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VII. Financial Status, Review of Business Performance, and Risk Management B.Business Performance 252 2009 Taishin Holdings Annual Report Unit: NT$1,000 Item 2008 2009 Value Change % Investment income calculated according to equity method 1,246,970 2,681,297 1,434,327 115.02 Other incomes 735,365 7,835,796 7,100,431 965.57 Investment loss calculated according to equity method (5,269,349) (396) 5,268,953 (99.99) Operating expense (327,265) (430,614) (103,349) 31.58 Other expenses and loss (1,556,582) (1,975,367) (408,785) 26.09 Pre-tax income (loss) (5,180,861) 8,110,716 13,291,577 (256.55) After-tax income (loss) Explanation for changes and variations : (5,227,592) 8,183,147 13,410,739 (256.54) (1) Investment net income based on equity method in 2009 was higher than that in 2008, due to turnaround of subsidiaries in 2009. (2) Other income in 2009 was higher than that in 2008, due to proceeds from the sellout of Taishin Securities to KGI Securities. (3) Operating expense in 2009 was higher than that in 2008, due to the listing of expense related to compensations for directors and supervisors and dividend sharing of employees according to the corporate charter and accounting principle after the turnaround of the company’s operation in 2009. (4) Other expense and loss in 2009 was higher than that in 2008, due to increased loss resulting from derivatives embedded in convertible corporate bonds issued by the company which was calculated according to the evaluation of fair value. C.Cash fl ow Initial cash balance 1 Expected cash fl ow from business activities for the whole year 2 Analysis of cash flow in the coming one year Expected cash outfl ow (infl ow) for the whole year 3 Expected cash surplus (shortage) 1+2-3 Unit: NT$1,000 Remedies for expected cash shortage Investment plan Financing plan 22,557,438 2,715,250 (11,810,565) 13,462,123 Nil Nil D.Infl uence on fi nance of major capital outlays in the recent one year a. Status of major capital outlays and funding sources Items of plans investment Actual or expected funding source Own fund or corporate-bond issuance Actual or expected date of completion Total fund needed Unit: NT$1,000 Actual or expected fund utilization 2009 2009 10,000,000 10,000,000 b. Expected benefi ts: Business expansion and increased returns for shareholders
E.Investment policy in the recent year, main reasons for income or loss, improvement plan, and investment plan in the coming one year The company carries out investments according to article 36 and 37 of the Financial Holding Company Law, the assessment of investment returns rate, and joint-marketing benefi ts among subsidiaries, in the hope of augmenting the returns on equity. In response to the demand of clients for assets accumulation and wealth-management planning, the company will inevitably expand its business scope, on top of providing comprehensive professional fi nancial services. Looking ahead, in the face of acute competition and a fast-changing fi nancial environment, the company will continue, via own or external growth, expanding the scale and market shares in the operations of banking, securities, insurance, investment fi nance, commercial paper/bond, and other fi nancial sectors, as well as overseas deployment, in order to tap the businesses of clients in various sections, strengthen competitive edge, and expand profi t sources. F. Assessment of risk management in the recent year and as of the date for the publication of the annual report by analyzing consolidated fi nancial and business status a. Risk-management framework and policy of the fi nancial holding company and subsidiaries To cope with its comprehensive business scope, the company needs effi cient identifi cation, assessment, consolidation, and management of risks, in addition to properly allocating capital to various business units. The company manages risks via a procedure closely associated with its risk-management policy, organizational framework, risk assessment, and business activities. According to overall risk-management planning, the fi nancial holding company has instituted independent risk-management organizations, with their frameworks listed below: Organization Contents 1.Approval of risk-management policy and procedure Board of directors 2.Approval of overall market risk, credit risk, and operational risk ceilings of the fi nancial holding company 1.The president of the fi nancial holding company serves as the convener of the committee. 2.Review of the risk-management policy and procedure of the fi nancial holding company 3.Ratifi cation of the policy, measures, and guidelines for the market risk, credit risk, and operating risk of subsidiaries 4.Supervising the institution of market-risk, credit-risk, and operating-risk management mechanism 5.Reviewing performance report of the risk-management units of subsidiaries and the overall risk analytical report of the fi nancial holding Risk Management company Committee 6.Reviewing and fi nalizing risk model, risk parameters and indicators, and pressure-test plan 7.The committee oversees a new product management committee, responsible for reviewing risks involving new products and complicated trading of subsidiaries’ trading units. 8.Monitoring various risks undertaken by the company, adopting necessary measures for controlling large risk exposure 9.Report of other risk-related projects 10.Execution of risk management-related resolutions of the board of directors 1.Vice convener of the Risk-Management Committee Risk-Management 2.Implementing risk-management strategy and instituting risk-management framework approved by the board of directors Department 3.Supervising Risk-Management Department and risk-management units of subsidiaries in executing related policy 4.Assuring effective cross-department communication and coordination for risk-management functions 1.Formulation and institution of risk-management mechanism 2.Disclosure of risk-management implementation 3.Producing overall risk analytical report for the fi nancial holding company Chief Risk-Manage- 4.Coordination and contact for risk-management affairs with subsidiaries ment Offi cer 5.Instituting integrated risk-management information system 6.Introducing the risk-management norm of Basel II Capital Accord, so as to institute a risk-management mechanism complying with international standards Risk-management 1.Provision of risk management-related information units of subsidiaries 2.Implementing the fi nancial holding company’s risk-management policy Financial Status, Review of Business Performance, and Risk Management 253
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III. Corporate Governance B.Data on
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III. Corporate Governance Title Nam
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III. Corporate Governance D. Penalt
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V. Operating Status 36.34%, respect
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Material transactions with related
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Ending Balance Highest Amount Norma
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Taishin Financial Holding and subsi
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