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Chairman's Statement
 
 
 
Dear Shareholders,

The global economy slowly gained strength in 2017. However, many Taiwanese companies were affected by the sharp appreciation of the NTD against the U.S. dollar, as well as the pressure of rising material costs and direct labor costs. The business environment in 2017 was still full of challenges. With the joint efforts of all Delta team members, Delta's consolidated revenues increased 4% from the previous year to NT$223.6 billion in 2017, while gross profit amounted to NT$60.8 billion, 2% higher than last year, with a gross margin of 27.2%. Net operating profits decreased 5% from 2016 to NT$19.8 billion with an 8.8% net operating margin. Our net income after tax decreased slightly by 2% from the previous year to NT$18.4 billion, which represented 8.2% of revenues. Delta's 2017 earnings per share (EPS) was NT$7.08 and the return on equity (ROE) ratio was 14.8%.

In 2010, Delta's management team jointly set a vision for "developing the brand business and providing customer solutions" as the strategic direction of our long-term development. In order to speed up the transition, Delta completed an internal organizational adjustment in 2017. We adjusted our three major business divisions (Power electronics, Energy Management, and Smart Green Life) that were originally divided by product category into market-oriented new business areas (Power Electronics, Automation, Infrastructure), as well established an automotive electronics business group directly under the category of Power Electronics. We believe the adjustments will help Delta provide more efficient solutions that meet our customers' needs. The following is a summary of our 2017 business results and prospects for the future.

 
 
Power Electronics

Not only has Delta maintained its leading position in the global market in the fields of power supplies, brushless DC fans, and others. Delta also ranks among the world's top manufacturers in the specific applications of thermal management and miniaturized components. As the telecommunications and consumer electronics markets have matured, Delta has already expanded these products into other areas such as medical care, industrial management, household appliances, automotive electronics and electric cars, and has won high praise from customers.

In the spirit of the continuous pursuit of innovation, Delta not only showcased the world's first high-brightness 8K projector at last year's "Delta Green Building Exhibition", but also launched "Innergie 55cc," the world's smallest universal charger, with a volume of only 55cc and a weight of 88g. In addition, Delta received the 2017 Quality Excellence Award from HP Inc. Delta's X-ray high-voltage power supply also obtained third-party medical equipment certification from TÜV Rheinland last year, and passed the EU Medical Device Directive (MDD) and ISO Medical Quality Management System certification, to become the first Taiwanese manufacturer to produce a high voltage power supply for medical X-rays. The computer-based tomography scanner DELPet-μCT developed and produced by Delta's subsidiary DELBio Inc. won the highest honor at last year's Taiwan Excellence Gold Awards. With the advent of DELPet-μCT, Delta is expected to bring new contributions to medical research, new drug development, and other applications.

Although demand in the information market is slowing, we believe that Delta will continue to grow as we expand our application coverage. The revenue and profits contributed by the Power Electronics business will also become one of the strongest and most important pillars supporting Delta's strategic transformation and the development of our new businesses.

Automation

Industrial automation is an area that Delta has been devoted to for over two decades. In addition to the horizontal expansion of product specifications, we also have complete vertical integration in our product line. Delta's acquisition of Unicom in 2016, which includes an MES (Manufacturing Execution System), further perfected Delta's vertical layout in industrial automation.

Delta has been planning to introduce its Delta Smart Manufacturing (DSM) solutions since 2016, and in 2017, and has established the Smart Manufacturing Department responsible for the development and promotion of Delta's smart manufacturing business. Our goal is to automate equipment, automate processes, automate logistics, and through the collection of big data, analysis of data, and others, to gradually and progressively achieve the ultimate goal of industrial "intelligence". At the same time, through the introduction of Delta's own automation experience, we can provide customers with better solutions, and help create a more flexible smart green factory.

In terms of building automation, following Delta's acquisitions of Loytec and Delta Controls Inc. in 2016, we again publicly acquired 49.2% shareholdings in the Taiwan-listed company Vivotek Inc. in 2017 to complement Delta's security monitoring capabilities.

In response to the market's rising demand for Industry 4.0 and smart green buildings, we believe that the automation department's business will continue to lead Delta to its next peak and become one of the most important dynamics of the company's future growth.

Infrastructure

In terms of communication infrastructure, Delta not only holds a leading global position in telecommunications power supplies, but also plays a significant role in the global market for continuous power systems, comprehensive data center solutions, and network communications.

In terms of energy infrastructure, we are looking at the market layout of the entire smart microgrid of the future. With government policies that continue to promote the adoption of electric cars, we are providing energy storage devices as well as cooperating with well-known vehicle manufacturers in two-way grids for electric cars. The power-receiving and power-supply design enables each electric car to become a mobile energy storage battery, so as to buffer the grid load and achieve optimum energy use.

We are convinced that to become a truly sustainable enterprise for the next century, we must continue to invest in corporate social responsibility and improve corporate governance while pursuing optimal revenue growth and financial performance. This is our duty.

Delta's mission is "To provide innovative, clean and energy-efficient solutions for a better tomorrow". With our long-term focus on climate change and sustainable corporate development, we continue to invest in R&D to provide highly efficient energy-saving products and solutions. Delta is among the first to adopt international targets to scientifically reduce carbon emissions. Our carbon target is to reduce carbon intensity by 56.6% by 2025 using the base year of 2014. In December 2017, Delta passed the Science Based Targets Initiative (SBTi) conformity review, becoming the first in Taiwan and among the first 100 companies in the world to be approved, and taking specific actions towards the goal of controlling global warming by 2°C.

Delta actively participates in international climate events through the Delta Electronics Foundation. At the COP23 UN Climate Conference held in Bonn, Germany in 2017, Delta was invited by the Local Governments for Sustainability, Council for Sustainable Development (ICLEI) to share with opinion leaders and decision makers from various countries our experience assisting cities in promoting sustainable development, and our practical achievements in construction, transportation, and energy infrastructure. Delta was the only corporate representative participating in the related conferences.

Delta's achievements in promoting corporate social responsibility are highly recognized worldwide. We were selected for the "World Index" and "Emerging Markets Index" of the Dow Jones Sustainability Indices in 2017, and won the RobecoSAM "2017 Sustainability Award". Our "Carbon Disclosure Project" received "Climate Change Leadership Level" revealing the climate change aspects of the supply chain, and gained A-level recognition. Last year, Delta won Corporate Social Responsibility Awards presented by Global Views Monthly, CommonWealth Magazine, and the 2017 Taiwan Corporate Sustainability Awards, and ranked as one of the Top 5% Listed Companies by the "Taiwan Stock Exchange" Corporate Governance Review Awards. In addition, the value of Delta's brand in 2017 once again made a major leap forward, up 11% from 2016, reaching US$250 million. We are one of the companies with the highest ratio of brand value growth as well as the only company that has grown for two consecutive years. Delta sincerely thanks our customers, suppliers, shareholders and the community for your support.

Looking to the future, we hope that through the balanced development of our three major business areas Power Electronics, Automation and Infrastructure, Delta will continue to operate sustainably and pursue opportunities in the international arena. As we lead our Delta team members to yet another growth peak, we are devoted to maintaining our role as a well-respected, world-class company that addresses human needs, is friendly to the environment, and has a positive impact on society.

Sincerely yours,
Yancey Hai, Chairman
 
 
 
 
 
 
 
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