Stock Code：2383 Search 2015 Annual Report Website：http：//newmops.tse.com.tw

EMC

Elite Materials Co., Ltd

2015

ANNUAL REPORT

Printed Date：May 20th, 2016

1.The Company Spokesman：Name：Li-Chio, Chang Job Title：Assistant Manager, Administration Section Telephone：(03)483-7937 Email：ia2@mail.emctw.com

The Company Acting Spokesman： Name：Bi-Chu, Chiang Job Title：Vice Manager, Finance Section Telephone：(03)483-7937 Email：vicky@mail.emctw.com

2.Elite Material Co., Ltd.Headquarter Address：No.18, Ta-Tung 1st Rd., Kung-Yin Industry District,

Kuang-Yin District, Tao-Yuang City Telephone：(03)483-7937

Hsin-Chu Factory Address： No.14, Wen-Hua Rd., Feng-Shuang Valley, Hu-Ko County, Hsin-Chu Hsien Telephone：(03)598-1688

3.Stock Transfer Processing Institute：Name：Agent of Ya-Tong Securities Co., Ltd. Address：No.86, 3F, 1st Section Chong-Ching South Rd., Taipei Telephone：(02)2361-8608 Website：www.osc.com.tw

4.Certified Accountant of the Latest Annual Finance Report：Name of the Accountant：Accountant, Liu-Feng, Yang/Accountant,

Ying-Ru, Chen Name of the Firm：KPMG Address： No.7, 68F, 5th Section Hsin-Yi Rd., Taipei Telephone：(02)8101-6666 Website：www.kpmg.com.tw

5.Name of the Transaction Place of the Global Negotiable SecuritiesCommerce and the Ways to Inquire the Information of the Global Negotiable Securities ：The Company has not issued the Global Negotiable Securities

6. The Company Website：www.emctw.com

Catalogue of the Annual Report

I. The Report to All of the Shareholders ....................................................................... 1 II. Introduction of the Company

1. Established Date .................................................................................................. 42. History and Development of the Company ........................................................ 4

III. Administer Report of the Company1. Organization System ......................................................................................... 82. The Information of the Directors, Supervisors, General Managers,

Vice-General Managers, Assistant Managers, and the Chiefs of theBranches ............................................................................................................ 11

3. Administrative Conditions of the Company ..................................................... 244. The Public Fee Information of the Accountants ............................................. 475. The Information of Changing the Accountants ................................................. 47 6. The Chairman, General Managers, and the Managerial Officers who Take

Charge of the Finance or Accounting Affairs in the Company, who HaveEver Worked in the Firms or Related Corporations of the CertifiedAccountants within the Very Latest One Year .................................................. 47

7. The Shares Rights Transfer and Pledge Situation of the Shareholders who isthe Director, Supervisor, or Managerial Officer and Owned 10% or More inthe Latest Year and Dated to the Annual Report Printed Date .......................... 47

8. The Information of the Shareholders who hold the Shares in the Top Tenand the Mutual Relationship is the Parties of Spouse or the Second DegreeRelatives that is Regulated in the Financial Accounting Standard BulletinNo.6. .................................................................................................................. 49

9. The Amount of Holding Shares of the Same Automatic ReinvestmentCorporations of the Company, Directors, Supervisors, Managerial Officer,and the Corporations that the Company is able to Control Directly orIndirectly, as well as the Calculation of the Comprehension SharesHolding Ratio. ................................................................................................... 49

IV. Funding Situation1. Company Capital and the Shares ...................................................................... 51

(1) Sources of the Stock Capital ....................................................................... 51 (2) Structure of the Shareholders ...................................................................... 52 (3) Scattering Situation of the Stock Rights ..................................................... 52 (4) Name of the Main Stockholders ................................................................. 53 (5) The Information of the Per Share Market Price, Net Value, Profile, and

Dividend in the Latest Two Years ............................................................... 53 (6) The Company Dividend Policy and Execution Situation ........................... 54 (7) The Effect of the Proposal of Stock Grant to the Company Operation

Result and the Earnings Per Share in this Shareholder Conference ........... 55 (8) The Bonus of the Employee and the Rewards of the Directors and

Supervisors .................................................................................................. 55 (9) Condition of the Company Shares Repurchased by the Company ............. 56

2. Handling Condition of the Corporate Bond ...................................................... 563. Handling Condition of the Preferred Stock ...................................................... 56

4. Handling Condition of the Global Depository Receipt .................................... 565. Handling Condition of the Employee Stock Option Certificates ................... 576. Handling Condition of the Limited Employee Right Shares and the Merge

or Transferee Other Company Issued New Shares ........................................... 58 7. Executing Condition of the Capital Operation Plan ....................................... 59

V. Operation Profile1. Business Content ............................................................................................... 60

(1) Business Scope ............................................................................................ 60 (2) Industrial Profile ......................................................................................... 60 (3) Technology and Research Profile ............................................................... 61 (4) Long/Short Term Business Development Plan ........................................... 61

2. Market and Production/Sale Profile .................................................................. 62 (1) Market Analysis .......................................................................................... 62 (2) Function and Producing Process of the Main Products .............................. 64 (3) Supply Situation of the Main Raw Material ............................................... 64 (4) Name of the Clients who Stock In/ Sale Out More than 10% in the

Latest Two Years, and the Amount and Ratio of the Buy In/Sale Out . 64(5) The Production Value Table of the Latest Two Years ................................. 65 (6) The Sale Value Table of the Latest Two Years ............................................ 66

3. The Working Employee Information of the Latest Two Years ......................... 664. The Expense Information of Environment Protection ...................................... 665. The Relationship between the Labor and the Company ................................... 676. Important Contracts ........................................................................................... 68

VI. Financial Profile1. Concise Balance Sheet and Profit & Lose Statement of the Latest Five Years .... 692. Financial Analysis of the Latest Five Years ...................................................... 783. Supervisor Review Report in the Latest Annual Financial Report ................... 854. The Latest Annual Financial Tablet .................................................................. 865. The Latest Annual Combined Financial Tablet of the Parent and Subsidiary

Companies that is Checked by the Certified Accountant ................................. 86 6. The Turnover Conditions that effect the Company Financial Condition of

the Company and the related Corporation in the Latest Year and Dated untilthe Annual Report Printed Date ...................................................................... 86

VII.The Review Analysis and Risk Matters of Financial Condition and ManagementResult1. Review and Analysis of Financial Condition ................................................... 872. Financial Result ................................................................................................. 88 3. Cash Flow Review and Analysis ....................................................................... 89 4. The Effect of the Expense of Significant Capital to the Financial Affairs in

the Latest Year ................................................................................................. 89 5. The Major Reasons and Improve Project of Profit or Deficit of the

Automatic Reinvestment Policy in the Latest Year and the InvestmentProject in the Next Year .................................................................................... 89

6. Risk Management ............................................................................................. 897. Other Important Affairs ..................................................................................... 91

VIII. Special Recorded Items1. Related Information of the Related Corporations ............................................. 922. Handling Condition of Private Placement of Negotiable Securities in the

Latest Year and Dated to the Annual Report Printed Date ............................... 95 3. Condition of Holding or Acting Stock Against the Company in the Latest

Year and Dated to the Annual Report Printed Date .......................................... 95 4. Other Necessary Additional Note Items ........................................................... 955. The Important Effect Items of Shareholder Interest or Securities Price in

the 2-2of the Act 36 in the Latest Year and Dated to the Annual ReportPrinted Date ....................................................................................................... 95

Annex I：The Measurement of the Employee Stock Warrant Issue and Subscription of the First time of 2011 .............................................................. 96

I.The Report to the Shareholders(I). Operation Condition of 2015

(1)Practice Result of Operation Plan

A.QunXang Factory, China: Monthly Production Capacity has reached 1,350,000 pcs/Month.B.JunXang Factor, China: Monthly Production Capacity has reached 950,000 pcs/Month.C.Guang-Yin Factory: Monthly Production Capacity has reached 500,000 pcs/Month.

Unit: TWD thousand dollars Category 2015Operating revenue 20,869,717 Gross profit from operations

5,064,330

Operating profit 3,249,150 Profit before tax 3,330,650 Profit after tax 2,392,187

(Note): Profit after tax: $2,948,000 combined with the net profit after taxes and the minor stock right in 2015.

(2)Budget Execution Condition:

The Company need not to disclose the financial forecast in 2015.

(3)Revenue and expenditure：Unit: TWD thousand dollarsCategory 2015Net cash flows from operating activities 3,574,639 Net cash flows used in investing activities 233,602 Net cash flows used in financing activities 1,562,378 Effect of exchange rate changes on cash and cash equivalents

-36,308

Net increase in cash 1,742,351

(4)Profitability Analysis：

Years

Item

Financial Information for these

2 years

2014 2015

Profitability

Return on assets (%) 10.11 14.08

Return On Equity(％) 20.44 26.78

In (%) of capital stock

Operating

profit 57.99 102.33

Earnings

before taxes58.17 2015.90

Profit margin (%) 8.16 11.46

Earnings Per Share(dollars) 4.91 7.55

1

(5) Research & Development Condition：It has developed successfully in 2015 as followings:(5)-1. High Reliable Environmental Protection Base Material for Automobile Electrics.(5)-2. New Type Ultra-Low Dielectric Application Environmental Protection Base

Material for High Frequency Communication(5)-3. New Type Ultra-Low Signal Lose. Base Material

Because the trend of the Global Green & Environmental Protection has added warmthcontinuously, the Ultra-Low Dielectric Mid Tg Environmental Protection Base Materialhas mass produced full-scally in 2015. The New Type Ultra-Low Dielectric ApplicationEnvironmental Protection Base Material has completed the development and expanded tosend the High-Level Communication samples to the great global terminal factories forcertification. The High-Frequency, High-Speed, and High-Coating application and theAutomobile Electric application Environmental Protection Base Material have completedthe certification and mass production in the end of customers. The target is to expand theglobal environmental protection material market occupied ratio with all of our strength,and to ensure the stable first position in the global environmental protection materialmarket.

(II)Operation Plans Profile of 2016：

(1)Management Guideline：(1)-1 Increase the Certification of the Automobile Base Material(1)-2 Search for the International Strategy Cooperation Partners.(1)-3 To Promote the High-Temperature Base Material Actively.(1)-4 To Culture the HDI Deeply.

(2)Expected sales：CCL(Sheet) PP(Roll) M/L(K PNL)

Guanyin factory

5,943,864 141,822

Kunshan factory

13,781,214 250,926

Zhongshan factory

8,700,161 184,001

Hsinchu factory

1,579

Total 28,425,239 576,749 1,579

(2)-1. Expected Total Sale Amount of CCL: 28,425,239 pcs/year Expected Total Sale Amount of PP: 576,749 rolls/year Expected Total Sale Amount of M/L: 1,579 KPNL /year

(2)-2. Important Production and Marketing Policy: (2)-2-(1) Production/Marketing balance, adjust the inventories elastically and loose the

operation capital. (2)-2-(2) To raise the defect-free rate to satisfy the demand of the customers (2)-2- 3) To increase the Environmental Protection Material sale to cope with the

regulations of the European Union.

(III) The Company development strategy and the effect of suffering the outer competitionenvironment, the regulation environment, and the entire management environment.

(1)The major development strategies of EMC in the future are as followings:(1)-1 To raise the ratio of Automobile Base Material sale(1)-2 To do customer service well and keep the relationship with the customers closely.(1)-3 To implement the inner control system and promote the management quality.

2

(1)-4 To harmony with the demand of the Cloud and develop the High-Frequency and High-Temperature Base Material.

(2)The effect of suffering the outer competition environment, the regulation environment, andthe entire management environment:

Prospecting to 2016, up on the gradual recovery after economic storm assault and thegrowth of the market demand in the world, the future economic development direction ofTaiwan will combine with the fast growth economic areas. The dealing ways of theCompany will be as followings:

(2)-1 To increase the market occupied ratio of the Halogens-Free Material and theAutomobile Base Material. Due to the future trend of Green & Environmental Protection, the cell phones and the consumer electric products will be entirely switched to Halogens-Free Material. The Company will be good at using the original superiority to increase the market occupied ratio of Halogens-Free Material and the Automobile Base Material.

(2)-2 To strengthen the customer service, to consolidate the present market, and to develop new customers actively.

(2)-3 To optimize the quality of result management and implement the self-exam system.

(2)-4 To increase the goods ship-out ratio of High-Frequency and High-Temperature Base Material.

Sincerely to thank all of the shareholders of cherish and support continuously.

With Fully Respect to Wish

Healthy and Best Wishes

Huy-Lian, Tsai, Chairman

3

II.Company Introduction(I) Established Date

Company Registration Date： March 24, 1992(1) Company Unified Business No.：86521351

Company Address： No.18, Ta-Tung 1st Rd., Guan-Yin Industrial District, Guan-YinDistrict, Tao-Yen CityCompany Telephone：(03)4837937

(2) Factory Established Permit：81Jian-Yi Tzu No.083375, Construction Tin, Province Government Issued on June 15, 1992Factory Address： No.18, Ta-Tung 1st Rd., Guan-Yin Industrial District, Guan-YinDistrict, Tao-Yen CityFactory Telephone：(03)4837937

(II) Company Variation and Development：

1992 The Company called for the first time Founder Meeting and passed the Joint Venture Agreement, the Company Rules and designated February 25th, 1992 as the deadline of Capital Stock Subscription.

The Company called for the second time Founder Meeting and voted for the Directors and Supervisors. The Company called for the First Degree, the first time meeting and elected Mr. Ho-Zen, Chu as the Chairman.

1993 The Provisional Shareholder Conference passed the Case of Capital Increase of $122,500,000. The amount of capital after capital increase was $430,000,000. The factory registration number is 99-079038-00 according to 82 Jian-Yi-Tze No.075808, Construction Tin, Taiwan Provience Government

The Provisional Shareholder Conference passed the Case ofvReelection for Directs and Supervisors, and voted 7 Directors and 2 Supervisors accordance with the Company Regulation No.22.

1995 To expand business and create larger profit, the Provisional Shareholder Conference passed the proposal of expanding factory building, purchasing machine and equipment, and proposed to conduct cash capital increase of $210,000,000. The amount of capital was $640,000,000 after capital increase. To lose the listed companies in OTC market and encourage the qualified companies, the Securities and Futures Commission certified the Company and asked to apply for the guidance operation of the listed company in OTC market in 1995.

The Board of Directors passed the amendment of Company Rules and switched the Supervisors from 2 to 3, and voted for the Third Degree Election of Directors, Supervisors, and Chairman.

1996 Business Result Launching Ceremony prior to Listed Company in OTC OTC Stock Go Public started date

4

The Board of Directors passed the Case of Expand Facilities on present owned lot site in 1997.

1997 The Company called for the First Time Shareholder Provisional Conference of 1997 and passed the followings: 1. Cash Capital Increase $70,000,000 Issued new Shares 7,000,000

shares $10 face value per share Premium issued $35 per share2. Applied for Listed Company instead of Listed Company in OTC in 1998

To develop the business opportunities and expand the scope of business,the Company proposed to engage in automatic reinvestment business indomestic and abroad market.

1998 The Stockholder Permanent Conference voted for the Fourth Degree Directors and Supervisors. The 4th Degree 1st time meeting of the Board of Director elected Mr. Ho-Zen, Chu as the Chairman again. Shares Go Public started date

2001 The Stockholder Permanent Conference voted for the Fifth Degree Directors and Supervisors. The 5th Degree 1st time meeting of the Board of Director elected Mr. Ho-Zen, Chu as the Chairman again.

2002 The Stockholder Permanent Conference passed the Case of $18,280,038 of Legal Surplus to make up the deficit of 2001.

2003 The Stockholder Permanent Conference passed the Case of $61,010,761 of Capital surplus and $56,449,987 of Legal Surplus to make up the deficit of 2002.

The Fifth Degree 18th meeting of Board of Directors stated Mr. Ho-Zen, Chu retired from the position of the Chairman and slated Ms. Mei-Chin, Dong-Her stepped as the position of the Chairman.

2004 The Shareholder Permanent Conference voted for the Sixth Degree Directors and Supervisors. The 6th Degree the 1st Board of Director Meeting elected Mr. Huy-Lian, Tsai as the Chairman and Mr. Ding-Yu, Dong as the Vice Chairman.

2005 Hsin-Chu Factory started to use and plunged into the production of Mass Lam.

2006 The 6th Degree 24th Board of Directors Meeting passed the Case of Organization Construct Rebuilding. The subsidiary companies of Grand Shianhai and EMC-HK that originally controlled by the EMC-Holding, and Grand ZhongShan switched the control to Grand ZhuHai

2007 The Shareholder Permanent Conference voted for the 7th Degree Directors

5

and Supervisors. The 7th Degree 1st Board of Director Meeting elected Mr. Huy-Lian, Tsai as the Chairman and Mr. Ding-Yu, Dong as the Vice Chairman.

The Earning Profit transfer to Capital Increase and the Convertible Bonds transfer to Common Share $274,997,960 The Contributed Capital after Capital Increase was $2,383,918,790

2008 The Treasury Shares decrease capital $23,180,000 The Contributed Capital after Decrease Capital was $2,369,331,320

The Earning Profit transfer to Capital Increase and the Convertible Bonds transfer to Common Share $214,708,230 The Contributed Capital after Capital Increase was $2,575,447,020

2009 The Treasury Shares decrease capital $28,880,000 The Contributed Capital after Decrease Capital was $2,546,567,020

The Earning Profit transfer to Capital Increase and Employee Subscription Share Right and the Convertible Bonds transfer to Common Share $135,116,740 The Contributed Capital after Capital Increase was $2,681,683,760

2010 The Shareholder Permanent Conference voted for the 8th Degree Directors and Supervisors. The 8th Degree 1st Board of Director Meeting elected Mr. Huy-Lian, Tsai as the Chairman and Mr. Ding-Yu, Dong as the Vice Chairman.

The Earning Profit transfer to Capital Increase and Employee Optional Share Right and the Convertible Bonds transfer to Common Share $163,450,840 The Contributed Capital after Capital Increase was $2,845,134,600

2011 The Earning Profit transfer to Capital Increase and Employee Optional Share Right and the Convertible Bonds transfer to Common Share $180,297,340 The Contributed Capital after Capital Increase was $3,025,431,940

2012 The Treasury Shares decrease capital $30,000,000 The Contributed Capital after Decrease Capital was $2,995,431,940 The Emplyee Subscription Share Right and the Convertible Bonds transfer to Common Share $68,492,650 The Contributed Capital after Capital Increase was $3,063,924,590

2013 The Shareholder Permanent Conference voted for the 9th Degree Directors and Supervisors. The 9th Degree 1st Board of Director Meeting elected Mr.

6

Huy-Lian, Tsai as the Chairman and Mr. Ding-Yu, Dong as the Vice Chairman.

2014 The Earning Profit transfer to Capital Increase and Employee Subscription Share Right and the Convertible Bonds transfer to Common Share $20,303,110 The Contributed Capital after Capital Increase was $3,136,011,400

2015 The Earning Profit transfer to Capital Increase and Employee Subscription Share Right and the Convertible Bonds transfer to Common Share $37,220,0000 The Contributed Capital after Capital Increase was $3,173,231,400

7

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ager

s, a

nd th

e C

hief

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icer

s of

the

Dep

artm

ents

and

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nche

s：

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rmat

ion

of

dir

ecto

rs,

sup

erv

iso

rs o

f th

e C

om

pan

y (

1)

2016

.4.1

5

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le

Nat

iona

lit

y /

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ce o

f In

corp

orat

ion

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e D

ate

of

taki

ng

offi

ce

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of

of

fice

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stly

ap

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tmen

t dat

e

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ding

of

shar

es a

t th

e ap

poin

tmen

t

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rent

sh

ares

hel

d

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ding

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shar

es

of s

pous

e an

d m

inor

chi

ldre

n

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ding

of

shar

es in

ot

her's

nam

eA

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mic

bac

kgro

und

and

expe

rien

ce

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er C

urre

nt P

osit

ions

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agin

g of

fice

rs,

dire

ctor

s or

su

perv

isor

s ar

e th

e 2n

d de

gree

re

lati

ves

Num

ber

of

shar

es

Pro

port

ion

of

shar

es

Num

ber

of

shar

es

Pro

port

ion

of

shar

es

Num

ber

of

shar

es

Pro

port

ion

of

shar

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mbe

r of

sh

ar es

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port

ion

of

shar

esT

itle

N

ame

Rel

atio

n

Cha

irm

an

RO

C

Rep

rese

ntat

ive

of

Yu

Cha

ng

Inve

stm

ent

Ltd

.：

Tsai

, H

ui-L

iang

102.

6.25

3y

ears

93.6

.25

25,4

61,4

77

1,52

6,24

4

8.19

0.49

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77

1,77

5,24

4

8.00

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0 0

0.00

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000

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Mas

ter

of

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mic

al

Eng

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ring

, N

atio

nal

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g

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er

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logy

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pora

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eria

l C

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.

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e

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e C

hair

man

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OC

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ong,

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g-yu

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25

3 ye

ars

90.5

.25

6,82

5,76

62.

205,

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766

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00

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tor

of

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ring

,

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ford

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vers

ity

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ista

nt P

rofe

ssor

, S

an J

ose

Stat

e U

nive

rsit

y

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eral

man

ager

of

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te

Mat

eria

l Co.

, Ltd

.

Dir

ecto

r R

OC

Rep

rese

ntat

ive

of

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Cha

ng

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stm

ent

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.：

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S

HU

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year

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tor

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he

form

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of

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h C

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ltan

ts, I

nc.

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ecto

r R

OC

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hen,

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-Shi

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tor

of

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istr

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d M

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logy

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sach

uset

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of

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orp

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nc.

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ther

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anag

er

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YA

L C

HE

F L

td.

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of

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max

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chem

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Co.

,

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.

11

Sup

ervi

sor

RO

C

S

hen,

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-Zhe

n 10

2.6.

25

3 ye

ars

90.5

.25

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60.

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0 0.

000

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tor

of

Law

, C

olum

bia

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ific

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vers

ity

Pro

fess

or

of

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tral

P

olic

e

Uni

vers

ity

Non

e

Sup

ervi

sor

RO

C

D

ong,

Fen

g-R

ong

102.

6.25

3

year

s 96

.6.2

50

0.00

00.

000

0.00

00.

00

Bac

helo

r of

L

aw,

Soo

chow

Uni

vers

ity

Cha

irm

an

of

Min

g Ta

i

Con

stru

ctio

n.C

o.,L

td

Vic

e ge

nera

l m

anag

er

of

Gua

ng D

a co

ncre

te L

td.

12

Table 1: Major Corporate Shareholder 2016.4.15

Corporate Shareholder Name Major Corporate Shareholder

Yu Chang Investment Ltd. Yu Sheng Investment Ltd.

Table 2：Table 1 Major Corporate Shareholder 2016.4.15

Corporate Name Major Corporate Shareholder

Yu Sheng Investment Ltd. DAITON PACIFIC LTD.

Information of directors, supervisors of the Company(2) 2016.4.15

Note 1: Please Check(“”) the Directors and Supervisors who copes with the following conditions within the elected first two years and the duty period on the blank under the condition signs. (1) Not the employee of the Company or the related corporations (2) Not the Directors or Supervisors of the Company. But not limited to the person who is the

Independent Director of the Company, parent Company, or the subsidiary Company that the Company hold the shares of right to vote more than 50%.

(3) Not the personal and spouse, minor children or on others’ name to hold more than 1% shares of the total issued Shares, or the natural person shareholder with top ten shares

(4) Not the spouse, the second degree relatives, or the direct descendant of the fifth degree of the above 3 conditions mentioned.

(5) Not the employee, director, or supervisor of the legal person shareholder who holds more than 5% of the Company issued Shares. Or the employee, director, or supervisor of the legal person shareholder who holds the top Five shares.

(6) Not the director, supervisor, manage officer, or the shareholder who holds more than 5% shares of the company or institute that deal with the Company in financial or business affairs.

(7) Not the professional expert or the owner, partner, director, supervisor, manage officer, or spouse of sole investor or joint venture that supply the service or consulting of commercial, legal affairs, financial affairs, or accounting to the Company.

(8) Without spouse or the second degree relative relationship between other directors (9) Without any conditions of the Clause 30 of the Company Act (10) Not against the Clause 27 of the Company Act to win the election by the title of

government, legal person, or their representative

Condition

Name

Personnel with more than 5 years experience and with the

following qualification Qualification for independence (Note1)

Part time independent directors of other company

University lecturer with Commercial, legal, accounting or other qualification

Judge, persecutor, lawyer, accountant, and other personnel with national qualification certificate

Commercial, legal, accounting or other qualification

1 2 3 4 5 6 7 8 9 10

Representative of Yu Chang Investment Ltd.：Tsai, Hui-Liang

V V V V -

Representative of Yu Chang Investment Ltd.：LI, SHU-JIU

V V V V V V V V -

Dong, Ding-yu V V V V V -

Shen, Yan-Shi V V V V V V V V V V V -

Xie, Meng-Zhang V V V V V V V V V V V -

Shen, Dao-Zhen V V V V V V V V V V V V -

Dong, Feng-Rong V V V V V V V V V V V V -

13

Det

aols

of

Gen

eral

man

ager

,Vic

e g

ener

al m

anag

er,A

ssis

tan

t V

ice

Pre

sid

ent,

and

oth

er B

ran

ch C

hie

f 20

16.4

.15

Titl

e N

atio

nalit

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ame

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and

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hers

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port

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ame

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ati

on

CE

OR

OC

Ts

ai,

Hui

-Lia

ng

93.2

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1,77

5,24

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56%

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00%

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e

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ter

of C

hem

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Eng

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, Nat

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l T

sing

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eral

man

ager

of

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wan

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on

Tec

hnol

ogy

Cor

pora

tion

Non

e

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e

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eral

m

anag

er

RO

C

Don

g,

Din

g-yu

97.1

0.1

5,26

5,76

61.

65%

15,8

420.

00%

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e

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tor

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C

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220.

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ache

lor

of A

pplie

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nal

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ng K

ung

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Fac

tory

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, Ltd

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l m

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RO

C

Zha

ng,

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helo

r of

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nd B

anki

ng, N

atio

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Che

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ter

of T

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e M

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ater

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cien

ce,

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iona

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aiw

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OC

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ter,

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e M

aste

r of

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mic

al E

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ng,

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vers

ity

of M

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te E

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r, S

up

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ance

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pa

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sion

in 2

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17

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)

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I, S

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pens

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mpl

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us 2015

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e S

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on a

mou

nt

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in n

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t an

d n

et p

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t af

ter

tax

rat

io (

％)

Incr

ease

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se )

rat

io

2015

2014

The

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ompa

ny

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pani

es in

the

cons

olid

ated

st

atem

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ompa

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the

cons

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ated

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tem

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ecto

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dep

ende

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e po

licy

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ble

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ess

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isk:

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the

assi

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ent

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he C

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egul

atio

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d fo

r th

e G

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anag

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Gen

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ard

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ce w

ith

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Com

pany

reg

ulat

ions

..

23

(III) The Company Administer and Operation Conditions 1. The Operation Conditions of Board of Directors

The presentation of director and supervisor in the Board for the latest 6 time:

Title Name Actual Attendance(Times)Ｂ

By proxy(Times)

Actual Attendance Rate(%)【Ｂ/Ａ】 Note

Chairman Representative of Yu Chang Investment Ltd.: Tsai, Hui-Liang

6 - 100%

Director Representative of Yu Chang Investment Ltd.:LI, SHU-JIU

6 - 100%

ViceChairman

Dong, Ding-yu 6 - 100%

Director Shen, Yan-Shi 6 - 100% Director Xie, Meng-Zhang 4 2 67% Supervisor Shen, Dao-Zhen 6 - 100% Supervisor Dong, Feng-Rong 6 - 100% Other required recorded tiems: 1. The mentioned items in Clause 14-3 of the Securities Transaction Act and other opposed or

reserved opinions of the Independent Director with record or in written statement that theBoard of Directors had resolved: NIL

2. The execution condition of director duck to the stake issues : There is no director duck to thestake condition.

3. The target to strengthen the professional ability of the Board of Directors in the present andrecent years and the estimate of execution condition. Such as to settle the audit committeeand raise the information transparency.: NIL

24

2. The operation condition of the Audit Committee: The Company will settle the AuditCommittee in 2016.Supervisor participating Operation of the Board: The presentation status for the latest 6times:

Title Name Actual Attendance(Times)(Ｂ)

Actual Attendance Rate(%)(Ｂ/Ａ)

Note

Supervisor

Shen,Dao-Zhen

6 100%

Supervisor

Dong,Feng-Rong

6 100%

Other required recorded items: 1. The assemble and responsibilities of Supervisors: (1)The communication situation between the Supervisors and the employee and the shareholders: The Supervisors consider that it needs to communicate and dialogue to the employee and shareholders directly if it is necessary (2)The communication condition between the Supervisors and the chief officers of inner audit and accountant： (2)-1 The chief audit officers reported the audit report to the Supervisors in the next month after completing the audit items. The Supervisors had no opposed opinion. (2)-2 The chief officer presented to the regular scheduled Board of Directors and reported the audit affairs. The Supervisors had no opposed opinion. (2)-3 The Supervisors communicated with the accountant for the financial conditions face-to-face or in written form irregularly. 2.If the Supervisors show up to the Board of Directors and state opinion, he or she shouldinterpret clearly the date of Board of Directors, the degree, the content of the issue, the resolution result of the Board of Directors, the measurement of the Company to the opinion of the Supervisors: NIL.

25

3.T

he C

ompa

ny A

dmin

iste

r O

pera

tion

Con

diti

on a

nd t

he D

iffe

renc

e an

d C

ause

s C

ondi

tion

wit

h th

e A

dmin

iste

r G

uide

line

s of

Lis

ted

Com

pany

/Lis

ted

Com

pany

in O

TC

Est

imat

e It

ems

Ope

rati

on C

ondi

tion

th

e D

iffe

renc

e an

d C

ause

s C

ondi

tion

wit

h th

e A

dmin

iste

r G

uide

line

s of

L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

O

TC

Yes

No

Sum

mar

y &

Des

crip

tion

Whe

ther

th

e C

ompa

ny

desi

gnat

edan

d di

sclo

se

the

Com

pany

A

dmin

iste

r G

uide

line

ac

cord

ance

w

ith

the

Lis

ted

Com

pany

/Lis

ted

Com

pany

in O

TC

?

VT

he C

ompa

ny h

ad n

ot d

esig

nate

d th

e C

ompa

ny A

dmin

iste

r G

uide

line

Sam

e as

the

Lef

t de

scri

ptio

n

The

C

ompa

ny

shar

e co

nstr

uctu

re

and

the

righ

ts

and

bene

fit

of

the

shar

ehol

der

(1) W

heth

er

the

Com

pany

de

sign

ated

the

inne

r op

erat

ion

proc

ess

to d

eal

with

th

e st

ockh

olde

r su

gges

tion,

doub

t, di

sput

e an

d lit

igat

ion

affa

irs,

and

exec

uted

ac

cord

ance

w

ith

the

proc

edur

e or

not

?

V

The

Com

pany

has

set

tled

the

stoc

k af

fair

s an

d th

e ag

ent

of s

tock

aff

air

to d

eal

with

the

su

gges

tion

and

disp

ute

of th

e sh

areh

olde

r. N

o si

gnif

ican

t di

ffer

ence

(2) W

heth

er

the

Com

pany

ha

ndle

th

ena

me

list

of

the

maj

or s

hare

hold

eran

d th

e fi

nal

cont

rolle

r of

th

esh

areh

olde

r w

ho

cont

rolle

d th

eC

ompa

ny d

efin

itely

or

not ?

VT

he C

ompa

ny c

ontin

uous

ly h

andl

ed t

he h

oldi

ng s

hare

inf

orm

atio

n of

the

Dir

ecto

rs,

man

age

offi

cer,

and

the

maj

or s

hare

hold

er w

ho h

old

mor

e th

an 1

0% s

hare

s of

the

C

ompa

ny a

nd c

laim

the

sit

uatio

n ac

cord

ance

with

the

reg

ulat

ion

of t

he S

ecur

ities

T

rans

actio

n A

ct m

onth

ly.

No

sign

ific

ant

diff

eren

ce

(3) W

heth

er t

he C

ompa

ny b

uild

up

and

exec

uted

th

e ri

sk

cont

rol

and

man

agem

ent

and

the

fire

wal

l w

ithth

e re

late

d co

rpor

atio

n or

no t

?

VT

he C

ompa

ny h

ad s

ettle

d th

e tr

eatm

ent

proc

ess

of o

btai

ning

or

mea

suri

ng p

rope

rty,

the

op

erat

ion

proc

ess

of c

apita

l lo

an t

o ot

hers

, an

d th

e op

erat

ion

proc

ess

of e

ndor

sem

ent

guar

ante

e an

d bu

ilt u

p th

e ri

sk c

ontr

ol a

nd f

ire

wal

l pro

perl

y.

No

sign

ific

ant

diff

eren

ce

(4) W

heth

er

the

Com

pany

de

sign

ated

the

inne

r re

gula

tion

to p

rohi

bit

the

inne

r pe

rson

nel

agai

nst

buyi

ng

orse

lling

neg

otia

ble

secu

ritie

s by

us i

ngth

e no

n-di

sclo

sed

info

rmat

ion

in t

h em

arke

t or

not ?

VTo

cou

nter

aga

inst

the

ins

ider

tra

ding

and

tre

atm

ent

proc

ess

of i

mpo

rtan

t in

form

atio

n,

the

Com

pany

had

set

tled

the

man

agem

ent

oper

atio

n to

aga

inst

ins

ider

tra

ding

and

the

op

erat

ion

proc

ess

of i

nner

inf

orm

atio

n tr

eatm

ent.

The

Com

pany

wil

l do

sel

f-es

tim

ate

and

the

audi

t roo

m d

o th

e re

gula

r au

ditin

g an

nual

ly..

No

sign

ific

ant

diff

eren

ce

26

Est

imat

e It

ems

Ope

rati

on C

ondi

tion

th

e D

iffe

renc

e an

d C

ause

s C

ondi

tion

wit

h th

e A

dmin

iste

r G

uide

line

s of

L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

O

TC

Yes

No

Sum

mar

y &

Des

crip

tion

Ass

embl

e an

d re

spon

sibi

lity

of

the

Boa

rd

of

Dir

ecto

r

(1) W

heth

er

the

Boa

rd

of

Dir

ecto

rspr

opos

ed

the

dive

rsif

icat

ion

guid

elin

es c

oped

with

the

mem

bers

and

allo

cate

the

exec

utio

n?

VT

he m

embe

rs o

f th

e C

ompa

ny B

oard

of

Dir

ecto

rs i

s di

vers

ifie

d an

d ow

ned

vari

ous

prof

essi

on b

ackg

roun

d an

d w

orki

ng f

ield

. It

mig

ht s

turd

y th

e st

ruct

ure

of th

e C

ompa

ny

Boa

rd o

f D

irec

tors

.

No

sign

ific

ant

diff

eren

ce

(2) W

heth

er

the

Com

pany

se

ttle

d th

esa

lary

an

d re

war

d co

mm

itte

e an

dau

dit c

omm

itte

e ac

cord

ance

wit

h th

ere

gula

tions

an

d w

ill

settl

e ot

her

v ari

ous

func

tiona

l co

mm

ittee

w

ithth

eir

wil

l or

not?

VT

he C

ompa

ny h

ad n

ot s

ettle

d ot

her

vari

ous

func

tiona

l com

mit

tees

. S

ame

as th

e L

eft

desc

ript

ion

(3) W

heth

er

the

Com

pany

de

sign

ated

the

esti

mat

ed

mea

sure

men

t an

des

tim

ate

met

hod

for

the

resu

lt of

the

Boa

rd

of

Dir

ecto

rs

and

proc

esse

dth

e re

sult

estim

ate

or n

ot?

VT

he r

esul

t es

timat

e of

the

dir

ecto

r an

d m

anag

e of

fice

r an

d th

e po

licy,

reg

ulat

ion,

st

anda

rd, a

nd s

truc

ture

of

sala

ry a

nd r

ewar

d is

dra

wn

up a

nd r

egul

arly

rev

iew

ed b

y th

e C

ompa

ny R

ewar

d an

d S

alar

y C

omm

itte

e. T

he R

ewar

d an

d S

alar

y C

omm

itte

e w

ill s

end

the

sugg

estio

n to

the

Boa

rd o

f D

irec

tors

for

dis

cuss

ion.

No

sign

ific

ant

diff

eren

ce

(4) W

heth

er t

he C

ompa

ny e

stim

ated

the

inde

pend

ence

of

th

e ce

rtif

ied

acco

unta

nt r

egul

arly

or

not?

VT

he C

ompa

ny c

erti

fied

acc

ount

ants

are

fro

m t

he l

arge

sca

le a

ccou

ntan

t fi

rm.

To c

ope

with

the

requ

irem

ent

of i

ndep

ende

nce,

the

Com

pany

cha

nged

the

acco

unta

nt e

very

fiv

e ye

ars.

No

sign

ific

ant

diff

eren

ce

Whe

ther

the

Com

pany

bui

lt up

the

com

mun

icat

ion

tunn

el

with

the

sta

keho

lder

s an

d se

ttled

the

spe

cial

are

a of

the

st

akeh

olde

r on

th

e C

ompa

ny

web

site

, an

d re

spon

sed

prop

erly

th

e is

sue

of

the

soci

al

resp

onsi

bilit

y of

an

im

port

ant i

ndus

try

that

the

stak

ehol

der

conc

erne

d or

not

?

VT

he C

ompa

ny w

ill c

harg

e th

e sp

okes

man

, th

e ac

ting

spok

esm

an,

the

stoc

k af

fair

s, a

nd

spec

ial

assi

gned

per

son

wit

h a

task

to

com

mun

icat

e w

ith

the

stak

ehol

der

in d

iffe

rent

co

nditi

ons

and

settl

e th

e co

ntac

t in

form

atio

n of

the

Com

pany

spo

kesm

an a

nd a

ctin

g sp

okes

man

on

the

Com

pany

Web

site

.

No

sign

ific

ant

diff

eren

ce

Whe

ther

th

e C

ompa

ny

com

mis

sion

ed

the

prof

essi

onal

in

stitu

te

of

stoc

k af

fair

ag

ent

to

cond

uct

for

the

shar

ehol

der

conf

eren

ce o

r no

t?

VT

he C

ompa

ny c

omm

issi

on t

he Y

a-D

on S

ecur

ities

Co.

, Ltd

as

the

agen

t of

dea

ling

with

th

e af

fair

s of

sha

reho

lder

s.

No

sign

ific

ant

diff

eren

ce

27

Est

imat

e It

ems

Ope

rati

on C

ondi

tion

th

e D

iffe

renc

e an

d C

ause

s C

ondi

tion

wit

h th

e A

dmin

iste

r G

uide

line

s of

L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

O

TC

Yes

No

Sum

mar

y &

Des

crip

tion

Info

rmat

ion

Ope

n to

the

Pub

lic

(1)W

heth

er t

he C

ompa

ny h

a d s

ettle

dth

e w

ebsi

te t

o di

sclo

se t

he f

inan

c ial

and

adm

inis

ter

affa

irs

or n

ot?

VT

he C

ompa

ny h

ad s

ettle

d th

e C

ompa

ny w

ebsi

te a

nd d

iscl

osed

the

fin

anci

al a

nd r

elat

ed

busi

ness

inf

orm

atio

n. I

t m

ight

be

inqu

ired

the

fin

anci

al, b

usin

ess,

and

adm

inis

ter

affa

irs

of th

e C

ompa

ny th

roug

h th

e in

form

atio

n op

erat

ion

stat

ion

that

is o

pene

d to

the

publ

ic.

No

sign

ific

ant

diff

eren

ce

(2)W

heth

er th

e C

ompa

ny a

dopt

ed o

ther

way

s to

di

sclo

se

the

info

rmat

ion.

Suc

h as

to s

ettle

the

Eng

lish

web

site

,to

ass

ign

the

spec

ial

assi

gned

per

s on

to

take

ch

arge

th

e co

llect

ion

and

disc

losu

re

of

the

Com

pany

info

rmat

ion,

to

al

loca

te

the

spok

esm

an s

yste

m,

and

to p

ost

the

proc

edur

e of

the

inv

esto

r co

nfer

ence

on th

e C

ompa

ny w

ebsi

te, e

tc.

VT

he C

ompa

ny h

ad a

ssig

ned

the

spec

ial

assi

gned

per

son

to t

ake

char

ge o

f th

e ta

sk o

f th

e op

en i

nfor

mat

ion

obse

rvat

ion

stat

ion

of e

xcha

nge

hous

e an

d th

e di

sclo

sure

of

the

Com

pany

web

site

info

rmat

ion,

and

allo

cate

d th

e sy

stem

of

the

Com

pany

spo

kesm

an.

