avatar Acer Europe B.V. Finance, Insurance, And Real Estate
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    P ublication Date : April 17 , 2 0 18

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    APPENDIX 1. Name, Title and Contact Details of Company’s Spokespersons: Principal Meggy Chen CFO +886-2-2696-1234 Meggy.Chen@acer.com Deputy Wayne Chang Manager +886-2-2719-5000 Wayne.Chang@acer.com 2. Address and Telephone Numbers of Company’s Headquarter and Branches Office Address Tel Acer Inc. 7F.-5, No.369, Fuxing N. Rd., Songshan Dist., +886-2-2719-5000 Registered Address Taipei City 105, Taiwan Acer Inc. 8F., No.88, Sec. 1, Xintai 5th Rd., Xizhi Dist., +886-2-2696-1234 (Xizhi Office) New Taipei City 221, Taiwan Acer Inc. 3F., No.139, Minzu Rd., East Dist., Hsinchu City +886-3-533-9141 (Hsinchu Branch) 300, Taiwan Acer Inc. 3F., No.371, Sec. 1, Wenxin Rd., Nantun Dist., +886-4-2250-3355 (Taichung Branch) Taichung City 408, Taiwan Acer Inc. 4F.-6, No.38, Xinguang Rd., Lingya Dist., +886-7-338-8386 (Kaohsiung Branch) Kaohsiung City 802, Taiwan Acer Inc. No.28, Neixin Rd., Luzhu Dist., Taoyuan City (Shipping & Warehouse +886-3-324-5100 338, Taiwan Management Center) 3. Address and Contact Details of Acer Shareholders’ Services Address: 7F.-5, No.369, Fuxing N. Rd., Songshan Dist., Taipei City 105, Taiwan Tel: +886-2-2719-5000 E-mail: stock.affairs@acer.com 4. Address and Contact Details of Auditing CPAs in the Most Recent Year Name: Huei-Chen Chang and Tzu-Chieh Tang at KPMG Address: 68F., No.7, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City 110, Taiwan Tel: +886-2-8101-6666 Website: www.kpmg.com.tw 5. Overseas Securities Exchange Listed Market for GDRs: London Stock Exchange Market For further information, please refer to Website: www.Londonstockexchange.com 6. Acer Group Website: www.acer-group.com

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    Se a 9 Ea grl Se A yal W ay 4 Zi y AcerWindows Mixed Reality Headset TAKING YOU TO A NEWREALITY E Escape to the World of Your Dreams 7° Gen Intel® Core™i7 Processor Fastest, Easiest Set-up Available Ultrathin, 8.98mm Design Inside-out Tracking Built-in 4G LTE Connectivity’ < > 20,000+ Universal Windows Apps == Up to 10 Hours ofBattery Life?

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    Being Signage Acer Being Signage A Te A Intel® Celeron™Processor’ MetalChassis Top-facing Speakersfor GreaterClarity Up to 14-hour Battery Life? Intel Inside®. Extraordinary Performances Outside. tnt thentl Lognie nt finte!Corp

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    DISCLAIMER This is a translation of the 2017 Annual Report of Acer Incorporated (the “Company”). The translation is intended for reference only and nothing else, the Company hereby disclaims any and all liabilities whatsoever for the translation. The Chinese text of the Annual Report shall govern any and all matters related to the interpretation of the subject matter stated herein.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 2 Index Index 3 INDEX 6 Corporate Social Responsibility 6.1 Environment, Safety and Health Management 66 67 6.2 Supply Chain Management 69 6.3 Communication 71 1 Business Report 04 6.4 Community Involvement 72 1.1 Acer’s Core Values 06 6.5 Enforcement of Corporate Social Responsibility by the Company 73 1.2 2017 Operating Report 07 1.3 2018 Business Plan 09 7 Financial Standing 79 2 Company In General 10 7.1 Five-year Consolidated Financial Information 7.2 Five-year Financial Analysis 80 82 2.1 Brief Account of the Company 11 7.3 Audit Committee's Review Report 84 7.4 Financial Statements Consolidated Subsidiaries Audited by CPAs of the Past Year 84 3 Corporate Governance Principles 17 7.5 Disclosure of the Impact on Company’s Financial Status Due to Financial Difficulties 7.6 Financial Prediction and Achievements 84 84 3.1 Organization of the Company 18 3.2 Information Regarding Board of Directors and Key Managers 20 3.3 Corporate Governance Status 30 8 Risk Management 85 8.1 Important Notices for Risk Management and Evaluation 86 4 Capital and Shares 47 4.1 Sources of Capital 48 Appendix 92 4.2 Corporate Bonds 53 2017 Consolidated Financial Statements 93 4.3 Special Shares 53 4.4 Global Depository Receipts (GDRs) Issuance 53 4.5 Employee Stock Options 54 4.6 Restricted Stock Awards 54 4.7 Issuance of New Shares Due to Company’s Mergers and Acquisitions 54 4.8 Issuance of New Shares for Capital Increase by Cash 54 5 Acer’s Business Formula 55 5.1 Business Scope 56 5.2 Market Highlights 57 5.3 Keys to a Sustainable Future 57 5.4 Employees 59 5.5 Important Contracts 65

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 4 Bu sin ess Rep ort Bus i nes s Report 5 Business Report to Shareholders After more than 40 years since our founding, Acer contin- Besides managing its operations, corporate social respon- ues to evolve with the times and is again seeing the results sibility is another of Acer’s focuses, and we have constantly of our latest efforts. Our fiscal 2017 consolidated revenues of been recognized by renowned sustainability indices around NT$237.28 billion (US$ 7.91 billion) and steady rise over the the world. Acer was listed on DJSI’s Emerging Markets Index 1 last few quarters demonstrate that the concerted efforts at and MSCI Global Sustainability Indexes for four consecutive Acer have steered our company onto the path of transforma- years; and on the FTSE4Good Emerging Index for the second tion with positive growth. year. As a global citizen Acer will continue to do its part and contribute toward corporate social responsibilities. Acer’s PC business has stabilized, and our full year revenue contributions from regional operations were: EMEA with With the objectives of enhancing our brand image and main- 39.7%, Pan Asia Pacific with 31.6%, and Pan America with taining sustainable and profitable operations, Acer will con- 28.7%. A double-digit operating margin also substantiates tinue to transform and optimize our organization so that we the success of our product-mix strategy for different market can overcome challenges and propel into the future. Once segments, and shows that Acer has profitable operational again, we wish to express our appreciation to our shareholders Bu s ine s s Repor t to momentum. In addition, Acer and its subsidiaries are making headway: Acer and AOPEN are collaborating in digital signage business development, and creating synergy with combined for your support and confidence as we persevere our way to a bright future ahead. S har ehold er s global channels, resources, and greater economies of scale. In the area of virtual reality, StarVR is enabling key entertain- ment partners to open VR experience centers in Los Angeles, New York, Tokyo, and Dubai. Another example is that in the field of artificial intelligence, Altos is making progress with high-performance computing, servers, and other software Jason Chen and service solutions. Chairman and CEO As for the development of new business initiatives, Acer has Acer Inc. continued to strengthen cooperation with alliance partners for the Internet of Things, and pursued a variety of service in- tegration solutions. Our subsidiaries are also gaining global recognition for their services: in the area of smart transporta- tion, Acer ITS’ roadside smart parking meter solution won the Global ICT Excellence Award at WCIT1 2018. In data security, ACSI (Acer Cyber Security Inc.) received ISO 17025 certifica- tion, and became Taiwan’s first and only private security op- eration center (SOC). To stimulate innovation, Acer allows its businesses and subsidiaries the freedom to explore and dis- cover markets to expand in, with the clear direction of first sta- bilizing operations, and then taking steps toward profitability. 1 World Congress on Information Technology (WCIT)

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 6 Bu sin ess Rep ort Bus i nes s Report 7 1.1 Acer's Core Values Core Value Rational Meaning Emotional Meaning Abide by corporate Acer is transforming itself to become a “hardware + software + services” company. Based on the Wangdao philosophy, Acer is governance, • Follow the codes of conduct or social norms when performing duties and regulations and always serve as a role model for others. working with partners to create value, and build an ecosystem that balances all stakeholders’ interests. In the process of transition, standards of business • Never appropriate public resources for private use. the company’s core values will be practiced to strengthen the core competencies needed to ensure a stronger Acer for the future. Integrity conduct not because we are required to, but • Never reveal or leak confidential information when inappropriate. Acer’s six core values are: Passion, User-centric, Innovation, Teamwork, Balance of Interests, and Integrity. because it is the right • Be aware of and stop any behavior that may violate regulations or social codes. thing to do. Core Value Rational Meaning Emotional Meaning • Serve as a bridge between people and technology. Be open to try new ideas, methods, and applications. Be ready to change the • Endeavor to face challenges, break through bottlenecks and create value. Passion world with a positive, enthusiastic, dare-to- • Sharpen professionalism to pursue excellence with dedication and enjoyment 1.2 2017 Operating Report in work to keep one step ahead of our competitors. dream and determined attitude. • Care for, delegate to, and support people. • Influence people through a positive attitude. 1.2.1 Consolidated Operating Results • Face up to difficulties and solve them in innovative and realistic ways. Unit: NTD Thousand • Explore users' habits and requirements by putting yourself in their position, Never forget that we and using the knowledge gained to design impressive products and services. Period 2013 2014 2015 2016 2017 are here to create • Base your decisions on sound research into users' requirements. Item value for end-users. User- • Listen to customers and understand the market trends from their point-of- Revenue 360,132,042 329,684,271 263,775,202 232,724,161 237,274,883 Always think about the centric view. benefits we can bring Gross profit 22,550,266 28,942,184 24,884,122 23,212,458 25,361,234 them in everything you • Create systems for evaluating users' needs and experience. do. • Build up a mechanism for developing products and services that meet global Operating (loss) income (11,409,666) 2,707,665 938,608 1,192,513 3,669,734 needs. Non-operating income and (loss) (9,654,070) (93,246) (92,051) (5,916,838) (230,602) • When engaged with product or service innovation, always consider users' needs and what they value to assure customer stickiness. Income (loss) before taxes (21,063,736) 2,614,419 846,557 (4,724,325) 3,439,132 Create unique • Remain curious and aggressive in the course of innovation. If you have Income (loss) from Continued competitive criticism, make sure it is constructive. (20,519,349) 1,790,584 603,795 (4,900,740) 2,796,733 advantages and segment Innovation • Consider the commercial value of your proposed innovations or improvements. look for value- Income (loss) from Discontinued based innovations in • Give equal consideration to cost, quality and the value that the innovation will 0 0 0 0 0 deliver to end users. segment everything you do. • Collaborate with strategic partners, and share cutting-edge knowledge to Net income (loss) (20,519,349) 1,790,584 603,795 (4,900,740) 2,796,733 create value. Other comprehensive income (loss) 2,262,505 2,438,464 (829,149) (1,752,356) (1,697,788) Communicate, create • Use the five 5Cs (Communication x3, Consensus, Commitment) to enhance for the period, net of tax communication and collaboration. consensus and Total comprehensive income (loss) collaborate as one • Specify performance indicators that are mutually agreed by the teams, and (18,256,844) 4,229,048 (225,354) (6,653,096) 1,098,945 then devote all team-members' efforts to achieve the goals. for the period team. Place the groups' Teamwork interests above the • Put the team's interests above an individual's interests. Net income (loss) attributable to individual's interests (20,519,428) 1,790,690 603,680 (4,900,296) 2,815,587 • Enhance interactions, respect and trust between teams. Shareholders of the Company and work towards a • Focus on the value chain as the highest priority in collaboration for maximizing common goal. customer value. Net income (loss) attributable to 79 (106) 115 (444) (18,854) Non-controlling interests • Keep promises and build trust-based relationships with stakeholders. Make an Total comprehensive income (loss) Work together to effort to overcome difficulties and construct a model that balances different attributable to Shareholders of the (18,526,899) 4,229,180 (225,467) (6,654,809) 1,115,222 create value, overcome parties' interests. Company Balance of difficulties and • Form collaborative relationships that balance the six aspect values: tangible vs. Interests construct a model that intangible; direct vs. indirect; present vs. future. Total comprehensive income (loss) balances the interests • Value the balance among associated groups (environment, society, and attributable to Non-controlling 55 (132) 113 1,713 (16,277) of all stakeholders. culture). interests • Motivate employees and partners and establish long-term partnerships. EPS (in New Taiwan Dollars) (7.54) 0.66 0.20 (1.62) 0.93

