HON HAI PRECISION INDUSTRY CO., LTD. Meeting Handbook

Transcription

1 [Summary Translation] HON HAI PRECISION INDUSTRY CO., LTD. Stock Code: 2317 Annual General Shareholders Meeting For Year 2011 Meeting Handbook June 8,

2 HON HAI PRECISION INDUSTRY CO., LTD. Annual Shareholders Meeting For Year 2011 Meeting Procedure Time of Meeting: Location of Meeting: June 8, 2011 (Wednesday) at 9:00 am 2 Tze-yiu Street, 5 Floor Tu-cheng Industrial Park Tu-cheng City, Taipei Hsien, Taiwan I. To report the total number of shares represented in this AGM meeting II. To announce the commencement of meeting III. Chairman s addresses IV. Items to be reported V. Matters to be acknowledged and discussed VI. Extraordinary Motions VII. Adjourned Meeting 2

3 HON HAI PRECISION INDUSTRY CO., LTD. Regular Shareholders Meeting for Year 2011 Agenda I. Chairman to announce the commencement of meeting. II. Chairman s report. i. To report business of ii. iii. iv. Statutory Auditors review of 2010 audited financial statements. Status Report of Company's indirect investment in Mainland China. Status Report of domestic and foreign corporate bond issuance III. Matters to be acknowledged and discussed: i. To acknowledge 2010 business operation report and 2010 audited financial statements. ii. iii. To acknowledge the proposal for distribution of 2010 profits. To approve the new shares issuance for capital increase by earnings re-capitalization. iv. To approve the overseas depository receipts ( DR s) issuance. v. To amend the Company s Articles of Incorporation. IV. Extraordinary Motions V. Adjourned Meeting 3

4 Matters to be Reported: Proposal One: Reporting the Company s Business Operation Reports and Financial Statements for year Description: 1. Please refer to addendum for detailed Business Operation Reports. 2. Please refer to addendum for detailed financial statements. 4

5 Proposal Two: Please review Statutory Auditors review reports and the audited financial statements for the year ended 31 December Description: 1. Please refer to financial statements. 5

6 Proposal Three: Reporting the Company s new indirect investments in Mainland China during Description: The new 2010 investments in Mainland China made via overseas subsidiaries are as follows: Approval Certificate # Company Name Amount Approved (US$) Honxun Electrical Industry (Hangzhou)Co.,Ltd. 14,390, System Integration Electronics (Hangzhou)Co.,Ltd. 11,283, Fukui Precision Component (ShenZhen) Co., Ltd. 30,009, Fuhuajie Industry (Shenzhen) Co.,Ltd. 45,000, Hongqisheng Precision Electronics (Qinhuangdao) Co., Ltd. 6,430, Hongqisheng Precision Electronics (Qinhuangdao) Co., Ltd. 19,034, HongHengSheng Electronical Technology (Huaian) Co., Ltd. 19,291, Hongqunsheng Precision Electronics (Yingkou) Co.,Ltd. 10,717, Foxconn Precision Electrons (Yantai) Co., Ltd. 9,193, YANTAI ZHENG YI PRECISION ELECTRONICS CO., LTD. 646, Wuxi IinGuan Metal Science & Technology Co.,Ltd. 1,587, Shanghai An Xin Gou Limited 50,000, Guangzhou OED Technologies Co., Ltd. 2,000, Hongfujin Precision Electronics (Chongqing) Co., Ltd. 50,000,000 6

7 Proposal Four: Status Report of domestic and overseas corporate bond issuance. Description: 1. To fulfill the needs of working capital and repayment of short-term debt, the Company, after obtaining the approval from Financial Supervisory Commission of Executive Yuan dated December 17, 2010 with the FSC Approval Certification No approving of total amount of NT$6 billions domestic unsecured corporate bond. (1) Conditions of Issue: (i) Total Amount of Issue: NT$6 billions (ii) Issue Period: ~ (iii) Face Value: NT$1,000,000 (iv) Issue Price: At Par (v) Issue Coupon/Interest Rate: fixed interest rate at 1.43% per anuum (vi) Repayment of Principal: By end of forth and fifth year since the issuing date, repay 50% of principal according to the face value. (vii) Distribution of Interest: Since the issuing date, based on the coupon rate distributing interest once a year with simple interest-bearing. (2) The Company s domestic unsecured corporate bonds traded in GreTai Securities Market since the issuing date. (3) Abovementioned amount of fund raising is fully executed in Q To fulfill the needs of overseas material procurement, the Company, after obtaining the approval from Financial Supervisory Commission of Executive Yuan dated August 18, 2010 with the FSC Approval Certification No approving of total amount of US$1 billions overseas unsecured convertible bond. (1) The issuing date of the overseas unsecured convertible bonds was Oct. 12, 2010 with 3 year issue period and the coupon rate is 0%. Apart from early redemption, repurchase and cancellation, bondholders exercise the conversion right, laws and regulations and fiduciary contracts stipulating the suspension of the transfer period, bondholders may request the issuer to convert the bonds into newly issued ordinary shares of the company in the period between 30 days after issuing date and 30 days before the due date. (2) The Company s overseas unsecured convertible bonds traded in Singapore Stock Exchange since the issuing date. (3) Abovementioned amount of fund raising is fully executed in Q