No

sign

ific

ant

diff

eren

ce

Whe

ther

the

Com

pany

ow

ned

the

impo

rtan

t in

form

atio

n th

at

is h

elpf

ul to

re

aliz

e th

e C

ompa

ny

adm

inis

ter

oper

atio

n co

nditi

on

Incl

uded

but

not

li

mite

d to

the

empl

oyee

co

ncer

ning

, the

The

ri

ghts

of

th

e em

ploy

ee

T

he

conc

erni

ng o

f th

e em

ploy

ee

VT

he C

ompa

ny p

rote

ct t

he e

mpl

oyee

leg

al r

ight

s an

d be

nefi

t ac

cord

ance

wit

h th

e L

abor

B

asic

Cod

e an

d bu

ild m

utua

l co

nfid

entia

l an

d re

liabl

e re

latio

nshi

p w

ith t

he e

mpl

oyee

th

roug

hth

e w

elfa

re s

yste

m a

nd g

ood

educ

atio

n tr

aini

ng s

yste

m.

No

sign

ific

ant

diff

eren

ce

The

rel

atio

nshi

p of

the

inv

esto

rs

The

re

latio

nshi

p of

the

supp

liers

T

he r

ight

s of

the

stak

ehol

ders

VT

he C

ompa

ny s

ettle

ssp

okes

man

and

act

ing

spok

esm

an. I

t is

the

tunn

el to

ann

ounc

e th

e op

inio

n or

res

pons

e th

e qu

estio

n to

the

inve

stor

N

o si

gnif

ican

t di

ffer

ence

The

con

ditio

n of

buy

ing

liabi

lity

insu

ranc

e of

the

Dir

ecto

rs a

nd th

e S

uper

viso

rs

VT

he C

ompa

ny h

ad b

ough

t lia

bilit

y in

sura

nce

for

the

Dir

ecto

r, S

uper

viso

r,an

d M

anag

e O

ffic

er a

nd e

stim

ated

the

cred

it o

f in

sure

d re

gula

rly

and

annu

ally

. N

o si

gnif

ican

t di

ffer

ence

The

exe

cutio

n co

nditi

on o

f th

e ri

sk

man

agem

ent p

olic

y an

d th

e st

anda

rd o

f ri

sk e

valu

atio

n

VTo

dra

w u

p th

e va

riou

s in

ner

regu

latio

ns a

ccor

danc

e w

ith t

he L

aw a

nd R

egul

atio

ns. T

o pr

oces

s th

e ri

sk m

anag

emen

t and

est

imat

e.

To c

ount

er a

gain

st t

he i

nsid

er t

radi

ng a

nd t

reat

men

t pr

oces

s of

im

port

ant

info

rmat

ion,

th

e C

ompa

ny h

ad s

ettle

d th

e m

anag

emen

t op

erat

ion

to a

gain

st i

nsid

er t

radi

ng a

nd t

he

oper

atio

n pr

oces

s of

inn

er i

nfor

mat

ion

trea

tmen

t. T

he C

ompa

ny w

ill

do s

elf-

esti

mat

e an

d th

e au

dit r

oom

do

the

regu

lar

audi

ting

annu

ally

.

No

sign

ific

ant

diff

eren

ce

The

exe

cutio

n co

nditi

on o

f th

e cu

stom

er

polic

y V

The

Com

pany

sho

uld

mai

ntai

n st

able

and

goo

d re

latio

nshi

p w

ith t

he c

usto

mer

s, r

ealiz

e th

e de

man

d of

the

cus

tom

ers,

aud

it an

d im

prov

e th

e pr

oduc

ts q

ualit

y co

ntin

uous

ly,

and

ensu

re to

sat

isfy

the

cust

omer

dem

and.

No

sign

ific

ant

diff

eren

ce

28

Est

imat

e It

ems

Ope

rati

on C

ondi

tion

th

e D

iffe

renc

e an

d C

ause

s C

ondi

tion

wit

h th

e A

dmin

iste

r G

uide

line

s of

L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

O

TC

Yes

No

Sum

mar

y &

Des

crip

tion

inve

stor

re

lati

onsh

ip, t

he

supp

lier

re

lati

onsh

ip, t

he

righ

t of

stak

ehol

der,

the

cond

ition

of

adva

nced

ed

ucat

ion

of th

e D

irec

tor

and

Sup

ervi

sor,

the

exec

utio

n co

nditi

on o

f th

e ri

sk

man

agem

ent

polic

y an

d

The

Con

ditio

n of

Adv

ance

d E

duca

tion

ofth

e D

irec

tors

and

the

Sup

ervi

sors

in 2

015

V

Job

Tit

le

Nam

e E

duca

ted

Dat

e H

ost U

nit

Cla

sses

E

duca

ted

Hou

rs

Dir

ecto

r D

ing-

Yu,

D

ong

2015

.10.

20

Tai

wan

Cor

pora

te

Gov

erna

nce

Ass

ocia

tion

To v

iew

the

oute

r au

dit a

nd in

ner

cont

rol f

rom

the

angl

e of

the

Dir

ecto

rs a

nd

Sup

ervi

sors

3

2015

.12.

17

Chi

nese

Sec

urit

ies

and

Fut

ures

M

arke

t D

evel

opm

ent

Fou

ndat

ion

Pra

ctic

al C

ase

Stud

y an

d A

naly

sis

of

brin

ging

the

Dir

ecto

r an

d S

uper

viso

r D

islo

yalt

y an

d S

peci

al D

islo

yalt

y

3

Dir

ect

or

Men

g-Ja

n,

Hsi

eh

2015

.08.

12

Taiw

an C

orpo

rate

G

over

nanc

e A

ssoc

iati

on

Wou

ld th

e D

irec

tors

an

d S

uper

viso

rs o

ut

of c

omm

itti

ng a

cr

ime

not b

e cl

aim

ed

for

com

pens

atio

n?

Set

the

fina

ncia

l re

port

as

the

cent

er

poin

t. T

he

Com

pens

atio

n C

laim

Cas

es

anal

ysis

of

Inve

stor

s P

rote

ctio

n In

stit

ute

to th

e C

ompa

ny

Dir

ecto

rs a

nd

Sup

ervi

sors

3

104.

11.1

1 Ta

iwan

Cor

pora

te

Gov

erna

nce

Ass

ocia

tion

Thi

rd-P

arty

Pay

men

t S

uper

visi

ng

Phi

loso

phy

and

Reg

ulat

ion

Sug

gest

ion

3

No

sign

ific

ant

diff

eren

ce

29

Est

imat

e It

ems

Ope

rati

on C

ondi

tion

th

e D

iffe

renc

e an

d C

ause

s C

ondi

tion

wit

h th

e A

dmin

iste

r G

uide

line

s of

L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

O

TC

Yes

No

Sum

mar

y &

Des

crip

tion

Whe

ther

the

Com

pany

wit

h th

e ad

min

iste

r se

lf-e

stim

ate

repo

rt o

r w

ith

othe

r co

mm

issi

oned

pr

ofes

sion

al in

stit

ute

to is

sue

the

adm

inis

ter

eval

uate

d re

port

or

not?

If

yes,

ple

ase

inte

rpre

tate

cl

earl

y th

e op

inio

n of

the

Boa

rd o

f D

irec

tor,

the

resu

lt

of s

elf-

esti

mat

e or

com

mis

sion

ed e

valu

atio

n, th

e m

ajor

fau

lt, t

he s

ugge

stio

n, a

nd th

e im

prov

emen

t co

ndit

ion.

VT

he C

ompa

ny s

till

had

no

self

-est

imat

e re

port

S

ame

as

the

Lef

t de

scri

ptio

n

30

4. (1) The Information of the Members of the Salary and Reward Committee

Identific

ation

(Note1)

Name

Conditio

n

Whether owned 5-year and up

working experience and the below

professional qualification or not?

The Condition Cope with Independence(Note2) The

number of

Serving as a

member concurrently in

the salary and

reward committ

ee of other public issue

company

Note

Instructor or above in public or private college of commerce, legal affairs, financial affairs, accounting, or the demand of the Company business

Judge, prosecutor, lawyer, accountant or other professional person and technician who passed the state examination and hold the certificate and with the business demand of the Company

With the working experience of commerce, legal affairs, financial affairs, accounting, or the demand of the Company business

1 2 3 4 5 6 7 8

other Wang, Jing-Yi

V V V V V V V V V V -

other You, Sheng-Fu

V V V V V V V V V V -

other Lin, Han

V V V V V V V V V V -

(Note 1): Please fill in Director, Independent Director, or other in the column of Identification (Note 2): Please Check(“”) the Directors and Supervisors who copes with the following conditions within the

elected first two year and the duty period on the blank under the condition signs. (1) Not the employee of the Company or the related corporations (2) Not the Directors or Supervisors of the Company. But not limited to the person who is the Independent

Directors of the Company, parent Company, or the subsidiary Company that the Company hold the shares of right to vote more than 50%.

(3) Not the personal and spouse, minor children or on others’ name to hold more than 1% shares of the total issued Shares, or the natural person shareholder with top ten shares

(4) Not the spouse, the second degree relatives, or the direct descendant of the fifth degree of the above 3 conditions mentioned.

(5) Not the employee, director, or supervisor of the legal person shareholder who holds more than 5% of the Company issued Shares. Or the employee, director, or supervisor of the legal person shareholder who holds the top Five shares.

(6) Not the director, supervisor, manage officer, or the shareholder who holds more than 5% shares of the company or institute that deal with the Company in financial or business affairs.

(7) Not the professional expert or the owner, partner, director, supervisor, manage officer, or spouse of sole investor or joint venture that supply the service or consulting of commercial, legal affairs, financial affairs, or accounting to the Company.

(8) Without any conditions of the Clause 30 of the Company Act (Note 3): If the identification of the member is Director, please explain clearly whether cope with the regulation of

the Settlement and Execution Position Rule of the Salary Committee of the Listed Company or the Clause 6-5 of the Securities Company Operation Act

31

(2) The Information of Operation Condition of the Salary and Reward Committee

1. The number of the committee member of the Company Salary and Reward Committee is 3.2. Assigned Period of the committee member: From August 9th, 2013 to June 24th, 2016. The

salary and reward committee called for 2 meetings in the latest year.The qualification of the committee members and the presentation condition is as followings.

Title Name Actual

Attendance(Times)(Ｂ) By proxy(Times) Actual Attendance Rate

(%) (Ｂ/Ａ)

Note

Convener Wang, Jing-Yi 2 - 100 Committee

member You,

Sheng-Fu 2 - 100

Committee member

Lin, Han 2 - 100

Other required recorded items: NIL 1. If the Board of Directors DO NOT adopt or verify the suggestion of the Salary and Reward Committee, the Board of

Directors has to interpretate clearly the date, the degree, the content of the issue, the resolution result of the Board of Directors, and the measurement of the Company to the opinion of the Salary and Reward Committee.

2. If the member of the Salary and Reward Committee had any opposed or reserved opinion to the resolution of the committeeand with record or written statement, he or she has to interpretate clearly the date, the degree, the content of the issue, all of the opinions of the members, and the treatment to all of the opinions of the members.

32

5.P

erfo

rman

ce o

f S

ocia

l Res

pon

sib

ilit

y

Est

imat

e It

ems

Ope

rati

on C

ondi

tion

T

he d

iffe

renc

e an

d ca

use

wit

h th

e L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

OT

C

Cor

pora

tion

Soc

ial

Res

pons

ibil

ity

P

ract

ical

Gui

deli

nes

Yes

No

Sum

mar

y &

Des

crip

tion

Impl

emen

t th

e C

ompa

ny

Adm

inis

ter

(1) W

heth

er

the

Com

pany

de

sign

ated

th

e po

licy

or

re

gula

tion

of

so

cial

re

spon

sibi

lity

and

rev

iew

ed

the

resu

lt?

V

Eve

n th

ough

the

Com

pany

had

not

des

igna

ted

the

corp

orat

ion

soci

al r

espo

nsib

ility

pol

icy,

th

e C

ompa

ny s

till

wil

l co

nduc

t th

e co

rpor

atio

n so

cial

res

pons

ibil

ity

cont

inuo

usly

and

wil

l dr

aw u

p th

e re

late

d po

licy

in th

e fu

ture

.

It d

epen

ds o

n th

e pr

acti

cal o

pera

tion

to

dra

w u

p in

the

futu

re

(2) W

heth

er t

he C

ompa

ny h

eld

the

soci

al

resp

onsi

bili

ty

educ

atio

n tr

aini

ngre

gula

rly?

V

The

rel

ated

sec

tion

s th

at t

ook

char

ge o

f th

e so

cial

res

pons

ibil

ity c

ondu

ct t

he r

elat

ed a

ffai

rs

acco

rdan

ce to

thei

r du

ties

.

No

Sig

nifi

cant

D

iffe

renc

e

(3) W

heth

er

the

Com

pany

se

ttle

d th

e sp

ecia

l un

it

of

prom

otin

g co

rpor

atio

n so

cial

re

spon

sibi

lity

an

d de

al

by

the

high

le

vel

man

ager

w

ho

was

au

thor

ized

by

the

Boa

rd o

f D

irec

tor,

and

repo

rted

th

e m

easu

rem

ent

to t

he B

oard

of

Dir

ecto

rs o

r no

t?

V

The

Com

pany

had

not

set

tled

the

spe

cial

or

conc

urre

nt u

nit

to p

rom

ote

the

corp

orat

ion

soci

al r

espo

nsib

ility

. It

dep

ends

on

the

prac

tica

l ope

rati

on

to s

ettl

e in

the

futu

re

(4) W

heth

er

the

Com

pany

im

plem

ente

d re

ason

able

sa

lary

and

rew

ard

poli

cies

, co

mbi

ned

the

empl

oyee

as

sess

sys

tem

of

resu

lt w

ith

the

soci

al

resp

onsi

bili

ty

poli

cy,

and

sett

led

expl

icit

an

d ef

fect

ive

rew

ard

and

puni

shm

ent r

egul

atio

ns?

V

The

Com

pany

app

rais

ed a

nd d

ecid

ed th

e em

ploy

ee s

alar

y by

the

educ

atio

n ba

ckgr

ound

and

w

orki

ng

expe

rien

ce,

prof

essi

onal

kn

owle

dge

and

tech

nolo

gy,

prof

essi

onal

w

orki

ng

expe

rien

ce, a

nd p

erso

nal p

erfo

rman

ce r

esul

t. T

he e

mpl

oyee

ass

ess

syst

em w

ill f

ollo

w th

e re

war

d an

d pu

nish

men

t reg

ulat

ion

of th

e C

ompa

ny P

erso

nnel

Man

agem

ent R

egul

atio

n.

No

Sig

nifi

cant

D

iffe

renc

e

33

Est

imat

e It

ems

Ope

rati

on C

ondi

tion

T

he d

iffe

renc

e an

d ca

use

wit

h th

e L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

OT

C

Cor

pora

tion

Soc

ial

Res

pons

ibil

ity

P

ract

ical

Gui

deli

nes

Yes

No

Sum

mar

y &

Des

crip

tion

Dev

elop

su

stai

nabl

e en

viro

nmen

t

(1) W

heth

er

the

Com

pany

de

vote

d to

pr

omot

e th

eef

fici

ency

us

ing

of

the

reso

urce

, an

d ut

iliz

ed

the

recy

cle

mat

eria

l th

at

was

low

er

impa

ct

to

the

envi

ronm

ent

nega

tive

bu

rden

?

V

The

Com

pany

is a

pro

fess

iona

l cor

pora

tion

to p

rodu

ce b

onde

d fl

at a

nd C

CL

. The

Com

pany

ha

s de

vote

d to

pro

mot

e th

e pr

oduc

t en

viro

nmen

t, pu

rsue

d th

e ev

er-l

asti

ng m

anag

emen

t co

rpor

atio

n, a

nd p

asse

d th

e IS

O 1

4000

cer

tifi

cati

on s

ince

the

Com

pany

fou

nded

. T

he

Com

pany

bu

sine

ss

haza

rdou

s w

aste

w

as

clas

sifi

ed

syst

em

and

stor

ed

care

full

y,

and

com

mis

sion

ed th

e E

PA c

erti

fied

was

te tr

eatm

ent i

nsti

tute

to c

lean

aw

ay.

No

Sig

nifi

cant

D

iffe

renc

e

(2) W

heth

er t

he C

ompa

ny b

uilt

up

mod

erat

e en

viro

nmen

tm

anag

emen

t sy

stem

ac

cord

ance

w

ith

the

indu

stri

al s

peci

alty

or

not?

V

The

Com

pany

set

tled

the

spe

cial

ass

igne

d pe

rson

to

take

cha

rge

of t

reat

men

t of

air

po

llut

ion

prot

ecti

on, w

ater

con

tam

inat

ion

prot

ecti

on, a

nd w

aste

cle

an a

way

. N

o S

igni

fica

nt

Dif

fere

nce

(3) W

heth

er

the

Com

pany

co

ncer

ned

the

effe

ct

ofcl

imat

e ch

ange

to

th

e op

erat

ion

acti

viti

es,

and

exec

uted

the

int

erro

gate

and

ex

amin

e of

gr

eenh

ouse

ga

ses

and

sett

led

the

stra

tegy

of

cons

erve

ene

rgy

and

redu

ce

carb

on

and

gree

nhou

se g

ases

em

issi

on?

V

Eve

n th

ough

the

Com

pany

had

not

des

igna

ted

any

stra

tegy

of

cons

erve

ene

rgy

and

redu

ce

carb

on a

nd g

reen

hous

e ga

ses,

the

Com

pany

fol

low

ed t

he C

ompa

ny r

egul

ated

env

iron

men

t po

licy

of

the

cont

amin

atio

n pr

otec

tion

and

red

uce

was

te, c

ompl

ianc

e to

the

reg

ulat

ion

and

allo

cate

the

env

iron

men

t pr

otec

tion

, an

d im

prov

e co

ntin

uous

ly t

o co

nduc

t th

e ph

ilos

ophy

of

env

iron

men

t pro

tect

ion

and

redu

ce th

e da

mag

e of

eco

syst

em.

No

Sig

nifi

cant

D

iffe

renc

e

34

Est

imat

e It

ems

Ope

rati

on C

ondi

tion

T

he d

iffe

renc

e an

d ca

use

wit

h th

e L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

OT

C

Cor

pora

tion

Soc

ial

Res

pons

ibil

ity

P

ract

ical

Gui

deli

nes

Yes

No

Sum

mar

y &

Des

crip

tion

Mai

ntai

n so

cial

pu

blic

w

elfa

re

(1) W

heth

er

the

Com

pany

se

ttle

d re

late

d m

anag

emen

tpo

lic y

an

d pr

oces

sac

cord

ance

wit

h th

e re

late

dre

gula

tion

s an

d th

ein

tern

atio

nal

hum

an

righ

ttr

eatm

ent?

V

The

C

ompa

ny

sett

led

the

wor

king

an

d re

late

d pe

rson

nel

man

agem

ent

regu

lati

ons

acco

rdan

ce w

ith

the

labo

r w

orki

ng r

egul

atio

ns a

nd l

aws

to p

rote

ct t

he r

ight

and

ben

efit

of

the

empl

oyee

, an

d ca

lled

for

the

labo

r an

d ca

pita

l mee

ting

to p

rom

ote

the

labo

r an

d ca

pita

l ha

rmon

y an

d cr

eate

the

mut

ual w

in-w

in p

ersp

ecti

ve.

No

Sig

nifi

cant

D

iffe

renc

e

(2) W

heth

er t

he C

ompa

ny b

uilt

up

the

empl

oyee

ap

peal

mec

hani

sm a

nd t

unne

l an

dtr

eate

d pr

oper

ly?

V

The

Com

pany

reg

ulat

ed t

he e

mpl

oyee

app

eal

syst

em t

o tr

eat

the

empl

oyee

app

eal

case

s,

and

sett

led

the

labo

r op

inio

n bo

x to

ado

pt t

he s

ugge

stio

ns t

o ex

pand

the

com

mun

icat

ion

tunn

el.

No

Sig

nifi

cant

D

iffe

renc

e

(3) W

heth

er

the

Com

pany

pr

ovid

es

the

safe

an

d he

alth

yw

orki

ngen

viro

nmen

t to

th

e em

ploy

ee,

and

carr

ied

out

the

empl

oyee

sa

fety

an

d he

alth

edu

cati

on r

egul

arly

?

V

The

C

ompa

ny

had

cond

ucte

d th

e en

viro

nmen

t in

spec

tion

an

d th

e fa

cili

ties

m

aint

ain

acco

rdan

ce

wit

h th

e sc

hedu

le,

and

sett

led

ES

H

envi

ronm

enta

l sa

fety

an

d sa

nita

tion

m

anag

emen

t sy

stem

to

push

the

OH

SA

S18

001

and

ISO

1400

1 sy

stem

s fo

r th

e ta

rget

of

envi

ronm

enta

l saf

ety

and

sani

tati

on.

The

new

em

ploy

ee h

ad t

o be

tra

ined

ade

quat

ely

in p

re-e

mpl

oym

ent

peri

od.

In t

he w

orki

ng

site

s, th

e ch

ief

offi

cer

shou

ld s

uper

vise

and

ens

ure

the

safe

ty o

f th

e w

orki

ng s

ites

. To

ensu

re

the

empl

oyee

he

alth

, th

e C

ompa

ny

had

to c

ondu

ct

the

empl

oyee

he

alth

ex

amin

atio

n re

gula

rly

and

the

spec

ial h

ealt

h ex

amin

atio

n to

the

spec

ial o

pera

tion

em

ploy

ee.

To p

rote

ct a

gain

st t

he p

rofe

ssio

nal

disa

ster

dam

age

and

prot

ect

the

empl

oyee

saf

ety

and

heal

th, t

he C

ompa

ny d

raw

n up

the

Saf

ety

and

San

itat

ion

Wor

king

Gui

deli

nes

to b

e fo

llow

ed

by t

he e

mpl

oyee

acc

orda

nce

wit

h th

e L

abor

Saf

ety

and

San

itat

ion

Act

and

the

det

ail

regu

lati

ons.

No

Sig

nifi

cant

D

iffe

renc

e

35

Est

imat

e It

ems

Ope

rati

on C

ondi

tion

T

he d

iffe

renc

e an

d ca

use

wit

h th

e L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

OT

C

Cor

pora

tion

Soc

ial

Res

pons

ibil

ity

P

ract

ical

Gui

deli

nes

Yes

No

Sum

mar

y &

Des

crip

tion

(4) W

heth

er t

he C

ompa

ny b

uilt

up

regu

lar

empl

oyee

com

mun

icat

ion

mec

hani

s man

d to

in

form

re

ason

ably

the

e mpl

oyee

th

e po

ssib

lesi

gnif

ican

t ef

fect

ive

oper

atio

n ch

ange

mig

ht b

eca

used

?

V

The

Com

pany

bui

lt u

p th

e em

ploy

ee c

omm

unic

atio

n an

d di

alog

ue t

unne

l to

mak

e th

e em

ploy

ee b

e ab

le to

obt

ain

the

info

rmat

ion

and

righ

t of

the

acti

viti

es a

nd th

e po

lici

es o

f th

e C

ompa

ny m

anag

emen

t.

The

Com

pany

ann

ounc

ed t

he o

pera

tion

cha

nge

that

mig

ht b

e a

sign

ific

ant

effe

ct t

o th

e em

ploy

ee w

ith

a re

ason

able

way

s.

No

Sig

nifi

cant

D

iffe

renc

e

(5) W

heth

er t

he C

ompa

ny b

uilt

up

effe

ctiv

e pr

ofes

sion

alab

ility

dev

elop

men

t pla

ns to

the

empl

oyee

?

V

The

Com

pany

dra

wn

up t

he t

rain

ing

plan

s to

cul

tiva

te t

he e

mpl

oyee

acc

ordi

ng t

o th

e pr

ofes

sion

al

abil

ity

and

the

func

tion

of

th

e w

orki

ng

sect

ion.

To

co

nduc

t ef

fect

ive

cont

inuo

us t

radi

tion

of

prof

essi

on a

nd t

echn

olog

y, t

he C

ompa

ny s

elec

ted

the

oute

r tr

aini

ng

inst

itut

e cl

asse

s or

the

inne

r in

stru

ctor

trai

ning

for

the

empl

oyee

.

No

Sig

nifi

cant

D

iffe

renc

e

(6) W

heth

er

the

Com

pany

de

sign

ated

re

late

d po

lici

esan

d ap

peal

pr

oces

s to

prot

ect

the

righ

t an

d in

tere

stof

the

con

sum

er i

n re

sear

ch&

dev

elop

men

t, pu

rcha

sing

,pr

oduc

ing,

op

erat

ion,

an

dse

rvic

e pr

oced

ure?

V

The

Com

pany

set

tled

the

cus

tom

er s

ervi

ce d

epar

tmen

t to

dea

l w

ith

the

cust

omer

com

plai

n.

To r

each

the

tar

get

of c

orpo

rati

on e

ver-

last

ing

man

agem

ent,

the

Com

pany

bui

lt u

p th

e qu

ality

sys

tem

of

cust

omer

-gui

de.

The

Com

pany

arr

ange

d th

e m

eeti

ng t

o co

mm

unic

ate

wit

h th

e cu

stom

ers

regu

larl

y. T

o ex

ecut

e th

e cu

stom

er s

atis

fact

ion

surv

ey a

nnua

lly. T

o id

enti

fy t

he 9

-ind

ex c

onta

ct w

ith

the

cust

omer

s.

Eac

h in

dex

has

the

spec

ial

assi

gned

un

it

to

take

ch

arge

of

bu

ildi

ng

the

sati

sfac

tion

ind

ex a

nd t

arge

t se

ttle

men

t an

d to

sup

ervi

se t

he s

atis

fact

ion.

If

the

anal

ysis

of

sati

sfac

tion

cou

ld n

ot r

each

the

stan

dard

, the

ass

igne

d un

it h

ad to

exe

cute

the

impr

ovem

ent

stra

tegy

and

to b

e re

view

ed in

the

high

leve

l chi

ef o

ffic

er m

anag

emen

t rev

iew

mee

ting

.

No

Sig

nifi

cant

D

iffe

renc

e

(7) W

heth

er

the

Com

pany

fo

llow

ed

the

rela

ted

regu

lati

ons

and

inte

rnat

iona

l gu

idel

ines

for

th

e m

arke

ting

an

d in

dica

tion

of

pr

oduc

ts

and

serv

ice?

V

The

Com

pany

set

tled

the

subc

omm

itte

e of

haz

ardo

us m

ater

ial t

o st

art t

o m

anag

e. T

o en

sure

to

cop

e w

ith

the

RE

AC

H s

piri

t, th

e C

ompa

ny c

ondu

cted

to p

roce

ss th

e pr

oduc

t con

trol

and

de

alin

g ac

cord

ance

wit

h th

e R

oHS

200

5 an

d th

e R

EA

CH

. To

kno

w w

ell

the

late

st

inte

rnat

iona

l re

gula

ted

tren

d,

the

Com

pany

ha

d to

co

llec

t th

e m

ajor

in

tern

atio

nal

envi

ronm

ent r

egul

atio

ns.

No

Sig

nifi

cant

D

iffe

renc

e

36

Est

imat

e It

ems

Ope

rati

on C

ondi

tion

T

he d

iffe

renc

e an

d ca

use

wit

h th

e L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

OT

C

Cor

pora

tion

Soc

ial

Res

pons

ibil

ity

P

ract

ical

Gui

deli

nes

Yes

No

Sum

mar

y &

Des

crip

tion

(8) W

heth

er

the

Com

pany

es

tim

ates

the

sup

plie

r w

ith

any

reco

rd o

f ef

fect

ing

the

envi

ronm

ent

or

soci

ety

befo

re

deal

ing

wit

h th

esu

ppli

er?

V

The

Com

pany

had

to

estim

ate

the

lega

l sp

ecia

lty,

cre

dibi

lity

man

agem

ent

poli

cy,

and

bad

fait

h ac

hiev

emen

t re

cord

pri

or t

o st

art

to b

uild

up

the

busi

ness

rel

atio

nshi

p w

ith

the

supp

lier

and

to

obta

in t

he l

ette

r of

com

mit

men

t of

env

iron

men

t, pr

ofes

sion

al s

afet

y an

d sa

nita

tion

, and

ene

rgy

from

the

supp

lier

.

No

Sig

nifi

cant

D

iffe

renc

e

(9) W

heth

er

if

the

maj

or

supp

lier

in

volv

ed

agai

nst

the

corp

orat

ion

soci

alre

spon

sibi

lity

po

licy

an

def

fect

ed t

o th

e en

viro

nmen

tan

d so

ciet

y ob

viou

sly,

th

eC

ompa

ny

coul

d te

rmin

ate

and

rele

ase

the

cont

ract

incl

uded

in

th

e co

ntra

ctbe

twee

n th

e C

ompa

ny a

ndth

e m

ajor

sup

plie

r?

V

The

Com

pany

con

duct

ed t

o au

dit

and

esti

mat

e th

e so

cial

env

iron

men

tal

resp

onsi

bili

ty o

f th

e m

ajor

sup

plie

r to

ens

ure

the

supp

lier

com

plia

nce

to t

he a

ctin

g gu

idel

ines

of

the

elec

tric

in

dust

ry o

r th

e lo

cal

regu

lati

on a

nd l

aws.

The

com

plia

nce

of t

he r

elat

ed r

egul

atio

ns,

allo

cati

on o

f la

bor

insu

ranc

e, a

nd a

gain

st b

ribe

and

cor

rupt

ion

to b

e in

clud

ed i

n th

e co

ntra

ct.

If t

he s

uppl

ier

viol

ates

the

se,

it w

ill

affe

ct t

he c

oope

rati

on r

elat

ions

hip

wit

h th

e C

ompa

ny.

No

Sig

nifi

cant

D

iffe

renc

e

4.To

st

reng

then

to

di

sclo

se

the

info

rmat

ion

Whe

ther

the

Com

pany

dis

clos

ed t

he r

elat

edin

form

atio

n of

th

e gr

eat

conc

erne

d an

dre

liab

le c

orpo

rati

on s

ocia

l re

spon

sibi

lity

onth

e w

ebsi

te a

nd t

he i

nfor

mat

ion

obse

rvat

ion

stat

ion

open

ed to

the

publ

ic?

V

The

Com

pany

had

not

dra

wn

up t

he c

orpo

rati

on s

ocia

l re

spon

sibi

lity

rep

ort.

It w

ill

be

cond

ucte

d in

the

futu

re to

str

engt

hen

to d

iscl

ose

the

corp

orat

ion

soci

al r

espo

nsib

ilit

y.

Sam

e as

the

Lef

t D

escr

ipti

on

5.If

the

Com

pany

set

tled

the

cor

pora

tion

soc

ial

resp

onsi

bili

ty g

uide

line

of

itse

lf a

ccor

danc

e w

ith

the

Lis

ted

Com

pany

/Lis

ted

Com

pany

in

OT

C C

orpo

rati

on S

ocia

lR

espo

nsib

ilit

y P

ract

ical

Gui

deli

ne, p

leas

e in

terp

rete

d cl

earl

y th

e di

ffer

ence

of

the

oper

atio

n an

d th

e ru

led

guid

elin

es：

The

Com

pany

had

not

set

tled

the

corp

orat

ion

soci

al r

espo

nsib

ility

gui

deli

ne a

nd r

elat

ed r

egul

atio

ns.

6.O

ther

impo

rtan

t inf

orm

atio

n th

at w

ere

help

ful t

o re

aliz

e th

e op

erat

ion

cond

itio

n of

cor

pora

tion

soc

ial r

espo

nsib

ility

：

1.E

nvir

onm

ent P

rote

ctio

n： T

o co

pe w

ith th

e gl

obal

des

ign

and

prod

ucti

on tr

end

and

deal

wit

h th

e re

ques

t of

RoH

S, c

usto

mer

HS

F, a

nd th

e C

ompa

ny H

SF

, the

Com

p any

37

Est

imat

e It

ems

Ope

rati

on C

ondi

tion

T

he d

iffe

renc

e an

dca

use

wit

h th

e L

iste

d C

ompa

ny/L

iste

dC

ompa

ny in

OT

CC

orpo

rati

on S

ocia

l R

espo

nsib

ilit

y

Pra

ctic

al G

uide

line

s

Yes

No

Sum

mar

y &

Des

crip

tion

ensu

red

the

Com

pany

pro

duct

s ar

e no

t on

ly c

onfo

rmed

to

the

inte

rnat

iona

l re

gula

tion

and

the

cus

tom

er d

eman

d, b

ut a

lso

com

plia

nce

to t

he W

aste

Cle

an A

ct,

Wat

er

Pol

luti

on P

rote

ctio

n A

ct, a

nd A

ir C

onta

min

atio

n P

rote

ctio

n A

ct to

exe

cute

con

tam

inat

ion

prot

ecti

on a

nd m

aint

ain

the

envi

ronm

ent q

uali

ty.

2.C

omm

unit

y pa

rtic

ipat

ion,

Soc

ial

Con

trib

utio

n, S

ocia

l S

ervi

ce, a

nd S

ocia

l P

ubli

c In

tere

st：

The

Com

pany

par

tici

pate

d to

the

act

ivit

ies

of e

duca

tion

, pub

lic

inte

rest

, and

cult

ure

thro

ugh

dona

ting

to th

e so

cial

gro

ups

to c

ondu

ct th

e co

rpor

atio

n so

cial

res

pons

ibil

ity.

3.R

ight

and

ben

efit

of

the

cons

umer

: T

o re

aliz

e th

e sa

tisf

acti

on c

ondi

tion

of

the

cust

omer

s, t

o en

sure

the

exi

stin

g cu

stom

ers,

and

to

catc

h th

e fa

vor

of t

he p

oten

tial

cust

omer

sB

y th

e w

ays

of a

ctiv

e, p

rom

pt, a

nd e

ffec

tive

ser

vice

qua

lity

to p

rom

ote

the

Com

pany

com

pete

abi

lity

.4.

Hum

an r

ight

s: T

he C

ompa

ny e

mpl

oyee

are

equ

al i

n th

e ca

reer

opp

ortu

niti

es n

o m

atte

r to

the

gen

der

whe

ther

mal

e or

fem

ale,

rel

igio

ns,

and

part

ies.

The

Com

pany

prov

ided

goo

d w

orki

ng e

nvir

onm

ent t

o th

e em

ploy

ee a

nd p

rote

cted

the

empl

oyee

aga

inst

dis

crim

inat

ion

and

hara

ssm

ent.

5.S

afet

y an

d Sa

nita

tion

: T

he C

ompa

ny c

ompl

ianc

e th

e go

vern

men

t la

bor

and

sani

tati

on r

egul

atio

ns t

o co

nduc

t th

e sa

fety

and

san

itatio

n af

fair

s. T

he r

elat

ed d

etai

led

info

rmat

ion

wer

e dr

awn

up in

the

labo

r sa

fety

and

san

itat

ion

wor

king

gui

deli

nes .

7.If

the

repo

rt o

f th

e C

ompa

ny C

orpo

rati

on S

ocia

l Res

pons

ibil

ity p

asse

d re

late

d ce

rtif

ied

stan

dard

of

rela

ted

cert

ifie

d in

stitu

te, t

he C

ompa

ny h

ad to

exp

lain

cle

arly

.T

o co

mpl

etel

y en

sure

and

con

duct

the

haza

rdou

s m

ater

ial c

once

ntra

tion

of

the

raw

mat

eria

l and

pro

duct

to h

arm

ony

wit

h th

e in

tern

atio

nal r

egul

atio

n an

d th

e de

man

d of

the

cust

o mer

s, t

he C

ompa

ny a

ppli

ed a

nd p

asse

d th

e Q

C08

0000

of

the

haza

rdou

s m

ater

ial

man

agem

ent

syst

em t

o co

nduc

t an

d re

gula

te t

he s

peci

fica

tion

of

the

haza

rdou

sm

ater

i al.

Hea

vy m

etal

and

spe

cial

con

tam

inat

ion

mat

eria

l, su

ch a

s L

ead,

Mer

cury

, C

adm

ium

, H

exav

alen

t C

hrom

ium

, an

d B

isph

enol

A,

etc.

It

is t

o en

sure

the

mar

keti

ngco

mpe

titi

on a

nd r

each

the

leve

l of

envi

ronm

ent p

rote

ctio

n to

avo

id th

e co

ntam

inat

ion

of h

eavy

met

al a

nd s

peci

al c

onta

min

atio

n m

ater

ial.

38

6.T

he

fulf

ill c

ond

itio

n a

nd

ad

opt

mea

sure

men

t of

th

e C

omp

any

cred

ibil

ity

man

agem

ent：

Imp

lem

ent

the

cred

ibil

ity

man

agem

ent

con

dit

ion

Est

imat

e it

ems

Ope

rati

on c

ondi

tion

T

he d

iffe

renc

e an

d ca

use

of

cred

ibil

ity

man

agem

ent

guid

elin

es o

f L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

OT

C

Yes

No

Sum

mar

y &

Des

crip

tion

Stip

ulat

e cr

edib

ility

m

anag

emen

t pol

icy

and

sche

me

(1)

Whe

ther

th

e C

ompa

ny

clea

rly

expr

esse

d th

e po

licy

an

d m

easu

re

of

the

cred

ibil

ity

man

agem

ent

on

the

oute

r do

cum

ent

or

the

regu

lati

ons,

an

d th

e pr

omis

e to

ac

tive

ly

impl

emen

t th

e m

anag

emen

t po

licy

of

the

Boa

rd

of D

irec

tor

and

the

man

ager

leve

l?

V

The

Com

pany

bas

ed o

n th

e pr

inci

ple

of f

airn

ess,

hon

esty

, cre

dibi

lity,

and

tr

ansp

aren

t to

cond

uct t

he b

usin

ess

acti

viti

es. T

o im

plem

ent t

he c

redi

bili

ty

man

agem

ent a

nd p

rote

ct a

gain

st th

e ba

d fa

ith

deed

act

ivel

y, th

e C

ompa

ny

desi

gnat

ed th

e O

pera

tion

Pro

cedu

re a

nd th

e C

ondu

ct G

uide

line

of

Cre

dibi

lity

Man

agem

ent t

o co

ncre

tely

reg

ulat

e th

e C

ompa

ny p

erso

nnel

to b

e ca

refu

l dur

ing

exec

utin

g th

e bu

sine

ss a

ffai

rs.

The

Com

pany

per

sonn

el p

rohi

bit t

o co

nduc

ting

any

bad

fai

th d

eed.

The

sai

d ba

d fa

ith

deed

incl

uded

the

Com

pany

per

sonn

el p

rovi

ded,

acc

ept,

prom

ise

or

requ

est a

ny u

nfai

r in

tere

st d

irec

tly

or in

dire

ctly

or

cond

ucte

d ot

her

deed

s th

at v

iola

ted

the

cred

ibil

ity, i

lleg

al o

r di

sobe

y th

e re

spon

sibi

lity

of

com

mis

sion

in o

rder

to o

btai

n or

mai

ntai

n th

e in

tere

st d

urin

g ex

ecut

ing

the

busi

ness

aff

airs

.

No

Sig

nifi

cant

D

iffe

renc

e

(2)

Whe

ther

the

Com

pany

sti

pula

ted

the

sche

me

of

prot

ecti

ng

agai

nst

the

bad

fait

h co

nduc

t, de

sign

ated

th

e op

erat

ion

proc

edur

e,

cond

uct

guid

elin

e, p

unis

hmen

t, an

d ap

peal

sys

tem

on

the

sche

me,

and

impl

emen

t to

exec

ute

or n

ot?

V

(3)

Whe

ther

the

Com

pany

ado

pted

any

pro

tect

ion

mea

sure

men

t to

agai

nst t

he c

ondu

cts

of r

efer

ring

to

th

e 7-

2 of

th

e C

redi

bili

ty

Man

agem

ent

Gui

deli

ne

of

the

Lis

ted

Com

pany

/Lis

ted

Com

pany

in

OT

C o

r ot

her

busi

ness

act

ivit

ies

wit

h hi

gher

ri

sk

of

bad

fait

h co

nduc

t in

th

e bu

sine

ss s

cope

or

not?

V

The

pro

tect

ion

mea

sure

men

t of

bad

fait

h co

nduc

t sho

uld

be in

clud

ed in

the

Com

pany

inne

r co

ntro

l mec

hani

sm a

nd th

e in

ner

sign

ed a

nd a

ppro

ved

proc

edur

e to

ens

ure

to p

rote

ct e

ffec

tive

ly a

nd d

isco

ver

the

corr

uptio

n de

eds.

No

Sig

nifi

cant

D

iffe

renc

e

39

Est

imat

e it

ems

Ope

rati

on c

ondi

tion

T

he d

iffe

renc

e an

d ca

use

of

cred

ibil

ity

man

agem

ent

guid

elin

es o

f L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

OT

C

Yes

No

Sum

mar

y &

Des

crip

tion

Impl

emen

t th

e cr

edib

ility

m

anag

emen

t

(1)

Whe

ther

the

Com

pany

est

imat

ed t

he c

redi

bili

ty

reco

rd

of

the

deal

ing

obje

cts

and

stip

ulat

ed

clea

rly

the

trea

tmen

t of

cre

dibi

lity

con

duct

on

the

desi

gnat

ed c

ontr

act

wit

h th

e de

alin

g ob

ject

or

not

?