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 8 Bu sin ess Rep ort Bus i nes s Report 9 1.2.2 Budget Expenditure in 2018 1.3 2018 Business Plan Not applicable. 1.3.1 Business Strategy A. Integrate new businesses with cloud technology and the Internet of Beings (IoB) model, which signifies Acer’s objective to pro- vide life-enhancing services as opposed to just “things.” Center on the core beliefs of the Wangdao philosophy of altruism, and 1.2.3 Financial Income and Earning Abilities combine the strengths of partners to create a mutually beneficial ecosystem and, hence, expand business boundaries. B. With a user-centric product strategy, strengthen brand premium, develop innovative high-margin products, and an efficient Unit: NTD Thousand product mix strategy tailored to different market needs. C. Enhance brand premium through the gaming portfolio, optimize operations, integrate resources, and run faster in new busi- Item 2017 nesses. Operating revenue 237,274,883 D. Efficiently use all resources, enhance internal and external communications, improve the interests of stakeholders, and fulfill corporate social responsibilities. Financial Income Gross profit 25,361,234 Net income 2,796,733 Return on assets(%) 1.85 1.3.2 Goals Return on equity(%) 4.84 A. Increase sales of core IT products, strengthen competitiveness in the gaming market, and improve product profitability. Earning Abilities B. Integrate cloud technology, develop new applications and services, and enhance the corporate image of a “hardware + soft- Net income ratio (%) 1.18 ware + services” company. EPS(NTD) 0.93 C. Pursue better operating income, promote the interests of shareholders, and strengthen corporate social responsibility. 1.3.3 Marketing Strategy A. Take a user-centric approach in the R&D of products and services. B. Consolidate and effectively share product development resources, and create profitable and innovative products. C. With capabilities in cloud technology, and big data analysis as the basis for artificial intelligence (AI), develop solutions that integrate hardware + software + services to create new businesses. D. Together with suppliers across the chain and also customers, promote corporate social responsibility, create value, and pursue sustainable operations, in accordance with the Wangdao philosophy that promotes the balance of interests of all. 1.3.4 Future Strategy A. Enhance the added value of key products and brand positioning. B. Develop innovative products based on the integration of hardware, software, services, and cloud technology. C. Uphold corporate social responsibilities, realize a sustainable business mindset, accumulate long-term value for the company, and give back to society and shareholders. 1.3.5 Impact on Company Due to Competition, Governmental Regulations and Overall Macro Market A. A thorough understanding of consumers’ preferences and needs is essential to new hardware, software and services in the ICT industry. B. Product strategy and product mix need to be adapted quickly to ever-changing market needs and trends. C. Respect international laws and regulations on information privacy and security, especially in the new realms of virtual reality (VR) and artificial intelligence (AI). D. In the Internet of Things (IoT), the ICT industry is shifting toward a cross-platform cloud integrated model, prompting the need for cloud service providers to find partners in a variety of fields to develop new services.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 10 Comp any I n Gene ral Compa ny In Genera l 11 2.1 Brief Account of the Company 2.1.1 Founded: August 1, 1976 1976 – 1986 1981 • Commercialized microprocessor technology • Acer manufacturing operations were established at the Hsinchu Science-based Industrial Park, Taiwan. 2 • MicroProfessor-I debuted as company’s first branded 1987 – 2000 product. • Created the Acer brand name and went global 1982 2001 – 2007 • MicroProfessor-II was unveiled as Taiwan's first 8-bit home • Transformed from manufacturing to a marketing and sales computer. company 1983 2008 – 2013 Company In General • Enhanced worldwide presence with a new multi-brand strategy • First company to promote 16-bit PC products in Taiwan. 1984 • Acer Peripherals, Inc. (now BenQ Corp.) and Multiventure 2014 – Beyond Investments, Inc. were established. • Transforming into a “hardware + software + services” com- pany 1985 • AcerLand, Taiwan's first and largest franchised computer 1976 retail chain was founded. • Acer was founded under the name Multitech, focusing on trade and product design. 1986 • Beat IBM to offer the 32-bit PCs. 1978 • Established the Microprocessor Training Centre, training 3,000 engineers for Taiwan's information industry. 1987 • The Acer name was created. 1979 • Designed Taiwan's first mass-produced computer for ex- 1988 port. • Acer Inc. completed its IPO.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 12 Comp any I n Gene ral Compa ny In Genera l 13 1989 2000 • Became a Sponsor of Scuderia Ferrari. • Launched the high-end and stylish Liquid smartphones. • TI-Acer DRAM joint venture with Texas Instruments was • As part of Acer’s latest re-engineering, Acer split off its • Celebrated its 30th anniversary. • Became the world No. 2 company in Total PCs. formed. OEM business unit to create Wistron Corp., an independent • Became the No. 3 notebook and No. 4 desktop brand design and IT manufacturing company. worldwide. 2010 1991 • Launched the green Aspire Timeline notebook - free from • Introduced ChipUp technology – world's first 386-to-486 TM 2001 2007 PVC and BFR materials. single-chip CPU upgrade solution. • Adopted a new corporate identity to reflect the company's • Acer readies for Windows Vista™ with full range of Vista- • Provided and managed computing facilities to ensure the commitment to enhancing people's lives through technol- certified LCD monitors. smooth running of sports events at the Vancouver 2010 ogy. Olympic Winter Games. 1992 • Set the trend in product design with new Aspire Gemstone- design consumer notebooks. • Chairman J.T. Wang named in TIME magazine’s annual list • Created the world's first 386SX-33 chipset. 2002 of 100 most influential people in the world. • Completed the merger of Gateway, Inc. • Stan Shih introduced the Smiling Curve concept. • The Product Value Labs were inaugurated to enhance Ac- • Acer launched clear.fi, a new entertainment experience al- • Announced its joining as an Olympic Worldwide Partner er's user-centric focus, and integrated technologies that lowing real-time sharing and playing of multi-format con- for the Winter Olympics in Vancouver 2010 and Summer add value to customers' lives. tent over multi-platform devices. 1993 Olympics in London 2012. • TravelMate C100 was the first convertible Tablet PC avail- • Integrated Founder Tech’s PC sales team and channels in • Developed a 64-bit performance-enhanced I/O and CPU • Became the No. 2 notebook and No. 3 desktop PC vendor able in the worldwide market. the China market. architecture to link MIPS RISC CPUs with Microsoft® Win- worldwide. dows® NT. • Successfully issued US$500 million in convertible bonds. 2004 • Announced expansion to Chongqing in western China, 2008 creating a new global IT manufacturing center and Acer’s 1994 • Launched a new Folio design for notebooks, featuring pure • Announced the acquisition of E-ten and plan to enter the second China base. • Introduced the world's first dual Intel® Pentium® PC. functional simplicity, smooth curves and subtle elegance. smart handheld market. • BusinessWeek selected Stan Shih as one of the "25 Stars of • Launched the new Aspire Gemstone Blue notebooks, the Asia." first to feature full HD widescreen 18.4” and 16” LCDs, Blu- 2011 1995 • Acer Founder Stan Shih retired from the Group. Ray Disc™ drive, and latest generation Dolby® Surround • Acer products began shipping from China’s Chongqing • The popular Aspire multimedia PC brought Acer closer to sound. production base. the consumer electronics market. • Aspire One was launched as Acer’s first mobile internet • Acer EMEA cleared high channel inventory with one-time 2005 device, and won the Japan Good Design award for quality US$150 million write-off. • J.T. Wang assumed the position of Chairman and CEO, while design. 1996 • Sir Julian Horn-Smith and Dr. F.C. Tseng elected as indepen- Gianfranco Lanci stepped into the role of Corporate Presi- • Ranked No. 3 for Total PCs and No. 2 for notebooks world- dent board directors. • Announced its commitment to providing fresh technology dent. wide. to be enjoyed by everyone, everywhere. • Acquired US-based iGware with US$320 million for mid- to • Launched Ferrari 4000, the first carbon-fiber notebook long-term investment in cloud technology. available in the worldwide market. 1998 2009 • Debuted first Ultrabook™: Aspire S3. • A series of Empowering Technology products were un- veiled. • Launched the Aspire Timeline notebooks – thin and light • As official IT Sponsor of the 13th Asian Games in Bangkok, with all-day battery life. Acer introduced the world's first PC-based management • Became the worldwide No. 4 vendor for Total PCs and note- 2012 system for a major international sporting event. books. • BusinessWeek named Acer among the “10 Hottest Tech • Unveiled world's thinnest Ultrabook™: Aspire S5. Companies of 2009.” • Became the No. 1 brand in EMEA and Western Europe for • Presented Aspire Timeline Ultra Series, extending main- notebooks. • Announced its first netbook based on the Android operat- 1999 stream notebook features with Ultrabook™ trend. ing system. • Aspire Academy was set up in Aspire Park to help manag- • Introduced new Full HD tablet, the Iconia Tab A700. • Taiwan’s Ministry of Economic Affairs presented Gianfran- ers of Asian firms and MNCs with offices in Asia to improve 2006 co Lanci with an Economic Medal for outstanding leader- • Supplied all computing equipment for the London 2012 their organizational and leadership effectiveness. • First-to-market with a full line of Intel® Centrino® Duo ship, and building the Acer brand name worldwide. Olympic Games and earned high appraisals from the as- mobile technology notebooks. sembly.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 14 Comp any I n Gene ral Compa ny In Genera l 15 • Aspire S7 Ultrabook named as CES Innovations 2013 De- • Signed MOU with MediaTek for cloud and wearable tech- • Acer subsidiary MPS Energy and Studio X-Gene announced • Announced the establishment of a joint venture with Swed- sign and Engineering Award Honoree. nologies. new electric all-terrain vehicle. ish game developer Starbreeze AB, stepping into the virtual reality realm. • The new Board of Directors elected George Huang as Acer • Announced third BYOC global operations with the estab- Chairman. lishment of Acer Cloud Technology (Chongqing) Limited in • Revealed the world’s first curved-screen notebook, the 2013 China, with the other two located in Taipei and Silicon Val- Predator 21 X. • Acer Chromebooks led the way in the US consumer market • Extended AcerCloud to support top three operating sys- ley. in Q1. • First shipment of the StarVR virtual reality head-mounted tems, for easier file and media sharing among Windows, iOS • Joined the American Business Act on Climate Pledge; display delivered. and Android devices. • Acer monitors topped the US retail market in 1H 2014 Acer pledged to reduce global greenhouse gas emissions • Celebrated its 40th anniversary with a series of forums and • Recognized NT$3.5 billion (US$120.1 million) in intangible • Expanded sales of the Liquid smartphone in Pan America. by 60% by 2020 and to continue purchasing100% green events. asset impairment based on the Generally Accepted Ac- power for its U.S. operations. • Acer’s Chrome devices expanded to include the Chrome- counting Principle (GAAP) and thorough assessment. • Named official sponsor for the 2016 League of Legends box desktop PC. • Announced the availability of Acer smartphones to Ecua- World Championships and All-Star events. • Launched B6 and V6 series commercial LED-backlit moni- dor, reaching 60 countries around the world. • Took the No. 1 position in Philippines in total PC, portable tors made with post-consumer recycled plastic and compli- • Announced investment in the IMAX VR Content Fund to PC and projector shipments. ance with EPEAT standards for environmental protection. support the development of high-quality and immersive • Debuted on Dow Jones Sustainability Emerging Markets 2016 VR content. • Held the fifth annual Corporate Social Responsibility Forum Index and listed on MSCI Global Sustainability Indexes for to continue exploring and leading the global trend of sus- • Announced the Liquid Jade Primo smartphone running • Gaming monitor with eye-tracking technology awarded environmental, social and governance. tainable management. Windows 10 Mobile which provides ultimate productivity “Best of Innovation” at the CES 2017 Innovation awards. • Aspire R 13 convertible notebook named as a 2014 CES In- for professionals with a PC-like experience when connect- • Proposed the second issuance of NT$6 billion in unsecured • Announced intangible asset impairment charge to address novation Awards Honoree. ed with a secondary display. convertible corporate bond. development needs of new businesses. • Showcased BYOC™ Solutions for connected car, business, • Reported the non-cash related intangible asset impair- 2015 education, and smart home at Mobile World Congress. ment of NT$9.94 billion (US$335.12 million) in Q3 finan- 2017 cial results. • Launched the industry’s first Chromebook with 15.6-inch • Acer monitors ranked No. 1 in North American retail mar- ket in 2015. • Unveiled smart transportation solutions that include smart • Set up a Transformation Committee with Acer co-founders display. parking, and the service-oriented and intelligent mixology Stan Shih as Chairman and George Huang as executive • Online ticketing system demonstrated Acer’s “hardware + • BYOC™ received ISO 27001 certification and passed HIPAA robot solution, the Acer MixBot, at Smart City Expo in Tai- secretary. software + services” capabilities. audit. wan. • Elected Stan Shih as New Chairman and Interim Corporate • Completed the second public offering of 300 million com- • Reported second year of profitability since it began its • Reported fiscal 2016 consolidated revenues NT$223.72 President as J.T. Wang and Jim Wong stepped down. mon shares to raise NT$5.4 billion (US$180 million) in transformation with operating income of NT$939 million billion (US$7.21 billion), operating income NT$1.19 billion funds. (US$28.4 million), net income of NT$604 million (US$18.3 • Sold 300,000 smartphones through partnership with Thai- (US$36.94 million), gross profit margin 10%, cash distribu- million) and gross profit margin 9.4%. land’s largest telecom operator. • Acer BYOC™ provided runner tracking service to Taiwan’s tion of NT$0.50 per share. First IAAF certified marathon. • Regrouped new and core businesses to accelerate corpo- • Announced Build Your Own Cloud (BYOC™) and the transi- • Rolled out new ultrathin gaming notebooks, and all-in-one rate transformation. tion to a “hardware + software + services” company. • Reported first full year of profitability since it began its PCs with advanced thermal technology at the next@acer transformation with operating income of NT$2.71 bil- • Announced strategic partnership and equity investment in global press conference in New York. • Appointed Jason Chen as Corporate President and CEO ef- lion (US$85.37 million) and net income of NT$1.79 billion grandPad®. fective January 1, 2014. • Named official sponsor and monitor partner for League of (US$56.46 million). • Debuted world’s first Chromebook with 14-hour battery Legends esports in 2017. • Announced industry’s first Chromebase all-in-one desktop life. • Garnered seven prestigious 2017 Red Dot Awards for prod- 2014 with touch display. • Unveiled the industry’s first cycling computer with intel- uct design. • Invested 7 million shares in PChome Group's third-party ligent video recording applications as part of new busi- • Revealed new back-to-school product range at the inau- • The Board appointed CEO Jason Chen as Chairman, Meggy payment business. nesses expansion at its next@acer global press conference gural "next@acer" event in New York. Chen as Corporate Chief Financial Officer, and approved • Wrote off additional NT$5.78 billion loss of 2013 in related in New York. • Announced the availability of the Predator gaming product the formation of a new Investment Committee. costs to speed up corporate transformation. • Introduced “BeingWare” vertical business models with in- line at the next@acer event at IFA Berlin. • Announced the Predator Orion 9000 series gaming desk- • Delivered the world’s first 4k2k monitor, XB280K, for telligent connected devices, which illustrate the vision of • Acquired GPS cycling computer brand, Xplova, to expand top, its most powerful to date, and Predator accessories to smoother and responsive gaming. “New New Acer” in integrating hardware, intelligent soft- reach in the sports industry. complete the premium gaming experience at the next@ ware, and cloud services to create true value. • Debuted the Liquid Leap as its first wearable device. acer global press conference at IFA Berlin. • Launched the CloudProfessor IoT training kit.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 16 Comp any I n Gene ral Corporate Governance Principles 17 • Listed on the DJSI Sustainability Indices (Emerging Markets Index) for the fourth consecutive year, and the second time on the FTSE4Good Emerging Index. • Scored eight 2017 Good Design Awards for outstanding product design. • Stepped up its financing in the StarVR joint venture by in- creasing its interest to 66.7%. • Expanded its digital signage business by participating in the private placement of AOPEN shares to reach 51% own- 3 ership 2018 • Launched the world’s thinnest laptop, Swift 7 (SF714-51T), measuring at just 8.98 mm thin. • Hosted the APAC Predator League 2018 tournament, with participation from eight countries and finals held in Jakar- ta, Indonesia. • Won 12 iF Design Awards for products from its gaming line, software and packaging designs, among others. • Won the ‘Global ICT Excellence Award - Private Sector Ex- Corporate Governance cellence’ at the WCIT 2018 for Acer ITS’ smart parking me- ter solution. Principles

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 18 Corporate Governance Principles Corporate Governance Principles 19 3.1 Organization of the Company 3.1.2 Corporate Functions 3.1.1 Department Functions Auditing BYOC Smart Products Business • Evaluation, planning and improvement of Acer’s • BYOC (Build Your Own Cloud) Services empower internal operations global business development and management through cloud-connected devices and solutions as well as diverse cloud-services providing flexible Shareholders’ Meeting Corp. Sustainability Office access to applications (SaaS), platforms (PaaS), and infrastructure (IaaS). BYOC business also covers AI • Strategic planning and management in corporate development platform for Data Scientists with pre- sustainability with the aim of fulfilling corporate social build AI frameworks, models, dataset and resource responsibilities management Board of Directors Chairman Global Projects • Global key project planning and execution Server Products Business • Managing server products line business Remuneration Investment Audit Auditing Committee Commission Committee PAP RO • Sales, marketing and after-sales service of Acer’s IT Corporate Marketing, Business Planning & products in Taiwan, China and Asia Pacific Operations • Corporate brand management, consolidation and implementation of global marketing strategies, corporate communications, and the strategic planning, EMEA RO operations of all IT business back-end function Corp. Sustainability • Sales, marketing and after-sales service of Acer’s IT Office products in Europe, Middle East and Africa Value Lab Corp. President • Research and development, design and devote to the & CEO PA RO technology for new value creation business • Sales, marketing and after-sales service of Acer’s IT products in Pan America Global Projects Global IT • Corporate information infrastructure and information Digital Display Business systems management • Managing global monitors, and projectors product Regional Supporting lines business Businesses Operations Function Global Finance • Corporate finance, investment, treasury, credit and IT Products Business risk control and accounting services management • Managing global notebook, desktops, Tablet, wearable Corp. products and gadget products business Marketing Global PAP RO IT Products e-Business Global Legal Biz Planning & Operations Finance Global HR • In response to market changes of global trends, e- Business formalize the human resources-related talent • End-to-end ICT solutions and services provider, strategies and organizational planning to meet the including mobile application and enterprise software company's sustainable development needs BYOC systems development, systems integration and Digital Server EMEA RO Smart Global HR Global IT Display Products Products operation services, value-added and vertical business solutions Global Legal • Corporate and legal affairs, intellectual property management General PA RO Value Lab Affairs General Affairs • General affairs, transportation services, office facilities management

  • Page 16

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 20 Corporate Governance Principles Corporate Governance Principles 21 3.2 Information Regarding Board of Directors and Key Managers (1) Board of Directors (April 17, 2018) Shares Held When Shares Held by Spouse & Spouse or Immediate Family Shares Held at Present Date of Elected Minors Holding Managerial Position Title Name Term Education Current Position(s) in Other Companies Election Relation- Number Percentage Number Percentage Number Percentage Title Name ship 1. Chairman, Mu-Jin Investment Co., Ltd. Chairman Jason Chen 06/21/2017 3 2,555,480 0.08 2,555,480 0.08 0 0 Master None - - 2. Other (Note 3) 1. Independent Director, TSMC 2. Director, Wistron 3. Director, Nan Shan Life Insurance Co., ltd. 4. Director, Hung Rouan Investment Corp. Carolyn Director Wife 5. Director, Idealive International Co. Ltd. Yeh 6. Director, Egis Technology Inc. 7. Director, iD Innovation Inc. Director Stan Shih 06/21/2017 3 69,024,395 2.24 51,024,395 1.66 6,839,225 0.22 Master 8. Chairman, Dragon Investment Co., Ltd.. 9. Director, DIGITIMES Inc. 10. Director, Public Television Service Founda- tion. 11. Chairman, Stans Foundation Maver- President Son 12. Director, Rongxin Management Consultants ick Shih Co., Ltd 13. Director, Bingyu Co., Ltd. 14. Director, CTS Inc. 1. Independent Director, PChome Online Inc. 2. Independent Director, Bio Net Corp. Director George Huang 06/21/2017 3 8,767,642 0.28 8,767,642 0.28 1,787,819 0.06 Bachelor 3. Director, Motech Industries Inc. None - - 4. Director, Les Enphants Co., Ltd. 5. Supervisor, Apacer Technology Inc. Hung Rouan Director Investment 06/21/2017 3 73,629,933 2.39 73,629,933 2.39 0 0 - - None - - Corp. 1. Chairman, iDSoftcapotal Inc. 2. Chairman, Hung Rouan Investment Corp. 3. Director, IP Fund Six Co., Ltd. Stan 4. Director, iD Innovation Inc. Director Husband Shih 5. Supervisor, ID Reengineering Fund Inc. Carolyn Yeh 6. Director, Stans Foundation (Representa- Legal Represen- 7. Director, Noordhoff Craniofacial Foundation tive of Hung 06/21/2017 3 6,839,225 0.22 6,839,225 0.22 51,024,395 1.66 Bachelor tative of Director 8. Director, Cardinal Shan Foundation Rouan Invest- ment Corp.) 9. Director, Sinyuan Foundation 10. Director, Fu Jen Catholic University Maver- 11. Supervisor, Shengxin Co., Ltd President Son ick Shih 12. Chairman, Rongxin Management Consul- tants Co., Ltd 13. Chairman, Bingyu Co., Ltd.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 22 Corporate Governance Principles Corporate Governance Principles 23 Shares Held When Shares Held by Spouse & Spouse or Immediate Family Shares Held at Present Date of Elected Minors Holding Managerial Position Title Name Term Education Current Position(s) in Other Companies Election Relation- Number Percentage Number Percentage Number Percentage Title Name ship Smart Capital Director 06/21/2017 3 12,228 0 12,228 0 0 0 - - None - - Corp. 1. Independent Director, AU Optronics Corp. 2. Director, Wistron NeWeb Corporation 3. Director, Aopen Inc. 4. Director, Wistron Information & Services Philip Peng Corp. Legal Represen- (Representa- 06/21/2017 3 0 0 1,319,469 0.04 258,007 0.01 Master 5. Chairman, Smart Capital Corp. None - - tative of Director tive of Smart Capital Corp.) 6. Director and President, iDSoftcapotal Inc. 7. Director, Global Strategic Investment Fund, Taiwan 8. Director, Dragon Investment Co., Ltd.. 9. Supervisor, iD Innovation Inc. 1. Director, Yulon Motor Co., Ltd. 2. Director,China Motor Corp. Director 3. Independent Director, E.Sun Financial Hold- Hsin-I Lin 06/18/2014 3 0 0 0 0 0 0 Bachelor ings Co., Ltd. None - - (Note 2) 4. Chairman, Guang Yuan Investment Co.,Ltd. 5. Independent Director, Shihlin Electric&Engineering Corp 1. Vice Chairman, Taiwan Semiconductor Manufacturing Company Limited 2. Chairman, TSMC China Company Ltd. Independent 3. Chairman, Global Unichip Corp. F.C. Tseng 06/21/2017 3 0 0 0 0 0 0 Ph. D. None - - Director 4. Vice Chairm an, Vanguard International Semiconductor Corp. 5. Chairman, TSMC Education and Culture Foundation 1. Professor, Department of International Business,National Taiwan University 2. Independent Director, Delta Electronics, Inc. 3. Independent Director, E.Sun Financial Hold- Independent Ji-Ren Lee 06/21/2017 3 0 0 0 0 0 0 Ph. D ings Co., Ltd. None - - Director 4. Chairman of Compensation Committee , Nien Hsing Textile Co., Ltd. 5. Member of Remuneration Committee, MediaTek Inc. 1. Chairman, Taiwan Mobile Foundation 2. President, BeingNet Alliance Independent 3. Independent Director, Winbond Electronics Director San-Cheng 06/21/2017 3 322 0 530,322 0.02 6,444 0 Ph. D Corp. None - - Chang (Note 1) 4. Director,, Xue Xue Company 5. President, Institute for Biotechnology and Medicine Industry

  • Page 18

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 24 Corporate Governance Principles Corporate Governance Principles 25 Shares Held When Shares Held by Spouse & Spouse or Immediate Family Shares Held at Present Date of Elected Minors Holding Managerial Position Title Name Term Education Current Position(s) in Other Companies Election Relation- Number Percentage Number Percentage Number Percentage Title Name ship 1. Chairman ,eMemory Technology Inc. 2. Chairman, iMQ Technology Inc. 3. Director,Powerflash Technology Corp. 4. Director, Powerchip Technology Corp. Independent 5. Director, SyntronixCorp. Director Ching-Hsiang 06/21/2017 3 0 0 0 0 0 0 Ph. D 6. Independent Director, Materials Analysis None - - Hsu (Note 1) Technology Inc. 7. Director, National Applied Research Labo- ratories 8. Executive Director, Taipei Computer As- sociation 1. Chairman and CEO of Acetti Software Independent 2. Consultant of Innovation and Prospective Director Chin-Cheng Technology Project, Institute for Information 06/18/2014 3 0 0 0 0 0 0 Master None - - Wu Industry (Note 2) 3. Honorary Chairman, New England Chinese Information and Networking Association Note 1: San-Cheng Chang assumed position on 2017.06.21 Ching-Hsiang Hsu assumed position on 2017.06.21 Note 2: Hsin-I Lin released on 2017.06.21 Chin-Cheng Wu released on 2017.06.21 Note 3: Appointed by Company to be Director and/or President of certain subsidiaries Major Institutional Shareholders (April 17, 2018) Name of Acer’s Institutional Major Shareholders of Acer’s Institutional Percentage of Shares Shareholders Shareholders Carolyn Yeh 20.13% Shih Hsuen Rouan Charity Foundation 1.60% Shih Hsuen Rouan 17.25% Hung Rouan Investment Corp. Shih Hsuen Huei 26.09% Shih Hsuen Lin 17.16% Shih Fang Cheng 8.93% Yeh Ting Yu 8.84% Philip Peng 56.25% Smart Capital Corp. Jill Ho 6.25% Fan Peng 37.5%

  • Page 19

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 26 Corporate Governance Principles Corporate Governance Principles 27 Professional qualifications and independence analysis of directors and supervisors Meet One of the Following Professional Qualification Requirements, Together with at Independence Criteria (Note 1) Least Five Years Work Experience Criteria An Instructor or Higher A Judge, Public Prosecutor, Have Work Position in a Department of Attorney, Certified Public Experience in the Number of Other Public Companies in Which the Commerce, Law, Finance, Accountant, or Other Areas of Commerce, Individual is Concurrently Serving as an Independent Accounting, or Other Professional or Technical Law, Finance, or Director Academic Department Related Specialist Who has Passed 1 2 3 4 5 6 7 8 9 10 Accounting, or to the Business Needs of the a National Examination and Otherwise Necessary Name Company in a Public or Private been Awarded a Certificate in for the Business of Junior College, College or a Profession Necessary for the the Company University Business of the Company Jason Chen 4 4 4 4 4 4 4 4 4 0 Stan Shih 4 4 4 4 1 George Huang 4 4 4 4 4 4 4 2 Hung Rouan Not applicable. Not applicable. Investment Corp. Carolyn Yeh (Representative 4 4 4 4 0 of Hung Rouan Investment Corp.) Smart Capital Corp. Not applicable. Not applicable. Philip Peng (Representative of 4 4 4 4 4 4 4 4 4 1 Smart Capital Corp.) Hsin-I Lin (Note 2) 4 4 4 4 4 4 4 4 4 4 4 2 F.C. Tseng 4 4 4 4 4 4 4 4 4 4 4 0 Ji-Ren Lee 4 4 4 4 4 4 4 4 4 4 4 4 2 San-Cheng Chang 4 4 4 4 4 4 4 4 4 4 4 0 Ching-Hsiang Hsu 4 4 4 4 4 4 4 4 4 4 4 1 Chin-Cheng Wu 4 4 4 4 4 4 4 4 4 4 4 0 (Note 2) Note1 : Please tick the corresponding boxes if directors or supervisors have been any of the following during the two years prior to being 8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company. elected or during the term of office. 9. Not been a person of any conditions defined in Article 30 of the Company Law. 1. Not an employee of the Company or any of its affiliates. 10. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law. 2. Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indi- Note 2: Hsin-I Lin released on 2017.06.21 and Chin-Cheng Wu released on 2017.06.21 rectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. 4. Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the per- sons in the preceding three subparagraphs. 5. Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of out- standing shares of the Company or that holds shares ranking in the top five in holdings. 6. Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company. 7. Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof.