8 Motions for Acknowledgement and Discussion (Proposed by the Board of Directors, BoD ) Motion 1: The operation performance reports and financial statements of the Company in 2010 have been completed and submitted. Please acknowledge. Descriptions: The operation performance reports and financial statements of the Company in 2010 have been approved by BoD, and have also been reviewed and audited by Supervisors. Please refer to Appendix and Appendix for the Books mentioned as above. Resolution: 8

9 (Proposed by BoD) Motion 2: The proposal of dividends repatriation program for the year of Please acknowledge. Description: 1. The dividend repatriation program of the Company for the year of 2010 has been submitted by BoD, in accordance with Company Act as well as Articles of Incorporation of the Company, as follows. 2. The Company s net profits after taxes for year 2010 is NT$77,154,550,754 by deducting the appropriated as legal capital reserve of NT$7,715,455,075 and adding the accumulated unappropriated earnings at beginning of period amounted NT$193,792,804,332, the available for appropriation of earnings at end of period is equal to NT$263,231,900,011, the Company plans to distribute dividends of NT$14,491,872,303 to shareholders. The abovementioned dividend will distribute first from year 2010 earnings. 3. After subjecting to the passage by regular shareholders meeting, the ex-dividend date for the cash and stock dividend repatriations would be decided by BoD. 4. If the number of total shares outstanding, prior to the ex-dividend date for the repatriation, has been changed due to the shares repurchasing by the Company, or treasury shares transferred to employees, shares conversion from domestic convertible bonds, etc., so as affecting the ratios of the stock dividends and cash dividends to be adjusted, BoD is authorized for such adjustments. Resolution: Hon Hai Precision Ind. Co., Ltd. Table of Earning Appropriations Year of 2010 Items Amounts Note Net profits after taxes for the year 77,154,550,754 Less: Appropriated as legal capital reserve (10%) 7,715,455,075 Available for appropriation of earnings for the year 69,439,095,679 Add: Accumulated unappropriated earnings 193,792,804,332 Available for appropriation of earnings 263,231,900,011 Items of Repatriations Shareholders bonus Unappropriated earnings Notes: Employee bonus 5,555,127,654 Compensation of BoD and Supervisors 0 Notes: 1. To repatriate the earnings of 2010 in higher priority Unit: New Taiwan Dollar Stock dividend NT$0.5 per share 14,491,872,303 Cash dividend NT$1.0 per share 9

10 (Proposed by BoD) Motion 3: Proposal of capital increase from retained earnings. Please review and discuss. Description: In order to expand the manufacturing capacity, it s to propose to have capital increase from retained earnings as well as employees bonus to issue new shares. 1. Capital increase from retained earnings: The company consider the demand of future business development, it s to propose to have capital increase from retained earnings as well as employees bonus to issue new shares. Appropriated from shareholders bonus of NT$4,830,624,100; while employees bonus of NT$5,555,127,654, and the number of shares issued to employees will be the closing price of the previous day of shareholders meeting, also need to consider the impact of ex-dividend as the basis for the calculation, it should be distributed in cash to employees for the portion of less than one share after the calculation. 2. The conditions of the new share issuance: (1) According to the proposed capital increase plan, 50 common shares will be repatriated for every 1,000 common shares for free, except for the part of employees stock bonus, recorded in the shareholders books and calculated as their shares held on the ex-dividend date. The number of shares repatriated to each shareholder for less one share will be purchased by the welfare committee of the Company in par value as calculated to the rounding of New Taiwan Dollar. (2) The new shares issuance by the capital increase will carry the same rights and obligations as the current outstanding shares. (3) The repatriation of employees bonus will be in accordance with the employees bonus policy of the Company. (4) The ex-dividend date will be decided by the Board of directors meeting after the regulators approval. (5) If the number of total shares outstanding, prior to the ex-dividend date for the repatriation, has been changed due to the shares repurchasing by the Company, or treasury shares transferred to employees, shares conversion from the convertible bonds, etc., so as affecting the ratios of the stock dividends to be adjusted, BoD is authorized for such adjustments. (6) BoD is authorized for any necessary amendments of the capital increase plan due to the needs of actual practices or by the instructions of regulators authorities. Resolution: 10