V

The

C

ompa

ny

wou

ld

esti

mat

e th

e le

gal

spec

ialt

y,

the

cred

ibil

ity

man

agem

ent

poli

cy,

and

the

bad

fait

h co

nduc

t re

cord

of

the

agen

t, su

ppli

er,

cust

omer

, an

d ot

her

busi

ness

dea

ling

obj

ect

befo

re b

uild

ing

the

busi

ness

re

lati

onsh

ip t

o en

sure

the

fai

r an

d tr

ansp

aren

t ty

pes

of b

usin

ess

man

agem

ent

and

wou

ld n

ot r

eque

st, p

rovi

de, o

r re

ceiv

e br

ibe.

The

Com

pany

sho

uld

real

ize

the

cred

ibil

ity m

anag

emen

t co

ndit

ion

of t

he

deal

ing

obje

ct a

nd c

ompl

ianc

e to

sub

sum

e th

e cr

edib

ility

man

agem

ent

into

th

e tr

eatm

ent o

f th

e co

ntra

ct.

No

Sig

nifi

cant

D

iffe

renc

e

(2)

Whe

ther

th

e C

ompa

ny

sett

led

the

spec

ial

assi

gned

uni

t th

at i

s go

vern

ed b

y th

e B

oard

of

Dir

ecto

r to

pu

sh

the

corp

orat

ion

cred

ibil

ity

man

agem

ent?

D

oes

it

repo

rt

the

exec

utio

n co

ndit

ion

to th

e B

oard

of

Dir

ecto

r re

gula

rly?

V

The

Com

pany

app

oint

ed t

he p

erso

nnel

dep

artm

ent

as t

he s

peci

al a

ssig

ned

unit

to

proc

ess

the

rela

ted

oper

atio

n an

d su

perv

ise

exec

utio

n of

am

endm

ent,

exec

utio

n,

expl

anat

ion,

co

nsul

ting

se

rvic

e an

d re

port

ing

the

cont

ent

regi

stra

tion

and

fil

e of

the

oper

atio

n pr

oced

ure

and

the

cond

uct g

uide

line

s.

No

Sig

nifi

cant

D

iffe

renc

e

(3)

Whe

ther

the

Com

pany

des

igna

ted

the

poli

cy o

f pr

otec

ting

int

eres

t co

nfli

ct,

prov

ided

app

ropr

iate

tu

nnel

, and

impl

emen

t the

exe

cuti

on o

r no

t?

V

The

C

ompa

ny

stre

ngth

ened

to

ad

vise

th

e in

ner

mor

alit

y no

tion

an

d en

cour

age

the

empl

oyee

to

repo

rt t

o th

e su

perv

isor

, m

anag

er,

inne

r au

dit

chie

f or

oth

er a

ppro

pria

te p

erso

n w

hen

won

der

or d

isco

ver

any

deed

tha

t vi

olat

ed to

the

law

s or

reg

ulat

ions

or

the

cond

uct g

uide

line

of

mor

alit

y. I

t had

be

tter

to

pr

ovid

e ad

equa

te

info

rmat

ion

to

the

Com

pany

to

tr

eat

the

cont

inuo

us a

ffai

rs p

rope

rly.

No

Sig

nifi

cant

D

iffe

renc

e

(4)

Whe

ther

th

e C

ompa

ny

buil

t up

ef

fect

ive

acco

unti

ng s

yste

m a

nd i

nner

con

trol

sys

tem

in

orde

r to

im

plem

ent

the

cred

ibil

ity m

anag

emen

t, an

d as

sign

ed

the

inne

r au

dit

unit

or

co

mm

issi

oned

th

e ac

coun

tant

to

ch

eck

regu

larl

y?

V

The

ope

rati

on c

ondi

tion

of

the

Com

pany

acc

ount

ing

syst

em a

nd in

ner

cont

rol

had

cond

ucte

d th

e in

ner

audi

t for

che

ckin

g th

e co

nduc

t con

diti

on.

No

Sig

nifi

cant

D

iffe

renc

e

(5)

Whe

ther

the

Com

pany

hel

d th

e in

ner

and

oute

r ed

ucat

ion

trai

ning

of

cr

edib

ility

m

anag

emen

t re

gula

rly

or n

ot?

V

The

C

ompa

ny

publ

iciz

ed

and

com

plim

ente

d th

e co

rpor

atio

n cr

edib

ility

m

anag

emen

t ide

a th

roug

h th

e m

eeti

ngs

and

trai

ning

s.

No

Sig

nifi

cant

D

iffe

renc

e

40

Est

imat

e it

ems

Ope

rati

on c

ondi

tion

T

he d

iffe

renc

e an

d ca

use

of

cred

ibil

ity

man

agem

ent

guid

elin

es o

f L

iste

d C

ompa

ny/L

iste

d C

ompa

ny in

OT

C

Yes

No

Sum

mar

y &

Des

crip

tion

The

op

erat

ion

cond

itio

n of

sy

stem

of

re

port

(1)

Whe

ther

the

Com

pany

sti

pula

ted

conc

rete

rep

ort

and

rew

ard

syst

em,

buil

t up

con

veni

ent

repo

rttu

nnel

, and

allo

cate

d th

e pr

oper

spe

cial

ass

igne

dpe

rson

to d

eal w

ith

the

pers

on w

ho is

rep

orte

d or

not?

V

T

he

Com

pany

st

reng

then

ed

to

advi

se

the

inne

r m

oral

ity

noti

on

and

enco

urag

e th

e em

ploy

ee t

o re

port

to

the

supe

rvis

or,

man

ager

, in

ner

audi

t ch

ief

or o

ther

app

ropr

iate

per

son

whe

n w

onde

r or

dis

cove

r an

y de

ed t

hat

viol

ated

to

the

law

s or

reg

ulat

ions

or

the

cond

uct

guid

elin

e of

mor

alit

y. I

t ha

d be

tter

to

prov

ide

adeq

uate

inf

orm

atio

n to

the

Com

pany

to

trea

t th

e co

ntin

uous

aff

airs

pro

perl

y.

The

Com

pany

wil

l tr

eat

the

repo

rt c

ases

by

secu

red

way

s, a

nd i

nves

tiga

ted

by in

depe

nden

t tun

nel a

nd w

ith

our

best

to p

rote

ct th

e re

port

er.

No

Sig

nifi

cant

D

iffe

renc

e

(2)

Whe

ther

th

e C

ompa

ny

desi

gnat

ed

the

inve

stig

atio

n st

anda

rd

oper

atio

n pr

o ced

ure

ofre

ceiv

ing

repo

rt

and

the

rela

ted

secu

rity

mec

hani

sm o

r no

t?

V

(3)

Whe

ther

the

Com

pany

ado

pted

the

mea

sure

men

tof

pro

tect

ing

the

repo

rter

aga

inst

suf

feri

ng u

nfai

rtr

eatm

ent b

ecau

se o

f re

port

ing

or n

ot?

V

4.To

str

engt

hen

to d

iscl

ose

the

info

rmat

ion

Whe

ther

the

Com

pany

dis

clos

ed t

he c

onte

nt o

f th

e cr

edib

ility

man

agem

ent

guid

elin

e an

d th

e re

sult

of

pr

omot

ion

on

the

web

site

and

the

inf

orm

atio

n ob

serv

atio

n st

atio

n op

ened

to

the

publ

ic?

V

The

Com

pany

Boa

rd o

f D

irec

tor

had

pass

ed t

he O

pera

tion

Pro

cedu

re a

nd

Con

duct

G

uide

line

of

C

redi

bili

ty

Man

agem

ent

and

the

Gui

deli

nes

of

Mor

alit

y C

ondu

ct i

n D

ecem

ber,

2014

, an

d pu

t fo

rwar

d an

d ha

nd i

n to

the

pe

rman

ent

stoc

khol

der

conf

eren

ce o

f 20

15. T

hose

whi

ch w

ill

be p

ost

on t

he

Com

pany

adm

inis

ter

page

s in

the

inv

esto

r se

ctio

n of

the

Com

pany

web

site

to

be

enqu

ired

for

the

inve

stor

s.

5.If

the

Com

pany

des

igna

te t

he c

redi

bili

ty m

anag

emen

t gu

idel

ine

of i

tsel

f ac

cord

ance

wit

h th

e cr

edib

ilit

y m

anag

emen

t gu

idel

ine

of t

he L

iste

d C

ompa

ny/L

iste

d C

ompa

ny i

nO

TC

, ple

ase

inte

rpre

tate

cle

arly

the

diff

eren

ce o

f op

erat

ion

to th

e gu

idel

ine:

No

diff

eren

ce.

6.O

ther

sig

nifi

cant

inf

orm

atio

n is

hel

pful

to

real

ize

the

cred

ibil

ity m

anag

emen

t op

erat

ion

of t

he C

ompa

ny t

: To

pro

mot

e th

e ef

fect

of

the

Com

pany

cre

dibi

lity

man

agem

ent,

itne

eds

to w

atch

the

rela

ted

deve

lopm

ent o

f th

e cr

edib

ility

man

agem

ent a

nd to

dis

cuss

and

impr

ove

the

poli

cy o

f th

e C

ompa

ny c

redi

bilit

y m

anag

emen

t.

7.If

the

Com

pany

had

sti

pula

ted

the

Com

pany

adm

inis

ter

guid

elin

es a

nd r

elat

ed r

egul

atio

ns,

it h

as t

o di

sclo

se t

heen

quir

y w

ays:

Ple

ase

refe

r to

the

Com

pany

adm

inis

ter

page

on

the

inve

stor

sec

tion

of

the

Com

pany

web

site

.

8.O

ther

sig

nifi

cant

info

rmat

ion

that

is g

ood

to p

rom

ote

the

real

izat

ion

of th

e C

ompa

ny a

dmin

iste

r op

erat

ion

cond

itio

n:N

one.

41

9. The execution condition of the inner control system(1)Statement of the Inner Control

EMC

Statement of the Inner Control System

Date: March 23, 2016

The result of the self-estimate of the 2015 inner control system is stated as followings：

1. The Company confirm and realize that build, conduct, and maintain the innercontrol system is the responsibility of the Board of Director and the managers.The Company has built the system. The purpose of the system is to reach theoperation effect and efficiency that the profit, business result and propertysafety protection are included, the reliability or report, the promptness,transparent, and compliance with the related regulations and laws and providereasonable insurance.

2. The inner control system has the inbred limitation, so the effective inner controlsystem could only provides reasonable ensure to reach the above mentioned threetargets no matter the design is how perfect. Besides, due to the change of theenvironment and condition, the efficiency of the inner control system might bechanged. Because there is the self-supervise mechanism in the Company inner controlsystem, the Company will adopt update actions once the fault identified.

3. According to the effective judgment items of the inner control system of theTreatment Guidelines of the Public Issue Company to Build Up the InnerControl System, thereinafter the Treatment Guideline, the Company wouldjudge the efficiency of the design and execution of the inner control system.The judgment items of the inner control system of the Treatment Guidelines isthe management of control procedure and is divided into five compositionfactors. 1. Control Environment 2. Risk Estimate 3. Control Operation 4.Information and Communication 5. Supervise Operation There are certainitems in each composition factors. Please refer the above mentioned items tothe regulation of the Treatment Guidelines.

4. The Company has adopted the judgment items of the inner control system, andestimated the design and the efficiency of execution of the inner controlsystem

5. Based on the result of the above estimate, the Company considered that theinner control system that the supervise and management of the subsidiarycompany is included of December 31, 2015 is effective, such as to realize theoperation result and efficiency of target reaching, the reliability of report,promptness, transparent, and compliance of design and execution of the relatedregulations and laws of inner control system. It could assure to reach the abovementioned targets reasonably.

6. The Statement will be the major content of the Company Annual Report andthe Public Prospectus, and will be opened to the public. If the above mentioned

42

content contained any illegal affairs such as false or lurk, it will involve the legal responsibility of the Securities Transaction Act No.20, No.32, No.171, and No.174.

7. The Statement has been passed on March 23, 2016 through the Company Boardof Director. All of the 5 presented Directors agreed the content of theStatement without any opposed opinion. Therefore, to express as the above.

EMC

Chairman： Signature/Seal

General Manager: Signature/Seal

(2)Inner Control Review Report of the Accountant: None

43

10. The major deficiency and improvement condition of the events,including the punishment that the employee being punishedaccordance with the regulation and the Company punished theemployee who violated the inner control regulations of the latest yearand up to the Annual Report printed date: None.

11. The significant resolution of the shareholder conference and the Boardof Director in the latest year and up to the Annual Report printed date:Shareholder ConferanceYear of the Conference Date Significant Resolution & Execution Condition Shareholder Permenant Conference of 2015

2015.6.15 1. Cause of Action: The Company Final Account Tablets of 2014Resolution: The cause has been unamimously confessed andpassed by probing the present shareholders through the chairmanof the conference

2. Cause of Action: The Company Profit Allocation Cause.Resolution： The cause has been unamimously confessed andpassed by probing the present shareholders through the chairmanof the conferenceExecution Condition: The Board of Director decided to stipulateSeptember 2, 2015 as the cash stock interest allocation recorddate, and to grant on September 25, 2015.

3. Cause of Action: The Amendment of the Company RegulationResolution: The cause has been unamimously confessed andpassed by probing the present shareholders through the chairmanof the conferenceExecution Condition: It has completed the alter registration onJuly 6, 2015.

4. Cause of Action: The Amendment of the Election Measurementof Directors and SupervisorsResolution: The cause has been unamimously confessed andpassed by probing the present shareholders through the chairmanof the conferenceExecution Condition: It has complete the Amendment of theElection Measurement of Directors and Supervisors accordancewith the treatment of the shareholder conference

Board of Directors Meeting Degree Order

Date Significant Resolution

9th Degree, 12th Meeting

2015.03.09 1. passed the business operation report and financial report tablet of 2014.2. passed the business operation report and financial report tablet of 2014.3. passed calling for the 2015 permenant shareholder conference and the

related affairs.4. passed the Statement of the inner control system of 2014.5. passed the case of reducing endorsement money guarantee to the subsidiary

company.6. passed the case of the Company automatical human resource cut off and the

capital expense.7. passed the Company domestic 3rd naked position convertible bond at

maturity repayment of principle and terminated the case of Listed Companyin OTC.

8. passed the Company Syndicated Loan case of $200,000,000.9. passed the Company personnel rotation case.

44

9th Degree, 13th Meeting

2015.05.06 1. Passed the issue new share record date case of the Company domestic 3rd

naked position convertible bond transfer into the common stock. 2. Passed the issue new share record date case of the Company employee

optional share certificate transfer into the capital increase share.3. passed the case of reducing endorsement money guarantee to the subsidiary

company.4. passed the case of suggestion of the Salary and Reward Committee to the

salary and reward of the Directors, Supervisors, and Managers.5. passed the amendment of the Operation Procedure of the Company Stamp

and Certification.9th Degree, 14th Meeting

2015.06.25 1. passed the capital expense of Guan-Yin Factory.2. Passed the issue new share record date case of the Company domestic 3rd

naked position convertible bond transfer into the common stock.3. Passed the issue new share record date case of the Company employee

optional share certificate transfer into the capital increase share.9th Degree, 15th Meeting

2015.07.30 1. passed the dividend record date of undivided profit of 2014.2. passed the case of reducing endorsement money guarantee to the subsidiary

company.3. passed the Company capital expense case.

9th Degree, 16th Meeting

2015.11.04 1. Passed the issue new share record date case of the Company employeeoptional share certificate transfer into the capital increase share.

2. passed the Company capital expense case.3. Passed the capital expense case of the Company subsidiary company,

JongShan EMC Inc.4. passed the audit plan of 2014.5. passed the payment calculation standard of management award of the two

Mainland Chinese factories.9th Degree, 17th Meeting

2015.12.23 1. passed the Company budget and capital expense case of 2016.2. Passed the issue new share record date case of the Company employee

optional share certificate transfer into the capital increase share.3. passed the case of the Salary and Reward Committtee to review the allocate

amount ratio of the reward of Directors and Supervisors, and the adjustmeasuement and regulation of the employee bonus and reward, and theworking proposal description of the Committee of 2016.

4. passed the adding designate cases of the Company Meeting Rules of theShareholder, the Election Measurement of Director and Supervisor, theConduct Guideline of Morality, the Operation Procedure and ConductGuideline of Credibility Management, the Operation Procedure of Obtainor Measure the Property, the Operation Procedure of Endorse Guarantee,the Operation Procedure of Capital Loan to Others, and the TransactionDeal Procedure of Acting the Financial Derivatives.

5. Passed adding the case of the Operation Procedure of Suspend and RestoreTransaction Application.

6. Passed the amendment case of the Inner Authorization Regulation.7. Passed the case of the Proposal of Raising the Ability of Self-Draw Up

Financial Report.8. passed the case of reducing endorsement money guarantee to the subsidiary

company.9. passed the case of reducing the Company short period extend credit

amount.9th Degree, 18th Meeting

20165.03.23

1. passed the case of the Salary and Reward Committee review of the Directorand Supervisor reward allocation ratio and the salary and reward of theDirectors, Supervisors, and Managers of 2015 and 2016.

2. passed the amendment of the Company Regulations.3. passed the reward allocation case of the employee and the Directors and

Supervisors of 2015.

45

4. passed the business opertion report and financial report tablet of 2015.5. passed the allocation case of profit of 2015.6. passed the case of calling for the 2016 shareholder permenant conference

and related affairs.7. passed the case of the Company Directors Reelection and settle the audit

committee.8. Passed the issue new share record date case of the Company employee

optional share certificate transfer into the capital increase share.9. passed the Statement of the inner control system of 2014.10. passed the case of the Company capital expense.11. passed the case of the capital expense of the subsdiary company, JongShan

EMC Inc.12. passed the amendment of the Company Information Safety Management

Measurement.13. Passed the amendment of the Company Employee Bonus Measurement.

9th Degree, 19th Meeting

20165.04.28

1. Passed the amendment of the Operation Procefure of the Company BudgetManagement, and the Financial Expense and Receipt Measurement andProcedure.

2. Passed adding the Company the Checking Standard Operation Procedureand Autonomy Regulation of Strategic Alliance, Financing, Investment,Merge, and the Major Customer Visiting.

3. passed the case of the ratio adjust arrangement of the Companymanagement award allocation.

4. passed the case of reviewing name list of the nomination of the Directorcandidate who holds the shares more than 1% that the shareholderpermenant conference of 2014 accepted.

5. passed to release the case of the Director non-compete clause.

12. The Directors or Supervisors held different opinion to the passedsignificant resolution and with record or in written statement in the latestyear or up to the Annual Report printed date: None.

13. The Chairman, General Manager, Accounting Chief, Financial Chief,Inner Audit Chief, and Research & Development Chief resigned orreleased condition: None.

46

(IV) Professional fees of the certified public accountant

Numerical Range Scale Professional fees of the certified public accountant(Please Check the harmony range scale or fill-in the amount)

Accounting Firm Accountant Verification period Note

KPMG Peat Marwick Yang, Liu-Fen

Chen, Yin-Ju 2015/1/1~2015/12/31

Unit: in thousand dollars (TWD) Official expense

Amount of money Level Audit feeNon-audit

fees Total

1 Less than 2,000 thousand dollars

V V

2 2,000 thousand dollars(included)～4,000 thousand dollars

V V

3 4,000 thousand dollars(included)～6,000 thousand dollars

4 6,000 thousand dollars(included)～8,000 thousand dollars

5 8,000 thousand dollars(included)～10,000 thousand dollars

6 More than 10,000 (included) thousand dollars

(1) The Audit Public Fee paid to the certified accountant, the firm of the certifiedaccountant, and the related corporation is one-forth and up: None.

(2) The Audit Public Fee of changing the accountant firm and year is lower than theprior year: The Company did not change the certified accountant firm in 2015.

(3) The Audit Public Fee decreased up to 15% and above compared to the prior year:None.

(V) The information of changing the accountant: None.

(VI) The Company Chairman, General Manager, or the manager who took charge offinancial or accounting affairs who had worked in the certified accountant firmor the related corporation: None.

(VII) The stock right transfer and pledge condition of the Directors, Supervisors,Managers, and the stockholders who hold the Company share more than 10%in the latest year and dated before the Annual Report printed date.

47

(1) The share holding alteration of Director, Supervisor, Manager, and major shareholders

Title Name

2015 A s o f A p r. 1 5 , 2 0 1 6Increase or decrease of share holding

Increase or decrease of share pledged

Increase or decrease of share holding

Increase or decrease of share pledged

Chairman

Representative of Yu Chang Investment Ltd.:Tsai, Hui-Liang

(260,000) - 375,000 -

Vice Chairman Dong, Ding-yu - - 270,000 -

Director

Representative of Yu Chang Investment

Ltd.:LI, SHU-JIU

- - - -

Director Xie, Meng-Zhang - - - - Director Shen, Yan-Shi - - - -

Supervisor Shen, Dao-Zhen - - - - Supervisor Dong, Feng-Rong - - - -

General manager Dong, Ding-yu - - 270,000 - Senior vice

general manager Wang, Li-Gang 100,000 - - -

Senior vice general manager Guan, En-Xiang (137,000) - - -

Vice general manager Zhang, Wen-Xing - - - -

Vice general manager Peng, Yi-Ren 106,000 - 45,000 -

Assistant Vice President Lin, Zheng-Long (36,000) - - -

Assistant Vice President Mu, Xin-De 30,000 - 30,000 -

Assistant Vice President

Chen, Ding-Yan 41,000 - 38,000 -

Assistant Vice President

Cui, Wen-Xiang (108,000) - 40,000 -

Assistant Vice President

Zhou, Li-Ming 53,000 - - -

Assistant Vice President

Yang, Yong-De 4,000 - 40,000 -

Assistant Vice President

Huang, Yao-Guo (80,000) - 7,000 -

Assistant Vice President

Also the Finance Supervisor

Zhang, Li-Qiu (35,000) - - -

Accounting Supervisor

Yan, Xiu-Zhu 17,000 - - -

(2) Stock Right Transfer Information: None

(3) Stock Right Pledge Information: None

48

(VIII) The Mutual Spouse or the Second Degree Relative Relationship of the TopTen Share Holding Ratio Shareholder:

NAME

HOLDING OF SHARES-PERSONAL

SHARES HOLD BY SPOUSE OR

MINOR CHILDREN

SHARE HELD IN OTHERS' NAME

The 10 Major shareholders are related parties or with 2nd degree relatives relation

NOTE

Number of shares

Proportion of shares

Number of

shares

Proportion of shares

Number of

shares

Proportion of shares

Name Relation

Yu Chang Investment Ltd.

25,461,477 8.00 0 0 0 0 Dong,

Ding-yu

Yu Chang Investment

Ltd.ChairmanNone

Si, Run-Hong 14,690,303 4.61 0 0 0 0 None None None

HSBC ENTRUSTED ROBECO CAPITAL INCREMENT FUND ACCOUNT

7,290,000 2.29 0 0 0 0 None None None

Labor Pension Fund(New Scheme)

6,309,000 1.98 0 0 0 0 None None None

Standard Chartered Bank Dunhua Branch Entrusted Fund Account

5,953,713 1.87 0 0 0 0 None None None

Dong, Ding-yu 5,265,766 1.65 15,842 0.00 0 0 None None None

Deutsche Bank 4,957,334 1.56 0 0 0 0 None None None

Tang, Shao-Hao 4,881,963 1.53 0 0 0 0 None None None

HSBC ENTRUSTED MITSUBISHI UFI MORGAN STANELY SECURITY TRANSACTION ACCOUNT

4,782,000 1.50 0 0 0 0 None None None

Dong, Feng-Cheng

4,038,278 1.27 0 0 0 0 None None None

(IX) The Shareholding Amount of the Automatic Reinvestment of the Company, theDirector, the Supervisor, the Manager, and the Industry that is controlled by theCompany directly or indirectly. It also combined the calculation of thecomprehensive shareholding ratio.

49

Comprehensive Shareholding Ratio Unit：Share;％

Reinvested Company (Note)

Invested by the Company

Investmetn Directly or Indirectly Controlled Director, Supervisor, and Manager

General Investment

Number of shares

shareholding ratio

Number of shares

shareholding ratio

Number of shares

shareholding ratio

EMC Overseas Holding Incorporated 35,656,950 100.00% - - 35,656,950 100.00%

Li Cheng Tech Co., LTD. 16,412,918 33.50% 5,342,644 10.90% 21,755,562 44.40%

(Note): The Company adopted investments accounted for using equity method.

50

IV. Funding Condition

(I) The Company Capital and Shares

(1) Source of capital:

Year/Month

Issue price

Authorized capital stock Paid in capital Note

Number of shares

Cash Amount Number of shares

Cash amount Source of capital

Subscriptions paid by

properties other than cash

Others

2015.2 10 400,000,000 4,000,000,000 315,994,140 3,159,941,400

Transfer of bond and share warrant certificate

None Note：(1)

2015.5 10 400,000,000 4,000,000,000 316,392,140 3,163,921,400

Transfer of bond and share warrant certificate

None Note：(2)

2015.7 10 400,000,000 4,000,000,000 316,613,140 3,166,131,400

Transfer of bond and share warrant certificate

None Note：(3)

2015.11 10 400,000,000 4,000,000,000 317,323,140 3,173,231,400Transfer of share warrant certificate

None Note：(4)

105.1 10 400,000,000 4,000,000,000 317,505,140 3,175,051,400Transfer of share warrant certificate

None Note：(5)

105.4 10 400,000,000 4,000,000,000 318,123,140 3,181,231,400Transfer of share warrant certificate

None Note：(6)

(Note 1): Permit of the Jin-Guan-Jen-Far Tze No. 0990026578 of June 1, 2001 approved that fund and issued the domestic 3rd naked position convertible bonds. Permit of the Jin-Guan-Jen-Far Tze No. 1000031551 of the Financial Supervisory Commission of Administry Yen of July 7, 2011 approved that issued the employee option stock right certificate. Jin-So-San Tze No. 10401005330 of Ministry of Economic Affairs of February 16, 2015

(Note 2): Permit of the Jin-Guan-Jen-Far Tze No. 0990026578 of June 1, 2001 approved that fund and issued the domestic 3rd naked position convertible bonds. Permit of the Jin-Guan-Jen-Far Tze No. 1000031551of the Financial Supervisory Commission of Administry Yen of July 7, 2011 approved that issued the employee option stock right certificate. Jin-So-San Tze No. 10401092260 of Ministry of Economic Affairs of May 21, 2015

(Note 3): Permit of the Jin-Guan-Jen-Far Tze No. 0990026578 of June 1, 2001 approved that fund and issued the domestic 3rd naked position convertible bonds. Permit of the Jin-Guan-Jen-Far Tze No. 1000031551of the Financial Supervisory Commission of Administry Yen of July 7, 2011 approved that issued the employee option stock right certificate. Jin-So-San Tze No. 10401132650 of Ministry of Economic Affairs of July 6, 2015

(Note 4): Permit of the Jin-Guan-Jen-Far Tze No. 1000031551of the Financial Supervisory Commission of Administry Yen of July 7, 2011 approved that issued the employee option stock right certificate. Jin-So-San Tze No. 10401240920 of Ministry of Economic Affairs of November 17, 2015

(Note 5): Permit of the Jin-Guan-Jen-Far Tze No. 1000031551of the Financial Supervisory Commission of Administry Yen of July 7, 2011 approved that issued the employee option stock right certificate. Jin-So-San Tze No. 10501002670 of Ministry of Economic Affairs of January 8, 2016

(Note 6): Permit of the Jin-Guan-Jen-Far Tze No. 1000031551of the Financial Supervisory Commission of Administry Yen of July 7, 2011 approved that issued the employee option stock right certificate. Jin-So-San Tze No. 10501069800 of Ministry of Economic Affairs of April 21, 2016

51

Type of Share

Authorized capital stock R e m a r k

Outstanding shares(listed) Unissued Stock Total

Registered common

stock 318,460,140 shares 81,539,860 shares 400,000,000 shares

337,000shares are not registered for alteration

The related information of the sum-up declaration system: None

(2) Shareholder structure: 2016.4.15

Shareholder

structure

Amount

Government

organization

Financial

Institutions

Other legal

person personal

Foreign institutions

and foreigner

Total

Number of

people 4 13 117 30,816 246 31,196

Shares held 8,738,008 5,569,218 49,225,729 147,206,048 107,721,137 318,460,140

shareholding

ratio 2.74% 1.75% 15.46% 46.22% 33.83% 100%

(3) Share holding status： 2016.4.15

Share holding scale The number of shareholders

Shares held shareholding ratio

(%)

1 to 999 16,639 2,460,329 0.77

1,000 to 5,000 10,703 21,940,716 6.89

5,001 to 10,000 1,785 13,975,492 4.39

10,001 to 15,000 644 8,032,269 2.52

15,001 to 20,000 363 6,706,467 2.11

20,001 to 30,000 333 8,498,192 2.67

30,001 to 40,000 145 5,220,275 1.64

40,001 to 50,000 88 4,082,602 1.28

50,001 to 100,000 218 15,488,770 4.86

100,001 to 200,000 117 16,675,697 5.24

200,001 to 400,000 59 16,879,301 5.30

400,001 to 600,000 28 13,962,311 4.38

600,001 to 800,000 15 10,660,071 3.35

800,001 to 1,000,000 5 4,595,000 1.44

More than 1,000,001 股 54 169,282,648 53.16

Total 31,196 318,460,140 100.00

(Note): The Company did not issue Prefer Stock

52

(4) List of major shareholders:

Shares Major shareholders Shares held

shareholding ratio(%)

Yu Chang Investment Ltd. Si, Run-Hong HSBC ENTRUSTED ROBECO CAPITAL INCREMENT FUND ACCOUNT Labor Pension Fund(New Scheme) Standard Chartered Bank Dunhua Branch Entrusted Fund Account Dong, Ding-yu Deutsche Bank Tang, Shao-HaoHSBC ENTRUSTED MITSUBISHI UFI MORGAN STANELY SECURITY TRANSACTION ACCOUNT Dong, Feng-Cheng

25,461,477 14,690,303

7,290,000 6,309,000 5,953,713 5,265,766 4,957,334 4,881,963 4,782,000 4,038,278

8.00 4.61 2.29 1.98 1.87 1.65 1.56 1.53 1.50 1.27

(5) Price per share, net amount, profit and dividends within 2 years

Unit： TWD

Year

I tem 2014 2015

As of

2016.3 .31

Price per

share

(Note1)

Highest 42.10 77.40 62.90

Lowest 25.00 39.25 49.80

Average 31.85 58.28 57.31

Book

value per

share

(Note2)

Before distribution 25.84 30.49 32.09

After distribution 23.34 (Note9) -

Earnings

Per Share

Weighted shares 313,197,478 316,634,554 317,600,138

Earnings Per Share

(Note 3)

Before adjusting 4.91 7.55 1.75

After adjusting 4.91 (Note9) -

Dividend

per share

Cash Dividends 2.496265 (Note9) -

Share

allotment

Stock Dividends from

Retained Earnings - (Note9) -

Stock dividends from

c a p i t a l s u r p l u s- (Note9) -

Unpaid dividend (Note4) - - -

Return on

investme

nt

analysis

P r i c e e a r n i n g s r a t i o ( N o t e 5 ) 6.49 7.72 -

P r i c e - d i v i d e n d r a t i o ( N o t e 6 ) 12.76 (Note9) -

Cash Dividend Yie ld (Note7) 0.08 (Note9) -

(Note 1): Present the annual highest and lowest market price of the common stock the average market price is according to the calculation of the annual transaction price and the transaction amount.

53

(Note 2): Please follow the standard of the issued stock amount of the end of the year and fill in according to the allocation resolution of the shareholder conference

(Note 3): If there is the situation of gratis and has to trace back and to be adjusted, it has to present the earnings per share of before and after adjustment.

(Note 4): If the issue condition of equity securities ruled that the non-grant stock interest could be accumulated to the profit year for grant, it has to disclose the accumulated non-grant stock interest up to the year respectively.

(Note 5): PE ratio = the average per share closing price of the present year/earnings per share (Note 6): price/profit ratio＝the average per share closing price of the present year/per share cash

share profit (Note 7): cash share profit yield = per share cash share profit/ the average per share closing price of the

present year (Note 8): per share net value and earnings per share has to be filled in the latest season information

that is checked and reviewed by the accountant up to the Annual Report printed date the else column have to fill in the present year information up to the Annual Report printed date

(Note 9): Refer to the resolution of the 2016 annual shareholder permanent conference

(6) The Company stock interest policy and the execution condition:

1. The stock interest policyTo concern about the speciality of industry growth and sturdy the Company financial structure,the Company might delete the annual profit allocation in the deficit year.The future development, the financial condition and the shareholder reward will be the primeconsideration of the stock interest policy, then to deliberate the future capital expense budget toallocate the stock interest in order to reserve the demand cash.

When there is profit in the annual final account, it has to pay the income tax first and make up the past deficit. To make provision 10% of the legal surplus according to the laws and regulations, and the special reserve or reserve part of the profit for non-grant according to the Securities Transaction Act No.41 or the resolution of the shareholder conference. The special profit surplus could be turn to the reserve profit for grant if the laws or regulation amended or the causes of the laws or regulations of making provision special profit surplus die out. The allocation of profit will be 10% to 70% of the allocable profit after making provision surpluses. The shareholder bonus is depended on the operation condition and is proposed by the Board of Director. Then, it could be submit to the shareholder conference for resolution and allocate. The Company Board of Director might adjust the allocation according to the actual operation environment and then submit to shareholder conference for resolution and allocate. Note: The above stock interest policy will be refer to the 2016 shareholder permanent conference amendment.

2. The proposed allocation conditon of stock interest in the shareholder conference:

Year Apprved

distribution date

Dividend Cash Dividends

(dollars) Stock Dividend from

Retained Earnings(dollars)

2015 105/3/23 1,367,929,502

(Per share 4.3 dollars)-

Note: per share distribution ratio is based on the amount of the circulation Shares. The case will be carried out according to the related regulations and be refer to the resolution of the shareholder permenant conference of June 13, 2016.

3. Expect stock interest policy will be changed significantly ：None

54

(7)The effect of the shareholder proposed stock grants to the Company business operation

and earnings per share:

Unit：TWD

Year

Item 2016

In the beginning of the term-Paid-in capital 3,175,051,400

Allotment and dividend

Cash dividends/per share(dollar) 4.30 Profit transferred to dividends 0.00 Capital surplus transferred to dividends 0.00

Performance status

Operating profit

N/A(Note1)

Operating profit comparing to previous term Net profit after tax Net profit after tax comparing to previous term Earnings Per Share Earnings Per Share comparing to previous term Average annual Return On Investment(Average PER reversal)

Earnings Per Share and

Price earnings ratio

Conducting the cash dividend issuance from the profit transferring to capital increment

Earnings Per Share Average annual Return On Investment

If not conducting Capital surplus transferring to capital increment

Earnings Per Share Average annual Return On Investment

If not conducting Capital surplus transferring to capital incrementand instead of issuing Cash dividends

Earnings Per Share Average annual Return On Investment

(Note 1): The Company has not drawn up and announced the 2015 financial forecast. The Company might not to disclose the information according to the regulation of the Tai-Tsai-Jen Tze(1) No.00371 of February 1, 2000 of the Securities and Futures Commission of the Ministry of Economic Affairs.

(Note 2): ration share and ration interest condition according to the Board of Director passed allotment of profit of March 23, 2016.

(8)The reward of the employee, Director, and Supervisor: 1. The portion and scope of the reward of the employee, Director, and Supervisor in the Company

Regulation:

If there is profit, the Company should allocate 3% as the employee reward and less than 1.2% as the reward of the Directors. Yet, if the Company still has the accumulated deficit, it has to reserve the makeup amount.

If the employee reward released by stock or cash, the releasing objects should include the qualified subsidiary company employee the measurement is designated by the Board of Director respectively.

2. The estimate base of the reward of the employee, Director, and Supervisor is accordance withthe amount of the stock that is the reward of the employee. If there is difference between theactual allotment and the estimated amount, it will be treated by accounting measurement. Theestimate reward amount of the employee, Director, and Supervisor is considered to the past

55

years self resolved lose-profit amount. If the actual grant is different from the estimate, it will be considered as the accounting estimate change and be listed on the 2015 lose-profit.

3. The information of the proposal of allocation of the employee reward that the Board ofDirector passed: The proposal the Board of Director passed on March 23, 2016 is as: (1). The amount of the allocation of cash reward for the employee and the Directors and

Supervisors:

The employee cash reward is TWD 91,422,260.

The reward of the Directors and Supervisors is TWD 30,474,087.

There is no difference between the total amount of the allocation of the cash reward of the employee and the reward of the Directors and Supervisors that the Board of Director proposed and the recognition expense of 2015.

(2). The proposed amount of the allocation of the employee stock reward and the ratio of the individual net profit after taxes and the employee reward total amount: There is no employee stock reward allocation this time.

(3). The hypothesis calculation of the earnings per share of the proposed allocation beyond the reward of the employee and the Directors and Supervisors: The reward of the employee and the Directors and Supervisors has been as expenditure since 2008.

Note: The above mentioned the reward of the employee and the Directors and Supervisors will be distributed after the passed amendment of the 2016 shareholders permanent conference.

4. The actual allotment condition of the profit of 2014 allocated in 2015:Unit:TWD

Item 2015

Actual distribution

2014 Accountting

Difference Reason Status

Director,Supervisor Compensation

16,998,394 dollars

16,997,588 dollars

806 dollars To

estimate difference

Listed in 2015adjustment

Employee bonus 42,495,987

dollars 42,493,970

dollars 2,017 dollars

(9)The Company repurchase the Company shares: None

(II) Corporation Bonds Process Condition: None

(III) Preferred Stock Process Condition: No Company Preferred Stock issued

(IV) Global Deposit Receipt Process Condition No Company Global Deposit Receipt issued

56

(V) Employee Stock Subscription Certificates Conduct Condition:

(1)Employee Stock Subscription Certificates Conduct Condition

April 15, 2016

categories of the Employee Stock Subscription Certificates

The 1s t Employee Stock Subscription Certificates of 2011

Declare Effective Date July 7, 2011 July 7, 2011

Issued Date August 9, 2011 July 6, 2012

Amount of the Issued Units 6,000,000 1,500,000 Amount of the Issued subscription Shares / Total amount of the Issued shares

6,000,000/318,460,140 1.88%

1,500,000/318,460,140 0.47%

The Period of the subscription Continue to exist

Refer to the No.6 of the Issue and Subscription Measurement of the 1 s t Employee Stock Subscription Certificates of 2011 as the Annex II

Types of honour an agreement pay by the type of the issued new stock

(%)Subscription Period and percentage limit

Refer to the No.6 and No.7 of the Issue and Subscription Measurement of the 1 s t Employee Stock Subscription Certificates of 2011 as the Annex II

Amount of the Obtained Executive shares

4,979,000 597,000

Subscription Amount of the executed

49,790,000 5,970,000

Amount of Non-Executed Subscription

296,000 358,000

Per Share Subscription price of the Non-executed

17.1 22.2

(%)Amount of Non-Executed Subscription/ Total amount of the issued shares

0.09% 0.11%

Effect to the Shareholders NIL NIL

57

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59

V. Operation Profile (I) Business Operation Content

(1) Business Operation Scope:

1. Major Content of the Business Operation

- CC01080 Electronic component Production, CB01020business machine Production -

CC01110 Computer and the peripheral facilities Production, C801010 Basic Chemical

Industry.

- C801990 Other Chemical Material Production, C901990 Other non-metal Mining

Product Production.

- F401010 International Trading.

- ZZ99999 Able to Operate the Business affairs that the Laws and Regulations do not

exhibit or limit out of the approved business affairs.

2. The Company Exist Products:

- CCL of the Double edged PCB.

- Inlayer CCL & prepreg of the Mutiple Layer PCB.

- Mass Lam Board.Mass Lam Board

3. Operation Ratio:

The major operation of Company are the producing, processing, and selling of PCB,

Prepreg, and Mass Lam Board after built the factory in 1993 and expanded the factory in

2005.