  • Page 20

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 28 Corporate Governance Principles Corporate Governance Principles 29 (2) Key Managers (April 17, 2018) Spouse or Immediate Family Shares Held by Spouse Shares Held by the Date of Shares Held Directly Holding Position as President Title Name & Minors Other’s Education Current Position(s) in Other Companies Accession or Vice President Number Percentage Number Percentage Number Percentage Title Name Relationship 1. Chairman, Mu-Jin Investment Co., Ltd. Corp. President & CEO Jason Chen 01/01/2014 2,555,480 0.08 0 0 1,234,049 0.04 Master None - - 2. Others (Note3) Emmanuel Corp.VP & President 01/01/2011 0 0 0 0 0 0 Bachelor (Note3) None - - Fromont President Ben Wan 05/16/2002 40,388 0 0 0 0 0 Master (Note3) None - - President Tiffany Huang 01/01/2013 94,817 0 90 0 0 0 Bachelor - None - - President Maverick Shih 01/24/2014 9,997,733 0.32 13,172,880 0.43 0 0 Ph. D. (Note3) None - - President Jerry Kao 12/01/2014 206,375 0.01 0 0 0 0 Master (Note3) None - - Gregg President 09/01/2015 0 0 0 0 0 0 Bachelor (Note3) None - - Prendergast President Andrew Hou 03/25/2016 40,000 0 19 0 0 0 Master (Note3) None - - President Victor Chien 03/25/2016 6 0 11 0 0 0 Bachelor - None - - CTO RC Chang 09/01/2015 61,135 0 0 0 0 0 Ph. D. (Note3) None - - Corp. CFO (Note1) Meggy Chen 07/01/2017 109,765 0 0 0 0 0 Master (Note3) None - - Accounting Officer (Note1) Sophia Chen 07/01/2017 2,930 0 0 0 0 0 Master (Note3) None - - 1. Director, NHL CPA Limited, H, 2. Director, Cal-Comp Biotech Co., Limited 3. Director, Brotherelephants Co., Limited 4. Independent Director, Carnival Group International Holdings Limited 5. Independent Director, Enterprise Devel- Corp. CFO (Note 2) Nancy Hu 05/01/2014 0 0 0 0 0 0 Master opment Holdings Limited None - - 6. Independent Director, United Pacific Industries Limited 7. Independent Director,Arich Enterprise Co., Limited 8. Consultant, Beautimode Co., Limited Consultant Accounting Officer (Note 2) Grace Lung 05/01/2014 0 0 0 0 0 0 Bachelor - None - - Maarten Vice President (Note 2) 07/01/2014 0 0 0 0 0 0 Ph. D. - None - - Schellekens Note 1: Meggy Chen assumed position on 2017.07.01 Sophia Chen assumed position on 2017.07.01 Note 2: Nancy Hu released on 2017.06.30 Grace Lung released on 2017.06.30 Maarten Schellekens released on 2017.01.31 Note 3: Appointed by Company to be Director and/or President of certain subsidiaries. Note 4: For those who resigned or be released from their positions, whose shareholdings are shown as 0.

  • Page 21

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 30 Corporate Governance Principles Corporate Governance Principles 31 3.3 Corporate Governance Status 3.3.2 Operational Situation of the Audit Committee The Audit Committee held two meetings from Jan. 1, 2017 to Jun. 20, 2017. The re- 3.3.1 Meetings Held by the Board of Directors cord of the Members’ attendances is shown below: The Board of Directors held two meetings from Jan. 1, 2017 to Jun. 20, 2017. The re- No. of Meetings No. of Meetings Meeting Attendance Title Name Note cord of the Directors’ attendances is shown below: Attended Attended by Proxy Rate(%) Independent No. of Meetings No. of Meetings Meeting Attendance F.C. Tseng 2 0 100% Director Title Name Note Attended Attended by Proxy Rate(%) Independent Ji-Ren Lee 2 0 100% Chairman George Huang 2 0 100% Director Director Stan Shih 2 0 100% Independent Chin-Cheng Wu 1 1 50% Director Director Jason Chen 2 0 100% Director Hsin-I Lin 2 0 100% The Audit Committee held three meetings from Jun. 21, 2017 to Dec. 31, 2017. The Carolyn Yeh record of the Members’ attendances is shown below: Director (Representative of Hung 2 0 100% Rouan Investment Corp.) Philip Peng No. of Meetings No. of Meetings Meeting Attendance Title Name Note Director (Representative of Smart 2 0 100% Attended Attended by Proxy Rate(%) Capital Corp.) Independent Ching-Hsiang 3 0 100% Independent Director Hsu F.C. Tseng 2 0 100% Director Independent Independent F.C. Tseng 3 0 100% Ji-Ren Lee 2 0 100% Director Director Independent Independent Ji-Ren Lee 3 0 100% Chin-Cheng Wu 1 1 50% Director Director Independent San-Cheng 3 0 100% Director Chang The Board of Directors held three meetings from Jun. 21, 2017 to Dec. 31, 2017. The record of the Directors’ attendances is shown below: No. of Meetings No. of Meetings Meeting Attendance Title Name Note Attended Attended by Proxy Rate(%) Chairman Jason Chen 3 0 100% Director Stan Shih 3 0 100% Director George Huang 3 0 100% Carolyn Yeh Director (Representative of Hung 3 0 100% Rouan Investment Corp.) Philip Peng Director (Representative of Smart 3 0 100% Capital Corp.) Independent F.C. Tseng 3 0 100% Director Independent Ji-Ren Lee 3 0 100% Director Independent San-Cheng Chang 3 0 100% Director Independent Ching-Hsiang Hsu 3 0 100% Director

  • Page 22

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 32 Corporate Governance Principles Corporate Governance Principles 33 3.3.3 Enforcement of Corporate Governance Implemented by Enforcement Status Discrepancy between the the Company and Reasons for Discrepancy corporate governance Discrepancy principles Enforcement Status between the Evalvation Items implemented corporate Yes No Summary by the Company governance and the principles Principles, and Evalvation Items implemented the reason for by the Company the discrepancy Yes No Summary and the (2) Does the company voluntarily Acer has set up Audit Committee, Principles, and establish other functional Remuneration Committee, and Investment the reason for committees in addition to the 4 Committee. Acer is willing to set up No discrepancy the discrepancy Remuneration Committee and the other functional committees depends on Audit Committee? practical needs. 1. Does the company establish and disclose the Corporate Governance The Company has enacted Acer’s The Company has formulated rules and Best-Practice Principles based on “Corporate Governance Best-Practice (3) Does the company establish procedures for board of directors’ 4 No discrepancy “Corporate Governance Best-Practice Principles” to establish sound corporate a standard to measure the performance assessments, and that each 4 No discrepancy Principles for TWSE/TPEx Listed governance systems. performance of the Board, and year we conduct regularly scheduled Companies”? implement it annually? performance assessments of the board of directors. 2. Shareholding structure & shareholders’ rights 1. The annual evaluation by the CPA is (1) Does the company establish an one of the main duties of the Audit internal operating procedure Committee, and being passed by the The Company has designated the Office Board of Directors meeting. to deal with shareholders’ 4 of Shareholders' Affairs to handle the No discrepancy 2. The Audit Committee comprehensively suggestions, doubts, disputes and shareholders' proposal and disputes. evaluates the independence of litigations, and implement based on the procedure? CPA based on CPA’s Statement of Independence and items stated in (2) Does the company possess the list relevant regulations. The Company holds information on the of its major shareholders as well 4 identities of major shareholders and their No discrepancy 3. The important evaluation items are as the ultimate owners of those ultimate controlling persons. summarized as following: shares? The Company has established the (1) Whether the management of the appropriate risk control mechanism and Company will respect objective and (3) Does the company establish and firewalls according to internal rules, such challenging audit procedures. execute the risk management as rules of supervision over subsidiaries, (4) Does the company regularly (2) Whether CPA’s non-audit service 4 No discrepancy and firewall system within its rules governing endorsement and evaluate the independence of 4 may affect the independence of No discrepancy conglomerate structure? guarantee, and the rules governing CPAs? CPA’s auditing. acquisitions and dispositions of assets, (3) Whether CPA firm enacts etc. independence rules and request the (4) Does the company establish itself, staffs and any other person to The Company enacted Regulations on keep independence in accordance internal rules against insiders 4 Insider Trading to prevent any illegal No discrepancy with the Norm of Professional Ethics trading with undisclosed activities in terms of insider trading. for CPA, and prohibit insider trading, information? misusing internal information or 3. Composition and Responsibilities of any behavior which the security or the Board of Directors capital market may be misleading. Although Acer has not yet adopted a (4) Whether the CPA mandatory policy indicating criteria of diversity and rotation is applied and complementarity of skills for director implemented to the lead auditor candidates, but diversity has always and review auditor in accordance (1) Does the Board develop and been one of the crucial factors for with competent regulations. implement a diversified policy for 4 No discrepancy recommending new director candidates. the composition of its members? The Company has set the diversification policy of the board of directors in Article 20 of Acer's Corporate Governance Best Practice Principles.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 34 Corporate Governance Principles Corporate Governance Principles 35 Discrepancy Discrepancy Enforcement Status between the Enforcement Status between the corporate corporate governance governance principles principles Evalvation Items implemented Evalvation Items implemented Yes No Summary by the Company Yes No Summary by the Company and the and the Principles, and Principles, and the reason for the reason for the discrepancy the discrepancy Acer practices its corporate governance (2) Does the company have other under Chairman and Corp President information disclosure channels & CEO's supervision. The Company's (e.g. building an English website, The Company has one chief speaker, two Global Finance, Legal, HR, Corporate appointing designated people to acting speakers and a designated team to 4 No discrepancy Sustainability Office and Internal Auditors handle information collection and be responsible for gathering and handle related matters as following disclosure, creating a spokesman disclosing relevant information. 4. Does a TWSE/TPEx listed company summary: system, webcasting investor set up a full/part-time corporate 1. Developing and designing a competent conferences)? governance unit or personnel to be in system to improve transparency, The Company has actively participated in charge of corporate governance affairs compliance and implementation of community or charitable activities. including, but not limited to, providing internal auditing. directors and supervisors with required • The Company has set up an exclusive 2. Preparing and providing Shareholder’s web site for the new labor pension information for business execution, 4 meeting notice, agenda and meeting No discrepancy system containing information for handling relevant matters with board minute within the prescribed period. employees regarding the laws and meetings and shareholders meetings according to the laws, processing 3. Sending the board of directors (including regulations, and to offer assistance. corporate registration and amendment independent directors, Audit Committee • In additional to the training courses registration, and preparing minutes and other functional committees) the required by authorities, the Company 8. Is there any other important of board meetings and shareholders notice, information and materials which also held related training courses for information to facilitate a better meetings? will be discussed in the meeting at least members of the Board. understanding of the company’s 7 days in advance. corporate governance practices • The Company has clearly set forth Providing and updating the status of (e.g., including but not limited to in the rules for the proceedings of applicable laws and regulations related employee rights, employee wellness, Board meetings, that a director shall to the Company's operation and business investor relations, supplier relations, voluntarily abstain from voting on a to assist the board of directors (including rights of stakeholders, directors’ and 4 proposal involved with his/her own No discrepancy independent director) in compliance. supervisors’ training records, the interests. implementation of risk management • It's stipulated in Acer's “Corporate 5. Does the company establish a The Company has established the policies and risk evaluation measures, Governance Best-Practice Principles” communication channel and build appropriate communication channels the implementation of customer that in case the Chairman also acts a designated section on its website 4 with suppliers, buyers, banks, investors No discrepancy relations policies, and purchasing as the President or the Chairman and for stakeholders, as well as handle all and other stakeholders, including a insurance for directors and President are spouses or relatives the issues they care for in terms of stakeholders section on our website. supervisors)? within one degree of consanguinity, corporate social responsibilities? it is advisable that the number of 6. Does the company appoint a independent directors be increased The Company has designated the Office professional shareholder service accordingly. 4 of Shareholders' Affairs to handle the No discrepancy agency to deal with shareholder shareholders' proposal and disputes. • • The Company has purchased liability affairs? insurance for directors and officers. 7. Information Disclosure • • The relevant information has been disclosed on Acer Inc.'s official website The Company has set up Acer Group (http://www.acer-group.com). website (http://www.acer-group.com) (1) Does the company have a containing the information regarding its 9. Please indicate the improvement that has been done for the results of the corporate governance evaluation issued by the corporate website to disclose both 4 finance and operations. The Company also No discrepancy Center for Corporate Governance of TWSE in the most recent year and provide priority measures for those items that have financial standings and the status discloses the enforcement of corporate not yet been improved. of corporate governance? governance in the shareholders' meeting The Company has listed the following two items as priority matters having to be improved. and other institutional investor meetings. 1. Enhance the disclosure of the communication among interdependent directors, chief internal auditor and CPA on the Company's website. 2. Amend the Company's Corporate Governance Best Practice Principals to improve the diversification policy of the board of directors.

  • Page 24

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 36 Corporate Governance Principles Corporate Governance Principles 37 3.3.4 Code of Ethics and Business Conduct Enforcement Status Discrepancy between the corporate governance principles implemented by Items Discrepancy between the Company and Enforcement Status Yes No Summary the corporate the Principles, and governance principles the reason for the implemented by discrepancy Items the Company and Yes No Summary Acer Group has committed ourselves the Principles, and to meeting high standards of law and the reason for the ethics compliance to carry out our discrepancy business. The management is required to establish a paragon of placing a high 1. Establishment of Corporate value of corporate conduct and ethics. Conduct and Ethics Policy and Under the supervision of the board of Implementation Measures directors, HR, Legal, Internal Auditor (1) Are the Company’s guidelines and other cross-functional teams on corporate conduct and co-work to promote the Company’s Integrity is the most important core corporate conduct and ethics and urge ethics provided in internal value of Acer’s culture. The Board all employees and stakeholders to act policies and disclosed of Directors and the management up to the corporate conduct and ethics. publicly? Have the Board of 4 No discrepancy team are dedicated to enforcing the For the concrete implementation Directors and the management Company’s guideline on corporate of the code of conduct and ethics, team demonstrated their conduct and ethics. the pertinent compliance status commitments to implement the policies? will be reported to Audit Committee and the Board of Directors meeting It is Acer Group’s policy to fully comply by Chief Internal Auditor. The core with all laws and regulations governing implementation is summarized as our people and operations around (2) Has the Company set up follows: (2) Has the company established the world and to conform to the dedicated unit in charge of 1.Reviewing contractual terms and relevant policies for preventing highest legal and ethical standards. promotion and execution of the 4 conditions to avoid dealing with No discrepancy any unethical conduct? Are the Our Standards of Business Conduct company’s corporate conduct someone who has negative record implementation of the relevant 4 No discrepancy (SBC) are formulated to guide the way and ethics? regarding corporate conduct and procedures, guidelines and Acer Group employees behave with ethics. training mechanism provided in each other, our customers, business 2.Promoting the Company’s the policies? partners, our shareholders and the cooperative parties to sign communities where Acer Group does Acer’s integrity declaration and business. undertaking (or including similar terms and conditions in the (3) Has the company establishes In order to prevent any unethical contracts) appropriate measures against conduct, we have enacted several the acts listed in Article 7 of the policies and guidelines, such as 3.Disseminating Acer’s corporate Ethical Corporate Management Standards of Business Conduct, conduct and ethics relevant policies 4 No discrepancy to every employee. Best Practice Principles for TWSE/ Antitrust and Fair Competition GTSM Listed Companies or Guidelines, Regulations on Insider 4.Requesting anyone who participates other higher potential unethical Trading, and Rules Governing in important project to sign non- conducts in the relevant policies? Management of Personal Data, etc. disclosure agreement and promise not to disclose the Company’s 2. Corporate Conduct and Ethics trade secret or other significant Compliance Practice information to third party. In addition to sending emails to our 5.Promoting other project with respect (1) Has the company conducted customers and suppliers to inform to the corporate conduct and ethics. investigation regarding unethical them about our ethical policy, in order records with whomever the to further enhance our commitment Company doing business with, 4 to ethical practice, we also request our No discrepancy We have enacted “Acer Group and included business conduct contractors, vendors, suppliers and (3) Has the Company established Standards of Business Conduct” and ethics related clauses in the service providers to sign a letter of policies to prevent conflicts to prevent conflicts of interest and business contracts. undertaking to demand compliance of interest and provided 4 provide whistleblower mailbox on our No discrepancy with our ethical policy. appropriate communication and website (http://www.acer-group.com/ complaint channels? public/Investor_Relations/corporate. htm).

