Material Information

Regarding Taiwan High Speed Rail profit growth news as reported by the Commercial Times

2017/10/23

  1. 1.Date of occurrence of the event: 2017/10/23
  2. 2.Company name: Taiwan High Speed Rail Corporation.
  3. 3.Relationship to the Company (please enter "head office" or"subsidiaries"): Head office.
  4. 4.Reciprocal shareholding ratios: Not applicable.
  5. 5.Name of the reporting media: Commercial Times (page A4).
  6. 6.Content of the report: Taiwan High Speed Rail Sees Double Digit Increase In Profits One Year After New Chairman Takes Office…
  7. 7.Cause of occurrence: Major announcement regarding news item reported by the media.
  8. 8.Countermeasures: The Company has disclosed no financial forecast information. Investors should refer to publicly available financial and business information on the Taiwan Stock Exchange Market Observation Post System.
  9. 9.Any other matters that need to be specified: None.


  10.  

Announcement of changes in the estimated useful lives of certain operating concession asset

2017/10/19

  1. 1.Date of the board of directors resolution:2017/10/19
  2. 2.The nature of the change:Changes in accounting estimates
  3. 3.Reason for the change:

    The Corporation changed the estimated useful lives of its certain operating concession asset based on the evaluations of the Corporation’s Asset Review Committee to ensure that the estimated useful lives appropriately reflect the economic substance and the expected future economic benefits of the Corporation’s operating concession asset.

  4. 4.The prior periods affected by retrospective application of the new accounting policy:Not applicable
  5. 5.The line items affected and the actual effect for the immediately preceding financial year:

    The changes in accounting estimates are expected to increase the Corporation’s amortization expense by approximately NT$308 million for the year ending December 31, 2017.

  6. 6.The actual effect on the opening balance of retained earnings for the immediately preceding financial year:Not applicable
  7. 7.The reasonableness and necessity for the change in accounting policy or accounting estimate after the beginning of the financial

    year:Using its vast experience and technical expertise that has been developed since the launch of passenger rail service, especially in the area of maintenance, the Corporation periodically reviews the expected economic benefits of its assets and changes in circumstances such as the operating environment that could result in the actual useful lives differing from the Corporation’s current estimates. During a meeting held on September 15, 2017, the Asset Review Committee of the Corporation reviewed the estimated useful lives of certain operating concession asset and determined that changes in estimate were appropriate. On October 19, 2017, the Board of Directors of the Corporation resolved the implementation of the recommended changes.

  8. 8.If retrospective application is impracticable, specify the reasons, how and from when the accounting policy change be applied:Not

    applicable

  9. 9.If retrospective application is impracticable, CPA provides the opinion about the impact of the audit opinion for the financial year

    preceding the accounting change:Not applicable

  10. 10.About the reasonableness of the item 2 to 9, the itemized analysis and reviewed opinion from CPA:

    The opinion of Ruske Ho, CPA with Deloitte & Touche Taiwan, is set forth as below:

    Operating concession assets subject
    to changes in accounting estimates
    Before change After change
    Items Estimated useful lives (years) Estimated useful lives (years)
    Machinery and equipment    
    Buildings and auxiliary structures 10-16 15-35
    Maintenance equipment and tools 5-25 10-35
    Power system 35 10-20
    Computer and technology equipment 5-15 5-35
    Transport equipment
    High-speed train sets 15-35 15-35
    Signaling system 5-35 5-35
    Telecommunication system 5-35 5-25
    • I.The changes in accounting estimates have demonstrated compliance with the relevant requirements under Article 6 of the

      Regulations Governing the Preparation of Financial Reports by Securities Issuer.