The Operation Ratio of 2015 is as:

Unit: TWD thousand dollars;% Major product Operating Revenue Operating Revenue Ratio

CCL 10,613,293 50.85Bonding sheet 9,277,723 44.46

Multi-layer laminated board

977,927 4.69

Others 774 0.00Total 20,869,717 100.00

4. The planed new products4. The main shaft of product development should cope with the environment protection and

conserve energy, so the Company continuously has developed the environment protectionmaterial to harmony with the demand and development of the future market.(1) Ultra-Low Signal Lose High Tg environment protection base material for radio frequency(2) High size-stability Ultra-Low Signal Lose environment protection base material for radio frequency(3) Low-flow- glue High- Liable environment protection prepreg for rigid-flex bond

(2) Industry Profile:

1. Industry present condition and development: The major market of 2015 is Taiwan andChina. The major export area is Korea The expected major market of 2016 will still beTaiwan and China, and Korea will take the second place. The target is to raise the ratio ofthe Hi-Tg, Br-Free, and Low CTE, etc to 60% and up..

60

2. The dependence of the industy upstream, middlestream, and downstream: To make the

upstream-downstream cooperation relationship better and to stable the market mechanism.

3. The various development trend and competition condition of the products:The product and technology development trend is originated from the downstream

demand, so the electronic products should head not only to light, thin, short, small, highreliability, multi-function, but also to high frequency, high-speed, and green environmentprotection. For example, the trend of environment protection demand ratio of HDI plate,multi-layer plate, IC load plate, rigid-flex plate, etc applied on the products such as cellphones and consumer electric products is higher The high functional green environmentprotection base material opposes strong growth potential and will be the major point ofthe PCB product development in the future.

(3)Technology and Research & Development Profile:

Year Successfully Developed Technology and Product

2013

1. Ultra-Low Dielectric Mid Tg Environment Protection Base Materialof the next generation.

2. Ultra-Low Signal Lose High Tg Environment Protection BaseMaterial for Extra-High-Frequency Communication.

3. Low-Flow-Glue Low Dielectric Environment Protection Prepregfor Rigid-Flex Plate Bond.

4. Compatible Price Tg Tg240℃ High Heat Duration IC Load Plateof Environment Protection Base Material.

5. There are 8 patents in Taiwan and China.

2014

1. Ultra-Low wastage environment protection material for high-speedcommunication transportation.

2. Ultra-Low Signal Lose Environment Protection Base Material forRadio-Frequency.

3. Tg 240℃ High Size-Stability Environment Protection BaseMaterial for Load Plate.

4. There are 18 pattens in Taiwan, China, and U.S.A.

2015

1. High-Reliable Environment Protection Base Material forAutomobile Electrics.

2. New style Ultra-Low Dielectric Environment Protection BaseMaterial for High-Frequency Communication.

3. New style Ultra-Low Signal Lose High Ta Base Material.4. There are 21 pattens in Taiwan, China, and U.S.A.

(4)Long/Short Term Business Development Plan:The Company upholds the credibility principle and builds good mutual relationship with thecustomers to reach the realm of win-win. Also, the operation team constructs the future view,value philosophy, and the long/medium/short terms development strategy as the followings:

1. Short Term Development Strategy:(1) Reach the 2016 Budget.(2) To increase the ratio of selling of the High-Frequency High-Temperature Base

Material, Automobile Base Material, Heat Conduction Base Material.(3) To deal with the demand of the customers, the Company adopt the integrate

marketing operation.

2. Medium/Long Term Development Strategy:(1) Expand the abroad market and raise the competition ability.

61

(2) Expand the diversity marketing tunnels of products.

(II) Market and Produce & Sale Profile:

(1)Market Analysis:

1. The major market of 2015 is Taiwan and China. The major export market is Korea. The

2016 major expected market is Taiwan and China. 2015 sale market percentage is as

follow:

2015 market analysis

Region Sales ratio (％)

Taiwan

P.R.C

Others

21.97

68.19

9.84

Total 100.00

2. Market occupied ratio: There 10 domestic corporations produced FR-4 CCL, PP, and Mass

Lam Board in 2015. The produce capacity of the corporations are as follow:

Company name

CCL Bonding sheet Multi-layer laminated

board Production capacity per month (10,000 sheets)

Market share(%)

Production capacity

per month(10,000 m)

Market share(%)

Production capacity per

month (10,000 m2)

Market share(%)

Nan Ya Plastic Corporation

220 38.9 220 20.4

Taiwan Union Technology Corporation

70 12.4 135 12.5 120 30.8

Elite Material Co., Ltd.

50 8.9 180 16.7 80 20.5

ITEQ Corporation

40 7.1 100 9.3

Panasonic Taiwan Co., Ltd.

30 5.3 100 9.3

Isola Taiwan 50 8.9 80 7.4 Uniplus Electronics Co., Ltd.

30 5.3 180 16.7 60 15.4

62

Company name

CCL Bonding sheet Multi-layer laminated

board Production capacity per month (10,000 sheets)

Market share(%)

Production capacity

per month(10,000 m)

Market share(%)

Production capacity per

month (10,000 m2)

Market share(%)

HONG TAI ELECTRIC INDUSTRIAL CO.,LTD.

30 5.3 30 2.7

ShineMore Technology Materials Corporation., Ltd.

25 4.4 10 0.9 50 12.8

Advance Materials Corporation

20 3.5 45 4.1 80 20.5

Total 565 100.0 1,080 100.0 390 100.0

3. The supply-demand situation and the growth of the future market: Taiwan will expand to

the higher level products.

4. The expected sale amount and the basis of 2016:

Refer to the 2015 production and marketing result, the future prosperity, the market supply

and demand conditon, and the result of the first season, the Company do as the followings:

2016anticipated sales.CCL(Sheet) PP(Roll) M/L(KPNL)

Guanyin factory

5,943,864 141,822

Kunshan factory

13,781,214 250,926

Zhongshan factory

8,700,161 184,001

Hsinchu factory

1,579

5. The effective factors of the future business affairs development:

(1) The favorable factors:

- CCL is the basic material of electric products, so there has had no any replacement

so far. The CCL life cycle is pretty long as well.

- adding value.

- Halogen-Free product is popular with high market occupied ratio and creates high

adding value.

- The Company products are diversified and coincided to the customer future

63

development demand.

- There are directly producing factories in the bilateral coasts. There are marketing

bases in Hong Kong and Korea as well.

(2) The unfavorable factors:

- The raw material prices changed greatly to effect the gross profit.

(3) counterplot of dealing:

- To increase the sale ratio of the high level product material to strengthen the adding

value.

- To scatter the sources of the raw material to reduce the risk. To negotiate the long

term co-operate unified purchase system with the supplier by the bilateral coast

group demand to reach the stable cost and supply target.

(2)The function and producing procedure of the major products:

1. The function of the major products

CCL: used in producing double edged or multiple-layer PCB.

Prepreg: Used in producing multiple-layer PCB.

Mass Lam Board: Used in producing multiple-layer PCB.

2. Produce Flow Path:

Mix Glue →Serve Glue →Dried by heat →Pile up →compose →thermoforming

→Inspection →Product

(3)The supply condition of the raw material:

The major raw material of the products are copper foil, glassfiber cloth, and epoxy resin.

Table of the major raw material supply areas and the conditon

major raw material supply area supply condition

copper foil

glassfiber cloth

epoxy resin

domestic

Japan, domestic

Japan, domestic

Normal

Normal

Normal

(4)The name list , stock-in(out) amount of money, and ratio of the customer who occupied

10% or more of the stock-in(out) amount in any one year in latest two years to

interpretate the changing causes of increase/decrease.

64

The major supplier information of the latest two years Unit: TWD thousand dollars

2014 2015 up to the first season of 2016

items

Name amount of money

〔%〕 Occupied ratio of stock-in

relationship with the issuer

Name amount of money

〔%〕

Occupied ratio of

stock-in

relationship with the issuer

Name amount of money

〔%〕

Occupied ratio of stock-in

relationship with the issuer

1 other 10,523,395 100 NIL other 13,547,229 100 NIL other 2,783,014 100 NIL

2 NIL -

Stock-in net

amount 10,523,395 100

Stock-in net amount

100 Stock-in

net amount 2,783,014 100

Major sale customer information of the latest two years Unit: TWD thousand dollars

2014 2015 up to the first season of 2016

Item Name amount of money

〔%〕 Occupied ratio of stock-out

relationship with the

issuer

Name amount of money

〔%〕Occupied ratio

of stock-out

relationship

with the issuer

Name amount of money

〔%〕Occupied ratio of

stock-out

relationship with the

issuer

1 someone

2,459,425 13 NIL someone

2,946,457 14 NIL 4,821,171 100 NIL

2 other 16,425,320 87 NIL other 17,923,260 86 NIL Stock-out net amoun

t

18,884,745 100 Stock-out net

amount20,869,717 100

Stock-out net

amount 4,821,171 100

Interpretation of the changing cause of increase/decrease: The supplier/ customer of stock-out who occupied 10% or more is the same as before. The major changing cause of stock-in/stock-out amount of money is caused by the operation increased.

(5) Table of the production amount value in the latest two years:

Unit: TWD thousand dollars

/1,000 sheets/1,000 M/1,000 SF

Year

Production

Product name

Unit

2015 2014

Amoun t Amount of

m o n e y

Amount A mo u n t

of money

CCL SHT 29,297 11,497,269 27,962 10,899,097

Bonding sheet MTR 98,157 7,748,282 95,882 6,984,570

Multi-layer laminated board

S.F. 6,738 1,040,534 7,492 1,123,751

T o t a l 20,286,085 19,007,418

65

(6)Table of the Sale amount value in the latest two years

Unit: TWD thousand dollars /1,000 sheets/1,000 M/1,000 SF

Year

sales Products

2015 2014

Domestic Sales Export Sales Domestic Sales Export Sales

Quantity

Value Quantity

Value Quantity

Value Quantity

Value

CCL 11,935 4,257,886 15,443 6,355,494 11,059 3,870,841 15,454 6,013,455

Bonding sheet

36,754 3,990,222 44,922 5,287,149 33,579 3,484,312 43,181 4,453,657

Multi-layer laminated board

5,925 956,229 787 22,737 6,023 880,176 1,476 178,366

Others - - - - - 3,938 - -

Total 9,204,337 11,665,380 8,239,267 10,645,478

(Note): 1. Because of the amount of other commodities and units are at odds, it could not be gathered together

2.Other commodities include the copper coil, chemical, glass cloth, raw material

(III)The working employee information of the latest two years and up to March 31, 2016:

Items 2014 2015 Up to March 31, 2016

employee am

ount

direct 1,796 1,582 1,615

indirect 229 235 231

marketing

management 231

237 237

total 2,256 2,054 2,083

average age 31.71 32.44 32.63

average serve year 4.47 4.91 5.03

distribution ratio

doctor 0.18 0.15 0.14

master 2.88 3.16 3.26

college 34.97 39.92 39.56

senior high 59.71 54.58 55.21

under senior

high 2.26

2.19 1.82

(IV) Environmental protection expense information:

Total amount of the damage and punishment caused by contaminating the environment in the latest

year and up to the Annual Report printed date: NIL.

66

(V) Labor-capital relationship:

(1) To present the employee welfare measurement, further study, training, retired system, and the conduct condition.

1. Employee welfare measurement(1) Designated staff welfare commission to conduct the employee welfare, such as the irregular

schedule employee travel and various entertainment and competitions. By the way, there are individual domestic and abroad tour allowance.

(2) Award of the 3 festivals, birthday, marriage and death, and Labor Date. (3) To hold regular employee training according to the Company training system and blueprint

to raise the corporation competition ability. (4) To conduct the regular employee health exam, labor insurance, national health insurance,

and group insurance. (5) To hold the annual year-end party and draw prize. (6) The employee bonus system is to encourage the employee to participate in the Company

management. (7) To issue the employee subscription stock right certificate to lead the employee to grow with

the Company and enjoy the result together with the Company.

2. The Company further study and training system and the conduct condition.The Company training classes is divided into the dispatch training and self-conduct training.After training, it has to fill in the report for learning.Except implementing the adequated training measurement, the Company took account of theresponse in the training period, and combined the training with the promotion. Besides,according to the individual education training information, the Company will take it as thereference of promotion and post away in the future.The education training fee of 2015 is $967,000. Total training hour is 4,881 hours, including theinner and outer training. The average training hour of the employee is 6 hours. It is to strengthenthe discipline and raise the human power quality.

3. Retirement system and the conduct conditionAccording to the regulation of the new rules of the retirement pension, the Company allocates 6% ofthe retirement pension in the employee personal exclusive account of the Labor Insurance Bureau.

4. Agreement between labor and capitalThe rights and responsibilities of the labor and capital accordance with the Company employeehandbook.To protect the right and interest of the labor and capital and to negotiate the relationship of thelabor and capital, the Company devoted to strengthen the harmony of the labor and capital andconduct the mutual communication to resolve the problems.So far, the labor and capital relationship is harmony and there is no significant labor and capitaldispute happened.To keep maintaining the harmony labor and capital relationship, the Company managementlevel will take much more account of the mutual communication tunnel of labor and capital, andconduct the human-base management system to create the good future together.

5. Measurement maintain condition of the employee right and benefitAll of the departments and sections stipulated completed operation flow pathes and implementthe reasonable right and benefit and the responsibility accordance with the related laws andregulations and the inner control regulations.In addition, with good communication mechanism, the Company take account of the opinionexchange between the employee and the chief and make appropriate treatment to maintain theright and benefit of the employee and the Company.

67

(2) To present the damage caused by the labor and capital dispute of the latest year and up to the Annual Report printed date, and disclose the possible estimate amount of money and the measurement that might happen in the present time and the future. If it is unable to estimate, please interpretate the facts of being unable to estimate reasonably: NIL.

6. Significant Contracts:

contract nature litigant contract

start/end datemajor content limited clause

authorization, formula using and marketing

Japan H Corporation

2002.1.21~2022.3.31

Patent authorization, formula using and marketing

NIL

68

VI. Financial Profile(I)Concise Balance Sheet and Profit& Loss Statement of the latest 5 years

(1)Simplified Balance Sheet Consolidated Gain and Loss Simplified Balance Sheet (Consolidated)

Unit: TWD thousand dollars Year

Item 2012 2013 2014 2015

As of 2016.3.31 Financial

Information Current assets 8,746,132 9,109,439 11,113,393 12,575,994 12,516,910Property, Plant and Equipment

4,561,523 5,093,0025,099,578 4,656,802 4,670,143

Intangible assets 2,982 3,491 1,614 3,286 3,128Other assets 297,207 365,500 489,308 471,747 466,758Total assets 13,607,844 14,571,432 16,703,893 17,707,829 17,656,939

Current liabilities

Before distribution

6,311,698 6,622,4327,753,666 6,295,239 5,724,037

After distribution

6,869,839 7,185,3298,544,091 (Note) (Note)

Non-Current liabilities 1,007,019 1,041,502 774,818 1,720,810 1,712,617

Total liabilities

Before distribution

7,318,717 7,663,9348,528,484 8,016,049 7,436,654

After distribution

7,876,858 8,226,8319,318,909 (Note) (Note)

Equity attributable to owners of the parent

6,274,843 6,890,271 8,166,112 9,680,618 10,208,500

Capital 3,083,880 3,124,138 3,159,941 3,175,051 3,181,231 Capital surplus 329,063 381,700 419,305 432,549 437,176

Retained earnings

Before distribution

2,727,353 3,010,0953,999,677 5,616,843 6,174,073

After distribution

2,169,212 2,447,1983,209,252 (Note) (Note)

Other Equity 134,547 374,338 587,189 456,175 416,020 Treasury Share - - - - - Non-controlling Interests 14,284 17,227 9,297 11,162 11,785Total equity Before

distribution

6,289,127 6,907,4988,175,409 9,691,780 10,220,285

After distribution

5,730,986 6,344,6017,384,984 (Note) (Note)

(Note): refer to the resolution of the 2016 shareholder permanent conference

69

Simplified Balance Sheet (Individual)Unit: TWD thousand dollars

Year

Item 2012 2013 2014 2015

Current assets 2,852,003 2,438,446 2,900,868 3,059,571Property, Plant and Equipment 1,646,204 1,690,781 1,592,347 1,494,447Intangible assets 2,106 2,430 1,077 1,794Other assets 5,022,365 6,085,763 7,597,212 9,252,895Total assets 9,522,678 10,217,420 12,091,504 13,808,707

Current liabilities

Before distribution

2,261,777 2,288,6433,152,842 2,412,692

After distribution

2,819,918 2,851,5403,943,267 (Note)

Non-Current liabilities 986,058 1,038,506 772,550 1,715,397

Total liabilities

Before distribution

3,247,835 3,327,1493,925,392 4,128,089

After distribution

3,805,976 3,890,0464,715,817 (Note)

Equity attributable to owners of the parent

6,274,843 6,890,2718,166,112 9,680,618

Capital 3,083,880 3,124,138 3,159,941 3,175,051 Capital surplus 329,063 381,700 419,305 432,549

Retained earnings

Before distribution

2,727,353 3,010,0953,999,677 5,616,843

After distribution

2,169,212 2,447,1983,209,252 (Note)

Other Equity 134,547 374,338 587,189 456,175 Treasury Share - - - - Non-controlling Interests - - - - Total equity Before

distribution

6,274,843 6,890,2718,166,112 9,680,618

After distribution

5,716,702 6,327,3747,375,687 (Note)

(Note): refer to the resolution of the 2016 shareholder permanent conference

70

Simplified Composite Income Sheet(Consolidated) Unit: TWD thousand dollars

Year

Item 2012 2013 2014 2015

As of 2016.3.31 Financial Information

Operating revenue 15,960,163 16,873,122 18,884,745 20,869,717 4,821,171 Gross profit from operations

2,665,851 2,545,2663,430,572 5,064,330

1,195,096

Operating income(loss)

1,245,616 1,019,2781,832,391 3,249,150

799,886

Non-operating income and expenses

-16,048 13,3895,860 81,500

-43,841

Profit before tax 1,229,568 1,032,667 1,838,251 3,330,650 756,045 Continuing operations Net Income

1,229,568 1,032,667 1,838,251 3,330,650 756,045

Loss for non-operating units

- -- -

-

Net Income(loss) 1,132,450 838,123 1,541,633 2,392,187 557,910 Other Comprehensive Income (net amount after tax)

-130,627 245,494 227,042 -113,745 -40,212

Total Comprehensive Income

1,001,823 1,083,6171,768,675 2,278,442

517,698

Net profit for parent company

1,130,206 836,020 1,538,696 2,389,239 557,230

Net profit for Non-controlling Interests

2,244 2,103 2,937 2,948 680

Composite income for parent company

999,969 1,080,674 1,765,330 2,276,577 517,075

Composite income for Non-controlling Interests

1,854 2,943 3,345 1,865 623

Earnings Per Share 3.74 2.69 4.91 7.55 1.75

71

Simplified Statement of Comprehensive Income(Individual) Unit: TWD thousand dollars

Year

Item 2012 2013 2014 2015

Operating revenue 5,024,071 4,817,145 5,357,007 5,852,231 Gross profit from operations

800,132 552,787 838,482 1,223,274

Operating income(loss)

341,904 141,366 396,502706,201

Non-operating income and expenses

844,999 757,037 1,216,328 2,219,312

Profit before tax 1,186,903 898,403 1,612,830 2,925,513 Continuing operations Net Income

1,186,903 836,020 1,538,696 2,389,239

Loss for non-operating units

- - - -

Net Income(loss) 1,130,206 836,020 1,538,696 2,389,239 Other Comprehensive Income (net amount after tax)

-130,237 244,654 226,634 -112,662

Total Comprehensive Income

999,969 1,080,674 1,765,330 2,276,577

Earnings Per Share 3.74 2.69 4.91 7.55

72

(2)Simplified Balance Sheet Composite Income Sheet-Taiwan FAS

Simplified Balance Sheet (Consolidated)-Taiwan FAS Unit: TWD thousand dollars

Year

Item 2009 2010 2011 2012

Current assets 6,208,842 7,434,736 6,926,156 8,743,389

Funds and Investments 55,077 106,808 24,199 25,704

Fixed assets 3,544,601 3,606,346 4,449,977 4,561,523

Intangible assets 81,295 110,997 114,152 107,172

Other assets 296,592 152,511 121,922 154,767

Total assets 10,186,407 11,411,398 11,636,406 13,592,555

Current

liabilities

Before

distribution

4,843,285 5,214,863 5,113,669 6,298,031

After

distribution

5,031,863 5,714,529 5,653,108 6,856,172

Long-term liabilities 932,016 1,159,310 711,916 845,441

Other liabilities 136,961 86,173 151,325 140,483

Total

liabilitie

s

Before

distribution

5,912,262 6,460,346 5,976,910 7,283,955

After

distribution

6,100,840 6,960,012 6,516,349 7,842,096

Capital 2,690,241 2,847,817 2,995,432 3,083,880

Capital surplus 122,777 197,419 233,933 330,300

Retained

earnings

Before

distribution

1,060,624 1,956,202 2,207,468 2,794,875

After

distribution

737,347 1,385,155 1,668,029 2,236,734

Unrecognized net loss

for pension cost -26,441 -29,291 -37,662 -49,287

Cumulative

Translation

Adjustments

138,601 -30,679 247,894 134,547

Total

Sharehold

ers' Equity

Before

distribution

4,274,145 4,951,052 5,659,496 6,308,600

After

distribution

4,085,567 4,451,386 5,120,057 5,750,459

73

Simplified Balance Sheet (Individual)-Taiwan FAS

Unit: TWD thousand dollars

Year

Item 2009 2010 2011 2012

Current assets 2,052,057 2,858,228 2,205,461 2,846,532

Funds and Investments 2,516,743 3,283,682 4,296,075 4,975,514

Fixed assets 1,345,390 1,595,067 1,682,938 1,646,204

Intangible assets 4,710 2,804 2,151 2,106

Other assets 262,666 88,481 32,684 50,577

Total assets 6,181,566 7,828,262 8,219,309 9,520,933

Current

liabilities

Before

distribution

1,282,940 1,729,025 1,717,228 2,248,503

After

distribution

1,471,518 2,228,691 2,256,667 2,806,644

Long-term liabilities 769,203 1,067,969 700,737 834,180

Other liabilities 143,621 89,800 154,279 143,935

Total

liabilitie

s

Before

distribution

2,195,764 2,886,794 2,572,244 3,226,618

After

distribution

2,384,342 3,386,460 3,111,683 3,784,759

Capital 2,690,241 2,847,817 2,995,432 3,083,880

Capital surplus 122,777 197,419 233,933 330,300

Retained

earnings

Before

distribution

1,060,624 1,956,202 2,207,468 2,794,875

After

distribution

737,347 1,385,155 1,668,029 2,236,734

Unrecognized net loss

for pension cost (26,441) (29,291) (37,662) (49,287)

Cumulative

Translation

Adjustments

138,601 (30,679) 247,894 134,547

Total

Sharehold

ers' Equity

Before

distribution

3,985,802 4,941,468 5,647,065 6,294,315

After

distribution

3,797,224 4,441,802 5,107,626 5,736,174

74

Simplified Balance Sheet (Consolidated)-Taiwan FAS

Unit: TWD thousand dollars

Year

Item 2009 2010 2011 2012

Operating

revenue 9,885,533 13,487,405 14,738,806 15,960,163

Gross profit

from operations 1,812,698 2,445,126 2,432,572 2,663,604

Operating

( loss ) gain 979,833 1,372,517 1,227,539 1,242,466

Non- operating

income 25,160 117,682 43,675 48,745

Non-Operating

expenses and

losses

97,131 81,239 102,208 64,788

Income before

tax from

continuing

operations

907,862 1,408,960 1,169,006 1,226,423

Gain and loss

from operating

department

788,064 1,220,961 852,036 1,129,090

Gain and loss

from

non-operating

department

- - - -

Abnormal Gain

and loss - - - -

Accumulate

alteration

amount related

to the alteration

of FAS

- - - -

Net income or

loss for current

period

788,064 1,220,961 852,036 1,129,090

Earnings Per

Share 2.80 4.30 2.87 3.73

75

Simplified Balance Sheet (Individual)-Taiwan FAS

Unit: TWD thousand dollars

Year

Item 2009 2010 2011 2012

Operating

revenue 3,568,185 4,508,029 4,703,075 5,024,072

Gross profit

from operations 613,884 713,059 617,674 797,923

Operating

( loss ) gain 320,201 352,735 232,987 338,722

Non- operating

income 489,484 963,945 759,458 875,136

Non-Operating

expenses and

losses

(29,118) (23,579) (63,931) (30,100)

Gain and loss

from operating

d e p a r t m e n t

780,567 1,293,101 928,514 1,183,758

Gain and loss

from operating

d e p a r t m e n t

739,642 1,218,855 850,183 1,126,846

Income (loss)

on discontinued

operations

- - - -

Extraordinary

Gain (Loss) - - - -

A c c u m u l a t e

a l t e r a t i o n

amount related

to the alteration

o f F A S

- - - -

Net income or

loss for current

period

739,642 1,218,855 850,183 1,126,846

Earnings Per

Share 2.80 4.30 2.87 3.73

76

Name and the Check Opinion of the Certified Accountant of the latest 5 years

Year Name of Accountant Opinion

2011 Jiang, Chon-Yi

Yang, Liu-Fen Clean Audit Opinion

2012 Jiang, Chon-Yi

Yang, Liu-Fen Clean Audit Opinion

2013 Jiang, Chon-Yi

Yang, Liu-Fen Clean Audit Opinion

2014 Yang, Liu-Fen

Chen, Yin-Ju Clean Audit Opinion

2015 Yang, Liu-Fen

Chen, Yin-Ju Clean Audit Opinion

※ If there is the event of changing the accountant, please present the interpretation of changing

clause of the former and the step accountants: It changed the KPMG Firm because of the

adjustment of the inner affairs of the firm.

77

(II) Financial Analysis of the latest 5 years

(1)Financial Analysis(consolidated)

Year

Item 2012 2013 2014 2015

As of 2016.3.31

Capital structure(％)

Debts ratio 53.78 52.60 51.06 45.27 42.12

Long-term capital to Property, Plant and Equipment Ratio

156.41 152.25 170.89 234.66 245.30

Repayment ability％

Current ratio 138.57 137.55 143.33 199.77 218.67

Quick ratio 111.76 113.21 119.52 171.33 186.73

Times interest earned ratio 24.05 21.71 40.06 94.06 106.71

Operating efficiency

Turnover of accounts receivable (times)

3.26 3.04 3.01 3.02 2.93

Average collection days of receivables

111.96 120.06 121.26 120.86 124.57

Turnover of inventory (times)

9.16 8.50 8.75 8.45 7.77

Turnover of accounts payable (times)

4.05 4.40 3.80 3.44 3.43

Average days of sales 39.84 42.94 41.71 43.19 46.97Property, plant and equipment turnover rate (times)

3.50 3.31 3.70 4.48 4.13

Turnover of total assets (times)

1.17 1.16 1.13 1.18 1.09

Profitability

Return on assets (%) 9.32 6.24 10.11 14.08 3.19Return on equity (%) 18.98 12.70 20.44 26.78 5.60Profit Before Tax to Capital Stock (%)

39.87 33.05 58.17 104.9 23.77

Profit margin (%) 7.10 4.97 8.16 11.46 11.57Earnings Per Share (TWD) 3.74 2.69 4.91 7.55 1.75

Cash flow

Cash flow ratio (%) 17.08 18.83 25.48 56.78 12.13

Cash flow adequacy ratio (%)

151.12 178.36 100.98 131.04 150.90

Cash flow reinvestment ratio (%)

5.36 5.90 10.43 16.94 4.07

Degree of leverage

Operating leverage 2.14 2.96 2.18 1.74 1.69

Financial leverage 1.04 1.05 1.03 1.01 1.01

78

The variation causes of the financial ratio of the latest two year: variation

increase/decrease not reach to 20% could depose from analysis. 1. Long-term fund to property, plant and equipment ratio: This term caused by increase in the

profit and the long-term debt.2. Index of repayment ability: This term caused by increase in the profit and short-term

debt’s switching to the long-term debt.3. Property, plant and equipment turnover rate: This term caused by the profit increase.4. Index of profitability: Because of the effect of market product demand, the gross profit

is higher than the former year and the index of the related profit increase as well.5. Index of cash flow: Because the present term profit is higher than last year, the cash

flow ratio, cash flow adequacy ratio, and cash flow reinvestment ratio is higher than lastyear.

6. Operating leverage is lower than last year, times interest earned ratio is higher than lastyear: Caused by the present term gross profit is higher than last year.

79

(1-1)Financial Analysis(Individual)

Year

Item

2012 2013 2014 2015

Capital structure(％)

Debts ratio 34.11 32.56 32.46 29.89

Long-term fund to property, plant and equipment ratio

431.84 457.40 546.56 730.09

Repayment ability％

Current ratio 126.10 106.55 92.01 126.81

Quick ratio 100.30 84.27 73.65 107.84

Times interest earned ratio 48.92 37.84 55.17 97.26

Operating efficiency

Turnover of accounts receivable (times)

3.24 3.01 3.36 3.21

Average collection days of receivables

112.65 121.26 108.63 113.70

Inventory Turnover rate (times) 8.51 7.51 7.99 8.40Turnover of accounts payable (times)

4.21 3.79 3.80 3.38

Average days of sales 42.89 48.60 45.68 43.45Property, plant and equipment turnover rate (times)

3.05 2.85 3.36 3.92

Turnover of total assets (times) 0.53 0.47 0.44 0.42

Profitability

Return on assets (%) 12.97 8.68 14.02 18.64Return on equity (%) 18.99 12.70 20.44 26.78Profit Before Tax to Capital Stock (%)

38.49 28.76 51.04 92.14

Profit margin (%) 22.50 17.36 28.72 40.83Earnings Per Share (TWD) 3.74 2.69 4.91 7.55

Cash flow

Cash flow ratio (%) 15.56 18.66 14.79 53.77

Cash flow adequacy ratio (%) 85.71 81.50 58.33 74.13

Cash flow reinvestment ratio (%) -1.61 -1.13 -0.87 3.68

Degree of leverage

Operating leverage 3.37 6.61 3.08 2.24

Financial leverage 1.08 1.21 1.08 1.04

The variation causes of the financial ratio of the latest two year: variation increase/decrease not

reach to 20% could depose from analysis. 1. Long-term fund to property, plant and equipment ratio: This term caused by increase in the profit and

the long-term debt.

2. Index of repayment ability: This term caused by increase in the profit and short-term debt’sswitching to the long-term debt.

3. Index of profitability: Because of the effect of market product demand, the gross profit is higherthan the former year.

4. Index of cash flow: Because the current liabilities is higher than last year, the cash flow ratio andcash reinvestment ratio is higher than last year; and because of the capital expenditure is higher than last year, the cash flow adequacy ratio is also lower than last year.

5. Operation leverage: Caused by the present term gross profit is higher than last year.

80

Note: the calculation formula of the ratio in the above tables are as followings 1. Capital structure analysis

(1) Debts ratio＝Total liabilities ／Total assets.(2) Long-term capital to Property, Plant and Equipment Ratio＝(Total equity＋Non-Current liabilities)／

Property, plant and equipment net amount. 2. Repayment ability

(1) Current ratio＝Current assets／Current liabilities.(2) Quick ratio＝(Current assets－Inventory－Advanced payment)／Current liabilities.(3) Times interest earned ratio＝ Net profit before Income Tax and Interest expense／Interest expense.

3. Operating efficiency (1) Turnover of accounts receivable (including Accounts Receivable and Notes Receivable occurred

from operation)＝ Net sales／Average accounts receivable (including Accounts Receivable and Notes Receivable occurred from operation) balance.

(2) Average collection days of receivables＝365／Turnover of accounts receivable. (3) Inventory Turnover rate＝Cost of sales／Average Inventories. (4) Turnover of accounts payable (including Accounts Payable and Notes Payable occurred from

operation)＝ Cost of sales／Average accounts payable (including Accounts Payable and Notes Payable occurred from operation) balance.

(5) Average days of sales＝365／Inventory Turnover rate. (6) Property, plant and equipment turnover rate＝Net sales／Average property, plant and equipment net

amount. (7) Turnover of total assets＝Net sales／Average Total assets.

4. Profitability (1) Return on assets＝〔Post-tax profit or loss＋Interest expense×(1-tax rate)〕／ Average Total assets.(2) Return on equity＝Post-tax profit or loss／Average Total equity.(3) Profit margin＝Post-tax profit or loss／Net sales.(4) Earnings Per Share＝(Profit (loss), attributable to owners of parent－Preferred share divedend)／加

Weighted average issued shares.(Note4) 5. Cash flow

(1) Cash flow ratio＝Operational Net Cash flow／Current liabilities.(2) Net Cash flow adequacy ratio＝Operational Net Cash flow within 5 years／ (Capital Expenditure＋

Inventory increment＋Cash dividends) within 5 years. (3) Cash flow reinvestment ratio＝(Operational Net Cash flow－Cash dividends)／(property, plant and

equipment gross amount ＋ Long-term investments ＋ Other Non-Current assets ＋ Working capital).(Note5)

6. Degree of leverage：

(1) Operating leverage＝(Operating revenue net amount－Altered Operating costs and expenses) ／

Operating profit (Note6). (2)Financial leverage＝Operating profit ／ (Operating profit－Interest expense).

81

(2) Financial Analysis(consolidated)-Taiwan FAS

Year

Item 2009 2010 2011 2012

Capital

structure %

Debts ratio 58.04 56.61 51.36 53.59

Long term capital to fixed

assets ratio 146.88 169.43 143.18 156.83

Repayment

ability %

Current ratio 128.19 142.57 135.44 138.83

Quick ratio 110.90 117.04 112.94 111.95

Times interest earned

ratio 12.50 25.81 20.54 23.99

Operating

efficiency

Turnover of accounts

receivable (times) 3.04 3.41 3.48 3.26

Average collection days

of receivables 120.17 107.04 104.88 111.96

Turnover of inventory

(times) 10.15 9.95 9.74 9.17

Turnover of accounts

payable (times) 5.26 4.69 4.88 4.40

Average days of sales 35.95 36.68 37.47 39.80

Turnover of fixed assets

(times) 2.79 3.74 3.31 3.50

Turnover of total assets

(times) 0.97 1.18 1.27 1.17

Profitability

Return on assets(%) 8.89 11.70 7.82 9.30

Return On Equity(%) 20.33 26.47 16.06 18.87

In (%) of

capital stock

Operating

profit 36.42 48.20 40.98 40.29

Profit Befo

re Tax 33.75 49.48 39.03 39.77

Profit margin (%) 7.97 9.05 5.78 7.07

Earnings Per Share

(TWD) 2.72 3.88 2.88 3.74

Cash flow

Cash flow ratio (%) 24.53 32.45 22.43 18.72

Cash flow adequacy ratio

(%) 65.68 108.87 113.19 108.06

Cash flow reinvestment

ratio (%) 11.14 17.16 6.70 5.92

Degree of

leverage

Operating leverage 2.80 1.96 1.98 2.45

Financial leverage 1.09 1.04 1.05 1.04

82

(2-2)Financial Analysis(individual)-Taiwan FAS

Year

Item 2009 2010 2011 2012

Capital

structure %

Debts ratio 35.52 36.88 31.30 33.89

Long term capital to fixed

assets ratio 353.43 376.75 377.19 433.03

Repayment

ability %

Current ratio 159.95 165.31 128.43 126.60

Quick ratio 138.46 136.58 106.53 100.36

Times interest earned

ratio 34.39 68.89 43.70 48.79

Operating

efficiency

Turnover of accounts

receivable (times) 3.32 3.52 3.39 3.24

Average collection days

of receivables 110 104 108 112.65

Inventory turnover Rate

(times) 11.15 9.64 9.17 8.51

Turnover of accounts

payable (times) 5.66 5.00 4.85 3.98

Average days of sales 33 38 40 42.89

Turnover of fixed assets

(times) 2.65 2.83 2.79 3.05

Turnover of total assets

(times) 0.58 0.58 0.57 0.53

Profitability

Return on assets (%) 13.10 17.60 10.82 12.94

Return On Equity (%) 20.50 27.31 16.06 18.87

In (%) of

capital stock

Operating

profit 11.90 12.39 7.78 10.98

Profit Befo

re Tax 29.02 45.41 31.00 38.39

Profit margin (%) 20.73 27.04 18.08 22.43

Earnings Per Share

(TWD) 2.55 3.88 2.87 3.73

Cash flow

Cash flow ratio (%) 36.23 30.07 23.25 17.20

Cash flow adequacy ratio

(%) 61.42 74.99 77.68 65.96

Cash flow reinvestment

ratio (%) 6.50 4.33 (1.22) (1.66)

Degree of

leverage

Operating leverage 2.74 2.79 3.98 3.40

Financial leverage 1.08 1.06 1.10 1.08

83

Note: the calculation formula of the ratio in the above tables are as followings: 1.Capital structure analysis

(1) Debts ratio＝Total liabilities ／Total assets.(2) Long term capital to fixed assets ratio＝(Net amount of shareholders' equity＋Long-term

liabilities)／Fixed assets net amount. 2.Repayment ability

(1) Current ratio＝Current assets／Current liabilities.(2) Quick ratio＝(Current assets－Inventories－advanced payment)／Current liabilities.(3) Times interest earned ratio＝ Income Tax and Interest expense／Interest expense.

3.Operating efficiency(1) Accounts receivable(including Accounts Receivable and Notes Receivable occurred from

operation) turnover rate ＝ Net sales ／ Average Accounts receivable(including Accounts receivable and Notes Receivable occurred from operation ) net amount.

(2) Average collection days of receivables＝365／Accounts receivable turnover. (3) Inventory turnover rate＝Cost of sales／Average Inventories. (4) Accounts payable(including Accounts Payable and Notes Payable occurred from operation)

turnover rate＝ Cost of sales／Average Accounts payable(including Accounts Payable and Notes Payable occurred from operation) net amount.

(5) Average sales day＝365／Inventory turnover rate. (6) Fixed assets turnover＝Net sales／Fixed assets net amount. (7) Turnover of total assets＝Net sales／Total assets.

4.Profitability(1) Return on assets＝[Profit after tax＋Interest expense(1－tax rate)]／Average Total assets.(2) Return On Equity＝Net profit after tax／Shareholders' equity net amount.(3) Profit margin＝Post-tax profit or loss／Net sales.(4) Earnings Per Share＝(Profit after tax－ Preferred share dividend)／Weighted average issued

shares. 5.Cash flow

(1) Cash flow rate＝Operational Net Cash flow／Current liabilities.(2) Cash flow adequancy ratio＝Operational Net Cash flow within 5 years／ (Capital Expenditure＋

Inventories increment＋Cash dividends) within 5 years. (3) Cash flow reinvestment ratio ＝ (Operational Net Cash flow － Cash dividends) ／ (Fixed

assetsgross amount＋Long-term investments＋Other assets＋Working capital). 6.Degree of leverage

(1) Operating leverage＝(Operating revenue net amount－Variated Operating costs and expenses)／Operating profit

(2) Financial leverage＝Operating profit／(Operating profit－Interest expense).

84

(III) Supervisor Review Report

Supervisor Review Report

To Grant

The Board of Director designated and sent the business operation report, financial

report, and profit allocation proposal of 2015. The financial report has been commissioned

Accountant Liu-Feng, Yang and Yin-Zu, Chen of KPMG accountant firm and has completed

and issued the checking report.

The above mentioned business operation report, financial report, and profit allocation

proposal have been checked by the Supervisor completely and considered that there is

nothing not compliance. So, it has to issue the report accordance with the regulation of

Clause 219 of the Company Act. Please be informed carefully.

With Kind Regard

Shareholder Conference, EMC

Supervisor, EMC

_______________________ _______________________

Dou-Jen, Sen Fong-Zon, Dong

March 23, 2016

85

(IV) Individual Financial Statement of 2015: Refer to the Annex III

(V) 2015 Consolidated Financial Statement of the Parent/ Subsidiary Company that is

certified and checked by the accountant: Refer to the Annex IV.

(VI) If the Company or the related corporation happened the financial turnover

difficulty in the latest year and up to the Annual Report printed date, it has to present

the effect to the Company financial conditon: NIL.

86

VII. Review Analysis and Risk Affairs of the Financial Condition andManagement Result(I)Analysis on Financial Status: Unit: TWD thousand dollars;%

Year Item 2015 2014

Variation

Amount %

Current assets 12,575,994 11,113,393 1,462,601 13.16

Long-term investments - - - -

Fixed assets 4,656,802 5,099,578 -442,776 -8.68

Intangible assets 3,286 1,614 1,672 103.59

Other assets 471,747 489,308 -17,561 -3.59

Total assets 17,707,829 16,703,893 1,003,936 6.01

Current liabilities 6,295,239 7,753,666 -1,458,427 -18.81

Long-term liabilities 1,235,660 539,366 696,294 129.09

Other liabilities 485,150 235,452 249,698 106.05

Total liabilities 8,016,049 8,528,484 -512,435 -6.01

Share capital 3,175,051 3,159,941 15,110 0.48

Capital surplus 432,549 419,305 13,244 3.16

Retained earnings 5,616,843 3,999,677 1,617,166 40.43

Share holders' equity and

other Items 456,175 587,189 -131,014 -22.31

Non-controlling interests 11,162 9,297 1,865 20.06

Total Shareholders' Equity 9,691,780 8,175,409 1,516,371 18.55

Remark：

1. Increment of Intangible assets：Owing to the purchase of Intangible assets.2. Increment of Long-term liabilities：Owing to the loan.3. Increment of Other liabilities：Owing to the increase of deferred income tax.4. Increment of Retained earnings：Owing to the continuous incoming profit.5. Decrease of Share holders' equity and other Items ：Owing to the exchange rate.6. Increment of Non-controlling interests：Owing to the continuous profit earning.