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 38 Corporate Governance Principles Corporate Governance Principles 39 Discrepancy between Discrepancy between Enforcement Status Enforcement Status the corporate the corporate governance principles governance principles implemented by implemented by Items Items the Company and the Company and Yes No Summary the Principles, and Yes No Summary the Principles, and the reason for the the reason for the discrepancy discrepancy Acer’s Internal Control Systems are (3) Has the Company established The Company has taking measures to (4) Has the Company established management processes designed by measures to protect the identity 4 No discrepancy protect the identity of the informer. effective accounting and the managers, passed by the board of the informer? internal control systems for the of directors, and implemented by the implementation of policies, and 4 board of directors, managers, and other No discrepancy 4. Information Disclosure the internal or external auditors employees for purpose of promoting audit such execution and sound operations of the Company. Our (1) Has the Company published The Company has published financial reports are also audited by information relating to the compliance. information relating to the Company’s external auditors regularly. Company’s corporate conduct 4 corporate conduct and ethics on our No discrepancy and ethics on its website or website (www.acer-group.com) and It is Acer Group policy to fully comply Market Observation Post Market Observation Post System. with all laws and regulations governing System? our people and operations around 5. If the company has established corporate governance policies based on TSE Corporate Conduct and Ethics Best Practice the world and to conform to the Principles, please describe any discrepancy between the policies and their implementation: No discrepancy highest legal and ethical standards. Our Standards of Business Conduct 6. Other important information to facilitate better understanding of the company’s corporate conduct and ethics (SBC) are formulated to guide the way compliance practices (e.g., promote and demonstrate the company’s commitment to ethical standard and provide Acer Group employees behave with training to its business partners; review the company’s corporate conduct and ethics policy). each other, our customers, business (5) Does the Company provide For details on the implementation of Acer’s Corporate Conduct and Ethics, please refer to “Acer's Corporate Governance partners, our shareholders and the training regarding ethic 4 No discrepancy Best-Practice Principles “. communities where Acer Group does compliance practice regularly? business. Within their first month, new staff are put through training to better understand the company's Standards of Business Conduct (including instruction on labor rights, freedom of expression, sexual harassment prevention, and corruption prevention), thus helping them become fully integrated parts of the team. 3. Channels for reporting any ethical irregularities In order to enhance corporate governance, Acer provides a whistleblower mailbox on our website (http://www.acer-group.com/public/ (1) Has the Company established Investor_Relations/corporate.htm) policy and channels in terms of for people to report any threats of reporting ethical irregularities involvement of fraudulence, corruption, 4 No discrepancy and designated competent violation of Acer's Standards of personnel to handle such Business Conduct, any illegal conducts matters? or conducts violated corporate governance by Acer employee. The audit office, which functions directly under the board of directors, will handle the report exclusively. (2) Has the Company established Acer has established policy and security policy and security mechanisms mechanisms regarding the procedures regarding the procedures for 4 No discrepancy for responding to the reports of ethical responding to the reports of irregularities. ethical irregularities?

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 40 Corporate Governance Principles Corporate Governance Principles 41 3.3.5 The Establishment and Enforcement of Remuneration 3.3.6 Status and Measures of Ethical Practice Committee As good corporate citizens Acer Group respect human rights, local communities and compliance with laws, environment, ethics, safety standards, regulations and social norms. Based on our core values of "Serve with honor and work with pride", we have formu- The Acer Inc. “Board of Directors and Supervisors Remuneration Guidelines” and “Executive Remuneration Guideline” are pro- lated a Standards of Business Conduct (SBC) document to guide us on how we interact with each other, our customers, our business posed by Remuneration Committee, effective upon the approval of Acer Inc. Board of Directors. The compensation of the Board of partners, our shareholders and the communities where the Acer Group does business. This is done every day in every decision and Directors is defined in “Acer’s Articles of Incorporation”. Where there are earnings at the end of the fiscal year after making up the every action by each one of us. We continue to build on our reputation for trust, integrity and honesty, both internally and exter- losses of previous years. Then, if any balance left over, no more than 0.8% of profits shall be distributed as profit sharing for the nally, by appreciating people, their diversities and cultures. Board of Directors and supervisors according to Acer Inc. “Board of Directors and Supervisors Remuneration Guidelines”. Employee Director are not entitled to receive Director profit-sharing. You are welcome to visit Acer Group website (http://www.acer-group.com) for the details of our “Standards of Business Conduct.” The remuneration of Acer executive is governed under Acer Group “Executive remuneration guideline”. The short-term incentive links to both individual and company overall team performance, while the long-term incentive links to long-term shareholders’ value. The annual KPIs, which includes a portion of strategic KPIs assigned by the board whether financial or non-financial, ensures the executive team move on the same direction to reach the strategic goal of the company. Standards of Business Conduct (SBC) is 3.3.7 Statement of Personnel Having Licenses Associated with reminded and confirmed by each executive on the compensation sign back letter each year. Financial Information Transparency from Competent Au- thorities A. Remuneration Committee held two meetings from Jan. 1, 2017 to Jun. 20, 2017. The record of their attendance is shown below: Numbers Name of Licenses Internal Auditor Financial Officer Meeting No. of Meetings No. of Meetings Certified Public Accountants (CPA) 0 2 Title Name Attendance Note Attended Attended by Proxy Rate(%) US Certified Public Accountants (US CPA) 0 1 Independent Ji-Ren Lee 2 0 100% Certified Internal Auditor (CIA) 1 0 Director Independent BS7799/ISO 27001 Lead Auditor 1 0 F.C. Tseng 2 0 100% Director Independent Chin-Cheng Wu 1 1 50% Director Note : Ji-Ren Lee was elected as the Chairman of Acer RemCo from June 18, 2014. B. Remuneration Committee held three meetings from Jun. 21, 2017 to Dec. 31, 2017. The record of their attendance is shown below: Meeting No. of Meetings No. of Meetings Title Name Attendance Note Attended Attended by Proxy Rate(%) Independent Ji-Ren Lee 3 0 100% Director Independent F.C. Tseng 3 0 100% Director Independent Ching-Hsiang Hsu 3 0 100% Director Note : Ji-Ren Lee was elected as the Chairman of Acer RemCo from June 21, 2017.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 42 Corporate Governance Principles Corporate Governance Principles 43 3.3.8 Statement of Internal Control System 3.3.9 Resolutions of the Board of Directors’ Meeting and the General Shareholders’ Meeting Date: March 21, 2018 Resolutions of the Board of Directors' Meeting Date Meeting Major Resolutions Based on the findings of a self-assessment, Acer Incorporated (hereinafter, the “Company”) states the following with regard to its 2017.03.30 First 2017 BOD Meeting 1. To Approve the 2016 Financial Statements and Business Report internal control system during year 2017: 2. To approve the Acer’s Statement of Internal Control System for 2016 1. The Company is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of 3. To Approve the Proposal for Profit & Loss Appropriation of 2016 its Board of Directors and managers. The Company has established such a system aimed at providing reasonable assurance regarding the achievement of objectives in the following categories: (1) effectiveness and efficiency of operations (including 4. To Approve the Cash Distribution from Capital Surplus profitability, performance, and safe-guarding of assets), (2) reliability, timeliness, transparency, and regulatory compliance of 5. To Approve the Appointment CPAs of KPMG as the Auditors of Acer reporting, and (3) compliance with applicable laws, regulations and bylaws. Incorporated 6. To Elect Nine Directors (Including Three Independent Directors) of the 2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system Company can provide only reasonable assurance of accomplishing the three objectives mentioned above. Moreover, the effectiveness 7. To approve amendments to Acer’s “Procedures Governing Acquiring or of an internal control system may be subject to changes of environment or circumstances. Nevertheless, the internal control Disposing of Assets” system of the Company contains self-monitoring mechanisms, and the Company promptly takes corrective actions whenever 8. To Release Non-Compete Restrictions on Newly-Elected Directors and a deficiency is identified. their 3. The Company evaluates the design and operating effectiveness of its internal control system based on the criteria provided 9. To Convene the 2017 General Shareholders’ Meeting in the “Regulations Governing Establishment of Internal Control Systems by Public Companies” promulgated by the Securi- 10. To Approve Strategic Investment and Disposal ties and Futures Bureau of the Financial Supervisory Commission (hereinafter, the “Regulations”). The criteria adopted by the 11. To Establish a Subsidiary for the Digital Signage Business Regulations identify five constituent elements of internal control based on the process of management control: (1) control en- vironment, (2) risk assessment, (3) control activities, (4) information and communications, and (5) monitoring activities. Each 12. To Establish a Subsidiary for Investment Management in China constituent element further contains several items. Please refer to the Regulations for details. 13. To Approve the Capital Injection into MPS Energy Inc. 14. To Approve a Subsidiary to Obtain Operational Equipment 4. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria. 15. To Amend “Corporate Governance Best Practice Principles” and “Procedures Governing Fixed Assets Management” of “Internal Control 5. Based on the results of the evaluation mentioned in the preceding paragraph, the Company believes that, as of December 31, System” 2017, its internal control system (including its supervision of subsidiaries), was effective in design and operation, and reason- 16. To establish “Wangdao Management Committee” under the Company’s ably assured the achievement of the above-stated objectives. Board of Directors 6. This Statement will be an essential content of the Company’s Annual Report for the year 2017 and Prospectus, and will be 17. To Approve the Renewal of the Bank Facilities publicly disclosed. Any false-hood, concealment, or other illegality in the content made public will entail legal liability under 18. To Approve the Company’s Corporate Guarantees Articles 20, 32, 171, and 174 of the Securities and Exchanged Act. 19. To Adoption of the Company and Worldwide Subsidiaries’ Lending of Capital to others 7. This Statement has been passed by the Board of Directors in their meeting held on March 21, 2018, with 0 of the 9 attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement. 20. Proposal of target bonus for the executives of 2016 21. Proposal of 2017 merit increase figures for all executives Acer Incorporated Corporate President & CEO Chairman of the Board of Directors

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 44 Corporate Governance Principles Corporate Governance Principles 45 Date Meeting Major Resolutions Date Meeting Major Resolutions 2017.05.11 Second 2017 BOD Meeting 1. To Approve the First Quarter of FY2017 Consolidated Financial 2017.11.9 Fourth 2017 BOD Meeting 1. To Approve the Third Quarter of FY2017 Consolidated Financial Statements Statements 2. Propose to Set the Record Date of Capital Reduction by Redeeming and 2. To Approve the Acer’s Annual Audit Plan for 2018 Cancelling a Portion of Restricted Stock Awards (“RSA”) Initially Issued 3. To Approve the Acer’s Annual Audit Plan for 2018 in 2014. 4. Propose to participates in AOPEN’s private placement of new common 3. To Approve Strategic Investment in Subsidiaries shares for cash capital increase. 4. To approve the transaction of India subsidiarie's minority shares 5. Propose to spin-off of Management of Maintenance and Operation Unit 5. To Approve the Renewal of the Bank Facilities of Internet Data Center 6. To Approve the Company’s Corporate Guarantees 6. Propose the Improvement plan of the subsidiary, Acer Being Communication Inc. 7. To Adoption of the Company and Worldwide Subsidiaries’ Lending of Capital to others 7. Propose the excution plan of Subsidiaries Improvements and Titan Project 8. Proposal of profit sharing guideline and executives allocation of 2016 8. Propose to participates in Kbest Technology Inc.’s new common shares 2017.06.21 First 2017 Special Meeting 1. To Elect The Chairman of Acer Incorporated for cash capital increase 2. To Set the Record Date for the Cash Distribution from Capital Surplus 9. To Approve Acer ITS Inc. the merge of its wholly-owned subsidiary 3. To Elect Members of Each Functional Committee PKLOT INC. 4. To Propose the 1st Tier Organization and Leader Appointment 10. To Approve the Capital Injection into Acer Subsidiary in Hong Kong 2017.08.10 Third 2017 BOD Meeting 1. To Approve Amendments of the Regulations Governing Procedure for 11. To Approve the disposal of Gateway Inc.'s real estate lactted in North Board of Directors Meeting and Audit Committee Sioux City 2. To Approve the Second Quarter of FY2017 Consolidated Financial 12. Donation of Acer Foundation Statements 13. To Approve the Renewal of the Bank Facilities 3. To Amend The “Internal Control Procedure of Stock Affairs Unit” 14. To Approve the Company’s Corporate Guarantees 4. Propose to Set the Record Date of Capital Reduction by Redeeming and Cancelling a Portion of Restricted Stock Awards (“RSA”) Initially Issued 15. To Adoption of the Company and Worldwide Subsidiaries’ Lending of in 2014. Capital to others 5. Propose to Agree Acer Holdings International, Incorporated to Make 16. Proposal of target bonus for the executives of the Year 2016 Capital Injection to Acer Subsidiary in Vietnam 17. Acer Group Global Salary Increase Proposal of the Year of 2018 6. To approve the Spin-off of the intelligent transportation business from AEB and to Establish a New Company 18. Proposal of long term incentive program for the executives of the Year 7. Propose to Agree the Capital Injection to Acer Subsidiary, PAWBO, INC. 2018 8. Propose to set up WILL wholly-owned subsidiary to do the system integration business 9. To Approve Strategic Investment 10. Propose to Agree the Capital Injection to AGP Insurance (Guernsey) Limited 11. To Approve the Renewal of the Bank Facilities 12. To Approve the Company’s Corporate Guarantees 13. To Adoption of the Company and Worldwide Subsidiaries’ Lending of Capital to others 14. Proposal of the Amendmend to "Self-Evaluation of the Board of Directors"

  • Page 29

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 46 Corporate Governance Principles Capital and Shares 47 Implementation of Resolutions in 2017 General Shareholders' Meeting Major Resolutions Carries out the situation irectors elected: Stan Shih, George Huang, Jason Chen, Hung Rouan Investment Corp. Legal Representative: 4 1. To Elect Nine Directors (Including Four Carolyn Yeh, Smart Capital Corp. Independent Directors) of the Company. Independent Directors Elected: F. C. Tseng, Ji-Ren Lee, San-Cheng Chang (Simon Chang), Ching- Hsiang Hsu (Charles Hsu) The registration was approved by the MOEA on July 27, 2017. 2. To Acknowledge 2016 Financial Statements and The shareholder resolution was adopted and approved as proposed. Business Report. 3. To Approve the Appropriate of Retained Earnings The shareholder resolution was adopted and approved as proposed. for 2016 Losses. To set July 20, 2017 and August 17, 2017 as the record date and the 4. To Approve the Proposal of Cash Distribution from distribution date of ex-dividend respectively. (Distribution ratio for the Capital Surplus. 5. To Approve the Amendment to the Company’s Internal Regulations: Acquiring or Disposing of cash dividend : NT$0.5 per share) The shareholder resolution was adopted and approved as proposed. Capital and Shares and published on the website of the company. Assets. 6. To Release Non-Compete Restrictions on Newly- The shareholder resolution was adopted and approved as proposed. Elected Directors and their Representatives.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 48 Capital and Shares Capital and Shares 49 4.1 Sources of Capital 4.1.3 Distribution of Shareholdings (April 17, 2018) The Number of Category Shares Percentage 4.1.1 Sources of Capital (April 17, 2018) Shareholders 1~999 116,246 30,930,410 1.01% Unit: Share/NTD Thousand 1,000~5,000 149,134 336,972,041 10.95% Authorized Common stock Paid-in Common stock Date Price of Issuance Notes 5,001~10,000 33,376 254,914,252 8.29% Shares Value Shares Value 10,001~15,000 11,454 141,206,144 4.59% September, Share/NTD10 3,500,000,000 35,000,000 3,076,502,828 30,765,028 - 15,001~20,000 6,752 122,876,982 3.99% 2017 20,001~30,000 5,910 146,830,237 4.77% Unit: Share 30,001~50,000 4,586 179,940,675 5.86% Shares Authorized capital Notes 50,001~100,000 2,896 204,534,797 6.65% Category Issued shares Non-issued Total 100,001~200,000 1,269 175,772,352 5.71% Common shares 3,076,502,828 423,497,172 3,500,000,000 - 200,001~400,000 490 135,707,868 4.41% 400,001~600,000 150 72,134,562 2.34% 600,001~800,000 83 57,454,862 1.87% 4.1.2 Shareholding Structure (April 17, 2018) 800,001~1,000,000 45 40,068,905 1.30% Unit: Share 1,000,001 and above 240 1,177,158,741 38.26% Total 332,631 3,076,502,828 100.00% FINI and Category Government Financial Other Individual Foreign Total Number Institution Institution Institution Investors No. of Shareholders 8 36 460 331,115 1,012 332,631 Shares 24,877,569 5,874,336 180,847,080 1,980,037,024 884,866,819 3,076,502,828 4.1.4 List of Major Shareholders (April 17, 2018) Percentage 0.81% 0.19% 5.88% 64.36% 28.76% 100.00% Item Shares Percentage Name Hung Rouan Investment Corp. 73,629,933 2.39% Stan Shih 51,024,395 1.66% VANGUARD EMERGING MARKETS STOCK INDEX FUND, A SERIES OF VANGUARD IN- 48,412,897 1.57% TERNATIONAL EQUITY INDEX FUNDS JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International 38,732,682 1.26% Stock Index Fund, a series of Vanguard Star Funds Management Board of Public Service Pension Fund 33,253,600 1.08% Acer GDR 32,053,125 1.04% iShares MSCI Taiwan Capped ETF 23,364,737 0.76% Polunin Developing Countries Fund, LLC 21,600,197 0.70% Government Pension Investment Fund - Internal - Re:MTBJ400045849 19,465,972 0.63% New Labor Retirement Fund 18,579,434 0.60%

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 50 Capital and Shares Capital and Shares 51 4.1.5 Market Price Per Share, Net Value, Earning& Dividend For 4.1.8 Compensation of Employees, Directors, and Supervisors: Last Two Years Unit: NTD 1. (1) Remunerations to Directors: Where there is profit in each fiscal year, after covering the accumulated losses, not more than eight thousandth (8‰) of the Period Until Mar. 31, profit shall be distributed as remuneration of directors; the standard for distribution of remuneration will be recommended 2016 2017 Item 2018 by Remuneration Committee and determined by the Board of Directors. Highest 16.20 24.90 33.75 (2) Employees’ Bonuses: Market Price Per Share Lowest 10.10 13.00 23.25 Where there is profit at the end of each fiscal year, after covering the accumulated losses, at least 4% of the profit shall be Average 13.28 15.95 27.21 distributed as employees' compensation. Before Distribution 19.01 18.92 18.95 The employees' compensation in the previous section shall be distributed, in the form of either cash or stock bonus, by reso- Net Value Per Share After Distribution 19.01 18.50 Un-appropriated lution approved by a majority voting attended by two-thirds of the directors of the Company. Qualification requirements of the employees who are entitled to receive the employees' compensation may be specified by the Board of Directors. 3,026,277 3,026,277 3,026,277 Weighted Average Share Numbers Thousand shares Thousand shares Thousand shares 2. The Board of Directors proposed a dividend distribution plan of year 2017 as follows: Earning Per Share Earning Current (1.62) 0.93 0.23 None Per Share Adjusted (1.62) Un-appropriated Un-appropriated Cash Dividend (NTD) 0.50 Un-appropriated Un-appropriated Retained Earning (%) 0 Un-appropriated Un-appropriated 3.The remunerations to Employees, Directors and Supervisors in 2017: Stock Dividend Per Share Dividend Capital Surplus (%) 0 Un-appropriated Un-appropriated 2017 Accumulated unpaid dividends 0 Un-appropriated Un-appropriated Dividend Distribution Actual Dividend Distribution P/E Ratio - 17.15 Un-appropriated Proposed by the BOD Amount Share Return on Investment P/D Ratio 26.56 Un-appropriated Un-appropriated Analysis Remunerations to Employees is paid in cash NTD 0 NTD 0 - Cash Dividend Yield 3.77% Un-appropriated Un-appropriated Remunerations to Employees is paid in stock NTD 0 NTD 0 0 Share Remunerations to Directors NTD 0 NTD 0 - 4.1.6 Dividend Distribution Plan Proposed To General Share- Total NTD 0 NTD 0 0 Share holders’ Meeting As the industry prosperity and the trends rapidly changed, the dividends strategy of the Company depends on yearly earnings and external environments, therefore, cash dividends of this Company shall be distributed at least ten percent of yearly dividends for complying with related regulations, which was approved at the Shareholder’s Meeting on June 17, 2004. 4.1.7 Analysis on Impact of Proposed Stock Dividends Ap- propriation in Terms of Operating Results, Earnings Per Share and Rate of Return of Shareholders’ Investment None