11 (Proposed by BoD) Motion 4: Propose to conduct a capital increase from cash, by means of common shares issuance to participate Global Depositary Receipts ( GDRs ) offerings. Description: 1. In order to raise funds to support future developments of the Company (include but not limited to capacity expansion, overseas procurement, long-term investment, debt repayment), as well as to raise capitals by ways of internationalized and diversified, it s to propose to shareholders meeting for the authorization to BoD to increase capitals from cash by means of common shares issuance to participate GDRs offerings. 2. The offerings of GDRs should be in compliance with the following rules, by authorizing BoD to handle the related matters: (1) The newly issued common shares by the capital increase from cash to participate GDRs offering would not be exceeded 1 billion shares. (2) The offering price will be referred to the market price of the common shares at offering; while the decision of the final offering price will be authorized to Chairman of the Board in discussion with securities underwriters in accordance with market condition at offering. The market price of the common share at offering would be referred to and calculated, in accordance with capital market practices and by the agreement between the Company and underwriters, either the close price of the common shares on the pricing date of the GDRs offering, or the average close price of those in certain period prior to the offerings. (3) Besides the 10% of those reserved for the Company employees subscriptions by the Article 267 of the Company Act, the remaining 90% of the newly issued common shares would be proposed to Shareholders meeting, by Article 28-1 of the Securities and Exchange Law, for public offering to become the original shares for the GDRs offering. The unsubscribed portion of the reserved shares for employees is authorized Chairman for delegated parties to subscribe or to be participated as the original shares on the GDRs (4) The offering details for the capital increase from cash, by means of common shares issuance to participate GDRs offering, including the offering price, number of shares (or quota) to be issued, terms and conditions, uses of proceed, amount to be raised, the offering schedule and possible effects, as well as other related offering procedures, are authorized to BoD for the arrangements and modifications according to market conditions. It s also fully authorized to Chairman for any necessary amendments pursuant to the opinions from regulator authorities or due to the changes from operating valuation or market conditions. (5) To comply with the capital increase from cash, by means of common shares issuance to 11

12 participate GDRs offering, it s to authorize Chairman or other designated persons by Chairman to represent the Company to sign for all of the related documents as well as handling the related matters. (6) After obtaining the approval from regulators, it s to authorize BoD for the related matters on the cash capital increase program. (7) If anything is not mentioned above, it shall be authorized to the BoD for the follow-up in accordance with relevant laws and regulations. 3. The offering price of the issuance should be fair as referred to the market practices and related regulations. In addition, the proposed capital increase from cash by means of new common shares will be issued for up to 1 billion, which accounts for 10.0% of the total shares outstanding of the Company. It would not substantially diluted for the shares of the original shareholders, so as not having major impact on the shareholding rights of them. Resolution: 12

13 (Proposed by BoD) Motion 5: Amend the Articles of Incorporation of the Company. Please review and discuss. Description: To meet the operation needs and in compliance with the Company Law, it s to propose to amend certain articles of the Articles of Incorporation. Please refer to Appendix for the comparison table of the amended and the original articles. Resolution: 13

14 Other Business or Special Motion 14

15 [Appendix 1] 2010 Business Report The business of 2010 is reported as follows: 1. The operating results of 2010 are described as below: The Company has delivered another excellent performance, and for another record year on the revenues and net profits. The consolidated net revenues of 2010 was NT$2,997,205 million, compared with NT$1,959,182 million in 2009, by increase of NT$1,038,023 million, a 53.0% YoY growth. The net profit was NT$77,154 million in 2010, compared with NT$75,685 million in 2009, for a 1.9% YoY increase. 2. The review of 2010 and the outlook for 2011 It's about time again to make summary of a year! The global economic situation was just like roller coaster in recent two years, on the rescue basis, the governments work together to turn the global economy around, in despite of the economic situation in year 2010 was significant improved from the sharp decline of year 2009, however due to the discrepancies of recovery situations led to a clear differentiation on financial and fiscal related macro-control policies for each country, which also shows, besides natural disaster, the man-made global economic risks have not yet eliminated. In order to stimulate demand, against deflation and remedy the unemployment rate, the United States maintains zero interest rates, and launched a second round of quantitative easing monetary policy (QE2). For those European countries, weak economic recovery, fragile banking system, worsened fiscal balance and those countries including Greece, Ireland, Portugal and Spain broke out sovereign debt crisis; in order to boost market confidence, the European countries also maintain low interest rates and quantitative easing policy, and develop some other action plans including deficit reduction. Compared to those western countries, the role of emerging markets in the global economy has rapidly risen to become the main growth driver of global economy since the financial crisis; however due to excessive liquidity of dollars and a substantial inflow of international capital led to the rapid appreciation of currency in those emerging market and commodity export countries, furthermore, many countries took actions on forex intervention which resulted in the possibility of disputes on trigger a global currency war, also contributed the great pressure on inflation and asset bubbles for those countries in emerging markets. Review the structural changes of global political and economic environment in the past year, including rocketed labor costs and prices of a variety of raw materials and crops, making the unprecedented severe business environment ever faced. However, in the efforts of all employees the Company overcame all the challenges, not only reached outstanding operating performance creating the first a hundred billions revenue of private enterprise in Chinese society, but also led on various technology trends based on its independent and solid innovation; in addition, the Company develops much deeper and trusted strategic partner relationship among those global leading brand customers based on its ecmms platform and channel service extension, at same time, the Company has become a leader in the aspects of committing to corporate social responsibility and building a harmonious society by large-scale wage increasing. Looking to year 2011, from an economic perspective, although the global economy is expected to resume growth, however due to clear differentiation on macro-control policies in different countries, international financial market turmoil will continue, the unemployment rate is still high in developed countries, the trade protectionism, such as resource monopoly and currency war, will be heating up, the overall economic and financial environment continues to face huge structural alignment; from the industrial perspective, the smart mobile devices sweeping the world completely disintegrated the PC-centric era. 29