87

(II) Financial performance:

Unit: TWD thousand dollars

Year 2015 2014 Alteration

amount

Variation ratio

Item (%)

Operating revenue, net 20,869,717 18,884,745 1,984,972 10.51

Operating costs 15,805,387 15,454,173 351,214 2.27

Gross profit from operations 5,064,330 3,430,572 1,633,758 47.62

Operating expenses 1,815,180 1,598,181 216,999 13.58

Operating ( loss ) gain 3,249,150 1,832,391 1,416,759 77.32

Non-operating income and

expenses

81,500 5,860 75,640 1290.78

Profit before tax from

continuing operations

3,330,650 1,838,251 1,492,399 81.19

Deduction: Tax expense 938,463 296,618 641,845 216.39

Profit after tax from

continuing operations

2,392,187 1,541,633 850,554 55.17

Increase/decrease ratio variation analysis interpretation: front/rear term variation reaches 20% variation amount of money reaches NT$10,000,000. (1) Gross profit from operations, Operating (loss) gain: The gross profit of the present term

is higher than last year because of the effect of market product demand. (2) Non-operating income and expenses: effect of exchange rate variation. (3) Tax expense, Profit before/after tax from continuing operations: caused by the present

term profit is higher than last year.

88

(III) Review and Analysis of Cash Flow (1) Shifting Analysis of the Latest Two Years

Unit: TWD thousand dollars 2015 2014 Variation

amount Alteration %

Net cash flows from operating activities

1,297,207 466,199 831,008 178.25

Net cash flows used in investing activities

(75,703) (109,278) 33,575 (30.72)

Net cash flows used in financing activities

(1,060,662) (328,018) (732,644) 223.35

淨現金流入 160,842 28,903 131,939 456.49

Causes of variation interpretation (1) Net cash flows from operating activities is higher than last year: Caused by the present term

profit is higher than last year. (2) Net cash flows used in investing activities is lower than last year: Caused by the expense of

obtaining property, plant and equipment is lower than last year. (2) Net cash flows used in financing activities is higher than last year: Caused by repayment the

debt. (3)net cash flow-in is higher than last year: Net cash flows from operating activities is higher than

the Net cash flows used in investing activities.

(2) Cash Shifting Analysis in the future one year Unit : TWD thousand dollars

Cash residual at the

beginning of the term

Cash flow from the operating

revenue

Cash outflow for the year

Cash residual Plan for cash shortage

Investment plan

Financial plan

653,223 1,783,459 1,882,670 (99,211) - - 1. Cash flow condition analysis of the year

(1) Operation activity: Match up the operation expect the net cash flow-in will be$1,783,459,000 come from the operation activity.

(2) Investment activity: Match up the business affair demand to improve the producing facilities

(3) Financing activity: Distribute cash stock interest match up the capital condition to increase loan

2. Redeem measurement and shifting analysis when cash insufficient: proposed to loan fromthe bank to make up the insufficient amount of money.

(IV) Effect of Significant capital expense to the financial affairs of the latest year: NIL.

(V) The latest year reinvestment policy, the profit/lose major cause and the improve plan and the next year investment plan: NIL.

(VI) Risk management (1) Effect of the latest year interest rate, exchange rate variation, inflation

to the Company profit/lose and the future measurement: Item 2015(NT$ Thousand

dollars)

Interest expense 35,792

Foreign exchange (loss) gain

112,878

To obtain much more premium loan interest rate, the Company estimate the

89

bank loan interest rate and keep close contact with the bank. To deal with the foreign exchange variation, the Company designated concise foreign exchange avoid risk strategy and strict control procedure.

(2)Major causes of profit/lose and the future measurement of conducting high risk, high lever investment, capital loan to others, policy of endorsement guarantee and financial derivative transaction: except the financing endorsement guarantee to the subsidiary company of automatic reinvestment, the Company has not conducted any high risk, high lever investment, capital loan to others, policy of endorsement guarantee and financial derivative transaction. Out of the careful estimate, regular response and control, the Company designated the Treatment Procedure of Obtaining and Measurement of Property, Operation Procedure of Loaning Capital to Others, Operation Procedure of Endorsement Guarantee, Treatment Procedure of Financial Derivative Transaction to follow.

The endorsement guarantee amount will be decrease gradually followed by the profit of the subsidiary company.

(3) The future development and research plans and the expected cast in research and development Expense: Insist green environment protection management idea The future research and development plan will focus on environment protection and conserve energy.

Items of the future research and

development plans

expected cast in expense of research and development

expected complete/mass produce date

major factors that affect the research and

development to success

Ultra-Low Signal lose High Tg environmental protection base material for radio frequency

$12,000,000 the 4th season of

2016 Product Certifications and market demand

High Size-stability Ultra-Low Signal Lose Environmental protection Base Material

$14,000,000 the 4th season of

2016 Product Certifications and market demand

Low-Glue High-Reliable Environmental Protection Prepreg for Rigid-Flex Board

$6,000,000 the 4th season of

2016 Product Certifications and market demand

(4) Effect and measurement of domestic/abroad important policy and laws change to the Company financial affairs of the latest year: NIL.

90

(5) Effect and measurement of science and technology change to the Company financial affairs of the latest year: NIL.

(6) Effect and measurement of corporation image change to the risk management of the latest year: NIL.

(7) Expected benefit and efficiency, possible risk, and measurement of merge of the latest year: NIL.

(8) Expected benefit and efficiency, possible risk and measurement of expanding factory building of the latest year: NIL.

(9) Risk and measurement of concentrated Stock-in/Stock-out of the latest year: NIL.

(10) Effect of the mass transfer or variation of share right of the Director, Supervisor, or the major shareholder who hold 10% or more shares to the Company, risk and measurement of the latest year: NIL.

(11) Effect of the variation of right of management to the Company Risk and Measurement of the latest year: NIL.

(12) Litigation and non-litigation events of the latest year: NIL. (13) Other important risk and measurement: NIL.

(VII) Other important affairs: NIL.

91

VIII. Special Record Items

(I) Related information of the related corporation

(1) Organization profile of the related corporation

1. Structure of the related corporation

(2) Basic Information of the related corporation

Company Date of Incorporati

on

Address Paid-up Capital Major Business Item

EMC OVERSEAS HOLDING INC. Jul. 1999 P.O. Box 957,Offshore Incorporations Center, Road

Town, Tortola, British Virgin Islands US＄35,656,950 Investment

Li Cheng Tech Co., LTD. Jun. 1999 No.11, Gongye 5th Rd., Guanyin Dist., Taoyuan City NT$489,951,900

Rechargeable Polymer Lithium Battery

Grand Shanghai Incorporated May.1997 P.O. Box 957,Offshore Incorporations Center, Road

Town, Tortola, British Virgin Islands US＄18,200,000

General Import/Export Business Investment

EMC(KunShan) Sep. 1997 No. 368, You Bi Road, Zhou Shi Township, Kun Shan City, Jiangsu Province US＄18,200,000

Manufacturing PCB bonding sheet and CCL

GRAND SHANGHAI INCORPORATED

Apr. 2004 Scotia Center, 4thFloor, P.O. Box 2804, George Town, Grand Cayman, Cayman Islands US＄33,798,821

General Import/Export Business Investment

EMC

EMC OVERSEAS HOLDING

INCORPORATED

(GRAND SHANGHAI INCORPORATED

EMC(QunSHAN)

100%

100%

100%

(GRAND ZHUHAI INCORPORATED)

Li-Chen Science and Technology Inc.

33.5%

(GRAND ZHONGSHAN INCORPORATED)

EMC(ZhongShan)

100%

99.79%

100%

92

Company Date of Incorporati

on

Address Paid-up Capital Major Business Item

GRAND ZHONGSHAN INCORPORATED

May. 2004 P.O. Box 957,Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands US＄16,437,000

General Import/Export Business Investment

EMC(ZhongShan) Jun. 2004 No. 7, Ke Ji Blvd., Huo Ju Development Zone, Zhong Shan City, Guangdong Province US＄20,200,000

Manufacturing PCB bonding sheet and CCL

(3) According to the Clause 369-3 of the Company Act, if it presumption control and subsidiary

relationship, it has to disclose the items: NIL.

(4) The industries of the entire related corporation business affair comprised: refer to the above

mentioned the basic information of the related corporation.

(5) Director, Supervisor, and General Manager of the related corporation.

March 31, 2016

Company Title Name or Representative Holding of shares

Number of shares(Share)

shareholding ratio(%)

EMC OVERSEAS HOLDING INC.

Director Dong, Ding-yu (Legal Representative, Elite Material Co., Ltd.)

35,656,950 100

GRAND SHANGHAI INCORPORATED

Director Dong, Ding-yu (Legal Representative, EMC OVERSEAS HOLDING INC.)

33,798,821 100

GRAND SHANGHAI INCORPORATED

Director

Dong, Ding-yu (Legal Representative, Grand Zhuhai Incorporated) Tsai, Hui-Liang/Zhang, Wen-Xing

18,161,515 99.79

GRAND ZHONGSHAN INCORPORATED

Director Dong, Ding-yu (Legal Representative, Grand Zhuhai Incorporated)

16,437,000 100

Elite Electronic Material (Kunshan) Co. Ltd.

Director General manager

Grand Shanghai Incorporated Representative：Dong, Ding-yu/Tsai, Hui-Liang/Zhang, Wen-Xing Guan, En-Xiang

- 100

Elite Electronic Material (Zhongshan) Co., Ltd.

Director General manager

Grand Zhongshan Incorporated Representative：Dong, Ding-yu/Tsai, Hui-Liang/Zhang, Wen-Xing Guan, En-Xiang

- 100

93

(6) Operation Profile of the related corporation

2015.12.31/Unit: TWD thousand dollars

Note: Earnings per share is according to the share amount of the end of the term to calculate

(7) Consolidated Financial Statement tablet of the related corporation: should intake draw up related

corporation Consolidated Financial Statement tablet is the same as the should intake draw

parent/subsidiary company according to the Financial and Accounting Guideline Bulletin No.7, so

it has not drawn related corporation combined financial tablet.

Company Capital Total

assets

Total

liabilitiesNet value

Operating

revenue

Operating

Income

Net

income or

loss for

current

period

(After tax)

Earnings

per share

after tax

(dollars)

EMC

OVERSEAS

HOLDING

INC.

1,160,487 9,148,078 50 9,148,028 0 0 2,220,063 62.26

Grand

Zhuhai

Incorporated

1,109,446 7,464,419 50 9,105,619 0 0 2,219,965 65.68

Grand

Shanghai

Incorporated

597,415 5,741,450 462,862 5,278,588 1,340,923 (32,584) 1,394,231 76.61

Grand

Zhongshan

Incorporated

539,545 4,320,985 484,711 3,836,275 713,584 (25,718) 828,938 50.53

Elite Electronic Material (Kunshan) Co. Ltd.

597,415 7,563,197 2,219,112 5,344,085 9,396,478 1,605,826 1,421,126 -

Elite

Electronic

Material

(Zhongshan)

Co., Ltd.

663,065 5,492,288 1,718,059 3,774,229 5,906,127 981,272 846,006 -

94

(II) Private equity conducting condition of the latest year and up to the Annual Report

printed date: No private equity conduction.

(III) Subsidiary company hold or measure the Company stock condition of the latest

year and up to the Annaul Report printed date: None.

(IV) Other necessary additional Note items: NIL.

(V) If it happened the significant effect events to the shareholder right and benefit or

the stock price ruled by the Clause 36-2-2 of the Company Act: None.

95

Annex I.

EMC The 1st Employee Subscription Right Certificate Issue and Subscription Measurement of 2011 1. Issue Purpose: To encourage the employee effectively, to keep the required talent for the Company

development, to raise the centripetal force and loyalty of the employee to the Company, to promotethe Company operation result, to share the operation result to the operation result to the colleaguespromptly, and to reach the target of benefit and glory together, the Company stipulated themeasurement.

2. Issue Period: The employee subscription stock right certificate will be issued one year afterapproved by the authorization organization. It will depend on the actual demand to issue one or twotimes. The actual issued date will be stipulated by the Company Chairman.

3. Issue total amount: The total issued amount is 7,500 units. Per unit could subscribe the Companycommon stock 1,000 shares accordance with the related regulation of the Measurement.

4. People of Subscription: The working employee and the employee who is full-time accredit at8-degree and above of the domestic or abroad subsidiary company that the Company directly orindirectly hold 50% or more the right to vote or the employee performed perfect approved by theChairman, and conference to the working result, the entire contribution, or special acting orseniority, etc, after reviewed by the Chairman and then put forward and hand in to the Board ofDirectors to pass. Any of the authorized employee subscription amount could not surpass 10% ofthe employee subscription stock right certificate. Meanwhile, any sole subscription person is unableto subscribe surpass 1% of the total amount of issued stock on the end date of the year.

5. Subscription Price: The subscription price will be the same as the Company common stock closingprice on the date of the subscription issued.

6. Period of right exercise: The continue to exist period of the certificate is 5 years The subscriptionperson should execute the right of subscription as below 2 years after granting the certificate:1:2 years after granting the certificate, the employee is able to subscribe up to 50% of the amount

of the certificate by the stipulated price. 2:3 years after granting the certificate, the employee is able to subscribe up to 75% of the amount

of the certificate by the stipulated price. 3:4 years after granting the certificate, the employee is able to subscribe up to 100% of the amount

of the certificate by the stipulated price. 7. Exercise Limit: The certificate could not be transferred in the period of continue to exist, but not

limit to the successor. After at maturity, the non-executed certificate will be regarded as abandon, sothe subscribed person could not claim the right. If the subscribed person leave the job by causes, itwill be treated as the followings:1:

The retire employee follows the example of the working employee to exercise the right of subscription accordance with the time schedule of the Clause 6 of the Measurement.

2: Volunteer to leave the job or dismissed according to the related regulations of the Labor Safety and Health Basic Act: the subscription certificate with exercise right could exercise the subscription right within a month dated from the date of leaving the job position. But if it happens to be suspended transferring, the period of exercising should be postponed according to the continue to exist period. The subscription certificate without exercise right would forfeit the right on the date of leaving the job.

3: Common Death: The subscription certificate with exercise right could be exercised by the successor within a year from the date of death. The subscription certificate without exercise right could not request to perform the right after the date of death.

96

4: Dead or handicapped caused by professional disaster: 4.1: The grant subscription certificate of the man who is handicapped caused by professional

disaster and unable to work continuously could exercise the entire subscription right during the period of leaving the job and could not be limited by the time schedule or ratio of the Clause 5th of the Measurement. Definitely, the right of subscription should be selected from one of the date counted from the date of leaving the job or the two-year maturity date of granting the subscription certificate and should exercise within a year. Absolutely, it should be limited in the period of continuing to exist.

4.2: The grant subscription certificate of whom dead of suffering professional disaster could be exercised the entire right by the successor after the death and might not be limited by the related time schedule and subscription ratio of the Clause 6th of the Measurement. Definitely, the right of subscription should be selected from one of the date counted from the date of death or the two-year maturity date of granting the subscription certificate and should exercise within a year. Absolutely, it should be limited in the period of continuing to exist.

5: Currently in suspension without pay: The subscription certificate with exercise right of the employee who approved to be currently in suspension without pay could exercise the subscription right from the date of being currently in suspension without pay within one month. But if it happens to be suspend transferring according to the regulations or laws, the subscription right could be recovered after being reinstated. Definitely, the subscription right exercise period should be postponed accordance with the period of being currently in suspension without pay.

6: Severance: The subscription certificate with exercise right could exercise the right from the date of severance effected within one month. But if it happens suspend transfer in according to the laws or regulations, the exercise period of the subscription certificate should be postponed accordance with the period of continuing to exist. The subscription certificate without exercise right should be canceled from the date of severance effected.

7: Post away: The right of the subscription certificate of whom is post away due to the demand of the Company operation and approved by the Company should not be effected.

8: Other issues of terminating or adjusting the employ relationship could follow time schedule and ratio of the right accordance with the Clause 6 of the Measurement or being approved the subscription right by the Company Chairman and reported to the Board of Directors for post recognition.

9: The Company could reclaim the subscription certificate without exercise right if the man who violated significant fault of the labor contracts or working regulation after being grant the subscription certificate.

8. Ways of performing an Agreement: The ways of performing an agreement of the subscription is thatthe Company will issue new Shares to hand over to the employee.

9. Subscription Price Adjustment:(1) If the subscription certificate meets any variation of the Company shares after issuing, ie.,

conduct cash capital increase, profit or capital surplus transfer to capital increase, corporation merge, stock split, or conduct cash capital increase joint to the GDR, the stock price will be adjusted accordance with the followings. The calculation down to NT$ cent. Below NT$ cent will be round down or up.

Subscription Price after adjustment = Subscription Price before adjustment X 【﹝issued stock amount ＋ ((per share payment×new stock issue amount)÷Subscription Price before adjustment)﹞÷(issued stock amount＋new stock issue amount)】

97

1: Issued stock amount is the Company issued common stock amount (the Company repay but not being canceled or transfer treasury shares included”; subscription stock payment certificate and the shares of bond right transfer certificate are not included).

2: If the per share payment is stock grant or stock split, the payment will be “zero(0)”. Because the Company issue the employee bonus new Shares, the adjustment formula of the per share payment as mentioned above should be the closing price one day before the shareholder conference and consider the effect of ex-right and ex-dividends.

3: If the subscription price after adjustment is higher than before adjustment, it would not be adjusted.

(2) If the subscription certificate meets the condition of common stock share decreasing not caused by treasury share cancel decrease capital after issued, it should adjust the subscription price after adjustment and the subscription ratio after adjustment on the decrease capital record date according to the below formula(calculated down to NT$ cent, below the NT$ cent should be round down or up). The subscription Price after adjustment = the subscription before adjustment ×〔issued common stock amount before decrease capital÷issued common stock amount after decrease capital〕

(3) If the subscription meets the condition that the Company distribute the common stock cash stock interest occupied per share present price is 1.5% or more, it should adjust down the transfer price accordance with the below formula of the occupied per share present price ratio on the ex-dividends record date.: Transfer Price after adjust down＝Transfer Price before adjust down×(1－ the ratio of distribution common stock cash stock interest occupied the per share present price).

The designation of the per share present price should follow the simple arithmetic mean of the common stock closing price of the date of 1, 3, or 5 operation days before the date of cash stock interest stopping transferring ex-dividends announcement date.

10. Procedure of Exercising Subscription Right:1: The subscription person could exercise the subscription right accordance with the designated

time schedule of the Clause 3rd of the Measurement except the suspend transferring period and the date from the Board of Directors called for deciding the grant stock record date and interest allocation record date to the grant stock record date and interest allocation record date (prevail the latest date) , and fill in the subscription demandant to apply from the Company stock affairs agency. It will be effective in delivery time and could not apply for rescinding.

2: The Company will announce the subscription person to pay the stock payment to the appointed bank after the Company stock affair agency accepted the subscription request. The overdue payment will be considered to abandon the right of the subscription.

3: The Company stock affair agency should record the subscription share amount on the Company stock record after confirming the adequate stock payment, and has to hand over the Company new issued common stock within 5 business days by the way of deposit allot. The mentioned common stock will go to market for transaction from the date the agency hand over to the distribution person.

4: The Company will apply the capital variation registration of the increased new issued shares of exercised employee subscription certificate toward the authorized organization the Company registrated.

11. Employee could exercise the subscription right twice per month.12. The right and responsibility of the Company consigned new issue common stock is the same as

the Company common stock.

98

13. The taxes of the Shares that the people subscribed according to the measurement transactionshould conduct accordance with the present ROC Taxes Regulations.

14. The Measurement could be agreed by 2/3 of the Board of Director present and 1/2 presentDirectors before issuing.Amendment before issuing is the same. And report to the authorized organization declarationeffective and then execute.If there is anything not explain clearly, it should cope with the related laws and regulations toconduct.

99

KPMGSecurities Competent Authority’s Approval ：

(90) Tai Cai Chen(VI) Tzi No. 166967 Jin Guan Chen Liu Tzi No. 0950161002

March 23rd, 2016

Independent Auditors,  Report 

To the Board of Directors of Elite Material Co.,Ltd: 

We have  audited  the balance  sheets of  Elite Material Co.,Ltd.  as of December 31, 2015  and  2014,  and  the  related  statements of  comprehensive  income,  changes  in equity  and  cash  flows  for  the  years  ended  December  31,  2015  and  2014.  These   financial  statements  are  the  responsibility  of  the  Company,

s management.  Our responsibility is to issue a report on these financial statements based on our audits. 

We  conducted our  audits  in  accordance with  the  “Regulations Governing Auditing and  Attestation  of  Financial  Statements  by  Certified  Public  Accountants”  and  the auditing  standards  generally  accepted  in  the  Republic  of  China.  Those  standards require  that we plan and perform  the audit  to obtain  reasonable assurance about whether  the  financial  statements  are  free  of  material  misstatement.  An  audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used  and  significant  estimates  made  by  management,  as  well  as  evaluating  the overall  financial  statement  presentation.  We  believe  that  our  audits  provide  a reasonable basis for our opinion. 

In  our  opinion,  the  financial  statenmnts  referred  to  above  present  fairly,  in  all material respects, the financial position of Elite Material Co.,Ltd. as of December 31, 2015 and 2014, and the results of their operations and their cash flows for the years ended December 31,2015 and 2014, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRIC Interpretations and SIC Interpretations endorsed by the FSC. 

Annex II

Individual Financial Statement that is checked and certificatedby the Accountant of 2015.

100

Elit

e M

ater

ial C

o., L

td.

Bal

ance

She

ets

DE

CE

MB

ER

31,

201

5 A

ND

201

4 (A

mou

nts E

xpre

ssed

in T

hous

ands

of N

ew T

aiw

an D

olla

rs)

(Eng

lish

Tran

latio

n of

Fin

anci

al R

epor

t Orig

inal

ly Is

sued

In C

hine

se)

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f the

con

solid

ated

fina

ncia

l sta

tem

ents

.

104.

12.3

1 10

3.12

.31

Ass

ets

Am

ount

％A

mou

nt

％

Cur

rent

Ass

ets：

1100

C

ash

and

cash

equ

ival

ents

(Not

e 6

(1))

$

653,

223

5 49

2,38

1 4

1150

N

et N

otes

Rec

eiva

ble(

Not

e 6

(3))

20

0,24

0 2

210,

375

2

1170

N

et T

rade

rece

ivab

le(N

ote

6 (3

))

1,69

1,92

0 12

1,

510,

517

12

1181

Tr

ade

rece

ivab

le-R

elat

ed p

artie

s 16

,878

-

19,4

49

-

1200

O

ther

Rec

eiva

bles

15

,534

-

64,9

58

1

1310

In

vent

ory(

Not

e 6

(4))

45

7,66

8 3

578,

849

5

1470

O

ther

Cur

rent

Ass

ets

24,1

08

-

24,3

39

-

Tot

al C

urre

nt A

sset

s

3,05

9,57

1 22

2,

900,

868

24

Non

-cur

rent

Ass

ets：

1550

In

vest

men

ts A

ccou

nted

for U

sing

Equ

ity M

etho

d (N

ote

6 (5

))

9,14

6,84

0 66

7,

497,

714

62

1600

R

eal E

stat

e、Pl

ant a

nd E

quip

men

t(Not

e 6

(6))

1,

494,

447

11

1,59

2,34

7 13

1780

In

tang

ible

Ass

ets

1,79

4 -

1,07

7 -

1840

D

efer

red

Inco

me

Tax

Ass

et(N

ote

6 (1

3))

10,8

20

-15

,242

-

1900

O

ther

Non

-cur

rent

Ass

ets

89,8

06

1 82

,080

1

1920

R

efun

dabl

e de

posi

t 5,

429

-

2,17

6 -

Tot

al N

on-c

urre

nt A

sset

s 10

,749

,136

78

9,

190,

636

76

Tot

al A

sset

s $

13,8

08,7

07

100

12,0

91,5

04

100

104.

12.3

1 10

3.12

.31

Lia

bilit

ies a

nd E

quity

A

mou

nt

%

Am

ount

%

C

urre

nt li

abili

ties：

2100

Shor

t-Ter

m B

orro

win

gs(N

ote

6 (7

)) $

8,32

9 -

390,

043

3

2110

Shor

t-Ter

m N

otes

and

Bill

s Pay

able

(Not

e 6

(8))

-

- 19

9,62

6 2

2170

Acc

ount

s Pay

able

1,

314,

145

9 1,

323,

679

11

2180

Acc

ount

s Pay

able

-Rel

ated

par

ties

76,2

18

1 22

,994

-

2200

Oth

er P

ayab

les

487,

225

4 42

1,10

8 3

2230

Cur

rent

Inco

me

Tax

Liab

ilitie

s 20

5,73

8 1

63,6

52

1

2250

Prov

isio

ns -

Cur

rent

(Not

e 6

(11)

) 3,

892

- 5,

446

-

2321

Cur

rent

por

tion

of b

ond

repu

rcha

se (N

ote

6 (1

0))

- -

9,80

1 -

2322

Long

Ter

m D

ebts

-Cur

rent

Por

tion(

Not

e 6

(9))

312,

500

2 71

2,50

0 6

2399

Oth

er C

urre

nt L

iabi

litie

s-O

ther

4,

645

-

3,99

3 -

Tot

al C

urre

nt L

iabi

litie

s

2,41

2,69

2 17

3,

152,

842

26

Non

-cur

rent

liab

ilitie

s：

2540

Long

Ter

m D

ebt(N

ote

6 (9

))

1,21

9,70

0 9

521,

719

4

2551

Net

ben

efit

liabi

lity-

Non

cur

rent

(Not

e 6

(13)

) 7,

971

- 35

,837

-

2570

Def

erre

d In

com

e Ta

x Li

abili

ties(

Not

e 6

(13)

) 47

7,17

9 4

199,

615

2

2645

Gua

rant

ee D

epos

its R

ecei

ved

10,5

47

-

15,3

79

-

Tot

al N

on-c

urre

nt li

abili

ties

1,71

5,39

7 13

77

2,55

0 6

Tot

al li

abili

ties

4,

128,

089

30

3,92

5,39

2 32

Equ

ity (N

ote

6 (1

4))：

3100

Cap

ital S

tock

3,

175,

051

24

3,15

9,94

1 26

3200

Cap

ital S

urpl

us

432,

549

3 41

9,30

5 3

Ret

aine

d Ea

rnin

gs：

3310

Lega

l Res

erve

74

0,73

7 5

586,

867

5

3351

Acc

umul

ated

Ear

ning

s/D

efic

its

4,87

6,10

6 35

3,

412,

810

29

3400

Oth

er E

quity

45

6,17

5 3

587,

189

5

Tot

al e

quity

9,68

0,61

8 70

8,

166,

112

68

Tot

al li

abili

ties a

nd e

quity

$

13,8

08,7

07

100

12,0

91,5

04

100

101

The accompanying notes are an integral part of the consolidated financial statements.

Elite Material Co., Ltd. Statement of Comprehensive Income

FOR THE YEARS ENDED DECEMBER 31,2015 AND 2014 (Amounts Expressed in Thousands of New Taiwan Dollars)

(English Tranlation of Financial Report Originally Issued In Chinese)

2015 2014 Amount ％ Amount ％

4000 Operating Income $ 5,852,231 100 5,357,007 1005000 Operating Costs(Note 6 (4)) (4,629,473) 79 (4,517,638) 84 Gross Income from Operations 1,222,758 21 839,369 165910 Deduction: Unrealized sales profit and loss (973) - (1,489) -5920 Add: Realized sales profit and loss 1,489 - 602 - Gross Income from Operations 1,223,274 21 838,482 16 Operating Expenses： 6100 Marketing Expenses (224,776) 4 (193,714) 46200 Administrative expenses (217,967) 4 (174,098) 36300 Research and Development Expenses (74,330) 1 (74,168) 16300 Operating Expenses (517,073) 9 (441,980) 8 Net Operating Income 706,201 12 396,502 8 Non-Operating Income and Expenses： 7010 Other Income 1,452 - 845 -7020 Other Gains and Losses(Note 6 (18)) 28,190 - 8,627 -7370 Share of Profit of Associates Accounted for Using Equity

Method 2,220,063 38 1,236,630 23

7050 Financial Costs (30,393) (1) (29,774) (1)Non-Operating Income and Expenses 2,219,312 37 1,216,328 22

7900 Continuing Operations’ Income Before Tax 2,925,513 49 1,612,830 307951 Deduction: Income Tax Expense (536,274) (9) (74,134) (1) Net Income (loss) 2,389,239 40 1,538,696 298300 Other Comprehensive Income： 8310 Items not to be reclassified into profit or loss 8311 Defined benefit plans Remeasurement 22,110 - 4,958 -8349 Income tax related to Items not to be reclassified (3,758) - 8,825 -

18,352 - 13,783 -8360 Items that may be subsequently reclassified into profit or loss 8361 Exchange difference in the financial report from operating units aboard (157,847) (3) 256,447 58399 Income tax related to Items to be reclassified 26,833 - (43,596) (1)

Items that may be subsequently reclassified into profit or loss (131,014) (3) 212,851 48300 Other Comprehensive Income(Amount after tax) (112,662) (3) 226,634 4 Total Comprehensive Income $ 2,276,577 37 1,765,330 33 Earnings Per Share(Note 6 (16))(Unit：TWD) $ 7.55 4.91 Diluted Earnings Per Share (Note 6 (16))(Unit：TWD) $ 7.46 4.84

102

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f the

con

solid

ated

fina

ncia

l sta

tem

ents

.

Elit

e M

ater

ial C

o., L

td.

Stat

emen

t of c

hang

es in

equ

ity

FOR

TH

E Y

EA

RS

EN

DE

D D

ECE

MB

ER

31,

2015

AN

D 2

014

(Am

ount

s Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

) (E

nglis

h T

ranl

atio

n of

Fin

anci

al R

epor

t Ori

gina

lly Is

sued

In C

hine

se)

Cap

ital S

tock

R

etai

ned

Ear

ning

s

Com

mon

Sto

ck

Cap

ital c

olle

cted

in

adva

nce

C

apita

l Sur

p lus

L

egal

Res

erve

U

ndis

trib

uted

E

arni

ngs

Exc

hang

e D

iffer

ence

s on

Tra

nsla

tion

of

Fore

ign

Fina

ncia

l St

atem

ents

T

otal

equ

ity

Jan.

1, 2

014

Bal

ance

$

3,12

4,13

8 -

381,

700

503,

265

2,50

6,83

037

4,33

86,

890,

271

Net

Inco

me

--

--

1,53

8,69

6-

1,53

8,69

6O

ther

Com

preh

ensi

ve In

com

e -

--

-13

,783

212,

851

226,

634

Tota

l Com

preh

ensi

ve In

com

e -

--

-1,

552,

479

212,

851

1,76

5,33

0 A

ppro

pria

tion

and

dist

ribut

ion

of re

tain

ed e

arni

ngs(註

1)：

Le

gal R

eser

ve

--

-8 3

,602

(83,

602)

--

Cas

h D

ivid

ends

of C

omm

on S

tock

-

--

-(5

62,8

97)

-(5

62,8

97)

Con

verti

ble

Secu

ritie

s Con

vers

ion

16

,193

-21

,918

--

-38

,111

The

right

to tr

ansf

er th

e rig

ht o

f cha

rge

of c

onve

rtibl

e bo

nds p

ayab

le

conv

erte

d to

com

mon

shar

e -

-(5

,955

)-

--

(5,9

55)

Adv

ance

Rec

eipt

s for

Cap

ital S

tock

-

36,8

84-

--

-36

,884

Exer

cise

Em

ploy

ee S

tock

War

rant

s 19

,610

(36,

884)

17,2

74-

--

-St

ock-

base

d Pa

ymen

t Tra

nsac

tion

--

4,36

8 -

--

4,36

8 D

ec.3

1, 2

014

Bal

ance

3,

159,

941

-41

9,30

558

6,86

73,

412,

810

587,

189

8,16

6,11

2N

et In

com

e -

--

-2,

389,

239

-2,

389,

239

Oth

er C

ompr

ehen

sive

Inco

me

--

--

18,3

52(1

31,0

14)

(112

,662

) To

tal C

ompr

ehen

sive

Inco

me

--

--

2,40

7,59

1(1

31,0

14)

2,27

6,57

7 A

ppro

pria

tion

and

dist

ribut

ion

of re

tain

ed e

arni

ngs(註

2)：

Le

gal R

eser

ve

--

-1 5

3,87

0(1

53,8

70)

--

Cas

h D

ivid

ends

of C

omm

on S

tock

-

--

-(7

90,4

25)

-(7

90,4

25)

Con

verti

ble

Secu

ritie

s Con

vers

ion

-

-2,

168

--

-2,

168

The

right

to tr

ansf

er th

e rig

ht o

f cha

rge

of c

onve

rtibl

e bo

nds p

ayab

le

conv

erte

d to

com

mon

shar

e 1,

600

-(5

84)

--

-1,

016

Mat

ured

bon

ds p

ayab

le

--

(1,2

24)

--

-(1

,224

)Ex

erci

se E

mpl

oyee

Sto

ck W

arra

nts

13,5

10-

11,1

44-

--

24,6

54St

ock-

base

d Pa

ymen

t Tra

nsac

tion

--

1,74

0 -

--

1,74

0 D

ec.3

1, 2

015

Bal

ance

$

3,17

5,05

1-

432,

549

740,

737

4,87

6,10

645

6,17

59,

680,

618

Not

e 1:

The

com

pens

atio

n fo

r dire

ctor

s and

supe

rvis

ors,

12,1

05,0

00 d

olla

rs, a

nd th

e em

ploy

ee b

onus

, 30,

263,

000

dolla

rs fo

r 201

3 ha

s bee

n de

duct

ed fr

om S

tate

men

t of C

ompr

ehen

sive

Inco

me.

N

ote

2: T

he c

ompe

nsat

ion

for d

irect

ors a

nd su

perv

isor

s, 16

,998

,000

dol

lars

, and

the

empl

oyee

bon

us, 4

2,49

6,00

0 do

llars

for 2

014

has b

een

dedu

cted

from

Sta

tem

ent o

f Com

preh

ensi

ve In

com

e.

103

Elite Material Co., Ltd. Statement of Cash Flows

FOR THE YEARS ENDED DECEMBER 31,2015 AND 2014 (Amounts Expressed in Thousands of New Taiwan Dollars)

(English Tranlation of Financial Report Originally Issued In Chinese) 2015 2014

Cash Payments for Other Goods and Services： Net Income before Tax $ 2,925,513 1,612,830Adjustments：

Income & Expense Items Depreciation Expense 165,755 186,330Amortization 1,339 1,622Expense for bad debts expense (transferred to income) (2,185) (280)Gains on Financial Assets (Liabilities) at Fair Value through Net Profit or Loss - 85Share of Profit of Associates Accounted for Using Equity Method (2,220,063) (1,236,630)Interest expense 30,310 29,033Interest revenue (1,452) (845)Interest from the disposition of Real Estate, Plant and Equipment 2,395 51Cost for share-based compensastion 1,740 4,368Convertible bonds issuance discount cost and interest expense 83 741Buy back the interests on Bonds Payable (1,224) -Others - 1,125

Income & Expense Items合計 (2,023,302) (1,014,400)Changes In Operating Assets and Liabilities：

Net Change In Operating Assets： Notes Receivable 10,246 (25,421)Trade receivable (176,713) (274,382)Other Receivables 49,377 (55,939)Inventory 121,181 (69,004)Deferred Revenues (1,174) 231Other Current Assets 231 (8,494)Other Non-current Assets (7,726) (4,004)

Net Change In Operating Assets (4,578) (437,013)Net Change In Operating Liabilities：

Accounts Payable 43,690 318,484Other Payables 66,058 60,681Provisions (1,554) (201)Other Current liabilities 652 (470)Net Defined benefit liability (5,756) (5,316)Net Change In Operating Liabilities 103,090 373,178

Changes In Operating Assets And Liabilities 98,512 (63,835)Adjustments (1,924,790) (1,078,235)

Cash Inflows of Operations 1,000,723 534,595Interest Received Classified As Investing Activities 1,457 845Dividends Received Classified As Investing Activities 414,262 - Interest Paid Classified As Financing Activities (30,109) (28,858)Income taxes paid (89,126) (40,383)

Cash provided by (used in) operating activities 1,297,207 466,199Cash flows from investing activities：

Acquisition Of Real Estate, Plant and Equipment (70,710) (111,106)Proceeds From Disposal Of Real Estate, Plant and Equipment 316 1,551Acquisition Of Intangible Assets (2,056) (269)Decrease(Increase) In Refundable deposit (3,253) 546

Cash provided by (used in) investing activities (75,703) (109,278)Cash flows from financing activities：

Decrease(Increase) In Short-Term Borrowings (381,714) 164,173Decrease(Increase) In Short-Term Notes and Bills Payable (199,626) 49,991Bonds buy back (6,700) -Proceeds From Long Term Debt 1,535,481 581,250Repayments Of Long Term Debt (1,237,500) (593,750)Decrease In Guarantee Deposits Received (4,832) (3,669)Cash Dividends (790,425) (562,897)Exercise Employee Stock Warrants 24,654 36,884

Cash Flows From Financing Activities (1,060,662) (328,018)Increase In Cash And Cash Equivalents 160,842 28,903Cash And Cash Equivalents At Beginning Of Period 492,381 463,478Cash And Cash Equivalents At End Of Period $ 653,223 492,381

The accompanying notes are an integral part of the consolidated financial statements.

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2015 & December 31, 2014

(Unless otherwise noted, all amounts are stated in thousands of New Taiwan Currency)

Ⅰ. Company History

Founded on March 24, 1992 after being approved by the Ministry of Economic Affairs,

Elite Material Co., Ltd. (hereinafter referred to as the Company) was engaged in manufacturing

and marketing raw materials, semi-finished products and finished products of green sheets,

speciality chemicals for electronic industry and electronic components, with green sheets and

adhesive sheets as the main operating revenue.

The application of the Company for shares over-the-counter was approved on October 3,

1996, and shares were officially listed for sale on December 26, 1996; the application for listing

of transferring shares was approved on October 22, 1998, and transferring shares were officially

listed for sale on November 27, 1998. Registered address is No.18, Datong 1st Rd., Guanyin

Dist., Taoyuan City. Please see Footnotes XIV.

Ⅱ. Date and Procedures of Approval of Financial Statement

The Individual Financial Statement was approved and released by the Board of Directors

on March 23, 2016.

Ⅲ. Application of New and Revised Standards and Interpretations

(Ⅰ) Influence of the Adoption of New and Revised Standards and Integrations Approved by

the Financial Supervisory Commission

Since 2015, the Company has fully adopted the International Financial Report

Standards (2013 Version) (excluding IFRS 9 Financial Instruments) which is approved by

the Financial Supervisory Commission (hereinafter referred to as FSC) to come into effect

to compile consolidated financial reports, with relevant new, amended and revised

standards and interpretations listed as follows:

New／Amended／Revised Standards & Interpretations

Effective Date Released by IAS

Board

Amendments to IFRS 1 IFRS 7 First-time Adoption Exemption July 1 2010

Amendments to IFRS 1 Severe Hyperinflation and Removal of

Fixed Dates for First-time

July 1 2011

Amendments to IFRS 1 Government Loan January 1, 2013

Amendments to Amendments to IFRS 7 Disclosures－Transfer of

Financial Assets

July 1 2011

Amendments to IFRS 7 [Disclosures－Offsetting Financial Assets January 1, 2013

105

and Liabilities]

IFRS 10 Consolidated Financial Report January 1, 2013

(Individual investor

effective date

IFRS 11 Joint Agreement January 1, 2013

IFRS 12 Disclosures of Rights and Interests of Other Individuals January 1, 2013

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New／Amended／Revised Standards & Interpretations

Effective Date Released by IAS

BoardIFRS 13 Fair Value Measurement January 1, 2013

Amendments to IAS 1 Other Comprehensive Income Presentation July 1, 2012

Amendments to IAS 12 Deferred Income Tax Asset: Withdrawal of Target Assets

January 1, 2012

Revision to IAS 19 Employee Benefits January 1, 2013

Revision to IAS 27 Separate Financial Report January 1, 2013

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities

January 1, 2014

IFRI 20 Stripping Costs in the Production Phase of a Surface Mine January 1, 2013

Nature and impact of major changes to the consolidated financial report by adopting IFRS (2013 Version) are as follows: 1. IFRS 13 Fair Value Measurement

IFRS changes the definition of fair value, sets out in a single framework for measuring fair value and requires disclosures about fair value measurements. The Company has added disclosures related to fair value measurement in accordance with the new standards and postponed the provisions on fair value measure applicable to the new standards in accordance with the interim provisions of the new standards but is not required to provide detailed information concerning the provisions on the added disclosures. Although the applicable new measurement provisions had been postponed from 2015, the assets and liabilities of the Company haven’t suffered material influences.