  • Page 32

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 52 Capital and Shares Capital and Shares 53 4.1.9 Buyback of Treasury Stock (December 31, 2017) 4.2 Corporate Bonds Term of Buyback The Buyback in Year 2016 None In order to maintain the Company's credit and shareholders' Purpose of Buyback equity Period of Buyback December 12, 2016 to February 20, 2017 4.3 Special Shares Price Range of Buyback NTD 10 to NTD 19 None Class and Quality of Bought back Common Shares: 0 shares Amount of Shares Bought back NTD 0 4.4 Global Depository Receipts (GDRs) Issuance Number of Shares having been written off and Transferred 0 share (March 31, 2018) Number of the Company Shares Held in accumulation 0 shares Date of issuance November 1,1995 July 23, 1997 Number of the Company Shares Held in accumulation out of Description 0% the Total Number Shares issued (%) Date of issuance November 1,1995 July 23, 1997 Location of issuance and transaction London London Total amount of issuance US$220,830,000 US$160,600,000 Unit price of issuance US$32.475 US$40.15 Total number of units issued 6,800,000units 4,000,000units Sources of valuable securities Capital increased in cash Capital increased in cash demonstrated Number of valuable securities Each unit stands for Acer’s 5 common Each unit stands for Acer’s 5 common demonstrated shares shares Rights and obligations of GDR holders Same as Acer’s common shareholders Same as Acer’s common shareholders Consignee None None Depository organization Citicorp Citicorp Custodian organization Citibank Taipei Branch Citibank Taipei Branch 6,410,606 units of Global Deposit Receipt as representing 32,053,125 shares of Balance not retrieved common stocks The expenses incurred by issuance The expenses incurred by issuance being taken to offset premium reserve. being taken to offset premium reserve. Method to allocate fees incurred during Expenses incurred during existence Expenses incurred during existence the period of issuance and existence being taken as expenses of the current being taken as expenses of the current term. term. Any key issue for the depository and None None custodian agreements Highest US$ 4.08 2017 Lowest US$ 2.03 Market Average US$ 2.61 Price Per Share Highest US$ 5.51 Until March 31, Lowest US$ 3.50 2018 Average US$ 4.39

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 54 Capital and Shares Acer’s Business Formula 55 4.5 Employee Stock Options None 4.6 Restricted Stock Awards (March 31, 2018) Restricted Stock Awards Granted First Grant of 2014 5 Approval Date by the Authority August 26, 2014 Grant Date August 26, 2014 Number of Shares Granted 17,460,000 shares Price Per Share None Percentage of Shares Exercisable to Outstanding Common Shares (%) 0.56% Number of Shares Redeemed/Buy-back 10,065,000 shares Number of Shares Exercised 3,915,000 shares Number of Shares Unexercised 3,480,000 shares Percentage of Shares Unexercised to Outstanding Common Shares (%) 0.11% Acer ’s Bu s ine s s For mula 4.7 Issuance of New Shares Due to Company’s Mergers and Acquisitions None 4.8 Issuance of New Shares by Cash None

  • Page 34

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 56 Acer’s Business Formula Acer’s Business Formula 57 for cloud applications, along with people-centric services • Two Acer short films won the prestigious Red Dot Award: 5.1 Business Scope to integrate ICT devices to create new solutions and busi- Communication Design 2017. The two awarded films were 5.2 Market Highlights ness models. titled Making Dreams Possible, and The Predator 21 X Design Story - Facing Challenges Head On; both films ex- 5.1.1 Business Portfolio 4. Competition: The PC industry is facing a pivotal change press Acer’s unwavering pledge to its corporate mission of 5.2.1 Market Study as it reacts to the demand for increasingly thin, light, and “Breaking barriers between people and technology.” In 2017, Acer’s revenue contributions among its regional op- Founded in 1976, Acer now is one of the world's top ICT mobile devices. With the rise of the IoT, the industry must companies and has a presence in over 160 countries. As transform to expand business opportunities. In light of • In the emerging virtual reality industry, Acer’s joint ven- erations were: EMEA with 39 %, Pan America with 33 %, and Acer looks into the future, it is focused on enabling a world this trend, Acer has defined its new “hardware + software ture with Starbreeze, StarVR, made headway market with Pan Asia Pacific with 28 %. In worldwide PC shipments, Acer where hardware, software and services will fuse with one + services” direction in order to create service-oriented the rollout of its high-end VR head-mounted displays en- ranked No. 5 for total PCs with 7% market. another to open up new possibilities for consumers and products rather than just hardware. With software and abling key entertainment partners to open VR experience businesses alike. From service-oriented technologies to services, more value will be created for the product and centers in Los Angeles, New York, Tokyo, and Dubai. the Internet of Things to gaming and virtual reality, Acer's brand. The product mix and marketing strategy must be 7,000+ employees are dedicated to the research, design, tailored to each market to create differentiation and high- • Acer made great progress in the area of smart transporta- marketing, sale, and support of products and solutions that break barriers between people and technology. er margins. tion. Its subsidiary Acer ITS Inc. won the “Global ICT Excel- lence Award - Private Sector Excellence” at the “Olympics 5.3 Keys to a Sustain- The revenue contribution by Acer's PC business is led by of the Global ICT industry” for its smart parking meter so- lution. able Future notebooks with 62.3% share, followed by desktops with 5.1.3 Technology and R&D 14.3% share, displays with 12.5% share. • The company's cyber security subsidiary, Acer Cyber Se- In 2017, Acer spent NT$2.5 billion on R&D, which accounted curity Inc. (ACSI), received the ISO17025 certification, be- for 1.05% of total revenues, focusing on user interface, in- coming Taiwan’s first and only security operation center 5.3.1 Transforming while dustrial design, ICT related hardware and software, cloud, and 5.1.2 Industry Highlights gaming technology. In addition, the company is building on (SOC). continuing to focus on 1. Status and Opportunity: The era of mobile communica- its existing PC business and expanding into new areas that competitive products tions has brought profound changes to people’s lifestyles. can seamlessly integrate PCs and other personal mobile de- With the rise of high mobility ICT devices, the PC is no vices with new software applications, and also integrate cloud 5.1.4 Long and Short Term with igh-margin longer a single-function piece of hardware. The growth platforms with cloud services to complete the transition to a Business Plan of the Internet of Things (IoT) has propelled the need for “hardware + software + services” company. With a focus on Based on its core competencies, Acer continues to forge hardware devices to integrate with cloud services, open- differentiated and high-margin products, Acer adopts an ef- In the short term, Acer will focus on strengthening the foun- ahead in its transformation. It is combining the strength and ing the way for a wider scope of innovation. ficient product-mix strategy that tailors to the needs of indi- dation of existing product lines and innovations, along with scale of its core IT products business with the innovation and vidual markets. the development of software applications, integrating cloud integration capabilities of new businesses to transform itself 2. Upstream to Downstream Suppliers: Acer’s upstream into a “hardware + software + services” company. With the commitment in designing for customer needs, Acer platforms and cloud services. In the midterm, Acer will strive suppliers include the CPU, chipset, graphics chip, DRAM, is proud to have received many international design awards in to enhance its brand positioning, strengthen brand identity, In addition Acer is reinforcing its core competencies: its DNA and other semi-conductor industries, as well as system 2017 and saw progress in new product areas: increase operating margins, and actively pursue the transition in entrepreneurship, innovation, talent cultivation and the programing and software industries. The midstream sup- to a “hardware + software + services” company. In the long strength of the Acer brand value. It aims to deepen the recog- pliers include motherboard, chassis, keyboard, moni- • Acer’s Predator 21 X gaming notebook was honored with term, in addition to its PC products, to stimulate innovation nition of the qualities of “trust”, “innovation” and “excellence” tor displays, optoelectronics, hard disk, battery, power a Taiwan Excellence Gold award, the top prize of the com- for new businesses, these businesses and subsidiaries will be associated with the Acer brand. The company will continue to supply, and other computer peripherals industries. The petition. In further recognition of Acer’s merits in gaming, given the freedom to explore and discover markets to expand push for operational growth through an efficient mix of unique downstream suppliers include notebook, desktop, projec- the Predator Z850 gaming projector was also awarded a in, with the clear direction of first stabilizing operations, and consumer-oriented product designs and innovative technolo- tor, smartphone, server and other OEM/ODM system as- Taiwan Excellence Silver award. then taking steps toward profitability. Acer will continue to gies, to create high margins and address the specific needs of sembly industries. • Eight Acer products were honored with a 2017 Good De- transform and optimize its organization to overcome chal- individual markets. 3. Trends: Acer’s core business in IT products includes PCs, sign Award for outstanding product design. The award- lenges and propel into the future. high-performance computing and servers, projectors, winning products included the Acer Holo360 Camera, Air LCD monitors, digital signage and other smart devices. Monitor, Predator Triton 700 gaming notebook, Switch 7 While continuing to research and innovate to enhance its Black Edition 2-in-1 notebook, among others. product offerings, Acer will also dedicate more resources to high-margin products such as gaming-related prod- • Seven Acer products were honored with a Red Dot Award: ucts and personal mobile devices to optimize its invest- Product Design 2017, including the Predator 21 X curved ments. With the prevalence of the IoT, Acer is actively in- screen gaming notebook, Chromebook 11 N7, Chrome- vesting in new businesses, including software and devices book Spin 11, among others.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 58 Acer’s Business Formula Acer’s Business Formula 59 5.3.2 Internalize the Wang- 5.3.3 Transforming with in- 3. The Sales Value in the Last Two Years: dao philosophy into the novative strategies and Unit: NTD Thousand Year 2015 2016 corporate culture, and products to reach new create value based on heights Major production Domestic Sales Foreign Sales Domestic Sales Foreign Sales profitability first In addition to strengthening its momentum and pursuing for Computer 6,629,473 174,825,937 6,561,454 178,517,222 strong operational results, Acer also takes the interests of its Peripherals & Others 15,108,983 36,159,768 18,511,502 33,684,705 The Wangdao philosophy of altruism is the foundation of Ac- stakeholders, such as shareholders and employees, into ac- Total 21,738,456 210,985,705 25,072,956 212,201,927 er’s transformation. Through the philosophy’s three key areas count. In terms of its PC products Acer diligently utilizes its of focus – Sustainable Development, Value Creation, Balance operational resources for maximum results. In addition, it uses of Interests – Acer continually strives to innovate in the field of creative marketing thinking and methods, working in concert technology and create value with its partners and stakehold- between the headquarters and regional offices to understand ers alike to pursue sustainable development. local market conditions and customers preferences. For its new businesses, Acer is actively seeking to expand in 5.4 Employees areas relating to smart applications and innovations that in- tegrate hardware and software. For instance, in transportation Acer has developed a smart parking solution that has received 5.4.1 Global Human Asset Management much acclaim, and continues to develop new AI solutions and Employees are the Company’s key assets and the main driver of business growth. Acer has fostered a work environment that em- businesses. powers employees by entrusting them with the tasks matched to their skill or qualification. There are clear objectives and reward for achievement, extensive communication and interaction among coworkers, constant encouragement for innovations, and an effective decision making process. On-the-job training provides the ideal platform for learning and development. Appendix As a result of employees’ joint effort, Acer has received numerous industry and media recognition. For example, Acer has been listed on the DJSI Sustainability Indices (Emerging Markets Index) for the fourth consecutive year, and the second time on the FT- 1. Key Buyers and Suppliers Accounting Over 10% of Total Net Sales and Pur- SE4Good Emerging Index in year 2017; scored eight 2017 Good Design Awards for outstanding products design. All above results chase: are contributed by our most valuable assets: our employees. (1) Key Buyers for Acer Group: None -Human Asset Analysis by Manpower, Age and Years of Service Date (2) Key Suppliers for Acer Group Category December 2015 December 2016 December 2016 March 2018 Unit: NTD Thousand Manpower 6,958 7,033 7,046 7,034 2016 2017 Average Age 37.7 37.4 38.7 39.1 Item Percentage Relationship Percentage Relationship From Amount of total net with Acer From Amount of total net with Acer Inc. Average Years of Employment 7.5 7.7 8.0 8.0 purchase (%) Inc. purchase (%) Male (%) 66.1% 64.7% 63.8% 63.4% 1 Supplier C 33,366,055 20.22 None Supplier C 33,151,860 20.08 None 2 Supplier D 21,276,641 12.90 None Supplier D 20,318,907 12.30 None Female (%) 33.9% 35.3% 36.2% 36.6% 3 Supplier B 17,430,648 10.56 None Supplier A 20,241,281 12.26 None Others 92,912,727 56.32 Others 91,421,223 55.36 Total Net Purchase 164,986,071 100.00 Total Net Purchase 165,133,270 100.00 2. Production Value in the Last Two Years: Not applicable.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 60 Acer’s Business Formula Acer’s Business Formula 61 -Human Asset Analysis by Job Function Management training, meanwhile, worked to improve people vation, improving cross-team cooperation, encouraging “5C” management skills, with the purpose of training management (communication, communication, communication, consen- Date December 2015 December 2016 December 2016 March 2018 how to select the best talents, enhance coaching and perfor- sus, commitment) communication, and promoting integrated Job Function mance management skills, and employ using motivational project promotion. General Management 177 202 183 185 tools skillfully to improve both team and individual perfor- Sales & Product Marketing 2,221 2,323 2,205 2,188 mance. To ensure the quality implementation of such training, all Customer Service 2,130 1,997 1,866 1,869 trainings are done in accordance with the "Management Pro- Research & Development 961 859 1,035 1,030 As for general education and training, by guiding staff in their cess of Internal and External Training." In 2017, for example, a Sales Support 844 851 859 844 application of the latest technological trends to marketing global total of 13,766 attendees participated in such training, and sales, we were able to make our workforce more effective accounting for 74,222 man-hours. All training was done in Administration 625 801 898 918 and more efficient. Directed by our core values, we continued accordance with the principles of operational necessity, gen- Total 6,958 7,033 7,046 7,034 to promote the full range of skills, including fostering inno- der equality, and equal opportunity. - Human Asset Analysis by Education Level No. of Training Participants Date Education Level December 2015 December 2016 December 2017 March 2018 2015 2016 2017 Doctor of Philosophy 0.8% 1.1% 1.1% 1.2% Senior Managers 723 759 372 Master’s Degree 39.9% 40.0% 38.6% 37.9% Mid / SupervisoryManagers 1,444 2,812 2,218 Bachelor’s Degree 40.7% 42.2% 42.8% 43.6% General Staff 6,814 15,558 11,176 Vocational Study 15.6% 14.1% 15.9% 15.7% Total 8,981 19,129 13,766 Senior High School or below 3.0% 2.6% 1.6% 1.6% Total 100% 100% 100.0% 100.0% No. of Participants and Man / Hours spent in Training 2015 2016 2017 No. Man/Hour No. Man/Hour No. Man/Hour Senior Managers 618 6,069 141 1,765 141 1,515 Mid / Supervisory Managers 1,098 10,492 985 7,741 986 10,482 5.4.2 Recruitment market. In 2017, a series of trainings were held for develop- General Staff 5,147 44,715 5,908 42,766 5,919 62,225 ing top leaders in the capacity of business decision-making, Total 6,863 61,276 7,033 52,272 7,046 74,222 The Company abides to each country’s labor laws and cus- accounting and financial analysis, business management toms. We are committed to providing equal opportunities and operation, risk management, global operation, and team and prohibiting discrimination against candidates in regards leadership. to their ethnic origin, gender, age, religion or nationality, and we are sticking to the principle of putting the right people In shaping branding competitiveness, Acer is committed to Multiple Approaches of With regard to the enhancement of professional competen- cies, the development opportunities were provided within the at the right position. Acer seeks high-potential candidates exploring the end-user’s needs to grasp the momentum from Learning and Development future trends. In 2017, we were aggressive in assisting people company, which included job training, coaching, job transfers, with multi-disciplinary backgrounds in order to build a strong to develop such expertise as artificial intelligence of technol- In order to help the key leaders of new business entities to seminars, and online learning. Employees can also participate global workforce. ogy, social media and marketing, innovative services in smart acquire the past business lessons and experiences along with in professional seminars and short-term training courses at tech, cross-boundary competition, and big data analysis. In management philosophy, we invited the senior managers of prestigious foreign universities and training organizations. In addition, we continued to strengthen Acer’s core values and Acer’s past periods as the guest speakers share their impres- order to encourage colleagues to obtain professional certifi- 5.4.3 Continuing Learning their implementation in daily work. sive struggling stories. Through the experience sharing fo- cation and improve their professional capabilities, we formu- and Growth With regard to the professional training, we have systemati- rums, the management rationales and culture can be revealed lated the regulation of incentives for professional certification and effectively passed by, and used to enhance the decision- to provide subsidies and bonuses to cover test fees for profes- cally organized a series of seminars on the latest trends, aim- making quality. In addition, we also invited well-known figures sional certification. People Development and Ca- ing to help our staff both understand end users better and to share their insights and experiences in industry trends and reer Growth stay on top of technological developments. We also strived to innovation to help hone the management vision of our col- integrate these into new product development and trouble- leagues. On top of this, through the My Acer internal com- For sustaining Acer’s competitiveness in multiple business shooting, facilitating a quick, accurate response to market munications platform, we have been able to further promote arenas, Acer introduces multiple growth engines by creating demands. Wangdao belief. new business entities and proceeding toward stock exchange