16 However, today's business environment and industry ecosystem have been very different from the past decade, the Company has always been self encouraged to become the pathfinder, after deepening of the Group s one-stop Opto-Mechatronics platform and diversified service platform, the Company will accelerate the paradigm shift in order to grasp the new opportunities from consumer-product-centric Green and Smart cloud era, the so called Post PC era. Finally I would like to reiterate on behalf of all shareholders, to all the families of staff and staff on the most sincere thanks. And wish the management team continue to work hard to maintain superior operating results. Thanks. 30

17 [Appendix 2] The Audited Report by Supervisors The financial statements, business report and the profit distribution table have been audited by us as Supervisors of the Company. We deem no inappropriateness on these documents. In accordance with Article 219 of the Company Law, hereto we present for the audited report. Please review. Submitted to: 2011 Regular Shareholders Meeting of the Company Hon Hai Precision Ind. Co., Ltd. Supervisor: Qing-Yuan Huang On the Date of April 28th,

18 The Audited Report by Supervisors The financial statements, business report and the profit distribution table have been audited by us as Supervisors of the Company. We deem no inappropriateness on these documents. In accordance with Article 219 of the Company Law, hereto we present for the audited report. Please review. Submitted to: 2011 Regular Shareholders Meeting of the Company Hon Hai Precision Ind. Co., Ltd. Supervisor: Fu-Rui International Investment Co., Ltd. Representative: Wan Jui-Hsia On the Date of April 28th,

19 [Appendix 3] Audited Reports by CPA and Financial Statements 33

20 [Appendix 4] Hon Hai Precision Ind. Co., Ltd. The Comparison Table for the Amendment of Articles of Incorporation Before amendment After amendment Reasons Article 4: The company established the headquarter in Taipei County, when necessary, the company can set up branches or subsidiaries in domestic or overseas after gaining the resolutions of BoD. After the resolutions of BoD, the company allows to investment in domestic or overseas, but if the company belongs to limited liability shareholder, the total investment amount will not restricted under company law Article 13 related to up to 40% paid-in capital. Article 6: The total capital stock of the Company is NT$108.2 billion, divided into billion shares with NT$10 each. The shares could be paid-up in installment by authorized to the Board for the issuance. Among which 2 billion shares are reserved for the warrants or entitlement certificates for the convertible debt issuance. The Board is also authorized for the issuance in installment. Article 30: the Articles of Incorporation is formed on January 5, 1974 with the 35 th amended on December 24, 2003; with the 37 th amended on June 14, 2005, and with the 39 th amended on June 8, 2007, and the 40 th amended on June 2, 2009, and the 41 th amended on April 16, 2010, and the 42th amended on June 8, Article 4: The company established the headquarter in New Taipei City, when necessary, the company can set up branches or subsidiaries in domestic or overseas after gaining the resolutions of BoD. After the resolutions of BoD, the company allows to investment in domestic or overseas, but if the company belongs to limited liability shareholder, the total investment amount will not restricted under company law Article 13 related to up to 40% paid-in capital. Article 6: The total capital stock of the Company is NT$117.5 billion, divided into billion shares with NT$10 each. The shares could be paid-up in installment by authorized to the Board for the issuance. Among which 2 billion shares are reserved for the warrants or entitlement certificates for the convertible debt issuance. The Board is also authorized for the issuance in installment. Article 30: the Articles of Incorporation is formed on January 5, 1974 with the 35 th amended on December 24, 2003; with the 37 th amended on June 14, 2005, and with the 39 th amended on June 8, 2007, the 40 th amended on June 2, 2009, the 41 th amended on April 16, 2010, the 42th amended on June 8, 2010 and the 43 rd amended on June 8, Complied with the capital increase plan Adding an amendment date of the Articles of Incorporation 34