2. IAS 1 Financial Report PresentationThe Standards makes amendments to the presentation of Other Comprehensive

Income and divides the items under Other Comprehensive Income into two categories Subsequent Non Reclassification under Gains and Losses and Subsequent Reclassification under Gains and Losses by nature. The Amendments also stipulates that the relevant taxes of Other Comprehensive Income recognized with pre-tax amounts shall be separately recognized with the foregoing two categories. The Company has changed the presentation of Other Comprehensive Income statement in accordance with the Standards, with the comparison matched with the reclassification presentation.

3. IAS 19 Employee BenefitsThe main amendments to the Standards multiply net defined benefit liability (assets)

by discount rate to determine the net interest, uses it to replace the pre-amendment interest costs and the expected returns of the planned assets, removal of actuarial gains and losses Corridor Approach or the accounting policy choice of one-time recognized under gains and losses when occurs, and stipulates remeasurements (including actuarial gains and losses) of the defined benefit plans to be recognized as other comprehensive income when occurs, past service costs to be considered as gains and losses when occurs, and stipulates not to recognize the apportion any longer based on the straight line method under the costs during the average period before meeting the defined conditions. In addition, companies could not any longer recognize the earlier of the cancelation of the offer of post-employment benefits or the recognition of relevant re-construction costs under the post-employment benefits, rather than to always recognize the post-employment under liabilities and costs when defining the premise of relevant post-employment events. Additional disclosures are required in relation to defined benefit plans.

Following accessment, the Standards hasn’t greatly affected the financial status and operation achievements of the Company, and will add defined benefit plans related disclosures as stipulated.

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(Ⅱ) New and Revised Standards and Interpretation Not Approved by FSC

The standards and interpretations listed in the table below have been released by the

International Accounting Standards Boards (hereinafter referred to as IASB) but not

approved to come effect by FSC:

New／Amended／Revised Standards & Interpretations

Effective Date Released by IAS

Board

IFRS 9 [Financial Instrument] 2018.1.1

Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets

between Investor and Its Affiliated Company

To be decided

Amendments to IFRS 10, IFRS 12 and IAS 28 Individual Investor:

Applicable Exceptions from Consolidated Report Exceptions

January 1, 2016

Amendments to IFRS 11 Accounting for Interests in Joint

Operations

January 1, 2016

IFRS 14 Regulatory Deferral Accounts January 1, 2016

IFRS 15 Revenue from Contracts with Customers January 1, 2018

IFRS 16 Leases January 1, 2019

Amendments to IAS 1 Disclosures January 1, 2016

Amendments to IAS 7 Disclosures January 1, 2017

Amendments to IAS 12 Recognition of Deferred Income Tax Asset

for Unrealized Loss

January 1, 2017

Amendments to IAS 16 and IAS 38 Clarification of Acceptable

Methods of Depreciation and Amortizement

January 1, 2016

Amendments to IAS 16 and IAS 41 Agriculture: Bear Plants January 1, 2016

Amendments to IAS 19 Defined Benefits Plan: Employee

Promotion

July 1, 2014

Amendments to IAS 27 Equity Method of Separate Financial

Statements

January 1, 2016

Amendments to IAS 36 Recoverable Amount Disclosure for

Non-Financial Assets

January 1, 2014

Amendments to IAS 39 Novation of Derivative and Continuation of

Hedge Accounting

January 1, 2014

2010‑2012 and 2011‑2013 Annual Improvements July 1, 2014

2012‑2014 International Financial Report Annual Improvements January 1, 2016

IFRS 21 Course January 1, 2014

The Company is continuously assessing the influences of the abovementioned

standards and interpretation on the financial status and operation results of the Company,

with the relevant influences to be disclosured upon completion.

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Footnotes to Individual Financial Statement

Ⅳ. Summary of Major Accounting Policies

The major accounting policies adopted in this Individual Financial Statement are

summarized as follows. Unless otherwise noted, the following accounting policies have been

applicable for all presentation period of the Individual Financial Statement.

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(Ⅰ) Following Statements

The Individual Financial Statement was compiled in accordance with the Guidelines

Governing the Preparation of Financial Reports by Securities Issuers.

(Ⅱ) Compiling Foundation

1. Measurement Foundation

Except the major items in the following balance sheet, the Individual Financial

Statement was complied based on the historical costs:

(1) Financial assets at fair value through profit or loss measured with fair value;

(2) Net defined benefit liability (or asset), is measured according to the fair value of the

retirement fund assets deducting present value of the defined benefit obligation and the

ceiling influence value listed in Footnotes IV (15)

2. Functional Currency and Presentation Currency

Each party of the Company takes the currency of major economic environment

where its operation is located as its functional currency. The Individual Financial

Statement is presented in the functional currency of the Company, TWD. All of the

financial information expressed herein in TWD is of one thousand per unit.

(Ⅲ) Foreign Currency

1. Foreign Currency Trading

Foreign currency is converted into functional currency according to exchange rate

on the date of transaction. The monetary items in foreign currency on the date of report

are converted into functional currency according to exchange rate on the day. The gains

and losses from conversion refer to the difference between the amount after costs after

amortization priced in functional currency in the beginning of the period adjust the

effective interests and post-payment amount in the current period and the amount of the

costs after amortization priced in functional currency is converted according to exchange

rate on the report day.

The non-monetary items of foreign currency measured with fair value are converted

into functional currency according to exchange rate on the day of measuring the fair

value, while the non-monetary items of foreign currency measured by historical costs are

converted according to exchange rate on the transaction day.

Unless non-monetary equity instruments available for sale are designated to be

financial liabilities to hedge for the net investment of foreign operating organizations or

qualified cash flow, the foreign currency exchange difference resulting from the

conversion is recognized to be other comprehensive Income, otherwise, recognized to be

gains and losses.

2. Foreign Operating Organizations

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Footnotes to Individual Financial Statement

The assets and liabilities of foreign operating organizations, including the business

reputation and fair value adjustment during the acquisition, are converted to be TWD

according to exchange rate on the report day; gains and losses are converted into TWD

according to exchange rate in the current period, and the resultant conversion difference

is recognized to be other comprehensive Income.

In case of the loss of control, joint control or material influences arising from the

punishment on foreign operating organizations, the accumulated conversion differences

related to the foreign operating organizations shall be fully reclassified as gains and

losses. In case of subsidiary company of foreign operating organizations involved in the

punishment, the related accumulated conversion differences shall be reclassified as

non-controlling interests in proportion. In case of affiliated company or joint ventures of

foreign operating organizations involved in some of the punishment, related accumulated

conversion differences shall be fully reclassified as gains and losses in proportion.

As to the receivable and payable monetary items of foreign operating organizations,

if without the repayment plan or the possibility of repayment in foreseeable future, the

resultant gains and losses from foreign currency conversion shall be regarded as a part of

net investments to the foreign operating organizations as recognized as other

comprehensive income.

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Footnotes to Individual Financial Statement

(IV) Standards for Classifying Current and Non-current Assets and Liabilities

Assets meeting one of the following conditions are recognized to be current assets,

and other assets not belonging to current assets are recognized to be non-current assets:

1. Those that are expected to be realized during the normal operating period of the

Company or intended to be sold or consumed.

2. Those held mainly for the purpose of transaction.

3. Those expected to be realized within 12 months after the balance sheet.

4. Cash or cash equivalents, but not including those used for exchange, liquidation of

liabilities or those with other restrictions.

The liabilities meeting any one of the following conditions are current liabilities, and

other liabilities not belonging to current liabilities are recognized to be non-current

liabilities:

1. Those expected to be paid off during the normal operating period of the Company.

2. Those held mainly for the purpose of transaction.

3. Those expected to be paid off within 12 months after the balance sheet.

4. Those that shall not allow the Company to unconditionally extend the liquidation period

to at least 12 months. Liabilities for liquidation arising from the issuing of equity

instruments in accordance with the clauses chosen by the other party of transaction will

not affect their classification.

(V) Cash or Cash Equivalents

Cash includes cash on hand and demand deposits. Cash equivalents are the

investments which are allowed to be converted into normed cash with few value change

risks and short-term high flowability. Certificate of deposit which satisfy the foregoing

definition and with the holding purpose of meeting the short-term cash pledges rather than

investment or others shall be recognized as cash equivalents.

(VI) Financial Instrument

Financial assets and financial liabilities can be recognized when the Company

becomes one party stipulated under the conditions of the Financial Instrument.

1. Financial assets

Financial assets of the Company are classified into: financial assets at fair value

through profit or loss, loans and account receivables.

(1) Financial assets at fair value through profit or loss

Such financial assets refer to those held for trading or designated financial assets

at fair value through profit or loss.

Financial assets held for trading are sold or re-purchased within a short period

due to the main purpose of obtaining or incurring. In case of any of the following

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Footnotes to Individual Financial Statement

conditions for the Company, the financial assets excluding those held for trading are

designated to be those measured fair value in accordance with gains and losses at the

original recognition:

A. Eliminate and greatly reduce the inconsistent measure or recognition arising from

the measurement on assets or liabilities on different basis and recognition of

relevant gains and losses.

B. Financial assets assess the performance based on fair value.

C. Composite instruments include embedded derivative.

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Footnotes to Individual Financial Statement

Such financial assets are measured with fair value at the original recognition and

the transaction costs are recognized as gains and losses when they occur; the

subsequent assessment is measured with fair value and the re-measurement gains or

losses (including relevant dividends income and interest income) are recognized as

gains and losses, which are then listed under non-operating income and expenses.

When purchasing or selling financial assets on the basis of the trade practices,

accounting treatment on the trading day will be adopted.

If such financial assets belong to the equity investment of Tight Market Public

Offer and Unreliable Fair Value Measurement, they shall be measured with costs

deducting impairment loss and recognized as Financial Assets Measured with Costs.

(2) Loans and account receivables

Loans and account receivables shall be public offer in tight market, and be the

financial assets with fixed or decidable payment amount, including account

receivables and other receivables. At original recognition, they shall be measured with

fair value plus the trading costs which can be directly attributable, and in subsequent

assessment, they are measured with post-amortization costs deducting impairment

losses according to effective interest rate method, except short-term receivables

recognized as those without materiality. When purchasing or selling financial assets on

the basis of the trade practices, accounting treatment on the trading day will be

adopted.

Interest income is recognized under non-operating income.

(3) Financial assets impairment

As to financial assets or financial liability not measured at fair value through

profit or loss, impairment loss shall be assessed on each report day. When there is

objective evidence showing single or multiple events happen on financial assets after

original recognition which gives rise to losses to the estimated future cash flow of the

financial assets, the impairment has occurred.

The object evident of financial asset impairment includes major financial

difficulties of issuers or debtors, default (such as the delay payment or default of

interest or non-payment), the greater possibility of debtors’ going bankrupt or other

financial re-organization and the disappearance of activated market of financial assets

due to financial difficulties. In addition, when the fair value of equity investment

available for sale greatly or continuously declines to below the costs, it also belong to

objective impairment evidence.

If there is no impairment arising from the individual evaluation on the accounts

receivables, combined basis shall be adopted to evaluate the impairment. The objective

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impairment evidence of receivables combination possibly includes the past receivables

experience of the Company, the increase in delayed payment exceeding the loan

period and national or regional economic situation changes related to the default of

receivables.

The impairment loss amount measured and recognized with post-amortization

costs is the difference between the carrying amount of the assets and the present value

of the estimated future cash flow discounted according to the original effective rate of

the financial assets.

All financial asset impairment losses are directly deducted from the carrying

amount of the financial assets, and only the carrying amount of the accounts receivable

shall be lowered through the provision accounts. When the accounts receivables are

judged to be uncollectible, they are used to offset the provision accounts. The

originally offset but later receivable amount can credit the provision accounts. The

changes of the carrying amount of the provision accounts are recognized to be gains

and losses.

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Footnotes to Individual Financial Statement

When the financial assets are measured with post-amortization costs, in case of

the reduction in subsequent impairment loss and such reduction occurring after the

recognition of impairment loss, the impairment losses previously recognized are

allowed to re-recognized as gains and losses, and accumulated under other equity

interest, but the carrying amount of the investment on the impairment re-recognition

date shall not be higher than the post-amortization costs when the impairment losses

are not recognized.

The bad debts loss of accounts receivable and increased amount shall be

recognized under administrative expenses.

(4) Financial assets de-recognition

When the Company only terminates the contractual rights from the cash flow of

such assets or has transferred the financial assets and almost all risks and returns of the

asset ownership have been transferred to other enterprises, the financial assets shall be

de-recognized.

When de-recognizing the overall single financial asset, the difference between the

carrying amount and the sum of the total of the received or receivable consideration

and the amount recognized as other comprehensive income and accumulated under

Other Equities – Unrealized Gains and Losses of available-for-sale financial assets

shall be recognized as gains and losses and listed under non-operating income and

expenses.

When not de-recognizing the overall single financial asset, the Company takes

the relative fair value of each part on the transferring date as basis to apportion the

original carrying amount of the financial assets to the parts that is continuously

recognized and de-recognized due to continuous participation. The difference between

the carrying amount that is apportioned to the de-recognition part and the sum of

consideration collected for de-recognition part and the part of any accumulated gains

or losses recognized as other comprehensive income that is apportioned to be

de-recognition part shall be recognized as gains and losses and listed under

non-operating income and expenses. The accumulated profits and losses recognized as

other comprehensive income shall be apportioned to continuously recognized part and

de-recognized part in accordance with their relative fair value.

2. Financial Liabilities and Equity Instruments

(1) Classification of Liabilities and Equity

The liabilities and equity instruments issued by the Company shall be classified

as financial liabilities or equity instruments in accordance with the essence of the

contract the definitions of financial liabilities and equity.

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Footnotes to Individual Financial Statement

Equity instruments shall refer to any contract recognizing the remaining equities

of the Company after deducting all liabilities from assets. The equity instruments

issued by the Company shall be recognized as the amount after directly deducting

issuing costs from the obtained prices.

As to the composite financial instruments issued by the Company, the owner has

the right of choice, and the instruments can be converted to be convertible bond of

capital, with the quantity of outstanding shares not to be changed as their fair value

varies.

As to the liabilities of composite financial instruments, the original recognition

amount shall be measured with fair value of similar equities excluding equity

conversion right. The original recognition amount of equities shall be measured with

the difference between the overall composite financial instrument fair value and

liabilities fair value. Any trading costs which can be directly attributable shall be

apportioned to liabilities and equities according to the proportions of carrying amount

of original liabilities and equities.

After original recognition, the liabilities of composite financial instruments shall

be measured with the costs after apportions according to the effective interest method.

The equities of composite financial instruments are not required to be re-measured

after original recognition.

Interests and losses or profits related to financial liabilities shall be recognized as

gains or losses and listed under non-operating income and expenses.

Financial liabilities are re-classified as equities during conversion, and the

conversion doesn’t generate gains and losses.

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(2)Financial assets or financial liabilities at fair value through profit or loss

Such financial liabilities refer to financial liabilities held for trading or measured

with financial asset or financial liabilities at fair value through profit or loss

Financial liability held for trading refer to those with main purpose for obtaining

or occurring being sold or re-purchased within a short period. In case of any of the

following conditions, the Company designates the financial liabilities excluded from

the financial assets held for trading to be measured with fair value according to gains

and losses:

A. Eliminate and greatly reduce the inconsistent measure or recognition arising from

the measurement on assets or liabilities on different basis and recognition of

relevant gains and losses.

B. Financial assets assess the performance based on fair value.

C. Composite instruments include embedded derivatives.

Such financial assets are measured with fair value at the original recognition and

the trading costs are recognized as gains and losses when they occur; the subsequent

assessment is measured with fair value and the re-measurement gains or losses

(including relevant dividends income and interest income) are recognized as gains and

losses, which are then listed under non-operating income and expenses.

If financial assets or financial liabilities at fair value through profit or loss belong

to unquoted equity investments unreliably measured with selling borrowed fair value

and shall deliver such equity investments, they are measured with costs and listed

under Financial Liabilities Measured with Costs.

The interests or losses of financial guarantee contract and loan pledge measured

with fair value designated and issued by the Company shall be recognized as gains and

losses and listed under non-operating income and expenses.

(3) Other Financial liabilities

The financial liabilities which do not belong to those held for trading and are not

designated to be measured with fair value according to gains and loss (including

long-term and short-term borrowings, accounts payable and other payables) shall be

measured with fair value plus directly attributable trading costs at original recognition;

and they are measured with post-apportion costs according to the effective interest

method at subsequent evaluation. The interests which haven’t capitalized as capital

costs shall be listed under non-operating income and expenditure of financial costs.

(4) De-recognition of Financial Liabilities

The Company shall de-recognize financial liabilities when the contract

obligations have been performed, canceled or terminated.

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Footnotes to Individual Financial Statement

When de-recognizing financial liabilities, the difference between carrying amount

and the sum of paid or payable considerations (including any transferred non-cash

capital or assumed liabilities) shall be recognized as gains and losses and listed as the

financial assets (liabilities) gains and losses measured with fair value according to

gains and losses under non-operating income and expenses.

(5) Offset between Financial Assets and Liabilities

Financial assets and financial liabilities can be offset with each other and

represented on the balance sheet with net value only when the Company has legal

rights to offset and has the intention to deliver with net value as well as realize capital

and liquidate the liabilities.

(6) Financial Guarantee Contract

As to financial guarantee contract, it means the issuer must reimburse the losses

of the holder with special amount when the specific debtor fails to make payment on

due date in accordance with the clauses of liability instruments.

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The financial guarantee contract issued and designated by the Company to be

measured with fair value according to gains and losses shall be originally measured

with fair value deducting directly attributable trading costs, and subsequently

measured with the higher of the following amount: (a) the contract obligation amount

determined under IAS 37 Provisions or Contingent Liabilities or Contingent Assets;

and (b) original recognition amount deducting the amount appropriately accumulate

charged for amortization recognized according to income accounting policy.

3. Derivative Financial Instruments

The Company holds derivative financial instruments to avoid foreign currency and

interest rate risks. They are measured with fair value in original recognition, and the

trading costs are recognized to be gains and losses; in subsequent evaluation, they are

measured with fair value, and the profits or losses due to re-measurement are directly

recognized as gains and losses and listed under non-operating income and expenses,

while the derivative instruments designated to the instruments effectively avoiding risks

shall be determined according to the nature of the hedging relationship when they are

recognized as gains and losses. When the fair value of the derivative instruments is

positive, they are recognized as financial assets; when it is negative, they are recognized

as financial liabilities.

The risks and features of embedded derivative instruments are not closely related

with those of host contract, and when the host contract is not measured with fair value

according to gains and losses, the derivative instruments are regarded as single derivative

instruments.

(VII) Inventory

Inventory shall be measured with the lower of the costs and net realizable value. The

costs include the acquisition, production and processing costs enabling them to arrive at the

available places and status and other costs, which are calculated according to the standard

cost method, and priced at cost transferring according to weighted mean method. The costs

of the inventory of finished products and products in process include the manufacturing

costs amortized based on normal production capacity according to proper percentage.

Net realizable value refers to the estimated prices under normal operation deducting

estimated costs to be needed for estimated completion and estimated costs to be needed for

completing selling.

(VIII) Investment Affiliated company

Affiliated companies refer to the enterprises which the Company has great influence

on their financial and operation policies but doesn’t control or jointly control.

The Company adopts equity method to treat the equities of its affiliated companies.

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Footnotes to Individual Financial Statement

Under the equity method, the equities are recognized originally with costs, and the costs of

an investment include the trading costs. The carrying amount of investment affiliated

company includes the business reputation recognized at the original investment deducting

any accumulated impairment losses.

The Individual Finance Statement includes the amount of gains and losses of

investment affiliated company recognized by the Company according to equity percentage

and other comprehensive income after the accounting policy consistence adjustment with

the Consolidated Company from the date of having significant influence till the date of

losing influence.

The unrealized profits generated from the trading between the Company and its

affiliated companies have been eliminated from the equity scope of the Company on the

investee company. The elimination method of the unrealized losses is the same as that of

the unrealized profits, but limited to the situation without impairment evidence.

When the loss share of affiliated companies recognized by the Company according to

percentage is equal to or exceeds the equity of affiliated companies, loss recognition shall

be terminated immediately. However, when legal obligations or constructive obligations

occur or the Company has made payments on the behalf of the investee company, the extra

losses and relevant liabilities shall be recognized.

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(IX)Investment in subsidiary company

The Investee company is evaluated by equity method and the alteration of the

ownership of the subsidiary company shall be conducted with the owner by equity

transaction.

(Ⅹ) Real Estate, Plant and Equipment

1. Recognition and Measurement

The recognition and measure of real estate, plant and equipment adopt cost mode,

and are measured with the costs deducting accumulated depreciation and accumulated

impairment. Costs include the expenditure which can be directly attributed to assets.

Self-constructed assets costs include raw materials and direct labor costs, any other

directly attributable costs which make assets reach the serviceable condition for expected

usage, costs of dismantling and removing the items and relocating to the original places

and borrowing costs meeting essential asset capitalization. In addition, costs also include

real estate, plant and equipment procurement arising from foreign currency denomination.

The software purchased for integrating the functions of relevant equipment is also

capitalized to be one part of the equipment.

When real estate, plant and equipment include different components which belong

to major items compared with the overall costs of the project and are appropriate to adopt

different depreciation rate or depreciation methods, these components are processed as

individual items (major components) of real estate, plant and equipment.

The gains and losses from the processing of real estate, plant and equipment are

determined by the difference between the carrying amount of real estate, plant and

equipment and the processing prices, and recognized with net value to be Other Gains

and Losses.

2. Subsequent Costs

If the future economic benefits forecast in subsequent expenditure of real estate,

plant and equipment items possibly flow into the Company and the amount can be

reliably measured, the expenditure is recognized as one part of the carrying amount of

the project and the reset carrying amount shall be de-recognized. The daily maintenance

costs of real estate, plant and equipment are recognized as gains and losses when they

occur.

3. Depreciation

Depreciation is calculated with costs deducting salvage based on the durable years

according to the straight-line method, and evaluated according to the major components

of assets. If the durable years of certain component are different from others, the

depreciation of the component shall be adjusted separately. The adjustment of

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depreciation is recognized as gains and losses.

Land is not required to make depreciation adjustment.

The estimated durable life in the current and comparison periods is as follows:

(1)Buildings (Structures) 3～56 years

(2)Machinery and equipment 3～19 years

(3)Other facilities 2～14 years

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Depreciation methods, durable years and salvage are inspected at the closing day of

each fiscal year, and if the expected value is different from the previously estimated

value, make adjustments if necessary and such changes will be processed according to

the provisions on accounting estimate changes.

(Ⅺ) Intangible Assets

Other intangible assets obtained by the Company are measured with costs deducting

accumulated amortization and accumulated impairment. The subsequent expenditure can be

capitalized only when they can increase the future economic benefits of relevant specific

assets, and all of other expenditures are recognized as gains and losses when they occur. In

amortization, the assets costs deducting salvage are amount available for amortization.

Intangible assets are amortized with the straight-line method according to the

following estimated durable years from the date when they can be available for using, and

the amount available for amortization is recognized as gains and losses:

1.Option Premium 5 years

2. Computer software 2～5 years

It is required to inspect the salvage, amortization period and amortization methods of

the intangible assets at least on the closing date of fiscal year, and any changes are regarded

to be accounting estimated changes.

(Ⅻ) Non Financial Asset Impairment

As to the non financial assets not coming from stocks, deferred income tax asset and

employee benefits, the Company assesses whether there is impairment on the closing date

of every report period, and estimates the recoverable amount of the assets with signs of

impairment. In case of the failure in estimating the recoverable amount of some assets, the

Company estimates the recoverable amount of cash-generating unit where the asset belong

to evaluate the impairment.

The recoverable amount is subject to the fair value of the higher of individual asset or

cash-generating unit deducting the cost of sale and their use value. If the recoverable

amount of individual asset or cash-generating unit is lower than the carrying amount,

reduce the carrying amount of individual asset or cash-generating unit to the recoverable

value and recognize it as impairment loss. The impairment loss shall be immediately

recognized as the current gains and losses.

The Company re-assesses at the closing date of every report period whether there are

signs showing that the impairment loss recognized by the non financial assets excluding

business reputation in the previous year might not exist or reduce. If there are any changes

to the estimates that determine the recoverable amount, covert the impairment loss to

increase the carrying amount of individual asset or cash-generating unit to recoverable

124

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amount but not exceeding the carrying amount after amortization or deducting the

depreciation expected to be adjusted if the individual asset or cash-generating unit didn’t

recognize the impairment loss in the previous year.

Business reputation, intangible assets with non-deterministic durable years and

intangible assets not available shall be tested on impairment regularly every year, and the

difference between the recoverable amount and carrying amount is recognized as

impairment losses.

(ⅩⅢ) Provisions

By the recognition of provisions, it means the Company is likely to reserve the

resources with economic benefits to liquidate the current obligations arising from the past

events and the amount of such obligations can be reliably estimated. Provisions is

discounted according to the pre-tax discount rate reflecting the time value of money and

liabilities specific risk evaluation in the current market, and the amortization of discount is

recognized as interest expense.

The provisions of discounts due to the defective goods sold by the Company is

recognized when the goods is sold. Such provisions is measured and estimated with the

relevant probability in accordance with the historical experience data and all possible

results.

125

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(ⅩⅣ) Income Recognition

The incomes from normal goods sales are measured with fair value of paid or payable

considerations after taking into account the return, commercial discounts and quantity

discounts. Incomes are recognized when there is persuasive evidence (generally the signed

sales agreement), major risks and returns of ownership have been transferred to the buyer,

the price is likely to be taken back, relevant costs and possible goods return can be reliably

estimated, and management and income amount of uncontinuous goods can be reliably

measured. If discounts are in all possibility and the amount can be reliably measured, they

can be recognized at the sales recognition as the deductions of incomes.

The time of risk and return transfer is determined based on the individual provisions of

sales contract. Export sales mainly adopts free on board shipping point, and risks and

returns are transferred to the buyer when loading the goods at the port; as to import sales,

risks and returns are usually transferred upon the arrival of goods at the warehouse of the

client for acceptance.

(XV)Employee Benefits

1. Defined Contribution Plan

Contribution obligations of defined contribution plan are employee benefit expense

recognized under gains and losses during the service period of employees.

2. Defined benefit plans

Post-employment benefit plan not belonging to the defined contribution plan is

defined benefit plan. Net obligations of the Company under the defined benefit and

pension plans are calculated for various benefit plans by discounting the future benefit

amount earned by employees through current or past service to be present value. The fair

value of any plan capital shall be deducted. Discount rate is subject to the interest rate of

market yield rate of high quality corporate bonds or government bonds with due date

close to the net obligation term of the Company and valuation currency same as the

expected payment benefit funds on the financial report day.

Enterprise net obligations are calculated actuarially annually by qualified actuaries

according to the projected unit credit method. When the calculation results are good for

the Company, the recognized capital is limited to the capital able to be returned from the

plan in the future or the sum of the present value of economic benefits able to be

obtained through the ways such as the future contribution to this plan. It is supposed to

consider the minimum capital contribution needs applicable to any plans of the Company

when calculating the present value of economic benefits. One benefit which is able to be

realized within the plan period or when the plan liabilities are liquidated is with

economic benefits for the Company.

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When the benefits of the plan improve, the relevant expenses from the part of

benefits increased due to the past services of employees are recognized as gains and

losses.

The re-measured number of the net defined benefit liabilities (assets) includes (1)

actuarial gains and losses; (2) return on plan assets but excluding the amount included in

the net interest of the net defined benefit liabilities (assets); and (3) any changes to the

influence number of the capital upper limit, but excluding the amount included in the net

interest of the net defined benefit liabilities (assets). The re-measured number of the net

defined benefit liabilities (assets) is recognized under other comprehensive income. The

Company recognizes the remeasurement from defined benefit plants to be retained

earnings.

The Company recognizes the deductions and liquidated gains and losses of the

defined benefit plan when deductions and liquidations occur. Deductions and liquidated

gains include any changes in fair Value of Plan Assets and changes in present value of

the defined benefit obligation.

127

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3. Short-term employee benefits

Short-term employee benefits are measured according to the undiscounted basis and

recognized as expenses in the supply of relevant services.

As to short-term cash dividends or the amount expected to be paid under the

dividend plan, if current legal or constructive obligations assumed by the Company are

attributed to the past services of employees and can be reliably estimated, the amount is

recognized to be liabilities.

(XVI) Stock-based Payment Transaction

Share-based payment rewards for employees are recognized as compensation costs

and increase relevant equities with fair value on the grant date during the period when

employees can get payment unconditionally. The recognized compensation costs are

adjusted according to the reward amount expected to meet the service conditions and non

market price vested conditions; the final recognized amount is measured based on the

vested reward amount meeting the service conditions and non market price vested

conditions.

The non vesting conditions of share-based payment rewards have been reflected on the

fair value measurement on the grant date of share-based payment, and the difference

between the expected and actual results are not required to check and adjust.

(XVII) Income Tax

Income taxes include current and deferred income tax asset. Except those related to

enterprise consolidation and items directly recognized as equities or other comprehensive

income, Current tax and deferred income tax asset shall be recognized as gains and losses.

Current taxes include expected payable income taxes or receivable tax rebates of the

annual taxation (losses) calculated according to the legal tax rate or substantial legal tax

rate on the report day, and any unappropriated retained earnings plus 10% income tax

recognized as tax expense in the shareholders meeting resolution year calculated according

to the adjustments to the payable income taxes in the previous year and the provisions of

income tax laws.

Deferred income tax assets are measured and recognized according to the temporary

difference between the carrying amount and taxation basis of assets and liabilities with

financial report objectives.

In case of any of the following situations, the temporary differences will not be

recognized as deferred income tax assets:

1. Those not belong to the assets or liabilities originally recognized in the transaction of

enterprise consolidation, and not influencing accounting profits and taxation incomes

(losses) during the transaction.

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2. Those generated due to investment subsidiary company and joint equities and likely to

not to be returned in the foreseeable future.

3. Original recognition of business reputation

Deferred income tax assets are measured according to the tax rate in the current period

when the expected capital is realized or liabilities are liquidated, and based on the legal tax

rate or substantial legal tax rate on the report day.

Only when the Company shall meet the following conditions at the same time, can the

deferred income tax assets and deferred tax liabilities offset with each other:

1. Having the legal execution right to make the current income tax assets and the current

tax liabilities offset with each other: and

2. Deferred income tax assets and deferred tax liabilities are related to one of the subjects

of tax payment from which the same tax authority levies income tax;

(1) Same subject of tax payment; or

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(2) Different subjects of tax payment, but all subjects intend to liquidate the current tax

liabilities and assets based on net amount or at the same time realize assets and

liquidate liabilities in each of the future periods when deferred income tax assets of

major amounts are expected to be recovered and deferred tax liabilities expected to be

liquidated.

Carry forward of unused taxation losses and unused income tax and deductible

temporary differences are recognize as deferred income tax assets within the scope where

the possible future taxable incomes are available. They are re-evaluated on each report day

and deduct the income tax benefits which are not possible to be realized.

(XVIII) Earnings Per Share

The Company lists the basic and diluted earnings per share of holders of common

stock equity of the Company. The basic earnings per share of the Company shall be

calculated with the gains and losses of the holders of common stock equity of the Company

divided by the weighted mean of current outstanding common shares. Diluted earnings per

share shall be calculated after adjusting the influence of all potential diluted common shares

of the gains and losses of the holders of common stock equity of the Company and the

weighted mean of current outstanding common shares. The potential diluted common

shares of the Company include convertible corporate bonds and stock options for

employees.

(XIX) Department

Please refer to the consolidated statement for the details for the separate departments.

Ⅴ. Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties

When compiling the Consolidated Financial Report under IFRS approved by the Financial

Supervisory Commission, the management must make judgment, estimate and assumption,

which will influence the adoption of accounting policies and the report amount of assets,

liabilities, incomes and expenditures. There may be differences between the actual results and

estimate.

The management authority continuously inspects the estimate and basic assumption, and

accounting changes are recognized during the period of changes and the period of future to be

influenced.

The relevant information about the major adjustments for the coming year arising from the

major risks of the estimate and assumption uncertainties is seen in the following attachments:

(1) Attachment Ⅵ (II): Assessment on Accounts Receivable Impairment

(2)Attachment Ⅵ (III): Inventory Evaluation

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Footnotes to Individual Financial Statement

Ⅵ. Description of Major Accounting Items

(Ⅰ)Cash and cash equivalents Dec.31, 2015 Dec. 31, 2014

Cash $ 506 525

Demand deposits 603,717 441,856

Certificate of Deposit 49,000 50,000

$ 653,223 492,381

Disclosures of interest rate risks and sensitivity analysis on financial assets and

liabilities of the Company are seen in Footnote Ⅵ (19).

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(Ⅱ) Notes Receivable, Accounts Receivable and Other Receivables Dec.31, 2015 Dec. 31, 2014

Notes Receivable $ 200,246 210,490

Accounts receivable－related parties 16,878 19,449

Accounts receivable－non-related parties 1,692,072 1,512,800

Other Receivables 15,576 64,958

Deduction: Allowance for impairment loss (200) (2,398)

$ 1,924,572 1,805,299

Notes receivable, accounts receivable and other receivables: Dec.31, 2015 Dec. 31, 2014

Not overdue $ 1,915,927 1,780,268

Overdue 1~30 days 7,379 19,254

Overdue 31~120 days 297 6,930

Overdue over 121 days 1,169 1,245

$ 1,924,772 1,807,697

Statement of Changes to the allowance for bad debt of notes receivable, accounts

receivable and other receivables of the Company for year 103 and 104 in Republic of China

is as follows: Individual

Impairment loss

Overall Impairment

loss Total

Jan.1, 2015 Balance $ 13 2,385 2,398

Impairment loss (reverse) 42 (2,227) (2,185)

Amount not to be written off for not

received for the year

(13) - (13)

Dec.31, 2015 Balance $ 42 158 200

Jan.1, 2014 Balance $ 204 2,654 2,858

Reversal impairment loss (11) (269) (280)

Amount not to be written off for not

received for the year

(180) - (180)

Dec. 31, 2014 Balance $ 13 2,385 2,398

The Company and financial institutions sign a contract on accounts receivable

factoring without recourse, under which the Company is not required to bear the risk of

unability to recover receivables, but only required to assume the losses arising from

commercial disputes, so the accounts receivable meets the conditions of financial assets

de-recognition. The information related to undue accounts receivable factoring on the

132

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report date is as follows: Dec. 31, 2014

Sales objects Derecognition

Credit (thousand dollars)

Advanced amount

Interest rate range

Bank credit

Taipei Fubon

Commercial Bank

Co., Ltd.

$ 54,834 USD 4,000 - - None

133

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Footnotes to Individual Financial Statement

(III) Inventories Dec.31, 2015 Dec. 31, 2014

Raw Materials and Supplies $ 240,880 317,737

Work in Process 29,022 41,160

Finished Goods 184,374 218,418

Goods in Transit 3,392 1,534

$ 457,668 578,849

The details of the cost of sales sold of the Company for year 103 and 104 in Republic

of China are as follows: 2015 2014

Cost of sales $ 4,652,514 4,573,899

Loss on obsolete inventory 4,103 5,650

Inventory Valuation and Obsolescence Losses 22,797 807

Revenue from sale of scraps (49,941) (62,718)

Total $ 4,629,473 4,517,638

As of December 31 of year 103 and 104 in Republic of China, the inventory of the

Company hadn’t been used for pledge guarantee.

(IV)Investments Accounted for Using Equity Method

The investments of the Company made by adopting equity method on the closing date

during the financial reporting period are listed as follows: Dec.31, 2015 Dec. 31, 2014

subsidiary company $ 9,146,840 7,497,714

Affiliated company - -

$ 9,146,840 7,497,714

1. Subsidiary company

Please refer to the 2015 consolidated Financial Statement.

2. Affiliated company

The Company approved at the end of year 94 in Republic of China that the investee

company Licheng Technology (Stock) Company (the former ELITE IONERGY CO.,

LTD., with cost of an investment of TWD 173.694 million) had been shut down, whose

assets could repay the liabilities and investment value had been impaired, so the

investments were all recognized as losses in year 94 in Republic of China and book value

was offset to zero.

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(V) Real Estate, Plant and Equipment

Changes to costs and depreciation of real estate, plant and equipment of the Company

for year 103 and 104 in Republic of China are as follows:

Land Buildings

and Structures

Machinery and

equipment

Other facilities

Unfinished Construction

and Equipment to

be verified

Total

Cost or Deemed cost:

Jan.1, 2015 Balance $ 470,621 642,667 2,276,987 415,502 36,117 3,841,894

Add - - - - 70,566 70,566

Disposal - (2,185) (21,671) (10,151) - (34,007)

Reclassification - 9,848 33,070 25,465 (68,383) -

Dec.31, 2015 Balance $ 470,621 650,330 2,288,386 430,816 38,300 3,878,453

Jan.1, 2014 Balance $ 470,621 633,506 2,240,571 386,340 25,215 3,756,253

Add - - - - 89,498 89,498

Disposal - (700) (2,189) (968) - (3,857)

Reclassification - 9,861 38,605 30,130 (78,596) -

Dec. 31, 2014 Balance $ 470,621 642,667 2,276,987 415,502 36,117 3,841,894

Depreciation:

Jan.1, 2015 Balance $ - 263,733 1,687,305 298,509 - 2,249,547

Depreciation of the year - 21,925 109,431 34,399 - 165,755

Disposal - (2,185) (18,960) (10,151) - (31,296)

Dec.31, 2015 Balance $ - 283,473 1,777,776 322,757 - 2,384,006

Jan.1, 2014 Balance $ - 242,431 1,555,298 267,743 - 2,065,472

Depreciation of the year - 22,002 132,594 31,734 - 186,330

Disposal - (700) (587) (968) - (2,255)

Dec. 31, 2014 Balance $ - 263,733 1,687,305 298,509 - 2,249,547

Book value:

Dec.31, 2015 $ 470,621 366,857 510,610 108,059 38,300 1,494,447

Jan.1, 2014 $ 470,621 391,075 685,273 118,597 25,215 1,690,781

Dec. 31, 2014 $ 470,621 378,934 589,682 116,993 36,117 1,592,347

As of December 31 of year 103 and 104 in Republic of China, they had been used for

long-term borrowings and financing credit guarantee, with details seen in Footnote Ⅷ.

135

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(VI) Short-Term Borrowings Dec.31, 2015 Dec. 31, 2014

Unsecured loans $ 8,329 390,043

Unused credits $ 1,899,994 1,507,453

Interest rate range 1.18% 0.99%~2.12%

(VII) Short-Term Notes and Bills Payable Dec.31, 2015 Dec. 31, 2014

Commercial paper payable $ - 200,000

Deduction: Unamortized discount - (374)

Net Amount $ - 199,626

Interest rate range - 0.95~0.97%

(VIII) Long-term borrowings

The details of Long-term borrowings are as follows: Dec.31, 2015 Dec. 31, 2014

Unsecured loans $ 987,500 900,000

Secured Loan 550,000 337,500

Deduction: Discount On Long-term Borrowings (5,300) (3,281)

Current Portion (312,500) (712,500)

Total $ 1,219,700 521,719

Unused credits $ 462,500 -

Interest rate range 1.8% 1.8~1.91%

Due year 109 106

Please see Footnote Ⅵ (19) for exposure of interest rate, foreign currency and

liquidity risks of the Company.

1. Securities for Bank Loans

Please see Footnote Ⅷ for mortgage based securities of the Company for bank

loans

2. Loan Contract

Under the loan contract, before the guaranteed loans of the Company during the

duration of the joint loan right or joint credit liabilities are in full settlement, the

Company is required to abide by specific accounting ratio in annual and semi-annual

reporting, such as current ratio, liabilities ratio and interest cover ratio. The Company

hasn’t violated relevant provisions.

136

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Footnotes to Individual Financial Statement

(IX) Unsecured Convertible Debentures Dec.31, 2015 Dec. 31, 2014

Total issuing amount of convertible bonds $ 400,000 400,000

Bonds payable discount not amortized - (99)

Bonds redemption (6,700) -

Total converted amount (393,300) (390,100)

$ - 9,801

Equity component－Transfer right

(Listed in Capital Surplus－Transfer right)

$ - 1,808

2015 2014

Embedded derivative－The gain and loss of the

right of redemption and sell back evaluated by fair

value principle (The financial asset or liability

listed as non-operational revenue or expense )

Financial assets(liabilities) evaluated by fair value

$ - 85

Interest expense $ 83 741

The Company issued the third 5-year unsecured convertible bonds with 0% nominal

interest rate on June 22 of the year 99 in the Republic of China, with total amount of TWD

400 million, maturity date on June 22 of the year 104 in the Republic of China and bond

discount rate of 1.85%. The creditor should ask the Company to redeem all convertible

corporate bonds with cash with the sum of bond denomination and interest compensation

when the bonds have been issued for two years or there are 30 days left before the third

year, with the conversion price of convertible bonds is based on the issuance contract of the

Company.