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 62 Acer’s Business Formula Acer’s Business Formula 63 Training System Professional Training New staff working in product-related positions also receive training on patent protection, CSR (including green products, 5.4.6 Pension This system provides the technical training required by the Managerial Training Company's various departments, as well as seminars by spe- EICC, and greenhouse gasses), and electrostatic discharge The Company abides to each country’s labor laws and cus- (ESD). We also actively encourage staff to take training in CPR toms. Taking Taiwan for example, Acer conforms to the Labor For senior manager training, in 2017, a series of training were cialist speakers given to help keep staff up on the latest trends and automated external defibrillator (AED) use. Standards Act and Labor Pension Act by contributing a por- conducted for developing top leaders of IPOs. The training in product development. In 2017 marked the start of our emphasized how the Board of Directors (BOD) operated busi- series of seminars on business trends, with a team of senior tion of employees’ salaries toward a pension scheme. Besides, ness and made decisions appropriately and effectively. For analysis from the Institute for Information Industry invited employees who have served for 15 years and have reached 50 years of age can apply for early retirement. training contents, it was composed of the two essential mod- each month to discuss with production-line staff analyses Performance Management ules, the first module was to embrace the practices of BOD and observations on IoT consumer trends. These seminars and Development operation, while the second module was to focus on the BOD’s covered topics including new Internet ideas (social media past experience sharing, so as to equip the participants with marketing, mobile commerce, big data applications), devel- The goal of Acer's performance management and develop- 5.4.7 Employee Relations the sound knowledge and experiences in merging, investing, opments in smart health and safety, opportunities in smart ment system is to improve performance at individual, depart- or establishing a new company. transportation, artificial intelligence, fog-computing tech, mental and organizational levels, and includes goal setting, Acer respects employees’ opinions and is dedicated to main- 5G telecommunication, and innovation for emotion sensors delegation, communication & coaching, the link between per- taining a harmonious relation between managers and their built-in. Each department also held its own experience shar- formance & remuneration, and career development. In 2017, team members. In the past two years, Acer has not suffered With regard to strengthening mid and supervisory-level man- ing sessions, with many focusing on implementing consumer any financial loss from employee conflict. the proportion of Acer’s global employees involved in perfor- agement’s managerial capabilities, we continued our focus on insights in product concepts or discussing how to make busi- mance evaluations approached 90%. Taking Taiwan for example, Acer offers multiple channels for personnel management training in five areas: people selection ness opportunities through product innovation. interaction in order to improve two-way communication: and interview skills, goal-setting, delegation of responsibility and authority, coaching for improvement, performance man- General Education • A Dedicated Hotline: A hotline for each supporting func- agement and motivational skills. Every leader was required to The focus of our general education courses was on the ap- 5.4.4 Compensation tion has been set up for employees to call, in confidence, complete this series of classes. plication of technology to enhancing business performance, to express concerns or issues. Acer will provide counsel Acer provides a competitive salary package to attract and including to integrate Big Data with BI, use Excel Power Pivot and/or resolve the issues in the most efficient way. EMEA invited a group of corporate coaches from The Euro- retain high-potential human assets. The Company surveys pean Centre for Executive Development, CEDEP (based in and Power Query to conduct smart business analysis, Cloud global IT companies’ salary levels annually, to ensure that our • Open and Candid Communication Channels: Employees Fontainebleau, France) to provide coaching instruction to applications-- -- Evernote, Wunderlist, Google's Cloud Apps. salary packages are adjusted accordingly and reasonably to can report areas of concern to their immediate supervisor the EMEA senior leaders, aspiring to help the leaders to re- We also continued to promote stronger core competencies reflect market conditions. On top of the monthly salary, the or choose to convey to higher authorities for resolution. flect, find and develop the effective ways to detect the root and basic professional skills through courses covering areas Company offers the bonuses that are differentiated from the Meanwhile, the Company Chairman & CEO meets face-to- causes of problems, made good use of their advantages and like improving workplace communication and the protection performance of business unit and each individual. Taking Tai- face with employee representatives from each office area opportunities, and made in-time response to the conditions. and use of patents. In marketing, we covered areas includ- wan for example, in addition to the fixed monthly salary and on a quarterly basis, to discuss areas of improvement and In addition, senior management of EMEA was dispatched to a ing Visualized Marketing- Instagram, innovations for mobile festival bonuses, Acer offers incentives that reward new in- respond to issues. The Chairman & CEO also assigns the leadership course run by London Business School and a senior payment, web analysis for promoting marketing. In order to novations, intellectual property rights, sales achievements, relevant member(s) to aggressively follow up on change or management training program at Lausanne’s International promote the awareness in the area of securing personal data, performance bonus and profit sharing. improvement, and to report on progress at the next quar- Institute for Management Development (IMD). we held General Data Protection Regulations ( GDPR) training. terly meeting to ensure the resolution effectiveness. The meeting minutes are published on the Company Intranet In Pan America Regional Office, we held Customer Experience New Employee Training in Leadership Training to help reinforce our the leadership On their first day of work, new staff are given orientation train- 5.4.5 Welfare for all employees’ attention. skills of our customer service quality department, as well as • The Chairman & CEO also hold face-to-face communica- ing to help them quickly come to grips with the Company's holding Quality Assurance Program Development sessions at The Company abides to each country’s labor laws and cus- tion meetings to deliver new vision, strategies, and action basic operating processes. Within their first month, new staff service points to promote service quality of the call centers. toms, and strives to provide a comfortable working environ- plans, so as to assure the general staff have a clear under- are put through training to better understand the company's ment, attractive welfare programs, candid communication standing of communication messages. In Pan Asia Regional Office, we organized a two-day Top Sales mechanisms, regulations, core values, brand values, corporate ways to enhance productivity and creativity. Taking Taiwan Training for promoting sales/marketing capability of leaders. culture, and the Standards of Business Conduct (including in- for example, Acer has established a welfare committee that A total of 60 senior/mid mangers have participated in the struction on labor rights, freedom of expression, individual initiates activities for employees’ welfare. For example: educa- training. In Thailand subsidiary, there has been customer sat- privacy rights, sexual harassment prevention, and corruption tional grants, Acer Family Days, internal social clubs, speeches isfaction and service training held for enhancing service qual- prevention), thus helping them become fully integrated parts on topics of arts appreciation, domestic and overseas holiday ity, with a total of 56 employees participating in it. In Malaysia of the team. breaks, gift money for wedding or funeral, and emergency subsidiary, we held Acer Day Product Training to assist people relief measures, etc. Besides, we have recreation and leisure to have the knowledge about the product line. In Philippines facilities installed in office area to release employees’ pressure subsidiary, we held a camp of Team Dynamics training for 28 from work, and provide health-promotion programs to keep local managers. the body and mind well-balanced.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 64 Acer’s Business Formula Acer’s Business Formula 65 5.4.8 Acer Employee Man- • Sexual Harassment Prevention Measures 5.5 Important Contracts agement The Company is dedicated to ensuring gender equality and human dignity in workplace, securing work environ- ment free from sexual harassment and discrimination. Nature of Beginning and Ending Restrictive To ensure business growth on a healthy and comprehensive Contracting Parties Major Content Contracts Dates of Contracts Clauses management system, the mutual rights and obligations be- With the promise, the Prevention Measures and Disci- tween the Company and employees are explicitly specified as plinary Actions on Sexual Harassment is enacted, which Obtain license from Software License Confidential specifies the reporting channels, dealing procedures, Microsoft Inc. Aug 1, 2014~Jul 31, 2018 Microsoft for using follows: Agreement Non-assignable certain software and disciplines. • Authority Management Oct. 29, 2003 until the end • Declaration of Secrecy and Intellectual IBM Corporation of related patents period Cross license arrange- According to the levels of management responsibili- ments for certain Confidential Property Rights Nov 22, 2006 until the end patents ties, “The Table of Authority Approval”, “Regulations on Patent License of related patents period Delegated Deputy”, and the “Scheme of Job Categories The Company places extreme importance on the protec- Agreement Cross license arrange- and Titles” are regulated to assure well-functioned in all tion of intellectual properties rights. All staff are required Confidential Microsoft Corp. Jan 1, 2016~Dec 31, 2018 ments for certain to have the Declaration on Non-Disclosure Agreement Non-assignable layers of directive operations, and furthermore, to pro- patents vide staff with a sound roadmap for career development signed when onboard, which declares the obligations to A bank group led by the arrangers, paths. protect confidential information and the restrictions on Bank of Taiwan, Chinatrust, Taiwan Confidential, use of the confidential information during the employ- Cooperative, Megabank, Taipei From April 29, 2016 for A maximum syndicat- Non-assign- • Standards of Business Conduct Syndicated Loan Fubon, Taishin, Bank SinoPac, DBS, a period of no more than ed financing amount able, Specific ment period and employment termination. Agreement Chang Hwa, Landbank, Taiwan four years of NTD12 billion financial ratio In addition to carefully abiding by relevant laws and Business, KGI and Agricultural covenants regulations, Acer requires staff to demonstrate integrity Bank of Taiwan and exceed the public's expectations for Acer. We have also set out our Standards of Business Conduct, and Acer management, global HR headquarters, and global legal headquarters are available for both staff inquiries and external inquiries. In the event that the SBC is violated, the situation will be handled according to the severity of the violation, with serious cases subject to disciplinary action and even dismissal. The SBC requires all Acer employees to carry out busi- ness activities to the highest standard of conduct, and every new employee receives training to ensure compli- ance with these standards. The SBC is integrated into performance appraisals to remind colleagues of their obligation to adhere to the code, and management is expected to supervise to ensure that all staff under their leadership follow the code. All new staff are required to undergo training regarding anti-corruption measures. During annual performance reviews, we require management and colleagues to re- view their adherence to our standards of professional behavior. In the event of corruption being found, the company must immediately report the incident and implement management measures, while also remind- ing staff that they must adhere to the regulations of the Standards of Business Conduct.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 66 Corporate Social Responsibility Corporate Social Responsibility 67 In recent years, Acer has worked hard to transform itself, and term CSR targets and strategies to internalize CSR programs through the transition from loss to profit, the company has throughout the whole global organization and suppliers. In reached the current stage of sustainable management. In 2012, we established GCSRC (Global Corporate Social Respon- 2017, we rethought and adjusted the existing meaning and sibility Committee) to include the heads of the most critical mission of corporate social responsibility, integrating key ele- departments to create the CSR and sustainability practice ments of the original mission and aligning the CSR strategy strategy. To deepen corporate responsibility governance and with the company’s new development direction and the core business strategy combination, we adjusted the corporate spirit of the brand. The redefined CSR mission is: sustainability office affiliated with the chairman from Corp. President & CEO. In 2017, we echoed the transformation of While pursuing profitability, leading transformation, and pro- the corporation and the change of the world, we adjusted the 6 viding innovative services, we will continue to create tangible Acer sustainability mission and the CSR policy to implement and intangible value while focusing on our three core beliefs the promise of the sustainability of corporate and the society. of creating value, balancing interests, and developing sus- tainably in order to promote sustainability model transfer and In the environment, safety and health management aspects, leverage our social influence as we become a future-oriented we implement office carbon reduction programs, enhance business. suppliers’ capacity of greenhouse gases management, launch several projects to improve the health and safety of our em- In addition, in line with the transformation of the company, ployees and have third party verification for the GHGs emis- we have also adjusted the existing Acer CSR policy to include sions data of Acer Group global operation sites every year. For three aspects: Integrated sustainable governance, pioneering supply chain management, we conduct suppliers' Social and green innovation, and comprehensive sustainable impact. Environmental Responsibility (SER) on-site audits, investi- Acer Corporate Social Responsibility Policy gate smelters in our supply chain for conflict minerals issue Corporate Social • Integrated Sustainable Governance: Deepening CSR governance and stakeholder engagement, as well as to enhance the SER performance of acer suppliers. Regarding communication, we build a good communication channel with stakeholders to ensure mutual understandings and respect, Responsibility strengthening the overall management and transparent disclosure of both financial and non-financial perfor- and we continuously improve the quality of our customer ser- mance. vice and the protection of customer privacy. About commu- nity involvement, Acer is committed to give back to the so- • Pioneering Green Innovation: Incorporating low-carbon, ciety by creating digital opportunities for the disadvantages sustainable, and cyclically innovative technologies and through Acer Volunteer Team and Acer Foundation. concepts into products and services, taking the lead in smart cities and the development of a new green econ- . omy. • Comprehensive Sustainable Impact: Creating real corpo- rate value and leveraging our influence on vendors and 6.1 Environment, Safety partners to help the overall industry move toward a sus- tainable future. and Health Man- Acer’s dedication has been widely recognized by the media and investors. 2017 marks the fourth consecutive year for agement Acer to be included in MSCI ESG Leaders Indexes, DJSI Emerg- ing Markets and the gold medal of sustainability report from 6.1.1 The Environmental Pro- the Taiwan Corporate Sustainability Awards. In addition, Acer has been included in the FTSE4Good Emerging Index for the tection second consecutive year. 1. Energy and Climate Change In 2008, Acer stablished the Corporate Sustainability Office (CSO) as an establishment directly in charge of Acer Group’s We continue to implement the Acer Integrated Energy and Cli- CSR affairs. The Office is in charge of promoting campaigns mate Change Policy. We have also formulated long-term car- on companywide sustainability issues. Since then, we take bon reduction targets in line with the methodology proposed into account stakeholders’ suggestions to establish longer by the Science Based Targeting initiative, and we expect to ac- complish in 2050 an 80% reduction in Scope 1 and Scope 2

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 68 Corporate Social Responsibility Corporate Social Responsibility 69 carbon emissions from the baseline year of 2009. However, by the chemicals. 2. Working Environment and Employ- the end of 2017/beginning of 2018, due to the acquisition of 6.1.2 Safety and Health Acer supports the concept of resource recycling. In 2017, we ee Safety listed companies and the disposal of related assets, the Group had already reached a point necessitating recalibration of the continued to use recycled plastics in display units and all-in- 1. Environmental Safety and Health one computers, including the B6 and V6 lines of displays and Acer cares about the working environment where employee’s base year emission limits, and as such the exact long-term Management the all-in-one VZ4640G, VZ4820G, and VZ6820G models. safety and health would largely depend on. We conducted a carbon reduction target must be recalculated and confirmed series of improvements, including water filtration system, Through the Acer Packaging Design Principles, we are able to As a global IT company focused on marketing and service, after the said recalibration is complete. drinking water quality, indoor air quality; strengthen the com- examine the life cycle of our packaging material and make Acer endeavors to achieve balanced development in econo- Regarding to the suppliers GHG management, we continu- my, environment and society. We are devoted to environmen- puter room and warehouse safety. Acer also implemented en- informed decisions about the environmental impact of our ally participate in the Carbon Disclosure Project Supply Chain tal protection. We understand that all our products, services vironment, health and safety management system and con- packaging at every stage, from initial R&D into and selection Program, providing the suppliers related training courses and and activities have potential impact to the environment and ducted office sites hazards identification. We then improved of materials through production methods, transportation and consulting. We enforce suppliers’ capability on reacting to community where we conduct business. We are also dedicated items with significant risks to lower the hazards. fuel consumption, durability in use, and waste handling. The the climate change and saving energy and reduce emissions. to providing a safe and healthy workplace for employees be- Acer Packaging Design Principles also address ongoing reduc- Besides, we also encourage our suppliers to set reduction tar- lieving that occupational health and safety is the foundation tion in design, the use of environmentally friendly materials, get to reduce the emission through the whole value chain. of sound and responsible business operations. We ensure all 3. Emergency Accident Operation and improved recyclability. According to the report, our suppliers’ overall disclosure and employees understand their roles and responsibilities and are performance on carbon reduction are over the average of the Acer is committed to improving energy efficiency in our prod- Acer has established its own emergency operation procedures working with our partners and suppliers to meet or exceed the global suppliers’ average. ucts to help consumers reduce the amount of energy they in the events of fire, earthquake, typhoon, power failure, water environmental, health and safety commitments. Our policies consume while using our products. During product design, supply failure, contagious disease and other major accidents. In 2017, Acer will expand our use of renewable energy in oper- on environmental safety and health management are as be- we comply with energy consumption guidelines in each of our In the fire safety aspect, we have organized a self-protection ating locations to Brazil, Mexico, and other countries, gradu- low: markets, including the European ErP eco-design directive. To firefighting team by the employees and their main duties are ally expanding the use of renewable energy to achieve our • Meet or exceed all applicable legal requirements, industry to extinguish the fire at the initial stage, evacuate the rest of ensure our products comply with the requirements of particu- medium-term goal of reducing carbon emissions by 60% by standards and voluntary agreements to which Acer sub- the employees when necessary and reduce possible damage lar customers and markets around the world, we have acquired 2020. scribes. from the accidents. US Energy Star® and China Energy Conservation labels for se- lected products. • Improve resource productivity by promoting pollution pre- vention, energy efficiency and waste reduction. 2. Green Product Management The implementation of recycling and reusing bring great ben- 4. Employee Health efits to the Nature and human beings’ life. Acer incorporates • Carefully select raw materials and suppliers to provide safe Acer’s green product policies are: environmental concerns during product design, striving to re- and low environmental impact products. Acer always cares about the health of colleagues. We keep duce the environmental impact of the product at each stage • Strive to create a safe and healthful workplace and to pre- • Based on the “product life cycle” concept, we offer high- promoting health management and promotion. Acer also ap- of its life cycle and aiming to design environmentally friendly, vent occupational injury and illnesses. quality products that are energy and resource efficient, plied for Healthy Workplace Certification in 2017, obtaining a easily recycled products. Through both voluntary and legally • Continuously improve EHS performance based on audit health promotion label that fully demonstrates our commit- low in pollutants and hazardous substances, and easy to required recycling programs, we provide consumers with com- and communications. ment to providing healthy workplaces. Moreover, in order to recycle. pliant, convenient recycling channels and promote recycling We implement the Acer EHS management system to fulfill strengthen workplace health promotion, we also hold after- • By employing green purchasing and through communica- and reuse of ICT products. We support Individual Producer our pledges and reaching our corporate targets, including noon lunch talks on health; offer weight loss classes, smok- tions with our suppliers we have been able to establish a Responsibility (IPR), and pledge to work with stakeholders like management of potential hazards to people and the environ- ing cessation classes, and physical fitness tests; hold sports green supply chain that is fully compliant with internation- governments, consumers and retailers to undertake responsi- ment, reducing the environmental impact of our company competitions; set up health stations; and promote articles on al environmental practice. bility for the recycling and management of e-waste. operations and products, regular monitoring to ensure we are health and wellbeing. All of Acer’s products are in compliance with regulatory and compliant with relevant laws and Acer standards, and ensur- customer requirements in all respective territories, protecting ing Acer staff enjoy a comfortable environment and attach the health and safety of users and reducing potential risk to 3.Office Carbon Reduction importance to health and safety precautions. the environment. In addition to legal compliance, we also pro- In 2017, Acer built a solar power plant with a total of four In 2017, Acer passed ISO 14001:2015 new environmental actively comply with our various markets' voluntary environ- mental demands including product life cycle considerations ground and rooftop arrays in the Aspire Park, generating management system. In order to comply with the Acer Group's 6.2 Supply Chain Man- about 3.52 million kWh of electricity each year. In addition, global strategy, preparations for the integration of the com- such as energy efficiency, reduced use of toxic and/or hazard- ous substances, and end-of-life product processing. Since Acer Cyber Security Inc. conducted a review of UPS equipment pany's environmental and safety and health management agement usage requirements and re-adjusted shutdown settings, sav- systems with those of acquired companies are underway. The 2009, Acer has kept launching PVC-free and BFR (Bromine ing approximately 1.752 million kWh per year. Group also plans to replace the existing OHSAS 18001 oc- We treat our top suppliers from all parts of the globe with con- Flame Retardants)-free products, and is steadily accomplish- cupational health and safety management system with ISO sistent fairness in order to achieve efficient global operations ing the target of non-halogenated products. We also continu- 45001 in the future. and partnerships and to provide clients with high quality prod- ally evaluate the related regulations and the concerns of ex- ucts. We also strive to ensure that a safe working environment ternal stakeholders, gradually extending the control scope of