    • II. Following a review of the factors influencing amortization policies, together with examination of supporting documentation, the

      Asset Review Committee of Taiwan High Speed Rail Corporation (the “Corporation”) approved changes in the estimated useful lives of certain operating concession asset on September 15, 2017. The table below shows the asset useful lives before and after the changes:

    • Ⅲ.Next follows a discussion of the underlying reasons for changes in the economic useful lives:
      • (I) Main items subject to changes: The estimated useful lives of servers and other computer hardware responsible for traffic

        control and classified as computer and technology equipment under the category of machinery and equipment have been shortened to 7 to 10 years from 12 years, taking into account the replacement time indicated by the initial design and historic records of failures and repairs. With respect to uninterruptible power supply used in the Disaster Warning System and classified as signaling system under the category of transportation equipment, its estimated useful life has been shortened to 5 years from 35 years. Certain equipment classified as telecommunication system under the category of transportation equipment such as the mobile switching office of the radio system, radio enhanced base transceiver station, bi-directional amplifier and monitoring and control Equipment in plant monitoring and control system will be depreciated over a period of 15 to 20 years, versus 35 years previously.

      • (II) Items subject to an increase in estimated useful lives: management have lengthened the estimated useful lives of certain

        assets after considering the opinion of the Corporation’s internal experts, history of all equipment repairs and conditions, ongoing maintenance and replacement activities, and expected enhancements. The assets subject to changes in accounting estimates include buildings and auxiliary structures, maintenance equipment and tools, and computer and technology equipment that come under the category of machinery and equipment; and high-speed train sets, signaling system and telecommunication system that fall under the category of transportation equipment.

      • (III) Items subject to a decrease in estimated useful lives: Factors that are considered in determining the useful lives of the

        Corporation’s power system, which is categorized as machinery and equipment, include instructions set out in the Maintenance Manual, the replacement schedule carried out by the maintenance staff, retirements of components that occur in the normal course of business, and maintenance, inspections and enhancements scheduled to extend the useful lives of existing assets. Given that the repair and maintenance needs for certain equipment are outsourced to third-party providers as the equipment are no longer supported by their original manufacturers, the Corporation has reassessed and reduced the estimated useful lives of said equipment. In relation to high-speed train sets under the category of transportation equipment, studies conducted by vendors on the retirement of railcars recommend replacing the cars ahead of original schedule. Moreover, the estimated useful lives of certain equipment were shortened on the grounds of instructions set out in the Maintenance Manual and initial design documents, recommendations following an evaluation of the interim maintenance program, and termination of support from the original equipment manufacturers. With regard to certain equipment classified as maintenance equipment and tools or computer and technology equipment under the category of machinery and equipment, plus those classified as signaling system or telecommunication system under the category of transportation equipment, the determination of shortened useful lives involves the judgment of in-house experts who have discussed in depth the topic and examined the original design, and the opinion of maintenance staff based on their experience and records of maintenance.

    • Ⅳ. Using its vast experience and technical expertise that has been developed since the launch of passenger rail service, especially

      in the area of maintenance, the Corporation periodically reviews the expected economic benefits of its assets and changes in circumstances such as the operating environment that could result in the actual useful lives differing from the Corporation’s current estimates. During a meeting held on September 15, 2017, the Asset Review Committee of the Corporation reviewed the estimated useful lives of certain operating concession asset and determined that changes in estimate were appropriate. Revisions in the estimated useful lives, as set forth in the table in Section II, became effective on October 1, 2017.

    • V.No material unreasonable events were discovered in the review of the meeting minutes provided by

      the Asset Review Committee of the Corporation, supporting documentation such as the original design of equipment, the findings and recommendations of the evaluation of assets, and other information such as a review and analysis of programs to extend the useful lives of certain assets.

  11. 11.Objection or reservation opinion from the independent directors:None
  12. 12.Countermeasures:None
  13. 13.Any other matters that need to be specified:

    Changes in accounting estimates were resolved at a meeting of the Board of Directors and announced in accordance with reporting requirements on October 19, 2017. Same information will be reported to the latest upcoming shareholders’ meeting.


 

New replacement accounting officer

2017/10/19

  1. 1.Type of personnel changed (please enter: spokesperson, acting spokesperson, important personnel(CEO, COO, CMO,CSO, etc.),financial officer, accounting officer, research and development officer, or internal audit officer): Accounting Officer
  2. 2.Date of occurrence of the change: 2017/10/19
  3. 3.Name, title, and resume of the replaced person: Hsin-Wei New, VP of Finance Division
  4. 4.Name, title, and resume of the replacement: Chih-Sheng Huang, AVP of Accounting Department, Finance Division
  5. 5.Type of the change (please enter: “resignation”, “position adjustment”, “dismissal”, “retirement”, “death” or “new replacement” ): New Replacement
  6. 6.Reason for the change: New Replacement
  7. 7.Effective date: 2017/10/19
  8. 8.Any other matters that need to be specified: Resolutions of the board of directors meeting on 2017/09/14 will be followed up.