1. Date and Terms of Principal Repayment:

Except those converted into common stock of the Company in advance or redeem

by the Company or put by the creditor in advanced, the principal is required to repaid at

one time on the due date.

2. Conversion Price and Adjustment:

The conversion price when issued is TWD 28.50 per share, which shall be adjusted

when the total volume of common stocks of the Company changes or there are

negotiable securities with common stock conversion rights re-issued at the conversion

price lower than the market value per share. As the Company conducted stock grants on

September 3 of the year 103 in the Republic of China as stock granting base date, the

137

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conversion price is adjusted from TWD 21.10 to TWD 20.00 in accordance with Article

11 of the Measures on the Issuance and Conversion of the Third Unsecured Convertible

Debentures at Home of the Company. There are no reset clauses on the bonds.

138

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Footnotes to Individual Financial Statement

3. Redemption Right of the Company on the Convertible Corporate Bonds:

(1) From the next day from one month after issuing to 40 days before the expiration of

issuance period, when:

A. the closing price of the corporate common stock at the over-the-counter center

exceeds 30% of the current conversion price on the thirty business day in

succession;

B. total value of the unconverted bonds is lower than 10% of the total stock issued

after convertible corporate bonds are converted as required by the creditor;

The Company should send a registered letter to the creditor with a Notice of Bonds

Recall with one-month expiry (the foregoing period is calculated from the date of

mailing by the Company and takes the expiry date of the period as bonds recall base

date), and should write a letter to invite the over-the-counter center to announce to

recall all bonds in cash on the expiry date of the period at the recall price calculated

in accordance with the interest rate of bonds redemption listed in (B).

(2) Redemption Yield:

Convertible corporate bonds are required to be redeemed with the bonds

denomination from the following day after issuing for one month to 40 days before the

expiry date.

(3) In case of the failure in replying the stock service agency of the Company in written

before the credit receives the bonds recall base date named in the Notice of Bonds

Recall (which becomes effective upon the arrival, and mailed reply is based on the

postmark date), the Company shall take the expiry date of the notice period to convert

the convertible corporate bonds to the new common stocks of the Company at the

current conversion price.

4. Put Right of Creditor:

The creditor shall ask the Company to redeem all convertible corporate bonds in

cash with the sum of bond denomination and interest compensation when the bonds have

been issued for two years or there are 30 days left before the third year. The interest

compensation for bonds having been issued for two years is 2.01% of bond

denomination, and for three years is 3.0301% of bond denomination. The Company

accepts the put request and shall redeem the convertible bonds in cash within 5 business

days after the put base date.

The repayment of the Company due to the expiry of convertible bonds in the year

104 in the Republic of China was TWD 6.7 million and the interest compensation

recognized due to expiry was TWD 1.224 million.

(X) Provisions

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Footnotes to Individual Financial Statement

Allowance for Sales Returns and

Discounts

Jan.1, 2015 Balance $ 5,446

Reversed Provisions for the year (1,554)

Dec.31, 2015 Balance $ 3,892

Jan.1, 2014 Balance $ 5,647

Added Provisions for the year (201)

Dec. 31, 2014 Balance $ 5,446

Liabilities due to goods return and discounts refer to the products return and discounts

estimated by the Company based on historical experience, management judgment and other

known reasons, and are recognized as operating revenue deduction in the year when the

relevant products are sold.

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Footnotes to Individual Financial Statement

(XI) Employee Benefits

1. Defined benefit plans

Present Value of the Defined Benefit Obligation: Dec.31, 2015 Dec. 31, 2014

Present Value of the Defined Benefit

Obligation

$ 114,438 136,110

Fair Value of Plan Assets (106,467) (100,273)

Net Defined benefit liability $ 7,971 35,837

The defined benefit plan of the Company is contributed to special account of contribution for retirement of Bank of Taiwan. The retirement payment of each employee applicable to Labor Standards Law is calculated in accordance with the base obtained based on the length of service and the average salaries within six months before retirement. (1) Composition of Plan Assets

The retirement fund contributed by the Consolidated under the Labor Standards Law shall be controlled by the Labor Funds Operation Bureau of the Ministry of Labor (hereinafter referred to as the Labor Funds Bureau), and under the provisions of Measures on the Management and Application of Labor Retirement Funds, the annual minimum return settled and distributed from the funds operation shall not be lower than the incomes calculated in accordance with the 2-year time certificate of deposit rate of the local banks.

As of the reporting date, the balance of the Company in the special account of contribution for retirement of Bank of Taiwan amounts to TWD 106.467 million. The data of the application of the labor retirement funds include funds yield and funds asset allocation, with details to be seen in the information released on the website of the Labor Funds Bureau.

(2) Changes in Present Value of the Defined Benefit Obligation 2015 and 2014Present Value of the Defined Benefit Obligation :

2015 2014

Jan.1-Defined Benefit Obligation $ 136,110 145,174

Current service cost and interest 3,497 3,786

Remeasurements of Net Defined benefit

liability

－Actuarial gains and losses occurred

from adjustment

(8,254) (6,434)

－Actuarial gains and losses occurred from

demographic

973 2,027

－Actuarial gains and losses occurred

from financial assumptive adjustment

(13,656) -

Benefit paid by the plan (4,232) (8,443)

Dec.31-Defined Benefit Obligation $ 114,438 136,110

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(3)Changes in Fair Value of Plan Assets

Changes in Fair Value of Plan Assets: 2015 2014

Jan.1- Fair Value of Plan Assets $ 100,273 99,063

Interest Income 1,504 1,734

Remeasurements of Net Defined benefit

liability

－ Return on plan assets(Not including

interest for this term)

1,174 551

Amount allocated to the plan 7,748 7,368

Benefits paid by the plan (4,232) (8,443)

Dec.31- Fair Value of Plan Assets $ 106,467 100,273

(4)Expenses Recognized as Gain or Loss

The 2015 and 2014 Expenses Recognized as Gain or Loss are as follows: 2015 2014

Current service cost $ 1,455 1,245

Net interest of the Net Defined benefit

liability

538 807

$ 1,993 2,052

Operating Costs $ 1,594 1,487

Selling Expenses 94 90

Administrative Expenses 204 395

Research and Development Expenses 101 80

$ 1,993 2,052

(5)The Remeasurements of the net defined benefit liability recognized as Other

Comprehensive Income

The 2014 and 2015 Remeasurements of the net defined benefit liability

recognized as Other Comprehensive Income: 2015 2014

Jan.1-Accumulated balance $ 6,073 11,031

Amounts recognized (22,110) (4,958)

Dec.31-Accumulated balance $ (16,037) 6,073

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Footnotes to Individual Financial Statement

(6)Actuarial Assumption

Present Value of the Defined Benefit Obligation: Dec.31, 2015 Dec. 31, 2014

Discount rate 1.88% 1.50%

Future salary increases 1.00% 1.50%

The contribution amount expected to be paid for defined benefit plan within one

year after the reporting date of the year 104 in the Republic of China is TWD 1.176

million.

The weighted average duration of the defined benefit plan is 17.62 years.

(7) Sensitivity Analysis

During the calculation of the present value of the defined benefit obligation, the

Company is required to determine the actuarial assumption related to the balance sheet

with the application of judgment and estimate, including discount rate and future

salary changes. Any changes to actuarial assumption may significantly influence the

amount of the defined benefit obligations of the Company.

The influences of major changes to the actuarial assumption adopted in year 103

and 104 in Republic of China (seeing the notices below for details) on the present

value of the defined benefit obligations are as follows: Effects on the Defined Benefit

Obligation Increase Decrease

Dec.31, 2015

Discount rate (+/-0.25%) (3,575) 3,730

Future salary increases (+/-0.25%) 3,693 (3,556)

The above sensitivity analysis refers to the analysis on the influence of single

assumption change based on the situation that other assumptions keep unchanged. In

practice, many changes to the assumptions may be linked. The calculation method of

sensitivity analysis shall be consistent with that of net defined benefit liabilities of the

balance sheet.

The method and assumption applied in current sensitivity analysis is consistent

with those adopted in early stage.

2. Defined Contribution Plan

As to the defined contribution plan, the Company shall contribute the retirement

funds of employees to the individual accounts for labor retirement funds of the Bureau of

Labor Insurance according to 6% of the monthly salaries of labors under the provisions

of Labor Pension Act. Under this plan, after contributing fixed amount to the Bureau of

143

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Footnotes to Individual Financial Statement

Labor Insurance, the Company will not assume the legal or constructive obligations of

paying extra amount.

The pension expense under the defined contribution retirement funds of the

Company in the year of 104 and 103 in the Republic of China are TWD 20.715 million

and TWD 25.736 million respectively, which have been contributed to the Bureau of

Labor Insurance.

144

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

(XII) Income Tax

1. Tax Expense (Income)

2015 and 2014 Tax expense Details are as follows: 2015 2014

Tax expense-Current term

For current term $ 230,001 73,575

Adjusted current tax 1,212 (17)

231,213 73,558

Deferred Income Tax Expense

The reverse and occurrence of temporary

discrepancy

305,061 576

Tax expense of Continuing operations $ 536,274 74,134

2015 and 2014 Recognized Income Tax (expenses) Interest is as follows: 2015 2014

Items that will not be reclassified subsequently

to profit or loss:

The gain and loss of defined benefit plans $ (3,758) 8,825

Items that will be reclassified subsequently to

profit or loss:

Exchange differences on translation of

foreign operations

$ 26,833 (43,596)

015 and 2014Tax expense(Income) Profit before tax: 2015 2014

Profit Before Tax $ 2,925,513 1,612,830

Income Tax calculated by the local tax rate $ 497,337 274,181

Non-deductible expenses (189) (202,689)

Exempt income (22,904) (16,335)

Unrecognized temporary alteration - 42

Under(over)estimated for the previous term 1,212 (17)

Unappropriated retained earnings plus10% 60,818 18,952

Tax expense(Income) $ 536,274 74,134

145

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

2. Deferred Income Tax Asset and Liability

(1)Unrecognized Deferred Tax Liabilities

From January 1 to December 31 of year 103 and 104 in Republic of China, the

temporary differences related to the investment subsidiaries are recognized as

unrecognized deferred tax liabilities as the Company controls the turning time of such

temporary differences and such difference are determined not to be turned in the

foreseeable future. The relevant amount is as follows: Dec.31, 2015 Dec. 31, 2014

Total temporary difference amount related to

the investment in subsidiary company

$ 5,074,438 5,074,438

Unrecognized Deferred Tax Liabilities $ 862,654 862,654

(2)Recognized Deferred Income Tax Asset and Liability

The alteration of 2014 and 2015 Deferred Income Tax Asset and Liability: Defined Benefit Plans

Accumulate exchange

adjustment

Foreign Investment Income

Other Total

Deferred Tax Liabilities:

Jan.1, 2015 Balance $ (3,327) (123,295) (72,876) (117) (199,615)

Debit ( credit ) Balance 1,452 - (306,986) (738) (306,272)

Debit ( credit ) Equity 1,875 - - - 1,875

Exchange differences on translation

of foreign operations

- 26,833 - - 26,833

Dec.31, 2015 Balance $ - (96,462) (379,862) (855) (477,179)

Jan.1, 2014 Balance $ (540) (79,699) (72,876) (350) (153,465)

Jan.1, 2015 Balance (912) - - 233 (679)

Debit ( credit ) Equity (1,875) - - - (1,875)

Exchange differences on translation

of foreign operations

- (43,596) - - (43,596)

Dec. 31, 2014 Balance $ (3,327) (123,295) (72,876) (117) (199,615)

146

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

Defined Benefit Plans

Provisions

Allowance for

inventory valuation

and obsolescen

ce loss

Other Total

Deferred Income Tax Asset:

Jan.1, 2015 Balance $ 10,699 927 3,616 - 15,242

Debit ( credit ) Balance (2,400) (264) 3,875 - 1,211

Debit ( credit ) Equity (5,633) - - - (5,633)

Dec.31, 2015 Balance $ 2,666 663 7,491 - 10,820

Jan.1, 2014 Balance $ - 961 3,479 - 4,440

Debit ( credit ) Balance - (34) 137 - 103

Debit ( credit ) Equity 10,699 - - - 10,699

Dec. 31, 2014 Balance $ 10,699 927 3,616 - 15,242

147

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

3. Income Tax Approval

The approval on the filing of final income tax return of the Company has lasted till

the year 102 in the Republic of China as required by the taxing authority.

4. Relevant Data of Income Tax Integration

Relevant data of income tax integration is as follows: Dec.31, 2015 Dec. 31, 2014

Unappropriated retained earnings after 1998 $ 4,876,106 3,412,810

Balance of imputation credit account $ 165,344 130,137

2014(expected) 2013(Actual)

Tax deduction ratio for the profit distributed to ROC

residents

7.61% 5.71%

The foregoing relevant data of income tax integration shall be the amount disposed

in accordance with the provisions of Taiwan Finance and Taxation No. 10204562810 of

the Ministry of Finance on October 17 of the year 102 in the Republic of China.

(XIII) Capital and Other Equity

1. The issuing of common stocks

On December 31 of year 104 and 103 in the Republic China, the total nominal share

capitals of the company are both TWD 4,000 million, with a denomination of TWD 10

per share and 400,000,000-share lot. The outstanding common stocks were divided into

ordinary share with 317,505,000 -share lot and 315,994,000-share lot, share payment of

both of which has been charged.

The regulation table of number of outstanding shares in year 104 and 103 in the

Republic China is as follows: (Expressed by the unit of 1000-share lot)

Common stock

2015 2014

Jan.1-Beginning balance $ 315,994 312,414

Exercise Employee Stock Warrants 1,351 1,961

The transfer of convertible bond 160 1,619

Dec.31-Ending balance $ 317,505 315,994

On December 31 of year 104 and 103 in the Republic China, subscription right was

exercised based on Employee stock option certificates and new shares were issued in

numbers of 1,351,000-share lot and 1,961,000-share lot in denomination respectively,

with a total amount of money of TWD 24.654 million and TWD 36.884 million, of

which legal registration procedures of 1,351,000-share lot and 1,961,000-share lot have

148

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

been already completed, and the share payment of all the share issued has been charged.

On December 31 of year 104 and 103 in the Republic China, based on exercising of

conversion right of convertible bond holders, new shares were issued in numbers of

160,000-share lot and 1,619,000-share lot in denomination respectively, with a total

amount of money of TWD 3.2 million and TWD 16.193 million, of which legal

registration procedures of 160 thousand shares and 1.619 million shares have been

already completed.

149

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Footnotes to Individual Financial Statement

2. Capital Surplus

The balance of capital surplus of the company is as follows: Dec.31, 2015 Dec. 31, 2014

Additional paid-in capital in excess of par -

common stock

$ 69,049 49,067

The transfer of convertible bond in excess 349,553 347,385

Employee Stock Option 13,947 21,045

Transfer right - 1,808

$ 432,549 419,305

According to the former share holding proportion of shareholders, corresponding to

the capital surplus that has been realized, new shares shall be issued or cash be released

after the capital surplus covers losses in priority. The realized capital surplus mentioned

above includes the overage of issued shares exceeding the denominational value and the

earnings from the gift recipient. As specified in the handling guidelines on raising of

issuers and issuing of securities, as to the capital surplus necessary for appropriation of

capital, the amount of the total annual appropriation shall not exceed 10% of the paid-in

capital.

3. Retained Earnings

According to the rules of the company, when the annual total final accounts have a

surplus, it should be first used to pay income tax and make up for previous losses, and

10% of the statutory reserve shall be drawn in line with laws, and as needed by the

Article 41 of the Securities Exchange Act or in accordance with the shareholders’

resolution, the special surplus reserve shall be drawn or part of surplus shall be retained

without distribution. In the case of modification of act or extermination of legal articles

based on which special surplus reserve can be drawn, the special surplus reserve drawn

in line with laws must be returned back to the distribution of retained earnings.

Considering the characteristics of industrial growth and improvement of the

company’s financial structure, if annual distribution of surplus is not carried out when

there are losses during the year, then the dividend policy will give priority to the future

development of the company, financial situations and shareholder remuneration, then the

company’s future capital expenditure budget will be considered to distribute share

dividend to preserve cash as needed, while other parts will be distributed to shareholders

in cash dividends, but the distribution of cash dividends shall not be less than 20% of the

total dividends to be released as planned.

Taking 10%-70% of the distributable surplus after drawing of all reserves as the

standard, the distribution of surplus is done according to the following ratio:

150

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Footnotes to Individual Financial Statement

(1) Employee dividend is 3%-5%, distributed according to the dividend distribution

methods developed by the board of directors. Object of distribution of employees’

dividend shall contain employees of subordinate companies in line with certain

conditions, which will be separately prescribed by the board of directors.

(2) Remuneration of the directors and supervisors is 2%.

(3) Varying to performance of the company, the board of directors shall draft a

distribution proposal of shareholders’ dividends, which shall then be distributed

according to the resolution of shareholders.

As to other dividends as well as remaining undistributed surplus in the past years,

the board of directors shall draft a distribution proposal and apply for shareholder’s

resolution, then they can be distributed.

151

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Footnotes to Individual Financial Statement

According to the Companies Act amended in May, year of 104 in the Republic China, employees’ dividend and remuneration of directors and supervisors were not part of the surplus distribution item, so the Company will amend the provisions of the company under guidance of authorities before the deadline. (1) Legal Reserve

The Company determines the 10% of the after-tax net income as the legal reserve until it is equal to the total capital. When there are no losses, after the resolution of shareholders meeting, the legal reserve shall be used to issue new shares or cash, but shall not be more than the amount of reserve that exceeds 25% of the paid-in capital.

(2) Distribution of surplus In year of 103 in the Republic China, the actually released dividend amount of

employees was TWD 42.496 million, while that of directors and supervisors was TWD 16.998 million. The actual distribution of staff dividend and remuneration of directors and supervisors differed from that of the annual financial reports in year of 103 in the Republic China, with differences of TWD 2,000 and TWD 1,000 respectively, which was included in the annual loss in year of 104 in the Republic China.

On June, 15 of year of 104 and June, 9 of year of 103 in the Republic China, the annual surplus distribution plans in year of 103 and 102 in the Republic China were respectively determined in the shareholder’s standing meeting, and the amount of dividend of relevant holders was as follows:

2014 2013

Placing rate(dollars)

Amount Placing rate(dollars

)

Amount

Dividends distributed to the

common share holders:

Cash $ 2.50 790,425 $ 1.80 562,897

4. Other Equity (amount after tax)Exchange

differences on translation of

foreign operation

Jan.1, 2015 $ 587,189

Exchange differences on translation of foreign operation (131,014)

Dec.31, 2015 Balance $ 456,175

Jan.1, 2014 $ 374,338

Exchange differences on translation of foreign operation 212,851

Dec. 31, 2014 Balance $ 587,189

152

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Footnotes to Individual Financial Statement

(XIV)Share-based payment

The Company has the following two Share-based Payment Transactions as of Dec. 31,

2015: Equity transfer

Employee share warrant plan

Employee share warrant plan

Grant date 101.07.06 100.08.09

Offering amount 1,500 6,000

Contract Duration 5 years 5 years

Condition and term Service in four

years in the future

Service in four

years in the future

Actual employee turnover rates 2.44% 0%

Estimated employee turnover rates - -

1.Fair value on the grant date

Adopting Hull & White and Ritchken option eva;uation model to estamate the fair

value of Grant date share-based payment:: 2015 2014

Employee Stock Option

To be issued on 2012

Employee Stock Option

To be issued on 2011

Employee Stock Option

To be issued on 2012

Employee Stock Option

To be issued on 2011

Fair value on the grant date 9.285 5.937 9.285 5.937

Stock price of Grant date 27.750 21.350 27.750 21.350

Exercise Price 22.200 17.100 23.000 17.700

Dividend yield - - - -

Anticipated fluctuating ratio (%) 38.08% 30.67% 38.08% 30.67%

Share warrant period 5.00 5.00 5.00 5.00

Risk-free interest rate (%) 1.05% 1.17% 1.05% 1.17%

The expected volatility rate was estimated with reference from the annualized

standard deviation of the company’s past daily remuneration rate of share price; in the

duration period of subscription right, the date specified in the Company’s subscription

right methods was called due date while the date difference from the measurement date

was called duration period; risk-free interest rate was based on government bonds. In the

determining of the fair value, the services contained in the transaction and non-market

price performance conditions were not taken into account.

When calculating the fair value of subscription rights, in order to take into account

the effect of early implementation, it is assumed that employees will exercise the

subscription rights when the share price is 2.14 times the exercise price after they obtain

the shares.

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2. Employee share purchase plan

Details of employee stock option certificates: (Expressed in thousand units)

2015 2014

Weighted average

Exercise price

(dollars)

Share warrant amount

Weighted average

Exercise price

(dollars)

Share warrant amount

Jan.1-Outstanding $ 18.80 2,976 19.83 5,291

Executed in the term 18.25 (1,351) 18.81 (1,961)

Expired in the term 17.10 (16) 21.68 (354)

Dec.31-Outstanding 18.29 1,609 18.80 2,976

Dec.31-executable 17.61 1,370 18.34 1,176

Outstanding option compensation plan: As of Dec.31, 2015outstanding stock options Exercisable stock option

Approve date

Issue date Exercise

price

Number of outstanding

options

Remaining period

Weighted average Exercise

price

Dec.31, 2015 Number of exercisable

options

Weighted average Exercise

price

100.07.07 100.08.09 $ 17.10 1,233 8 months 17.10 1,233 17.10

100.07.07 101.07.06 22.20 376 1 years and 7

months

22.20 137 22.20

1,609 18.29 1,370 17.61

As of Dec. 31, 2014outstanding stock options Exercisable stock option Approve

date Issue date

Exercise price

Number of outstanding

options

Remaining period

Weighted average Exercise

price

Dec. 31, 2014 Number of exercisable

options

Weighted average Exercise

price

100.07.07 100.08.09 $ 17.70 2,356 1 years and 8

months

17.70 1,033 17.70

100.07.07 101.07.06 23.00 620 2 years and 7

months

23.00 143 23.00

2,976 18.80 1,176 18.34

3. Employee-related expense and liabilities

2015 and 2014 share-based payment expenses: 2015 2014

Employee stock option certificates expenses $ 1,740 4,368

154

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Footnotes to Individual Financial Statement

(XV) Earnings Per Share

1. Earnings Per Share

In the year of 104 and 103 in Republican of China, the basic earnings per share of

the Company was a part of the net profit attributable to the equity holders of the

company, calculated by the weighted average outstanding ordinary shares as follows:

(1)Net profit attributable to the equity holders of our company 2015 2014

Net profit attributable to the equity holders of our

company

$ 2,389,239 1,538,696

(2)Weighted average outstanding ordinary shares(1000-share lot) 2015 2014

Jan.1-Ordinary shares outstanding 315,994 312,414

Effects of Convertible Securities Conversion 120 253

Conversion of convertible bonds 521 530

Dec.31-Weighted average outstanding

ordinary shares

316,635 313,197

2. Diluted Earnings Per Share

In the year of 104 and 103 in Republican of China, the diluted earnings per share

was a part of the net profit attributable to the equity holders of our company, calculated

based on the weighted average outstanding ordinary shares after adjusting the dilution

effect of all the potential common stocks as follows:

(1)Net profit attributable to the equity holders of our company (Dilution) 2015 2014

Net profit attributable to the equity holders of the

parent company(Basic)

$ 2,389,239 1,538,696

Convertible bonds influenced by related taxation 69 686

Net profit attributable to the equity holders of the

parent company(Dilution)

$ 2,389,308 1,539,382

155

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Footnotes to Individual Financial Statement

(2)Weighted average outstanding ordinary shares (Dilution) (1000-share lot) 2015 2014

Weighted average outstanding ordinary

shares(Basic)

316,635 313,197

Effects of Convertible Securities Conversion 40 1,860

The effects of employee profit sharing 2,009 1,528

Impact of Employee Stock Options 1,661 1,764

Dec.31 balance-Weighted average

outstanding ordinary shares (Dilution)

320,345 318,349

When calculating the diluted effect of share options, the average market value

was determined on the basis of the Company’s share market price during the

outstanding of the option rights.

156

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Footnotes to Individual Financial Statement

3. Earnings Per Share:2015 2014

Earnings Per Share $ 7.55 4.91

Diluted Earnings Per Share $ 7.46 4.84

(XVI) Revenue

2015 and 2014 Income Details are as follows: Continuing operations

2015 2014

Merchandise sales $ 5,852,231 5,357,007

(XVII) Remuneration of employees and directors and supervisors

According to the rules of the Company passed by the board of directors’ meeting but

not passed the shareholders’ meeting yet, for any annual profit, 3% of it will be

appropriated as the remuneration of employees and not more than 1.2% of it as the

remuneration of directors and supervisors. But if there are accumulated losses of the

company, certain amount should be reserved in advance to make up. The subjects of the

above employees’ remuneration of shares or cash include employees from subordinate

companies in line with certain conditions.

In year of 104 in Republican of China, the estimated appropriated amount of

remuneration of employees, directors and supervisors was respectively TWD 91.422

million and TWD 30.474 million, with an estimated base of the company’s net profit

during the period before deducting employees’ remuneration and that of directors and

supervisors, multiplied by the proportion prescribed in the Company’s rules for employees’

remuneration and that of directors and supervisors, which is reported as operating costs or

operating expenses in year of 104 and the relevant information can be inquired in the public

information inquiry stations. If the actual amount of distributed remuneration differs from

estimated amount, the way to handle depends on changes in accounting reports, and the

differences are recognized and included as gains and losses in year of 105 in the Republic

of China.

(XVIII) Non-Operating Income and Expenses

1. Other Income

本公司2015 and 2014之Other Income Details are as follows: 2015 2014

Interest Income $ 1,452 845

157

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Footnotes to Individual Financial Statement

2. Other Gains and Losses

2015 and 2014 Other Gains and Losses Details are as follows: 2015 2014

Foreign currency Exchange gain or loss $ 25,261 7,559

Proceeds From Disposal of Property, Plant and

Equipment interest

(2,395) (51)

Financial assets at fair value through profit or

loss(liability)-net loss

- (85)

Other income 5,324 1,204

$ 28,190 8,627

158

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

3. Financial Costs

本公司2015 and 2014之Financial Costs Details are as follows: 2015 2014

Interest expense $ 30,393 29,774

(XIX) Financial Instruments

1. Credit risk

(1)Credit exposures

The major financial loss may be owing to the transacting party failing to fulfill

the obligation on Dec.31 2014 and 20015:

‧The Financial assets carrying amount in the balance sheet；and

‧The financial guarantee for the Company is USD 54,500 dollars, 69,000,000 dollars,

and USD 68,500,000 dollars, and 70,000,000 dollars.

2. Liquidity Risk

The following table shows the expiry date of financial liabilities contract, including

estimated interest but not including the impact of the net agreement.

Carrying amount

Cash flowWithin 6 months 6-12

months 1-2 years Over 2

years

Dec.31, 2015

Non-derivative financial liabilities

Secured Loan $ 544,700 585,337 - 69,925 - 515,412

Unsecured loans 995,829 1,051,021 146,410 108,065 - 796,546

Accounts Payable 1,390,363 1,390,363 1,390,363 - - -

$ 2,930,892 3,026,721 1,536,773 177,990 - 1,311,958

Dec. 31, 2014

Non-derivative financial liabilities

Secured Loan $ 334,219 346,891 56,708 56,250 115,954 117,979

Convertible bonds 9,801 9,900 - - - -

Commercial paper payable 199,626 200,000 200,000 - - -

Unsecured loans 1,290,043 1,306,356 918,746 75,000 154,876 157,735

Accounts Payable 1,346,673 1,346,673 1,346,673 - - -

$ 3,180,362 3,209,820 2,522,127 131,250 270,830 275,714

The Company does not expect that analysis of occurring of cash flow on the

maturity date will come significantly earlier, or the actual amount will be significantly

different.

159

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Footnotes to Individual Financial Statement

3. Exchange rate risk

(1) Exposure of exchange rate risk

The financial assets and liabilities of the Company that are disclosed to

significant foreign exchange rate risk are as follows: Dec.31, 2015 Dec. 31, 2014

Foreign currency

Exchange rate

TWD Foreign currency

Exchange rate

TWD

Financial assets

Monetary item

USD $ 39,090 32.825 1,283,129 36,825 31.650 1,165,511

Financial liabilities

Monetary item

USD 30,291 32.825 994,335 32,182 31.650 1,018,560

JPY 347,020 0.2727 94,632 - - -

(2) Sensitivity analysis

The Company’s exchange rate risk primarily comes from foreign

currency-denominated cash and cash equivalents, accounts receivable and other

receivables, loans, accounts payable and other payables, resulting into gains and losses

of conversion of foreign currency when exchanging. In year of 104 in the Republic

China, TWD depreciated or appreciated by 1% compared with US dollar, while, when

all the other factors remain unchanged, in year of 104 and 103 in the Republic China,

after-tax net income in year 104 and 103 will decrease by TWD 1.612 million and

TWD 1.21 million, respectively.

(3)Exchange gain or loss of monetary item

The Exchange gain or loss of monetary item information is as follows: 2015 2014

Exchange gain or loss

Average Exchange

rate

Exchange gain or loss

Average Exchange

rate

TWD $ 25,261 - 7,559 -

4. Interest rate analysis

The interest rate exposure of the Company’s financial assets and financial liabilities

is described in the liquidity risk management in the footnotes.

The following sensitivity analysis is dependent on the interest rate exposure risk of

derivative and non-derivative instruments on the reported date. For liabilities with a

floating interest rate, the way of analysis is to assume the outstanding liabilities on the

reported date will be outstanding in the whole year. The fluctuation rate the internal

160

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Footnotes to Individual Financial Statement

workers report to the management staff of the Company is to increase or decrease by

0.5% based on the interest rate, which also shows the evaluation made by management

staff on the reasonable fluctuation range of interest rate.

If the interest rate increases or decreases by 0.5%, in the case of all the other

variables remaining unchanged, the net profit of the Company in year of 104 and 103 in

the Republic of China will decreased or increased by TWD 19.067 million and TWD

7.63 million, mainly due to the evaluation on the financial assets of the loans with

fluctuation rate of the Company and corporate bonds with risk-free interest rate changes.

161

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Footnotes to Individual Financial Statement

5. Fair value information

(1) Type of financial instruments and fair value

The carrying amount and fair value of the Company’s financial assets and

financial liabilities (including the hierarchy information of the fair value, but

excluding the financial tools with a carrying amount reasonably approximate to fair

value measured by fair value, the fair value information of which is not needed to be

disclosed in accordance with the provisions) are as follows: Dec. 31, 2014

Fair ValueCarrying amount

Level 1 Level 2 Level 3 Total

The financial liabilities evaluated by the

amortizing cost

Convertible bonds － Liability

component

9,801 - 9,801 - 9,801

(2) Evaluation technique of fair value of financial instruments measured at fair value

A. Non-derivative Financial Instruments

If financial instruments are subject to active market public quotations, their fair

value is taken as the publicly quotations of active market. Market price published in

major exchanges and the trading center of central government bond counters of

popular bonds, is the basis of fair value of equity tools on the market (counter) and

bond tools with public quotations of active market.

If the public quotations of financial instruments can be timely and often

obtained from exchanges, brokers, underwriters, industry associations, pricing

service institutions or regulatory authority, and the quotations represent the actual

and frequently-occurring fair market trading, then the financial instruments have a

publicly quotation of active market. If the above conditions are not met, then the

market is considered not active. In general, those, the bid-ask spread is very large,

significantly increases or is extremely small, are all indicators of a non-active

market.

If the financial instruments held by the Company has no active market

indicator, its fair value is shown by category and attributes as follows:

Equity instruments without public quotation: use the net asset value-based

method, main assumption is to take the net value per share of investees as the basic

measurement.

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Footnotes to Individual Financial Statement

(XX) Financial risk management

1. Summary

Due to usage of financial instruments, the Company is disclosed to the following

risks:

(1) Credit risk

(2) Liquidity Risk

(3) Market risk

The footnotes describe the disclosure risk information of the Company and the

target, policy and procedures of measurement and management risks of the Company.

The further quantitative disclosure is seen in the corresponding footnotes of the

individual financial statement.

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Footnotes to Individual Financial Statement

2. Risk management framework

The financial department provides service for other department to analyze the risk

of domestic and international market. The company uses financial instruments to avoid

risk including Exchange rate risk, interest rate risk, and Credit risk. The Company does

not involved in the speculating transaction of financial instruments.

3. Credit risk

Credit risk is the risk of financial losses generated from the failure of the

counterpart against the customers or financial instruments to fulfill contractual

obligations of the Company, mainly from the account receivables from the customers

and securities investment of the Company.

(1) Accounts Receivable and Other Receivables

The credit exposure risk of the Company is mainly affected by the situation of

each individual customer. But only management staff considers the basic statistics of

customers of the Company, including default risks of industries and countries which

customers are engaged in and belong to, all of which may affect the credit risk.

The Company has established credit policies, according to which, before the

Company offers standard of payment, shipment conditions and articles, individual

credit rating analysis for each new customer shall be made. The review of the

Company contains, if available, the external ratings, and, in some cases, the bank’s

note. Procurement thresholds’ establishment by individual customers means the

maximum un-received amount without approval of the board of directors. This

threshold is regularly reviewed. Customers without the group’s basic credit ratings can

only do transactions with the Company with the basis of receivables in advance.

The Company is available with allowance for doubtful accounts to reflect the

estimation of losses already occurred of accounts receivable and other receivables and

investment. The main component of the allowance account contains specific losses

related to certain significant exposure risks and that part of combined losses

established for losses that have already occurred but yet not been identified in similar

asset group. The allowance account of combined losses is dependent on statistical

materials of historical payment of similar financial assets.

(2) Bank deposits and trading contracts of foreign exchange derivative instruments

Credit risk of bank deposits and trading contracts of foreign exchange derivative

instruments is measured and monitored by the financial department of the Company.

Because the trading partners and the other parties in compliance of the transactions of

the Company were banks with good credit, without major concerns of performance, so

there is no significant credit risk.

164

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

4. Liquidity Risk

Liquidity risk refers to the risk of the Company’s inability to deliver cash or other

financial assets to settle financial liabilities and risk of failure to fulfill relevant

obligations. The method of liquidity management of the Company ensures as far as

possible that in general case and cases under pressure, there are enough liquidity fund to

cope with liabilities that are due, so as to avoid unacceptable losses or the risk of harmed

reputation of the Company.

165

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

The Company uses standard cost system to estimate the cost of their products to

help the company to supervise cash flow demands. In general, the Company ensures

there is enough cash to cope with expected operating expenditure need within ninety

days, including the fulfillment of financial obligations, but excluding the potential impact

which could not be reasonably expected under extreme circumstances, such as natural

disasters. In addition, on December 31, year of 104 and 103 in the Republic China, the

total borrowing amount that had not been used of the Company was TWD 2,362.494

million and TWD 1,507.453 million, respectively.

5. Market Risk

Market risk refers to the risk of affected earnings of the Company or value of

financial instruments held by the company due to market price changes, such as changes

of exchange rates, interest rates and equity instrument price. The objective of market risk

management is to control the market risk exposure extent within affordable range and

optimize investment return.

To manage market risks, the Company is engaged in transactions on derivative

instruments, and thereby financial liabilities emerge. Performance of all the transactions

is executed under the guidelines of the board of directors.

(1) Exchange rate risk

The Company is disclosed to exchange rate risk that is not generated due to sales,

procurement and loan exchanges valuated according to the functional currencies of the

companies in the group. TWD and US dollar are the main valuation currencies of these

transactions. In addition, under the natural hedge principle, based on the Company’s

individual currency demand and net location (and the difference between foreign

currency assets and liabilities location), and in accordance with the foreign exchange

market situation, hedge is done. The Company hedges exchange rate risks of forward

foreign currency, currency exchange contracts within one year from the maturity date

as the report date.

Interest of borrowings is evaluated by the currency of principal of the borrowings.

In general, the currency of borrowings is the same with that of the cash flow generated

from operations the company’s operations, mainly TWD and US dollars. In this case,

economic hedging does not require entry of derivative instruments; therefore, hedge

accounting is not adopted.

As to other monetary assets and liabilities valuated in foreign currencies, when

the short-term imbalance occurs, the Company is buying or selling foreign currencies

in real exchange rates in order to ensure that the net exposure risk is maintained at an

acceptable level.

166

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

(2) Interest Rate Risk

The borrowings of the Company are based on a floating rate, and the

circumstance never occurs that the Company converts fluctuation rate into fixed rate

via interest rate conversion contract. The Company should take measures

corresponding to interest rate changes, dominated by periodic assessment of banks and

currencies’ borrowing rate, and maintaining of good relations with the financial

institutions to secure lower-cost financing, together with the strengthening of operating

capital management at the same time, to reduce dependence on bank borrowings to

disperse the risk of changes in interest rates.

(3) Other Price Risks

In addition to coping with expected consumption and sales demand of the

Company, the Company does not sign commodity contracts; such commodity

contracts do not take close-out netting.

167

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

(XXI) Capital Management

Policies of board are to maintain a sound capital base, in order to maintain the

confidence of investors, creditors and the market and support the future operation and

development. The capital comprises share capital, capital surplus, retained earnings and

non-controlling interests of the Company. Board of directors controls capital return rate,

and also the dividend level of common stocks.

Debt-to-capital ratio on the report date is as follows: Dec.31, 2015 Dec. 31, 2014

Total Liabilities $ 4,128,089 3,925,392

Deduction: Cash and cash equivalents (653,223) (492,381)

Net Liabilities $ 3,474,866 3,433,011

Total equity $ 9,680,618 8,166,112

Debt-to-Capital Ratio 35.90% 42.04%

Until the December 31, year of 104 in the Republic China, the capital management

mode of the Company had not been changed.

VII. Transactions of Related Parties

(1) The parent company and subsidiary company

The details of the subsidiary company of the Company are as follows: Owner equity (share%)

Established at Dec.31, 2015

Dec. 31, 2014

EMC OVERSEAS HOLDING

INCORPORATED

BVI 100% 100%

Grand Zhuhai Incorporated Cayman Islands 100% 100%

Grand Shanghai Incorporated BVI 99.79% 99.79%

Elite Electronic Material (Kunshan)

Co. Ltd.

Mainland China 100% 100%

Grand Zhongshan Incorporated BVI 100% 100%

Elite Electronic Material (Zhongshan)

Co., Ltd.

Mainland China 100% 100%

(2) The parent company and ultimate controller

The Company is the actual controller of the Company and the subsidiary company.

168

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

(3) Major sale to related parties

1. Operating revenue

Major sale revenue to related parties are as follows: 2015 2014

subsidiary company $ 61,603 89,556

The sales condition to affiliated company is not significantly different to other

company; the payment term is 90-120 days.

169

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

2.Purchase

Purchasing amount from Related parties: 2015 2014

subsidiary company $ 137,574 145,700

The purchasing price is not significantly different from other companies; the

payment term is 90-120 days.

3. Receivables-Related parties

Receivables-Related parties Details are as follows: Item Types of related parties Dec.31, 2015 Dec. 31, 2014

Accounts

Receivable

subsidiary company $ 16,878 19,449

Other

Receivables

subsidiary company 14,154 6,976

$ 31,032 26,425

4. Related parties payment

Details of Related parties payments are as follows: Item Related parties Dec.31, 2015 Dec. 31, 2014

Accounts

Payable

subsidiary company $ 76,218 22,994

5.Property transaction

(1)Purchasing Real Estate、Plant and Equipment

Purchasing equipment from Related parties: 2015 2014

subsidiary company $ - 762

6.Endorsement

Please refer to note 13 for the endorsement for subsidiary company on Dec.31,

2015.

(4) Transactions of major management personnel

Remuneration of major management personnel includes: 2015 2014

Short-term employee benefits $ 61,964 38,766

Post-employment benefit 638 408

share-based payment 395 1,033

$ 62,997 40,207

The details of description on share-based payment are seen in Footnote VI (15).