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 70 Corporate Social Responsibility Corporate Social Responsibility 71 is provided throughout the supply chain, that employees are Acer has taken multiple actions to verify the absence of forced We completed and published our 2016 Conflict Minerals Re- ing the latest global trends in corporate sustainability and treated with dignity and respect, and that suppliers observe labor, slavery and human trafficking in supply chain, including port, including a summary of Acer High-Risk Areas, a respon- emphasizing Acer’s requirements of and goals for supply ethical codes and shoulder their environmental responsibili- supplier risk assessment, declaration, on-site audit and train- sible and sustainable minerals trade, neral country of origin. chain CSR management performance. In 2017, the meeting ties throughout their business operations. We will continuous- ing etc. The report showed that the quantity of smelters in our supply was held through an online real-time meeting service, reduc- ly investigate the necessary responses to sustainability issues chain had plateaued. At the same time, the compliant smelt- ing the need for vendors to physically travel and thus also Regarding to the topic on conflict minerals: Over the years, with a positive attitude and from a broad perspective so as to ers increased. We also increased the visibility of the historic reducing travel-related carbon emissions. The meeting fo- growing evidence has shown that mining is an intensive pro- increase the positive effect of the supply chain on society and trends on Acer, including a summary of Acer High-R indica- cused on the performance of Acer's supply chain in terms of cess involving social and environmental risks. In 2017, Acer the environment. tors. social and environmental responsibility and our expectations began the transformation of its conflict minerals program of vendors. At the 2017 Vendor CSR Communication Meet- Acer has been a member of the Responsible Business Alliance into a responsible minerals sourcing program with a broader In order to review suppliers’ SER performance, we established ing, we announced a list of prohibited and restricted chemical (RBA) (formerly the Electronic Industry Citizenship Coalition focus that seeks to strategically identify priority minerals the acer suppliers CSR scorecard. Through the mechanism, substances, including substances that may impact the exter- (EICC)) since 2008, and actively participates in actions and and regions that are a high risk for negative social and envi- we could know and track suppliers’ environmental, social and nal environment or the health of operators. discussions around supply chain social and environmental re- ronmental impacts. The mechanisms that drove the conflict governmental risks in early time and assist the suppliers to sponsibility to better understand international trends in CSR minerals program are being adapted to address this broader conduct the necessary measures to reduce or mitigate the and share in the practical experience of its members. All Acer focus, especially the supply chain tracing and due diligence risks. To implement acer suppliers’ environmental and social manufacturers and service providers are required to comply processes that remain in alignment with the OECD Due Dili- responsibility, our suppliers have to conduct the risk assess- 6.3.3 Customer Relations with both the RBA Code of Conduct and local regulations. gence Guidance for Responsible Supply Chains of Minerals ment and management to their next-tier suppliers according from Conflict-Affected and High-Risk Areas. In addition, Acer to the RBA code of conduct. Besides, they have to conduct Acer has always followed a quality policy of "Delivering zero- In addition, we carry out annual on-site RBA Code of Conduct realigned its policy and internal procedures to drive this re- on-site audit to the suppliers with high risk. We called the defect, competitive products and services on time" and ad- vendor audits, gaining a deeper understanding of each loca- newed focus. mentioned management “Acer RBA 2.0.” We include the per- heres to the concept of "Serve with honor and work with pride" tion’s working environment and the human rights conditions formance by the suppliers in the evaluation of CSR scorecard. in providing professional products and services. Acer designs of the staff. We also encourage and require vendors to uphold As part of this responsible minerals sourcing policy, Acer will: Overall, in 2017, the performance of all types of suppliers and conducts regular customer satisfaction surveys tailored their corporate responsibility by ensuring their own vendors • Identify and prioritize minerals for inclusion in our respon- have improved compared to 2016. to each region to get customer feedback and work on the area implement socially and environmentally responsible manage- sible sourcing strategy; that need improvement to enhance the quality of customer ment and to advocate for RBA Code of Conduct adherence, service. thus improving the working environment in the electronics • Conduct due diligence on prioritized minerals in accor- supply chain worldwide. dance with the OECD Due Diligence Guidance for Respon- In addition, we also establish a complete globalized service We continue to communicate with vendors and enhance their sible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas; 6.3 Communication structure in all major localized service sites and design differ- ent service programs for variety of customers and retailers. ability to respond to sustainability issues, as well as encourag- Consumers and corporate customers can communicate with ing vendors to incorporate sustainable development matters • Require suppliers to conduct due diligence on prioritized into their management agendas. In line with Acer's sustain- minerals in accordance with OECD Guidance and provide 6.3.1 Communication with us through multiple channels including: able development strategy, we hold a variety of vendor sus- routine reporting using the tools developed by the Respon- Stakeholders (1) Global web site download and actively update service tainability conferences, and in our annual vendor CSR com- sible Minerals Initiative (RMI) to enable supply chain trans- (2) Call center support center / technical support munication meetings, provide information on the latest in parency; Acer is positioned to be a global citizenship among its stake- (3) Direct service center CSR developments and trends, as well as analyzing important holders. With that in mind, we endeavor to understand stake- • Co-work with its supply chain, industry groups (RMI), gov- (4) Authorized service center and professional system repair supply chain matters and potential actions that we can take holder’s opinions and recommendations, and build a good ernment, civil society, and other organizations (OECD Re- company together. These meetings also provide an opportunity for two- communication channel with them to ensure mutual under- sponsible Minerals Forum & Public-Private Alliance for Re- standings and respects. Stakeholders are defined as consum- (5) International Traveler Warranty service center way communication between Acer and vendors, strengthen- sponsible Minerals Trade) to develop supply of conflict-free ing the supply chain's environmental and social responsibility ers, investors, suppliers, media, Non-governmental Organi- (6) Acer Web Master products when sourcing prioritized minerals that originate and deepening our CSR-related cooperative relationships. in Conflict-Affected and High-Risk Areas; zations (NGOs), government, community, academia, trade We are committed to the protection of customers confiden- organizations and others. In addition to CSR performance tial information and strictly follow Acer’s privacy policies to We require new vendors pass the social and environmental • Seek to support organizations that focus on peace ne- disclosure for stakeholders on all fronts via Acer's designated request all Acer employee must protect customers’ confiden- responsibility assessment and sign an RBA Code of Conduct gotiations in Conflict-Affected and High-Risk Areas, a re- Acer Sustainability webpage. tial information and private data with cautious; we also im- compliance statement before they become official vendors. In sponsible and sustainable minerals trade, and diverse and plement data protection and security related tool to protect order to put into practice environmental and social responsi- stable economies; and customers personal data in the products. In the same time, a bility in Acer’s supply chain, since 2016 we have required our suppliers to implement risk assessment and management • Publicize Acer’s progress on due diligence and supply chain 6.3.2 Supplier CSR Communi- dedicate mail account is set up to handle all escalation of pri- risk mitigation. vacy protection related case. All of our service engineers have based on the RBA Code of Conduct. For higher risk suppliers, we also carry out on-site audits and management of follow-up cation Meeting signed a non-disclosure agreement and prior to any actual repair, our service staff will provide the customer with a main- improvement efforts. We call this “Acer RBA 2.0.” Additionally, Every year, Acer invites representatives of our major vendors tenance service list to the customer to decide if any private in- we incorporate performance in this regard into our vendor CSR to participate in annual CSR Communication Meetings, shar- scorecard assessments.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 72 Corporate Social Responsibility Corporate Social Responsibility 73 formation need to be deleted or removed and store in another hard drive or memory drive to prevent confidential informa- tering a good understanding of computers and the Internet while also creating more opportunities for learning and em- 6.5 Enforcement of Corporate Social Responsibility tion from being compromised. ployment. We also encourage our staff to serve as volunteers, teaching members of the public about hardware, software, by the Company and the Internet, helping them become more competent us- ers of technology. Implementation Status Deviations Besides, Acer Foundation continues to hold the Dragon Smile 6.4 Community Involve- Contest and Acer Digital Arts Award to encourage young stu- from “Cor- porate Social dents to unleash the innovation energy. Responsibility ment Having seen how the Internet of Things and cloud techno- Assessment Items Best Practice Yes No Summary Description Principles for logies are shaping the future, the promotion and intensifi- TWSE/GTSM 6.4.1. Acer Volunteer Team cation of new technologies is a top priority. In response, the Listed Com- Acer Foundation’s Digital Creation Awards have transfor- panies” and The Acer Volunteer Team was established in 2004 for the pur- med, becoming the BeingLife Creativity Competition, in the reasons pose of giving employees a channel to contribute their spare hopes of creating a platform for young innovators to come 1.Exercising Corporate Governance time and energy to public welfare service. Apart from pro- together and compete as they create innovative solutions to Acer Corporate Social Responsibility Policy: viding opportunities for interaction and friendship between life’s problems through cloud technologies. In this IoT age, the employees from different departments and backgrounds, BeingLife Creativity Competition aims to stimulate new defi- • Integrated Sustainable Governance: Deepening CSR governance and stakeholder engagement, as well as strengthening the overall the volunteer service also bring Acer employees new life ex- nitions of “being life” built on the concept of the “Internet of (1) Does the com- management and transparent disclosure of both financial and periences and personal growth through the activities. The Beings” and user-centric approaches. The results of the inau- pany declare its non-financial performance focused areas of the Volunteer Team include digital inclusion, gural BeingLife Creativity Competition were unveiled in April corporate social • Pioneering Green Innovation: Incorporating low-carbon, sustain- responsibility able, and cyclically innovative technologies and concepts into charity and philanthropy, international volunteer work, and 2017. From these enthusiastic entrants, we can surely see that policy and exam- 4 products and services, taking the lead in smart cities and the No discrepancy environmental conservation. Our volunteer teams have also IoT knowledge and the idea of the Internet of Beings are slowly ine the results of development of a new green economy created many opportunities to give back to the community but surely taking root along the educational path of today’s the implementa- tion? • Comprehensive Sustainable Impact: Creating real corporate value through volunteer experiences, organizing a number of ac- students. and leveraging our influence on vendors and partners to help the tivities for both staff and their families to promote concepts overall industry move toward a sustainable future of charity. In the past, such activities have included recruiting We formulate the action plans based on the corporate social respon- sibility policy and regularly review the performance. Please view Acer IT volunteers, working to protect mountains and the oceans, Corporate Responsibility Report for details. second-hand item donation drives, blood drives, electronics Acer conducts Corporate Social Responsibility (CSR) training accord- recycling, working with people with dementia, promoting car- ing to planned schedule. In 2015, the CSR trainings includes: (2) Is there any bon reduction and energy saving to address climate change, training about • Green product training and helping both disadvantaged children and the elderly. Corporate Social • EICC training Responsibility 4 No discrepancy (CSR) conducted • GHG training regularly? • Acer’s management system on environment safety, and health 6.4.2 Acer Foundation • Facet analysis of significant environmental impact ISO 14001/ OHSAS 18001-- regulations and implementation Acer Foundation is committed to promote digital opportunity In 2008, Acer stablished the Corporate Sustainability Office (CSO) since its establishment. The Acer Digital Mobile Vans continue as an establishment directly in charge of Acer Group’s CSR affairs. to enhance digital competitiveness of the underprivileged in The Office is in charge of promoting campaigns on companywide (3) Does the com- Hualien and Yilan since the project launched in 2010; in 2014, sustainability issues. Since then, we take into account stakeholders’ pany establish suggestions to establish longer term CSR targets and strategies to Acer further expanded the scope to cover Taitung County. The exclusively (or internalize CSR programs throughout the whole global organiza- mobiles were equipped with the notebooks and ICT technolo- concurrently) tion and suppliers. In 2012, we established GCSRC (Global Corporate dedicated units to gy and can go to the communities to deliver computer classes Social Responsibility Committee) to include the heads of the most be in charge the 4 No discrepancy critical departments to create the CSR and sustainability practice upon application. By this way, people can have more opportu- corporate social strategy. To deepen corporate responsibility governance and busi- nities to learn computer and thus increase their digital com- responsibility ness strategy combination, we adjusted the corporate sustainability policies and re- petiveness which can better their lives. office affiliated with the chairman from Corp. President & CEO. In port to the Board 2017, we echoed the transformation of the corporation and the Through the Digital Mobile Vans project, we also hope to im- of Directors? change of the world, we adjusted the Acer sustainability mission prove the technological literacy of people around Taiwan, fos- and the CSR policy to implement the promise of the sustainability of corporate and the society.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 74 Corporate Social Responsibility Corporate Social Responsibility 75 Implementation Status Deviations Implementation Status Deviations from “Cor- from “Cor- porate Social porate Social Responsibility Responsibility Best Practice Best Practice Assessment Items Assessment Items Yes No Summary Description Principles for Yes No Summary Description Principles for TWSE/GTSM TWSE/GTSM Listed Com- Listed Com- panies” and panies” and reasons reasons (4) Have the criti- (3) Does the com- We have also formulated long-term carbon reduction targets in line cal factors of Acer promulgates Standards of Business Conduct (SBC) as the pany monitor the with the methodology proposed by the Science Based Targeting corporate social guidelines to regulate the employees’ behavior in doing business. impact of climate initiative, and we expect to accomplish in 2050 an 80% reduction responsibility It is essential for each employee to abide by SBC. We require a new change on its in Scope 1 and Scope 2 carbon emissions from the baseline year of been clearly employee attend the training, emphasizing the importance of abid- operations and 2009. However, by the end of 2017/beginning of 2018, due to the articulated in ing by the regulations. The standards of SBC --- the core essence of establish com- 4 acquisition of listed companies and the disposal of related assets, No discrepancy 4 No discrepancy the performance CSR in doing business----- are built-in Acer’s performance appraisal pany strategies the Group had already reached a point necessitating recalibration appraisal system, system, which helps managerial staff to monitor the status of exer- for energy conser- of the base year emission limits, and as such the exact long-term with fair and ef- cising the regulations. For any behavior that violates the regulations vation and carbon carbon reduction target must be recalculated and confirmed after fective rewarding of SBC, the disciplinary actions will be taken, including an employ- and greenhouse the said recalibration is complete. or penalty system ment dismissal. gas reduction? Please view Acer Corporate Responsibility Report for details. followed? 3. Preserving Public Welfare 2. Fostering a Sustainable Environment The Standards of Business Conduct requires each site of Acer Acer strives to lower the environmental impacts of our operation and (1) Are there any worldwide follow the principles of labor rights, which are both inter- products, and keeps improving the efficiency of resource usage. The human right poli- nationally or locally-regulated, including general labor laws, equal major achievements of 2017 include: cies or processes opportunity and transparency in recruitment process, with no dis- formulated in a. Use of Post-Consumer Recycled Plastics crimination of race, gender, age, religion, or nationality, in pursuit of the company in 4 No discrepancy our value emphasizing that right man should be in the right position. Acer supports the concept of resource recycling, and as such we response to the Besides, employing a child labor is forbidden. We have sound human actively strive to use post-consumer recycled plastics (PCR) in our request of Inter- resources management systems, for example, clear employment products. At the same time, with regard to the materials that are national Bill of (1) Does the company contracts, work rules, or human resources regulations, to ensure the most likely to create problems of pollution or occupational safety Human Rights? endeavors to uti- legitimate rights and benefits of an employee being well-protected. in the recycling process, we work with plastics manufacturers and lize all resources (2) Are there any Acer sets up whistleblower.acer@acer.com, encouraging people upstream recyclers to conform to international standards of quality, more efficiently complaint chan- inside and outside the company to directly report any incidences of environmental safety, occupational health and safety, and respon- and uses renew- 4 No discrepancy nels created for fraud, corruption, breaches of the Standards of Business Conduct, or sible recycling (R2), earning international export licenses and recy- able materials employees, and 4 any other activity that is illegal or a counter to good corporate gov- No discrepancy cling service provision qualifications from local governments. which have a low are the com- ernance. Through this, personnel, legal, or auditing departments can impact on the b. Use of recycled paper in packaging plaints properly be notified, with each report passed on to the appropriate authori- environment? handled? ties for confidential investigation. Acer carefully considers the materials we use in our packaging, with packaging design emphasizing recyclability and making use of easily In order to build a good working environment and ensure colleague recyclable materials a priority. In 2017, more than 98% of our desk- health and safety, the Acer Taiwan headquarters has launched an top PCs used 100% recycled pulp, minimizing the negative impact (3) Does the com- ESH (Environment, Safety, and Health) management system. The of packaging on the environment. On top of this, all of the posters pany provide safe ESH management group is comprised of 42 members. In addition included with products are produced with Forest Stewardship Council and healthy work to regularly organizing meetings to discuss issues relating to ESH, certified paper, while all printing uses environmentally friendly environments for the team also carries out an annual workplace hazard identification, water-based and soy inks. its employees, considers environmental impact and proposes improvements for 4 No discrepancy Acer adopted international standards ISO 14001 to establish the and organizes significant risk, high-impact projects. environmental management system and keep maintaining the training on safety (2) Does the company In order to continue to increase employee safety awareness in the validity of the Certificate. We also adopted OHSAS 18000 for our and health for its establish proper workplace and strengthen health and hygiene concepts, Acer Taiwan occupational health and safety management. In 2017, Acer passed employeeson a environmental- has held the Education and Training for General Labor Safety and ISO 14001:2015 new environmental management system. In order regular basis? management sys- Health. tems based on the 4 to comply with the Acer Group's global strategy, preparations for the No discrepancy characteristics of integration of the company's environmental and safety and health Please view Acer Corporate Responsibility Report for details. their industries? management systems with those of acquired companies are un- derway. The Group also plans to replace the existing OHSAS 18001 occupational health and safety management system with ISO 45001 in the future..

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 76 Corporate Social Responsibility Corporate Social Responsibility 77 Implementation Status Deviations Implementation Status Deviations from “Cor- from “Cor- porate Social porate Social Responsibility Responsibility Best Practice Best Practice Assessment Items Assessment Items Yes No Summary Description Principles for Yes No Summary Description Principles for TWSE/GTSM TWSE/GTSM Listed Com- Listed Com- panies” and panies” and reasons reasons Acer attaches great importance to employees’ opinions, and there- (8) Has the company Performance in all vendor categories in the 2017 vendor CSR score- (4) Does the company fore strives to ensure communication channels open and candid, in- assessed the sup- card was improved over that of 2016. We also use quarterly business build up sound cluding the announcement of critical messages, dedicated hotlines pliers’ records for reviews or individual meetings in order to demand underperform- communication 4 No discrepancy of internal services, communication meetings across multiple-layers the impact on the ing vendors implement appropriate actions to improve their CSR channels and em- of managers, employee opinion survey, employees’ complaint chan- environment and performance. ploy the appro- 4 nels. Besides, the Employee Representative Meeting is held by on No discrepancy society? priate methods Please view Acer Corporate Responsibility Report for details. quarter basis, where Corporate President & CEO has a face-to-face to inform the communication with employee representatives, discussing about (9) The company employees of the company’s business operation, work environment, and employees’ contracts with its possible signifi- rights. For any consensus reached, the essential or corrective ac- major suppliers, cant impacts? tions will be taken. such as whether to include supplier Acer provides a variety to training targeting to the requirements of (5) Does the compa- when it comes to new employees, staff in a variety of specialized functions, manage- Under our current-existing supply agreements with main suppliers, ny have effective violations of its rial staff, or general audience. All of the trainings will direct to meet it contains provisions of compliance of laws and relevant Corporate career develop- 4 No discrepancy corporate social the needs of organization development and employee growth, which Social Responsibility regulations such as the RBA code of conduct. ment plans for responsibility facilitates to employees’ career and competency growth to the full- 4 In the event that a supplier breaches to the above-mentioned provi- No discrepancy employees? policy, and there est. sions, we are entitled to exercise any and all rights given by the sup- is a significant ply agreements, including without limitation, the right to terminate Acer customers can contact us at any time and provide comments impact on the such supply agreement. (6) Does the com- and suggestions through any one of the channels listed below: environment and pany establish society, may at • Network download and support services policies on con- any time termi- • Telephone service support center/ technical support sumer rights and nate or cancel • Acer-managed service centers provides griev- the terms of the • Authorized service centers and professional maintenance compa- ance mechanism contract? 4 nies No discrepancy regarding its • International travelers' warranty service centers 4. Enhancing Information Disclosure development and • Acer Web Master (procedures and mechanism for handling cus- research, procure- (1) Does the com- tomer complaints) ment, production pany disclose operation and We also set up the email whistleblower.acer@acer.com for all stake- the relevant and services? holders to report any issue regarding our operation such as research reliable informa- and development, procurement, production, and service. tion relating to We disclose our CSR information and CR report on the below website: their corporate 4 No discrepancy Acer holds firmly to the principles of integrity, transparency, pro- http://www.acer-group.com/public/Sustainability/index.htm social responsibil- activeness, timeliness, and regularity, and carries out marketing ity in the website communication with consumers and partners, in compliance with and the Market local laws and regulations, through the corporate website, subsidiary Observation Post websites, advertising, product exhibitions, (7) Does the company System? comply with the press conferences, and sponsorship of activities. In these ways the law and interna- Company communicates information on its corporate ideals, prod- tional regulations ucts, and services. 4 No discrepancy on marketing All Acer products and services carry required and labeling of its product and labeling and product information in accordance with the law. Manu- service? als for Acer products include guidelines for safe usage, laying out proper usage of the product and relevant items to be aware of, as well as recycling measures for when replacing a product. Consum- ers will also find details on how to contact Acer and how to find our website, further facilitating troubleshooting via telephone or online customer service