 

The Corporation enters into the fourth amendment of the NT$382 billion Syndicated Loan Agreement with a bank syndicate consisting of eight(8) banks.

2017/10/13

  1. 1.Date of amendment of the contract or commitment:2017/10/13
  2. 2.Counterparty of the contract or commitment: A bank syndicate consists of eight(8) banks, including Bank of Taiwan.
  3. 3.Relationship to the Company: Government-related entities(some banks).
  4. 4.Reason for the amendment: The Corporation applied to the bank syndicate for the reduction of interest rates of Tranche A1 Facility and Tranche A2 Facility in Syndicated Loan Agreement.
  5. 5.Content amended: Starting from the 9th year to the 30th year of the first drawdown date, the markup interest rates of the Tranche A1 Facility and Tranche A2 Facility in Syndicated Loan Agreement will be reduced to 0.92%.
  6. 6.Effect on the Company’s finances or business: No unfavorable effect.
  7. 7.Any other matters that need to be specified: None.

 

Board meeting resolved to approve the change of accounting officer

2017/09/14

  1. 1.Type of personnel changed (please enter: spokesperson, acting spokesperson, important personnel(CEO, COO, CMO,CSO, etc.),financial officer, accounting officer, research and development officer, or internal audit officer): Accounting Officer
  2. 2.Date of occurrence of the change: 2017/09/14
  3. 3.Name, title, and resume of the replaced person: Li-Feng Lai, AVP of Accounting Department.
  4. 4.Name, title, and resume of the replacement: Hsin-Wei New, VP of Finance Division, will be acting as the Accounting Officer temporary.
  5. 5.Type of the change (please enter: “resignation”, “position adjustment”, “dismissal”, “retirement”, “death” or “new replacement” ): Position Adjustment
  6. 6.Reason for the change: Business Purpose
  7. 7.Effective date: 2017/09/15
  8. 8.Any other matters that need to be specified: The new Accounting Officer will be announced as the successor is identified.

 

The Company to attend "Credit Suisse 18th Annual Asian Technology Conference"

2017/09/07

  1. 1.Date of the investor conference: 2017/09/08
  2. 2.Time of the investor conference:  9:00 a.m.(Taiwan Time)
  3. 3.Location of the investor conference:  Grand Hyatt Taipei
  4. 4.Brief information disclosed in the investor conference:  The Company will attend ” Credit Suisse 18th Annual Asian Technology Conference” to give investors the company’s operational performance and the prospects for the future.
  5. 5.The presentation of the investor conference release:  Please refer to MOPS or THSRC’s website for the conference presentation material.
  6. 6.Will the presentation be released in the Company’s website: www.thsrc.com.tw
  7. 7.Any other matters that need to be specified: None. 

 

Taiwan High Speed Rail announces distribution of the 2016 Company’s cash dividend in 2017

2017/07/13

  1. 1.Date of the resolution by the board of directors or shareholders’ meeting or decision by the Company:2017/07/13
  2. 2.Type of ex-rights or ex-dividend (please enter:“Ex-rights”,”Ex-dividend”, or ”Ex-rights and dividend”):Ex-dividend
  3. 3.Type and monetary amount of dividend distribution: Cash dividend NTD$3,376,975,835, each common share is entitled to receive NTD$0.6.
  4. 4.Ex-rights (ex-dividend) trading date:2017/08/01
  5. 5.Last date before book closure:2017/08/02
  6. 6.Book closure starting date:2017/08/03
  7. 7.Book closure ending date:2017/08/07
  8. 8.Ex-rights (ex-dividend) record date:2017/08/07
  9. 9.Any other matters that need to be specified:
    • (1) The Company’s 2016 profit distribution has been approved at the 2017 annual shareholders’ meeting.

    • (2) Cash dividend for common shares is expected to be paid on 2017/08/24.