,884
Total changes in operatingassets and liabilities	-22,775,474	-8,247,869
Total adjustments	-24,203,880	-10,299,271
Cash inflow(outflow) generated from operations	-21,187,834	-7,654,884
Interest received	2,829,402	2,571,322
Dividends received	209,570	205,205
Interestpaid	-960,952	-849,409
Income taxes refund(paid)	-398,301	278,186
Net cash flows from(used in)operatingactivities	-19,508,115	-5,449,580
Cash flows from(used in)investingactivities
Acquisition of financial assets at cost	-182,901	115,230
Acquisition of investments accounted for usingequitymethod	0	-49,000
Acquisition ofpropertyand equipment	-171,965	-55,246
Proceeds from disposal ofpropertyand equipment	159,334	3
Decrease in operationguarantee	30,000	-25,000
Increase in deposits settlement fund	-2,408	19,153
Increase in refundable deposits	4,353	2,586
Acquisition of intangible assets	-16,971	-16,793
Increase in other financial assets	-39,386	25,000
Increase in other assets	-9,554	-10,855
Net cash flows from(used in)investingactivities	-229,498	5,078
Cash flows from(used in)financingactivities
Increase in due to the central bank and banks	19,239,937	5,558,685
Increase in commercialpaperspayable	3,019,895	310,656
Cash dividendspaid	-1,488,342	-695,886
Payments to acquire treasuryshares	0	-316,245
Treasuryshares sold to employees	157,724	0
Change in non-controllinginterests	-680,192	8,669
Net cash flows from(used in)financingactivities	20,249,022	4,865,879
Effect of exchange rate changes on cash and cash equivalents	-111,771	-104,838
Net increase(decrease)in cash and cash equivalents	399,638	-683,461
Cash and cash equivalents at beginningofperiod	2,170,687	2,854,148
Cash and cash equivalents at end ofperiod	2,570,325	2,170,687
Cash and cash equivalents reported in the statement of financialposition	2,562,952	1,993,195
Due from the central bank and call loans to banks qualifying for cash and cash
	7,373	177,49
equivalents under the definition of IAS 7

16

Statement of Stockholders' Equity

==> picture [728 x 441] intentionally omitted <==

17