  • Page 45

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 78 Corporate Social Responsibility Financial Standing 79 Implementation Status Deviations from “Cor- porate Social Responsibility Best Practice Assessment Items Yes No Summary Description Principles for TWSE/GTSM Listed Com- panies” and reasons 7 5. If the Company has established corporate social responsibility principles based on “Corporate Social Respon- sibility Best Practice Principles for TWSE/GTSM Listed Companies”, please describe any discrepancy between the principles and their implementation: To boost Acer's overall competitiveness, fulfill its corporate responsibility in the social, economic and envi- ronmental aspects, and make Acer a leading brand-name in the history, the Standards of Business Conduct (SBC) were revised and promulgated in 2009 that serve as behavioral guidelines to Acer global employees providing them principles of conducting business at worldwide. In 2017, we revised and announced the provi- sion related to the "human right protection" in SBC. The enactment of the SBC no only protects Acer’s global business interest in a legitimate manner but also helps to enhance its service quality for customers, partners, and the communities. We also establish Antitrust and Fair Competition Guidelines, Regulations on Insider Trading, Rules Governing Management of Personal Data, and Subject Regulations of Prevention, Complaint and Punishment of Sexual Harassment to bring the practice of corporate responsibility into our daily opera- tion. 6. Other important information to facilitate better understanding of the Company’s corporate social responsi- bility practices: Financial Standing More information can be found at: 1. Acer Sustainability website: http://www.acer-group.com/public/Sustainability/index.htm 2. Acer Foundation website: http://www.acerfoundation.org.tw/english/index.php 7. If the products or corporate social responsibility reports have received assurance from external institutions, they should state so below: Acer engaged KPMG to perform an independent limited assurance in accordance with ISAE 3000 on 2017 acer corporate responsibility report, of which GRI Standards Core option was applied.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 80 Financial Standing Financial Standing 81 7.1 Five-Year Consolidated Financial Information 7.1.2 Five-Year Consolidated Income Statement Consolidated Income Statement under International Financial Reporting Standards 7.1.1 Five-Year Balance Sheet (“IFRS”) Consolidated Balance Sheet under International Financial Reporting Standards Unit: NTD Thousand (“IFRS”) Period 2013 2014 2015 2016 2017 Unit: NTD Thousand Item Revenue 360,132,042 329,684,271 263,775,202 232,724,161 237,274,883 Period 2014 2013 2015 2016 2017 Gross profit 22,550,266 28,942,184 24,884,122 23,212,458 25,361,234 Item (Restated) Current assets 147,088,855 150,885,170 132,949,777 133,863,136 126,294,298 Operating (loss) income (11,409,666) 2,707,665 938,608 1,192,513 3,669,734 Net property, plant and equipment 6,133,729 5,484,061 4,827,412 4,321,152 4,106,559 Non-operating Loss (9,654,070) (93,246) (92,051) (5,916,838) (230,602) Intangible assets 28,720,088 26,727,547 26,609,427 18,595,922 17,184,151 Income (loss) before taxes (21,063,736) 2,614,419 846,557 (4,724,325) 3,439,132 Other assets 8,557,038 7,998,259 7,355,587 8,893,852 10,027,763 Income (loss) from Continued segment (20,519,349) 1,790,584 603,795 (4,900,740) 2,796,733 Total assets 190,499,710 191,095,037 171,742,203 165,674,062 157,612,771 Income (loss) from Discontinued segment 0 0 0 0 0 Before Distribution 113,688,491 117,755,891 102,576,092 105,421,675 93,239,933 After income tares (20,519,349) 1,790,584 603,795 (4,900,740) 2,796,733 Current Liabilities After Distribution 113,688,491 117,755,891 102,576,092 105,421,675 Un-appropriated Other comprehensive income (loss) for the 2,262,505 2,438,464 (829,149) (1,752,356) (1,697,788) period, net of tax Long-term liabilities 20,559,849 12,709,296 3,311,010 2,573,909 6,397,432 Total comprehensive (18,256,844) 4,229,048 (225,354) (6,653,096) 1,098,945 Before Distribution 134,248,340 130,465,187 105,887,102 107,995,584 99,637,365 income (loss) for the period Total Li- abilities After Distribution 134,248,340 130,465,187 105,887,102 107,995,584 Un-appropriated Net income (loss) attributable to share- (20,519,428) 1,790,690 603,680 (4,900,296) 2,815,587 holders of the Company Equity attributable to shareholders 56,248,981 60,627,593 65,852,731 57,674,395 57,319,443 Net income (loss) attributable to of the Company 79 (106) 115 (444) (18,854) non-controlling interests Common stock 28,347,268 27,965,678 30,854,428 30,807,328 30,765,028 Total comprehensive income (loss) attrib- Capital surplus 43,707,727 34,098,396 36,232,755 34,743,105 29,852,184 (18,526,899) 4,229,180 (225,467) (6,654,809) 1,115,222 utable to Shareholders of the Company Retained Before Distribution (8,325,852) 903,649 1,451,899 (3,448,397) 2,815,587 Total comprehensive income (loss) 55 (132) 113 1,713 (16,277) Earnings attributable to Non-controlling interests After Distribution 0 903,649 1,451,899 0 Un-appropriated EPS ( in New Taiwan Dollars) (7.54) 0.66 0.20 (1.62) 0.93 Other reserves (1,425,876) 845,908 228,505 (1,512,785) (3,198,500) Treasury Stock (6,054,286) (3,186,038) (2,914,856) (2,914,856) (2,914,856) Non-controlling interests 2,389 2,257 2,370 4,083 655,963 Before Distribution 56,251,370 60,629,850 65,855,101 57,678,478 57,975,406 7.1.3 CPAs’ and Auditors’ Opinions Total equity After Distribution 56,251,370 60,629,850 65,855,101 57,678,478 Un-appropriated Year Name of CPA(s) Auditors’ Opinion 2013 Huei-Chen Chang, Wei-Ming Shih Unqualified 2014 Tzu-Chieh Tang, Wei-Ming Shih Unqualified 2015 Tzu-Chieh Tang, Wei-Ming Shih Modified Unqualified 2016 Huei-Chen Chang, Tzu-Chieh Tang Unqualified 2017 Huei-Chen Chang, Tzu-Chieh Tang Unqualified

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 82 Financial Standing Financial Standing 83 3. Ability to Operate 7.2 Five-Year Financial Analysis (1) Account receivable (including account receivable and notes receivable from operation) turnover=Net sales/the average of ac- count receivable (including account receivable and notes receivable from operation) balance Financial Analysis under International Financial Reporting Standards (“IFRS”) (2) A/R turnover day=365/account receivable turnover (3) Inventory turnover=Cost of goods sold/the average of inventory (4) Account payable (including account payable and notes payable from operation)turnover=Cost of goods sold/the average of Period 2013 2014 2015 2016 2017 account payable(including account payable and notes payable from operation)balance Item (5) Inventory turnover day=365/Inventory turnover Total liabilities to total (6) Net property, plant and equipment turnover=Net sales/Average Net property, plant and equipment 70.47 68.27 61.65 65.19 63.22 assets(%) Financial Ratio (7) Total assets turnover=Net sales/Average Total assets Long-term funds to Net 1,252.28 1,337.31 1,432.78 1,394.36 1,567.56 fixed assets (%) 4. Earning Ability Current ratio(%) 129.38 128.13 129.61 126.98 135.45 (1) Return on assets=[PAT+Interest expense×(1-Tax rate)]/the average of total assets Ability to Quick Ratio(%) 95.39 94.52 93.45 86.93 88.99 Payoff Debt (2) Return on equity=PAT/the average of total equity Interest protection (22.16) 5.01 3.49 (17.88) 16.23 (3) Net income ratio=PAT/Net sales A/R turnover (times) 5.50 5.44 4.91 5.03 5.20 (4) EPS =(Earning attributable to shareholders of the Company -Dividend from prefer stock)/weighted average outstanding shares A/R turnover days 66.36 67.09 74.33 72.56 70.19 Inventory turnover (times) 8.56 8.33 6.76 5.73 5.35 5. Cash Flow Ability to A/P turnover (times) 5.32 5.47 4.90 4.38 4.43 (1) Cash flow ratio=Cash flow from operating activities/Current liability Operate Inventory turnover days 42.64 43.81 53.99 63.69 68.22 (2) Cash flow adequacy ratio=Most recent 5-year Cash flow from operating activities=Most recent 5-year (Capital expenditure+the Fixed assets turnover (times) 56.90 56.76 51.16 50.88 56.31 increase of inventory+cash dividend) Total assets turnover (times) 1.73 1.73 1.45 1.38 1.47 (3) Cash reinvestment ratio=(Cash flow from operating activities-cash dividend)/(Gross property, plant and equipment+long- Return on assets(%) (9.49) 1.22 0.49 (2.78) 1.85 term investment+other non-current assets+working capital) Return on equity(%) (31.46) 3.06 0.95 (7.93) 4.84 6. Leverage Operating (1) Operating leverage=(Net revenue-variable cost of goods sold and operating expense)/operating income To Pay-in (40.25) 9.68 3.04 3.87 11.93 Earning Ability income Capital (%) (2) Financial leverage=Operating income/(Operating income-interest expenses) PBT (74.31) 9.35 2.74 (15.34) 11.18 Net income ratio(%) (5.70) 0.54 0.23 (2.11) 1.18 EPS(NTD) (7.54) 0.66 0.20 (1.62) 0.93 Cash flow ratio (7.61) 4.78 (0.84) 7.85 (7.90) Cash Flow(%) Cash flow adequacy ratio 102.96 53.18 18.83 46.07 (34.29) Cash reinvestment ratio (15.60) 10.33 (1.71) 16.63 (13.37) Operating leverage (1.99) 10.65 25.94 18.62 6.70 Leverage Financial leverage 0.93 1.32 1.57 1.27 1.07 1. Financial Ratio (1) Total liabilities to total assets=Total liabilities/Total assets (2) Long-term funds to Net property, plant and equipment=(Net equity+Long term debts)/Net property, plant and equipment 2. Ability to Pay off debt (1) Current ratio=Current Assets/Current liability (2) Quick ratio=(Current assets-Inventory-Prepaid expenses)/Current liability (3) Interest protection=Net income before income tax and interest expense/Interest expense

  • Page 48

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 84 Financial Standing Risk Management 85 7.3 Audit Committee Review Report The Board of Directors has prepared the Company’s 2017 Business Report, Financial Statements, and the Proposal for profit & loss appropriation. The CPA Huei-Chen Chang and Tzu-Chieh Tang from KPMG were retained to audit Acer’s Financial Statements and have issued an audit report relating to the Financial Statements. The said Business Report, Financial Statements, and Proposal for profit & loss appropriation have been reviewed and determined to be correct and accurate by the Audit Committee of Acer Incor- porated in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, I hereby submit this Report. 8 Acer Incorporated Convener of the Audit Committee: Ching-Hsiang, Hsu March 21, 2018 7.4 Financial Statements Consolidated Subsidiaries Audited by CPAs of the Past Year Ri s k M anag ement Please refer to Appendix. 7.5 Disclosure of the Impact on Company’s Finan- cial Status Due to Financial Difficulties Not applicable. 7.6 Financial Prediction and Achievements 7.6.1 Financial Forecast of Year 2017 Not applicable.

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    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 86 Risk Management Risk Management 87 4 Global Accounting Head Office is responsible for veri- • General Affairs Office is responsible for the management 8.1 Important Notices for Risk Management and fying and checking hedging transactions, ensuring of potential risks to environmental safety & health or to the validity of transactions and reliability of financial Evaluation statements. the Group’s assets. • Global Brand Marketing and Strategic Operations Center 4 Global Risk Management Head Office is responsible is responsible for risk strategy planning, management, and Risk Management Organization rized units are formulated, and progress in the implemen- for risk management and insurance allocation per- improvement for business intelligence and market analy- tation and control of risk items reported by the various taining to global credit risk and operating risk. sis, supply chain operating risk management, brand and The ultimate goal of Acer's business philosophy is sustain- committees and management is monitored. In addition, PR risk management, and quality control management. ability. We firmly believe that rigorous risk management not internal management functions are further strengthened only represents the emphasis Acer places on our long-term to enhance the effectiveness of risk management. commitments to customers, partners, and shareholders, but • Management is responsible for supervising and following Acer's Risk Management Framework also provides concrete actions that can ensure stable business risk management strategy, and for conducting regular as- performance and the implementation of corporate social re- sessments of effectiveness sponsibility. One could even say that the sustainable develop- ment of a company is inextricably tied to its risk management. • Audit Office regularly reviews and monitors implementa- Board of Directors Only by continuously and consistently identifying dynamic tion of internal control processes, annual audit plan, etc. Chairman changes in risk and implementing relevant management • The Corporate Sustainability Office is responsible for iden- Auditing Investment Remuneration Audit measures can we truly achieve sustainability and ensure our tification and management of sustainability risk, using commission Committee Committee hard-won results are protected. various analytical methods to identify operating risks, in- Acer collects and evaluates potential strategic, operational, cluding forward-looking social and environmental issues, financial, and hazard risks that could impact the Company’s and drafting follow-up management plans to mitigate operations, setting out management policies and enforce- their impact on the organization. Corporate Sustainability Office ment mechanisms and organizations in response to ensure • Global Human Resources Headquarters is responsible for risks are controlled and responded to appropriately. For the implementing HR policies, including matters pertaining sake of ongoing monitoring, strengthening of risk manage- to hiring, performance, compensation, projects, organiza- Corp. President ment, timely response, where risk has been identified, it is in- tion, command, controls, and negotiation to accomplish cluded into routine meetings of the Audit Committee, where business development and goals and create an adaptable it is taken into consideration alongside the operating condi- organizational system. tions of the Company and a decision regarding the relevant • Global Legal Headquarters is responsible for legal risk department and issue is made. management, reviewing and processes contract disputes, Corp. etc. to reduce legal risk. Marketing, Global Global Global Global General Business Business Acer's Risk Management Framework • Global Information Technology Headquarters is respon- HR Legal IT Finance Affairs Planning and Units sible for the construction and planning of overall informa- Operations At the end of 2012, Acer established a Risk Management tion systems and information security management. Workgroup. The members of this group are drawn from de- • Global Financial Headquarters: partments throughout the Company, including legal affairs, finance, HR, supply chain management, marketing, IT, envi- 4 Global Financial Information Head Office is responsi- ble for operations analysis and planning, financial in- Global Financial ronmental health and safety, asset management, product Global Risk Global Accounting Planning and Global Treasury Global Taxation business groups, and the sustainability office. Through this formation integration, and investment management Management Operation Reporting workgroup’s annual meetings, members carry out identifica- in response to relevant risks. tion and discussion of potential operating risks and emerg- 4 Global Funds Head Office is responsible for finance- ing risks facing the Company along economic, environmental, related planning and tasks including risk sharing and Chairman of the Board, Investment Review Committee, Remuneration Committee, Audit Committee, Audit Office, Strategic De- and social axes. insurance allocation. cision-making Committee, Corporate Sustainability Office, CEO and global president, Global Human Resources Headquarters, • The Board of Directors works to improve and strengthen Global Legal Headquarters, Global Information Technology Head Office, Global Financial Technology Head Office, Global Finance 4 Global Taxation Head Office is responsible for the corporate governance and determines the strategic direc- Head Office, General Affairs Office, Global Brand Marketing and Strategic Operations Center, Operational Business Units, Global planning and coordination of international invest- tion of risk management. At the same time, in response to Financial Information Head Office, Global Information Security Head Office, Global Risk Management Head Office, Global Taxation ment frameworks and tax risk planning, manage- various operational risks, relevant regulations and autho- Head Office, Global Accounting Head Office. ment, and response.

  • Page 50

    Acer Incorporated 2017 Annual Report Acer Incorporated 2017 Annual Report 88 Risk Management Risk Management 89 Risk Identification 8.1.1 Impact of Interest Rate, Exchange Rate and Inflation on The Risk Management Workgroup uses risk maps to analyze the probability of losses resulting from various risks and the extent of Company’s P&L and Future Strategy those losses should the risks occur, as well as analyzing the level of potential threat those risks pose to the Company and carrying out risk classification in order to ensure the Company’s risk management strategy is properly prioritizing risks. The following risk 1.Interest Rate Fluctuation analysis and testing methods are adopted to further quantify and analyze risks and examine whether there is a high degree of cor- ECB may continue its expansionary policy due to slow recovery of economy in Eurozone. Fed may raise rates, depending on incom- relation between risk factors. ing data for labour market and inflation. Under the assumption of controlled inflation, Central Bank of the Republic of China (Tai- • Correlation Analysis wan) is unlikely to raise interest rate. Short-term TWD and foreign currency deposits remain to be the most common used instru- • Sensitivity Analysis ments for Acer to optimize return while reducing risk. • Stress Test 2.Exchange Rate The Risk Management Workgroup aggregates the results of these and drafts follow-up action plans, reporting to the convener of the group. Material risk information is also provided in Audit Committee reports. In 2017, the Risk Management Workgroup identi- The incoming political risks, including the initiation of Brexit, may weaken EUR. Fed is expected to raise interest rate, which may fied a total of 63 risk items, of which 11 were categorized as medium-high risk or higher, including IP and litigation risk, information strengthen USD and weaken NTD comparatively. The international relations between the US and China may influence CNY’s ex- security risk, and exchange rate risk. Personnel from the relevant departments are assigned to formulate follow-up risk manage- change rate. The monetary policies of major economies influence the stability of the currencies in emerging markets. Acer will ment strategies and related implementation plans for risk items that have been identified and analyzed, including common risk maintain its strategy to meticulously hedge its foreign positions to minimize the impacts on earnings caused by foreign exchange management response methods such as loss prevention, avoidance, separation & duplication, risk transfer, and risk retention. rate fluctuations. They also evaluate the appropriate investment of resources, set out implementation priorities, and lay out follow-up methods. At the same time, risk response plans and crisis management mechanisms have been formulated to reduce the potential adverse 3.Inflation effects of various potential risks on operations. In summary, we are engaged in ongoing and proactive risk management, taking a According to recent IMF World Economic Outlook, there may be signs that economic activity is going to pick up pace. With com- forward-looking focus on prevention and facing both current and future risks and challenges with prudence. We also reported on modity prices rising, inflation rate is expected to be higher than last year. Appropriate measures will be taken accordingly to mini- the critical risk information to the Audit Committee. The reports are as followings: mize impacts on business operation if need. • Patent, IP and litigation risk management report • Liability insurance for directors, supervisors, and managers • Overview of foreign exchange losses and risk controls 8.1.2 How Corporate Image Change Affects Company’s Risk • Full inventory risk control Management Mechanism • Risk control report based on trends in tax reform The Company split off its manufacturing division at the end of year 2000 in order to focus on the design and marketing of IT prod- In summary, we are engaged in ongoing and proactive risk management, taking a forward-looking focus on prevention and facing ucts and services. The potential crises within manufacturing and marketing companies are very different, and the Company’s crisis both current and future risks and challenges with prudence. The Audit Committee also aggregates risk environment, risk manage- management now focuses on our global supply-chain and logistics. By outsourcing our manufacturing sector to multiple vendors ment priorities, risk assessment, and response measures, with the chair reporting this to the board. and suppliers, the Company gained greater flexibility in inventory control and lowered risks compared to a single-vendor policy. With the ever-changing global economy, it is essential to be prepared for risks and challenges at all times. The Company’s risk management team has a clear sense of crisis management and has taken the precautions where necessary. We have set up a crisis mechanism that will minimize potential damages to ensure the Company’s sustainable management. 8.1.3 Predicted Benefits and Potential Risk to Company with Factory/Office Expansion Not applicable. 8.1.4 Potential Risks to Company from the Consentration of Procurement and Sales None

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