170

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

VIII. Collateralization of Assets

The book value of assets of the Company to provide pledged security is as follows:

Assets Pledged object Dec.31, 2015 Dec. 31, 2014

Real Estate 、 Plant and

Equipment

Land Bank Loan Warrant $ 470,621 470,621

Buildings (Structures) " 312,229 330,857

Guarantee deposits paid Deposit of dormitory 5,429 2,176

$ 788,279 803,654

IX. Significant unrecognized contractual commitments or those with liabilities

(1) Significant unrecognized contractual commitments:

1. The credit balance of the Company that has been opened yet not used is as follows:Dec.31, 2015 Dec. 31, 2014

LC not being used

TWD $ 85,272 82,212

USD 1,036 4,414

JPY 236,769 1,440

2. The non-payment amount of significant contracts of engineering construction and

machinery and equipment purchase singed for the expansion of new plant and machinery

and equipment are as follows: Dec.31, 2015 Dec. 31, 2014

Total contract value

TWD $ - 16,300

3. According to the option premium contract of environmental-friendly material

technology signed between the Company and the Japanese H Company, the payment of

option premium is as follows: 2015 2014

$ 49,913 49,963

4. On December 31, year of 104 and 103 in the Republic China, entrusted by the Company,

Mega International Commercial Bank Zhongli Branch issued a letter of guarantee with

TWD 4 million and TWD 5 million granted to the Customs as a guarantee for tariffs for

sales on home market and for hiring foreigners to be employed in services.

X. Major disaster losses: None.

XI. Significant after-date affairs: None.

171

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

XII. Others

Function s of Employee Benefits, Depreciation, Depletion and Amortization:

Function 2015 2014

Nature

Operation

cost

Operation

expense Total

Operation

cost

Operation

expense Total

Employee benefit expense

Salary Expense 494,178 193,818 687,996 449,608 144,746 594,354

Insurance Expense 33,868 10,302 44,170 32,904 9,955 42,859

Pension expense 17,241 5,467 22,708 21,765 6,023 27,788

Other employee benefit

expense

22,864 4,116 26,980 23,065 4,200 27,265

Depreciation Expense 156,963 8,792 165,755 176,999 9,331 186,330

Amortization Expense 136 1,203 1,339 233 1,389 1,622

The company has 799 and 786 employees in 2015 and in 2014.

XIII. Other affairs disclosed in the footnotes

(1) Information related to significant transactions

In year of 104 in the Republic China, according to the provisions in the development

guidelines of financial statements for issuers of securities, the Company should disclose the

information related to significant transactions as follows:

1. Loans to others: None.

2. Endorsement and guarantee for others:

Unit: TWD (IN THOUSANDS) No. Endorse

d Compa

ny

Object Limited amount for

single endorseme

nt

Highest endorsement balance

for the term

Endorsement

balance for the term

Actual used

amount

Amount guarantee

d by property

Ratio in total amount

Cap. For parent

company

For subsidiar

y company

For endorsem

ent in China

Company name

Relation

(Remark 2)

(Remark 3)(Remark 3)

0 Elite Material Co., Ltd.

Grand Shanghai Incorporated

3 4,840,309 666,350 655,850 226,534 - 7% 9,680,618 Y

0 〞 Grand Zhongshan Incorporated

3 4,840,309 712,125 640,088 335,146 - 7% 9,680,618 Y

0 〞 Elite Electronic Material (Zhongshan) Co., Ltd.

3 4,840,309 759,600 459,550 - - 5% 9,680,618 Y Y

0 〞 Elite Electronic Material (Kunshan) Co. Ltd.

3 4,840,309 98,610 98,475 - - 1% 9,680,618 Y Y

172

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

Remark 1: 0 indicates the Company.

Remark 2: 1. Companies with business relationship.

2. Subsidiary company’s directly-held aggregated common stocks exceed 50%.

3. Investee companies with aggregated common stocks held by the parent company and subsidiary companies exceeding 50%.

4. Common stocks held directly by the parent company or indirectly through a subsidiary company exceed 50%.

Remark 3: Under the provisions of endorsement assurance measures of the Company:

The total amount of external endorsement and guarantee shall not exceed 100% of the net value in the most recent financial statements of the

Company, the limit of endorsement guarantee for an individual enterprise shall not exceed 50% of the net value in the most recent financial

statements of the Company.

173

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

3. Holding securities by the end of the period (exclude subsidiary companies withinvestment, affiliated companies and the part controlled in the joint-venture companies): None.

4. Accumulative buying or selling the same securities amounting to TWD 300 million ormore than 20% of paid-in capital: None.

5. Acquisition of property amounting to TWD 300 million or more than 20% of paid-incapital: None.

6. Disposal of property amounting to TWD 300 million or more than 20% of paid-incapital: None.

7. Purchase and sales from and to related parties amounting to TWD 100 million or morethan 20% of paid-in capital:

Unit: TWD (IN THOUSANDS)

Transaction status Terms of transaction

Receivables (Payables)

Purchase(Sales)

Company

Name Relation Purchase(S

ales) Amount

Ratio in

total

amount

Credit

period Unit

Price

Loan period Balance

Ratio in

total

amount

Remark

Grand Shanghai Incorporated

Elite Electronic Material (Kunshan) Co. Ltd.

The Investee company evaluated by equitymethod

Sales (1,340,923) (100)% Depending on the finacial status of the subsidiary company

- 263,804 81%

〞 〞 〞 Purchase 241,570 100% 〞 - (61,473) 17% Remark 1

Elite Electronic Material (Kunshan) Co. Ltd.

Grand Shanghai Incorporated

The Investee company evaluated by equitymethod

Sales (241,570) (3)% 〞 - 61,473 2% Remark 1

〞 〞 〞 Purchase 1,340,923 23% 〞 - (263,804) 14%

Grand Zhongshan Incorporated

Elite Electronic Material (Zhongshan) Co., Ltd.

The Investee company evaluated by equitymethod

Sales (713,584) (100)% 〞 - 312,076 62%

〞 〞 〞 Purchase 528,349 100% 〞 - (222,750) 52% Remark 2

Elite Electronic Material (Zhongshan) Co., Ltd.

Grand Zhongshan Incorporated

The Investee company evaluated by equitymethod

Sales (528,349) (9)% 〞 - 222,750 10% Remark 2

〞 〞 〞 Purchase 713,584 19% 〞 - (312,076) 22%

〞 Elite Material Co., Ltd

〞 Sales (105,736) (2)% 〞 - (47,970) - %

Elite Material Co., Ltd

Elite Electronic Material (Zhongshan) Co., Ltd.

The Investee company evaluated by equitymethod

Purchase 105,736 3% 〞 - 47,970 3%

174

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

Remark 1: This transaction is through the parent company---Grand Shanghai Incorporated for resales to customers, without spread. The relevant

purchase and sales have been shown by the Grand Shanghai Incorporated in the way of elimination.

Remark 2: This transaction is through the parent company---Grand Zhongshan Incorporated for resales to customers, without spread. The relevant

purchase and sales have been shown by the Grand Zhongshan Incorporated in the way of elimination.

8. Receivables from the related parties amounting to TWD 100 million or more than 20%

of paid-in capital:

Unit: TWD (IN THOUSANDS) Name Transacting

party Related

parties-account receivable

Overdue Receivables-Related parties

Receivables-Related parties

Allowance for bad debt

Relation Turnover(times)

Amount Disposition

Grand Shanghai Incorporated

Elite ElectronicMaterial (Kunshan) Co.Ltd.

The Investeecompany evaluatedby equity method

263,804 4.18 - 168,524 -

Grand Zhongshan Incorporated

Elite ElectronicMaterial (Zhongshan) Co.,Ltd.

〞 312,076 1.90 - 237,592 -

Elite Electronic Material (Zhongshan) Co., Ltd.

Grand ZhongshanIncorporated

The Investeecompany evaluatedby equity method

222,750 2.30 - 134,591 -

9. Engagement in derivative transactions:

The detailed information of the company’s engagement in derivative transactions is

seen in the description about “financial instruments” in Footnote VI (19) in the financial

statements.

175

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

(2) Re-investment business-related information:

The information of re-investment business of the Company in year of 104 in the

Republic China is as follows (excluding mainland Chinese investee companies):

Unit: TWD (IN THOUSANDS) Investment company

Investee company Located area Major business

Initial Investment Amount Share holding in the end of the term Investee company

Recognized

investment

gain or loss

End of the period

End of last year

Number of shares(Share)

Ratio Carrying amount

Net income or loss for

current period

Remark

Elite Material Co.,Ltd.

EMC OVERSEASHOLDING INCORPORATED

Offshore Incorporations Limited P.O. Box957, OffshoreIncorporations Centre. Road Town,Tortola, Britishvirgin Islands

Investment 1,160,487 1,160,487 35,656,950 100.00% 9,148,028 2,220,063 2,220,063 subsidiary company

〞 Li Cheng Tech Co.,LTD.

No.11, Gongye 5thRd., Guanyin Dist.,Taoyuan City 328,Taiwan (R.O.C.)

Electric equipment 、

Telecom Instruments、Wholesale 、Retail Sale、Battery 、Electricity generation 、Power Distribution Machinery Manufacturing

173,694 173,694 16,412,918 33.50% - - -

EMC OVERSEASHOLDING INCORPORATED

Grand ZhuhaiIncorporated

Scotia Centre,4thFloor, P.O. Box2804, George Town,Grand Cayman,Cayman Islands

Import export business andInvestment

1,109,446 1,109,446 33,798,821 100.00% 9,105,619 2,219,965 2,219,965 Invested Company

〞 Li Cheng Tech Co.,LTD.

No.11, Gongye 5thRd., Guanyin Dist.,Taoyuan City 328,Taiwan (R.O.C.)

Electric equipment 、

Telecom Instruments、Wholesale 、Retail Sale、Battery 、Electricity generation 、Power Distribution Machinery Manufacturing

7,311 7,311 250,000 1.53% - - -

Grand ZhuhaiIncorporated

Grand ZhongshanIncorporated

P.O.Box 957,Offshore Incorporations Centre, Rood Town,Tortola, BritishVirgin Islands

Import export business andInvestment

539,545 539,545 16,437,000 100.00% 3,834,714 828,938 828,938 Invested Company

Grand ZhuhaiIncorporated

Grand ShanghaiIncorporated

Offshore Incorporations Limited P.O. Box957, OffshoreIncorporations Centre. Road Town,Tortola, Britishvirgin Islands

Import export business andInvestment

1,084,261 1,084,261 18,161,515 99.79% 5,267,426 1,394,231 1,391,282 〞

Remark 1: Carrying amount refers to the investment balance recognized under the equity law, including investment gains and losses and cumulative

translation adjustment, etc.

Remark 2: It is required to evaluate with equity method in accordance with the financial statements approved by the accountants of the investee

company.

176

Elite Material Co., Ltd.

Footnotes to Individual Financial Statement

(3) Mainland China investment-related information:

1. Re-investment business in Mainland China-related information:

Unit: TWD (IN THOUSANDS)

Name of the

invested company

Business scope Paid-in

Capital

Investm

ent type

Accumulate

amount

remitted out

of Taiwan

Investment

amount remitted

or withdrew

Accumulate

amount

remitted out

of Taiwan at

the end of this

term

Invested

company

Direct or

indirect share

holding rate

Recognized

gain and loss

Face value of

the

investment

Investment

interest

withdrew

as of this

term

(Remar

k 1)

Remit Withdraw Net income or

loss for

current period

(Remark 2)

Elite Electronic

Material

(Kunshan) Co. Ltd.

The

manufacturing

and sales of CCL

and Bonding

sheet

597,415

(2)

650,816 - 414,262 236,554 1,421,126 99.79% 1,418,141 5,332,862 414,462

Elite Electronic

Material

(Zhongshan) Co.,

Ltd.

〞 663,065

(2)

440,613 - - 440,613 846,006 100.00% 846,006 3,772,668 -

177

2. Limits of re-investment in Mainland China:Accumulated amount

invested in China remitted from Taiwan-to the end of the

period

Amount approved by MOEA Investment

Commission

Amount invested in China approved by MOEA Investment

Commission

673,494 1,141,188 5,808,371

Remark 1: Investment methods are divided into:

1. Directly investing in Mainland China.

2. Re-investing through the company in a third region.

3. Other methods.

Remark 2: In the column of gains and losses recognized in the current period:

The recognized basis of investment gains and losses is divided into the following three categories.

(1) Financial statements audited and certified by international CPA firms working with the Accounting Firm of ROC.

(2) Financial statements audited and certified by a certifying CPA from the parent company in Taiwan.

(3) Other financial statements self-compiled by investee companies.

Remark 3: The difference between paid-in capital and Taiwan remittance is the direct investment of USD6.012 million made by overseas

subsidiary companies.

Remark 4: The difference between paid-in capital and Taiwan remittance is the capital increase of USD6.255 million converted by surplus of

the Company.

Remark 5: The difference between paid-in capital and Taiwan remittance is the capital increase of USD800 million converted by surplus of the

Company.

Remark 6: The difference between paid-in capital and Taiwan remittance is the direct investment of USD110 million made by overseas

subsidiary companies.

Remark 7: It is converted according to the exchange rates of 32.825 (assets liabilities) and 31.7562 (gains and losses) on December 31, 2015.

3. Major transactions:

The significant transactions directly or indirectly engaged by the Company

with investee companies in Mainland China in year of 104 in the Republic China

(had been written off when the merging report was developed), details of which

can be seen in the description of “major transactions-related information”.

XIV Department Information

Please refer to the 2015 Consolidated Financial Statement.

178

Statement

In 2015 (from 2015/01/01 to 2015/12/31), the Company included the companies for the preparation of the consolidated financial statements of the affiliated enterprises based on the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises”, and the companies for the preparation of the consolidated financial statements of the parent companies based on International Financial Reporting Standards No. 10 recognized by the FSC. The relevant information that shall be disclosed at the consolidated financial statements of the affiliates has already been disclosed at the aforementioned consolidated financial reports of the parent companies, so the consolidated financial statements of the affiliates will not otherwise be prepared.

Hereby declared.

Company: Elite Material Co., Ltd.

Chairman of the Board: Tsai Fei Liang Date: March 23rd, 2016

Annex III.

The Consolidated Financial Statement of the Parent/Subsidiary Company that is checked and certified

by the Accountant of 2015.

179

KPMGSecurities Competent Authority’s Approval

：(90) Tai Cai Chen(VI) Tzi No. 166967 Jin Guan Chen Liu Tzi No. 0950161002

March 23rd, 2016

Independent Auditors, Report 

To the Board of Directors of Elite Material Co.,Ltd: 

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Elite Material Co.,Ltd.  and  its  subsidiaries  as  of  December  31,  2015  and  2014,  and  the  related consolidated statements of comprehensive income, changes in equity and cash flows for  the  years  ended  December  31,  2015  and  2014.  These  consolidated  financial statements are the responsibility of the Company,

s management. Our responsibility is to issue a report on these consolidated financial statements based on our audits. 

We  conducted our  audits  in  accordance with  the  “Regulations Governing Auditing and  Attestation  of  Financial  Statements  by  Certified  Public  Accountants”  and  the auditing  standards  generally  accepted  in  the  Republic  of  China.  Those  standards require  that we plan and perform  the audit  to obtain  reasonable assurance about whether  the  financial  statements  are  free  of  material  misstatement.  An  audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used  and  significant  estimates  made  by  management,  as  well  as  evaluating  the overall  financial  statement  presentation.  We  believe  that  our  audits  provide  a reasonable basis for our opinion. 

In our opinion, the consolidated financial statenmnts referred to above present fairly, in all material respects, the consolidated  financial position of Elite Material Co.,Ltd. and its subsidiaries as of December 31, 2015 and 2014, and the consolidated results of their operations and their consolidated cash flows for the years ended December 31,2015 and 2014,  in conformity with  the Guidelines Governing  the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRIC Interpretations and SIC Interpretations endorsed by the FSC. 

We have also audited the standalone financial statements of Elite Material Co.,Ltd. as of  December  31,2015  and  2014,  and  the  related  statements  of  comprehensive income,  changes  in equity, and  cash  flows  for  the  years ended December 31,2015 and 2014, on which we have issued an unqualified audit report. 

180

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me

Tax

Ass

et(N

ote

6 (1

3))

24,2

86

-27

,975

-

1900

O

ther

Non

-cur

rent

Ass

ets

310,

738

2 31

7,26

7 2

1920

R

efun

dabl

e de

posi

t 15

,674

-

18,5

98

- 19

85

Long

-term

pre

paid

rent

10

2,49

5 1

107,

578

1T

otal

Non

-cur

rent

Ass

ets

5,13

1,83

5 29

5,

590,

500

34

Tot

al A

sset

s $

17,7

07,8

29

100

16,7

03,8

93

100

104.

12.3

1 10

3.12

.31

LIA

BIL

ITIE

S A

ND

ST

OC

KH

OL

DE

RS'

EQ

UIT

Y

Am

ount

%

A

mou

nt

%

C

urre

nt li

abili

ties：

21

00

Sh

ort-T

erm

Bor

row

ings

(Not

e 6(

7))

$ 12

,605

-

902,

493

5 21

10

Sh

ort-T

erm

Not

es a

nd B

ills P

ayab

le(N

ote

6(8)

) -

- 19

9,62

6 1

2120

Cur

rent

Fin

anci

al a

sset

or f

inan

cial

liab

ility

at f

air v

alue

thro

ugh

loss

(N

ote

6 (2

))

18,3

25

-

-

-

2170

Acc

ount

s Pay

able

4,

474,

140

25

4,71

4,48

5 29

22

00

O

ther

Pay

able

s 1,

132,

092

6 1,

068,

330

6 22

30

C

urre

nt In

com

e Ta

x Li

abili

ties

311,

617

2 10

3,91

4 1

2250

Prov

isio

ns -

Cur

rent

(Not

e 6

(11)

) 20

,101

-

28,5

55

- 23

21

C

urre

nt p

ortio

n of

bon

d re

purc

hase

(Not

e 6

(10)

) -

- 9,

801

- 23

22

Lo

ng T

erm

Deb

ts-C

urre

nt P

ortio

n(N

ote

6 (9

))

312,

500

2 71

2,50

0 4

2399

Oth

er C

urre

nt L

iabi

litie

s-O

ther

13

,859

-

13

,962

-

Tot

al C

urre

nt L

iabi

litie

s

6,29

5,23

9 35

7,

753,

666

46

N

on-c

urre

nt li

abili

ties：

25

40

Lo

ng T

erm

Deb

t(Not

e 6

(9))

1,

219,

700

7 52

1,71

9 4

2551

Net

ben

efit

liabi

lity-

Non

cur

rent

(Not

e 6(

12))

7,

971

- 35

,837

-

2570

Def

erre

d In

com

e Ta

x Li

abili

ties(

Not

e 6

(13)

) 47

7,17

9 3

199,

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1 26

45

G

uara

ntee

Dep

osits

Rec

eive

d 15

,960

-

17

,647

-

Tot

al N

on-C

urre

nt L

iabi

litie

s1,

720,

810

10

774,

818

5 T

otal

liab

ilitie

s

8,01

6,04

9 45

8,

528,

484

51

Equ

ity a

ttri

buta

ble

to o

wne

rs o

f the

par

ent c

ompa

ny (N

ote

6 (1

4))：

31

00

C

apita

l

3,17

5,05

1 18

3,

159,

941

19

3200

Cap

ital S

urpl

us

432,

549

2 41

9,30

5 2

Ret

aine

d Ea

rnin

gs：

33

10

Le

gal R

eser

ve

740,

737

4 58

6,86

7 4

3351

Acc

umul

ated

Ear

ning

s/D

efic

its

4,87

6,10

6 28

3,

412,

810

20

3400

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er E

quity

45

6,17

5 3

587,

189

4 36

XX

Non

-con

trolli

ng In

tere

sts

11,1

62

-

9,29

7 -

Tot

al e

quity

9,69

1,78

0 55

8,

175,

409

49

T

otal

LIA

BIL

ITIE

S A

ND

ST

OC

KH

OL

DE

RS'

EQ

UIT

Y

$ 17

,707

,829

10

0 16

,703

,893

10

0

181

The accompanying notes are an integral part of the consolidated financial statements.

Elite Material Co., Ltd.and subsidiary company CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (Amounts Expressed in Thousands of New Taiwan Dollars)

(English Tranlation of Financial Report Originally Issued In Chinese) 2015 2014

Amount ％ Amount ％

4000 Operating Income(Note 6 (17)) $ 20,869,717 100 18,884,745 1005000 Operating Costs(Note 6 (4)) (15,805,387) (76) (15,454,173) (82)

Gross Income from Operations 5,064,330 24 3,430,572 18 Operating Expenses：

6100 Marketing Expenses (1,183,770) (6) (1,054,894) (6)6200 Administrative expenses (448,953) (2) (376,278) (2)6300 Research and Development Expenses (182,457) (1) (167,009) (1)

Total Operating Expenses 1,815,180 9 1,598,181 9 Net Operating Income 3,249,150 15 1,832,391 9 Non-Operating Income and Expenses(Note 6 (19))：

7010 Other Income 7,300 - 4,267 -7020 Other Gains and Losses 109,992 1 48,660 -7050 Financial Costs (35,792) - (47,067) -

Non-Operating Income and Expenses 81,500 1 5,860 - Continuing Operations’ Income Before Tax 3,330,650 16 1,838,251 9

7951 Deduction: Income Tax Expense(Note 6 (13)) (938,463) (4) (296,618) (1) Net Income 2,392,187 12 1,541,633 8

8300 Other Comprehensive Income： 8310 Items not to be reclassified into profit or loss 8311 Defined benefit plans Remeasurement 22,110 - 4,958 -8349 Income tax related to Items not to be reclassified (3,758) - 8,825 -

Items not to be reclassified into profit or loss 18,352 - 13,783 -8360 Items that may be subsequently reclassified into profit or loss 8361 Exchange difference in the financial report from operating units aboard (158,930) (1) 256,855 18399 Income tax related to Items to be reclassified 26,833 - (43,596) -

Items that may be subsequently reclassified into profit or loss (132,097) (1) 213,259 18300 Other Comprehensive Income(Amount after tax) (113,745) (1) 227,042 1

Total Comprehensive Income $ 2,278,442 11 1,768,675 9Net Income for：

Owners of the parent $ 2,389,239 12 1,538,696 8 Non-controlling Interests 2,948 - 2,937 -

$ 2,392,187 12 1,541,633 8Aggregate loss and gain attributable to：

Owners of the parent company $ 2,276,577 11 1,765,330 9 Non-controlling Interests 1,865 - 3,345 -

$ 2,278,442 11 1,768,675 9Earnings Per Share(TWD) (Note 6 (16)) Earnings Per Share(Unit：TWD) $ 7.55 4.91 Diluted Earnings Per Share (Unit：TWD) $ 7.46 4.84

182

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f the

con

solid

ated

fina

ncia

l sta

tem

ents

.

Elit

e M

ater

ial C

o., L

td. a

nd su

bsid

iary

com

pany

C

ON

SOL

IDA

TE

D S

TA

TE

ME

NT

S O

F C

HA

NG

ES

IN E

QU

ITY

FO

R T

HE

YE

AR

S E

ND

ED

DEC

EM

BE

R 3

1, 2

015

AN

D 2

014

(Am

ount

s Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

) (E

nglis

h T

ranl

atio

n of

Fin

anci

al R

epor

t Ori

gina

lly Is

sued

In C

hine

se)

Equ

ity a

ttri

buta

ble

to o

wne

rs o

f the

par

ent c

ompa

ny

Cap

ital S

tock

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etai

ned

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ning

s

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ck

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ital

colle

cted

in

adva

nce

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apita

l Su

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s L

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Res

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istr

ibut

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ning

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Exc

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tion

of

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ncia

l St

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ity

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f the

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Inte

rest

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otal

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Jan.

1, 2

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Bal

ance

$

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8 -

381,

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6,83

0 37

4,33

8 6,

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et In

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l Res

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(83,

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h D

ivid

ends

of C

omm

on S

tock

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(562

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) -

(5

62,8

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(562

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) C

onve

rtibl

e Se

curit

ies C

onve

rsio

n

16,1

93

- 21

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38,1

11

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e rig

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sfer

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right

of c

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verti

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bond

s pa

yabl

e co

nver

ted

to c

omm

on sh

are

-

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(5,9

55)

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-

- (5

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) -

(5,9

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ance

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s for

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ital S

tock

- 36

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ec.3

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ance

3,

159,

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- 41

9,30

5 58

6,86

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et In

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2,38

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2,

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er C

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me

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erm

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-

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- 18

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2 A

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and

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iden

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(7

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(7

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ritie

s Con

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ured

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ds p

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(1,2

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tock

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rant

s 13

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k-ba

sed

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ent T

rans

actio

n

-

- 1,

740

-

-

- 1,

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- 1,

740

Dec

.31,

201

5 B

alan

ce

$ 3,

175,

051

-

432,

549

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737

4,87

6,10

6 45

6,17

5 9,

680,

618

11,1

62

9,69

1,78

0

183

Elite Material Co., Ltd. and subsidiary company CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (Amounts Expressed in Thousands of New Taiwan Dollars)

(English Tranlation of Financial Report Originally Issued In Chinese)

2015 2014 Cash Payments for Other Goods and Services：

Net Income before Tax $ 3,330,650 1,838,251Adjustments：

Income & Expense Items Depreciation Expense 535,229 528,291Amortization 1,767 2,635Expense for bad debts expense (transferred to income) (2,947) 36,351Gains on Financial Assets (Liabilities) at Fair Value through Net Profit or Loss 19,904 (1,294)Interest expense 35,709 46,326Interest revenue (7,300) (4,267)Loss on Disposal Of Real Estate, Plant and Equipment Loss 6,209 1,461Cost for share-based compensastion 1,740 4,368Convertible bonds issuance discount cost and interest expense 83 741Buy back the interests on Bonds Payable (1,224) -Others - (6,802)

Total Income & Expense Items 589,170 607,810Changes In Operating Assets and Liabilities：

Net Change In Operating Assets：Notes Receivable (17,372) 101,737Trade receivable 263,121 (1,508,687)Other Receivables 39,601 (35,896)Inventory 30,065 (190,874)Other Current Assets (6,572) (6,310)Other Assets 5,198 (87,444)

Total Net Change In Operating Assets 314,041 (1,727,474)Net Change In Operating Liabilities：

Accounts Payable (335,147) 1,350,129Other Payables 134,226 209,773Provisions (8,072) 13,516Other Current liabilities 7,275 134Net Defined benefit liability (5,756) (5,316)Total Net Change In Operating Liabilities (207,474) 1,568,236

Changes In Operating Assets And Liabilities 106,567 (159,238)Total Adjustments 695,737 448,572

Cash Inflows of Operations 4,026,387 2,286,823Interest Received Classified As Investing Activities 7,310 4,248Interest Paid Classified As Financing Activities (36,315) (48,512)Income taxes paid (422,743) (266,781)

Cash provided by (used in) operating activities 3,574,639 1,975,778Cash flows from investing activities：

Acquisition Of Real Estate, Plant and Equipment (233,854) (486,535)Proceeds From Disposal Of Real Estate, Plant and Equipment 1,045 2,487Acquisition Of Intangible Assets (3,457) (269)Decrease(Increase) In Refundable deposit 2,664 (2,756)

Cash provided by (used in) investing activities (233,602) (487,073)Cash flows from financing activities：

Decrease In Short-Term Borrowings (885,769) (716,771)Decrease(Increase) In Short-Term Notes and Bills Payable (199,626) 49,991Proceeds From Long Term Debt 1,535,481 581,250Repayments Of Long Term Debt (1,237,500) (593,750)Decrease In Guarantee Deposits Received (1,615) (4,474)Cash Dividends (791,303) (562,897)Exercise Employee Stock Warrants 24,654 36,884Bonds buy back (6,700) -Purchase of Non-controlling Interests - 3,405

Cash Flows From Financing Activities (1,562,378) (1,206,362)Effects of exchange rate change on cash and cash equivalents (36,308) 50,104Increase In Cash And Cash Equivalents 1,742,351 332,447Cash And Cash Equivalents At Beginning Of Period 2,168,919 1,836,472Cash And Cash Equivalents At End Of Period $ 3,911,270 2,168,919

The accompanying notes are an integral part of the consolidated financial statements.

184

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

2015 & December 31, 2014

(Unless otherwise noted, all amounts are stated in thousands of New Taiwan Currency)

Ⅰ. Company History

Founded on March 24, 1992 after being approved by the Ministry of Economic Affairs,

Elite Material Co., Ltd. (hereinafter referred to as the Company) was engaged in manufacturing

and marketing raw materials, semi-finished products and finished products of green sheets,

specialty chemicals for electronic industry and electronic components, with green sheets and

adhesive sheets as the main operating revenue.

The application of the Company for shares over-the-counter was approved on October 3,

1996, and shares were officially listed for sale on December 26, 1996; the application for listing

of transferring shares was approved on October 22, 1998, and transferring shares were officially

listed for sale on November 27, 1998. Registered address is No.18, Datong 1st Rd., Guanyin

Dist., Taoyuan City.

Please see Footnotes XIV for main business item of the Company and its subsidiary

company (hereinafter referred to as the Consolidated Company).

Ⅱ. Date and Procedures of Approval of Financial Statement

The Consolidated Financial Statement was approved and released by the Board of Directors

on March 23, 2016.

Ⅲ. Application of New and Revised Standards and Interpretations

(Ⅰ) Influence of the Adoption of New and Revised Standards and Integrations Approved by

the Financial Supervisory Commission

Since 2015, the Consolidated Company has fully adopted the International Financial

Report Standards (2013 Version) (excluding IFRS 9 Financial Instruments) which is

approved by the Financial Supervisory Commission (hereinafter referred to as FSC) to

come into effect to compile Consolidated Financial Statements, with relevant new,

amended and revised standards and interpretations listed as follows:

New／Amended／Revised Standards & Interpretations

Effective Date Released by IAS

Board

Amendments to IFRS 1 IFRS 7 First-time Adoption Exemption July 1 2010

Amendments to IFRS 1 Severe Hyperinflation and Removal of

Fixed Dates for First-time

July 1 2011

Amendments to IFRS 1 Government Loan January 1, 2013

185

Amendments to Amendments to IFRS 7 Disclosures－Transfer of

Financial Assets

July 1 2011

Amendments to IFRS 7 [Disclosures－Offsetting Financial Assets

and Liabilities]

January 1, 2013

IFRS 10 Consolidated Financial Statement January 1, 2013

(Individual investor

effective date

IFRS 11 Joint Agreement January 1, 2013

IFRS 12 Disclosures of Rights and Interests of Other Individuals January 1, 2013

IFRS 13 Fair Value Measurement January 1, 2013

186

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

New／Amended／Revised Standards & Interpretations

Effective Date Released by IAS

Board

Amendments to IAS 1Other Comprehensive Income Presentation July 1, 2012

Amendments to IAS 12 Deferred Income Tax Asset: Withdrawal of

Target Assets

January 1, 2012

Revision to IAS 19 Employee Benefits January 1, 2013

Revision to IAS 27 Separate Financial Report January 1, 2013

Amendments to IAS 32 Offsetting Financial Assets and Financial

liabilities

January 1, 2014

IFRI 20 Stripping Costs in the Production Phase of a Surface Mine January 1, 2013

Nature and impact of major changes to the Consolidated Financial Statement by

adopting IFRS (2013 Version) are as follows:

1. IFRS 13 Fair Value Measurement

IFRS changes the definition of fair value, sets out in a single framework for

measuring fair value and requires disclosures about fair value measurements. The

Consolidated Company has added disclosures related to fair value measurement in

accordance with the new standards and postponed the provisions on fair value measure

applicable to the new standards in accordance with the interim provisions of the new

standards but is not required to provide detailed information concerning the provisions

on the added disclosures. Although the applicable new measurement provisions had been

postponed from 2015, the assets and liabilities of the Consolidated Company haven’t

suffered material influences.

2. IAS 1 Financial Report Presentation

The Standards makes amendments to the presentation of other comprehensive

income and divides the items under other comprehensive income into two categories

Subsequent Non Reclassification under Gains and Losses and Subsequent

Reclassification under Gains and Losses by nature. The Amendments also stipulates that

the relevant taxes of other comprehensive income recognized with pre-tax amounts shall

be separately recognized with the foregoing two categories. The Consolidated Company

has changed the presentation of other comprehensive income statement in accordance

with the Standards, with the comparison matched with the reclassification presentation.

3. IAS 19 Employee Benefits

The main amendments to the Standards multiply net defined benefit liability (assets)

by discount rate to determine the net interest, uses it to replace the pre-amendment

interest costs and the expected returns of the planned assets, removal of actuarial gains

187

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

New／Amended／Revised Standards & Interpretations

Effective Date Released by IAS

Board

and losses Corridor Approach or the accounting policy choice of one-time recognized

under gains and losses when occurs, and stipulates remeasurements (including actuarial

gains and losses) of the defined benefit plans to be recognized as other comprehensive

income when occurs, past service costs to be considered as gains and losses when occurs,

and stipulates not to recognize the apportion any longer based on the straight line method

under the costs during the average period before meeting the defined conditions. In

addition, companies could not any longer recognize the earlier of the cancelation of the

offer of post-employment benefits or the recognition of relevant re-construction costs

under the post-employment benefits, rather than to always recognize the

post-employment under liabilities and costs when defining the premise of relevant

post-employment events. Additional disclosures are required in relation to defined

benefit plans.

Following acccessment, the Standards hasn’t greatly affected the financial status

and operation achievements of the Consolidated Company, and will add defined benefit

plans related disclosures as stipulated.

188

Footnotes to Consolidated Financial Statement of Elite Material Co., Ltd. (Continued)

(Ⅱ) New and Revised Standards and Interpretation Not Approved by FSC

The standards and interpretations listed in the table below have been released by the

International Accounting Standards Boards (hereinafter referred to as IASB) but not

approved to come effect by FSC:

New／Amended／Revised Standards & Interpretations

Effective Date Released by IAS

Board

IFRS 9 Financial Instrument January 1, 2018

Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets

between Investor and Its Affiliated Company

To be decided

Amendments to IFRS 10, IFRS 12 and IAS 28 Individual Investor:

Applicable Exceptions from Consolidated Report Exceptions

January 1, 2016

Amendments to IFRS 11 Accounting for Interests in Joint

Operations

January 1, 2016

IFRS 14 Regulatory Deferral Accounts January 1, 2016

IFRS 15 Revenue from Contracts with Customers January 1, 2018

IFRS 16 Leases January 1, 2019

Amendments to IAS 1 Disclosures January 1, 2016

Amendments to IAS 7 Disclosures January 1, 2017

Amendments to IAS 12 Recognition of Deferred Income Tax Asset

for Unrealized Loss

January 1, 2017

Amendments to IAS 16 and IAS 38 Clarification of Acceptable

Methods of Depreciation and Amortizement

January 1, 2016

Amendments to IAS 16 and IAS 41 Agriculture: Bear Plants January 1, 2016

Amendments to IAS 19 Defined Benefits Plan: Employee

Promotion

July 1, 2014

Amendments to IAS 27 Equity Method of Separate Financial

Statements

January 1, 2016

Amendments to IAS 36 Recoverable Amount Disclosure for

Non-Financial Assets

January 1, 2014

Amendments to IAS 39 Novation of Derivative and Continuation of

Hedge Accounting

January 1, 2014

2010‑2012 and 2011‑2013 Annual Improvements July 1, 2014

2012‑2014 International Financial Report Annual Improvements January 1, 2016

IFRS 21 Course January 1, 2014

The Consolidated Company is continuously assessing the influences of the

abovementioned standards and interpretation on the financial status and operation results of

the Consolidated Company, with the relevant influences to be disclosure upon completion.

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Ⅳ. Summary of Major Accounting Policies

The major accounting policies adopted in this Consolidated Financial Statement are

summarized as follows. Unless otherwise noted, the following accounting policies have been

applicable for all presentation period of the Consolidated Financial Statement.

(Ⅰ) Following Statements

The Consolidated Financial Statement was compiled in accordance with the

Guidelines Governing the Preparation of Financial Reports by Securities Issuers

(thereinafter referred to as the Guidelines Governing the Preparation), IFRS approved by

the Financial Supervisory Commission, and IAS, Interpretations and Interpretation

Announcement (hereinafter referred to as IFRS approved by the Financial Supervisory

Commission).

(Ⅱ) Compiling Foundation

1. Measurement Foundation

Except the major items in the following balance sheet, the Consolidated Financial

Statement was complied based on the historical costs:

(1) Financial assets at fair value through profit or loss measured with fair value;

(2) Available-for-sale financial assets measured according to fair value;

(3) Net defined benefit liability (or asset), is measured according to the fair value of the

retirement fund assets deducting present value of the defined benefit obligation and the

ceiling influence value listed in Footnotes IV (15)

2. Functional Currency and Presentation Currency

Each party of the Consolidated Company takes the currency of major economic

environment where its operation is located as its functional currency. The Consolidated

Financial Statement is presented in the functional currency of the Company, TWD. All

of the financial information expressed herein in TWD is of one thousand per unit.

(Ⅲ) Consolidation Foundation

1. Compiling Principles of the Consolidated Financial Statement

The main compliers of the Consolidated Financial Statement are composed of the

Company and the individuals controlled by the Company (subsidiary company). When

the Company discloses the variable compensations of invested individuals or has rights

to enjoy such compensations and is able to influence such compensations with its power

on invested individuals, the Company controls the individuals.

Since the date of being control, the subsidiary companies have started to integrate

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their financial reports to the Consolidated Financial Statement till the date of the

cancelation of the control. All trading, balances and any un-realized gains and losses

among the consolidated companies have been terminated when the Consolidated

Financial Statement is complied. The sum of the integrated gains and losses of subsidiary

company are under control of the owner the Company and belong to non-controlling

interests, even if when non-controlling interests become losses.

The financial reports of subsidiary company have been appropriately adjusted, so as

to make their accounting policies consistent with those adopted by the Consolidated

Company.

The changes made by the Consolidated Company to the ownership interests of

subsidiary company, if not giving rise to the loss of control on subsidiary company, are

considered as the interest issues with the owner. The difference between the amount of

adjusted non-controlling Interests and the payment or charges of consideration fair value

is directly recognized to be interests which are attributed to the owner of the Company.

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2.Subsidiary company listed in the consolidated financial statement

Subsidiary company listed in the consolidated financial statement including:

Business Equity Ratio Investment Company subsidiary company nature Dec.31, 2015

Dec. 31, 2014 Details

The Company EMC OVERSEAS HOLDING

INCORPORATED

Investment 100.00% 100.00% Established at BVI in Jul.

1996 and the Paid-in

capital id USD 35,657,000

dollars as of 2015.

EMC OVERSEAS

HOLDING

INCORPORATED

Grand Zhuhai Incorporated Import export

business

andInvestment

100.00% 100.00% Established at Cayman

islands in Apr. 2004 and

the Paid-in capital id USD

33,689,000 dollars as of

2015.

Grand Zhuhai

Incorporated

Grand Shanghai Incorporated Import export

business and

Investment

99.79% 99.79% Established at BVI in May

1997 and the Paid-in

capital id USD 18,200,000

dollars as of 2015.

〞 Grand Zhongshan Incorporated Import export

business and

Investment

100.00% 100.00% Established at BVI in 2014

and the Paid-in capital id

USD 16,437,000 dollars as

of 2015.

Grand Shanghai

Incorporated

Elite Electronic Material

(Kunshan) Co. Ltd.

Manufacturing CCL

and bonding sheet

for PCB

100.00% 100.00% Established at China

KETDZ in Sep. 1997 and

the Paid-in capital id USD

18,200,000 dollars as of

2015.

Grand Zhongshan

Incorporated

Elite Electronic Material

(Zhongshan) Co., Ltd.

Manufacturing CCL

and bonding sheet

for PCB

100.00% 100.00% Established at China

Kuandong ZHtorch Zone in

jul. 2004 and the Paid-in

capital id USD 20,200,000

dollars as of 2015.

3. Subsidiary companies not listed in the Consolidated Financial Statement: no.

(Ⅳ) Foreign Currency

1. Foreign Currency Trading

Foreign currency is converted into functional currency according to exchange rate

on the date of transaction. The monetary items in foreign currency on the date of report

are converted into functional currency according to exchange rate on the day. The gains

and losses from conversion refer to the difference between the amount after costs after

amortization priced in functional currency in the beginning of the period adjust the

effective interests and post-payment amount in the current period and the amount of the

costs after amortization priced in functional currency is converted according to exchange

rate on the report day.

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The non-monetary items of foreign currency measured with fair value are converted

into functional currency according to exchange rate on the day of measuring the fair

value, while the non-monetary items of foreign currency measured by historical costs are

converted according to exchange rate on the transaction day.

Unless non-monetary equity instruments available for sale are designated to be

financial liabilities to hedge for the net investment of foreign operating organizations or

qualified cash flow, the foreign currency exchange difference resulting from the

conversion is recognized to be other comprehensive Income, otherwise, recognized to be

gains and losses.

2. Foreign Operating Organizations

The assets and liabilities of foreign operating organizations, including the business

reputation and fair value adjustment during the acquisition, are converted to be TWD

according to exchange rate on the report day; gains and losses are converted into TWD

according to exchange rate in the current period, and the resultant conversion difference

is recognized to be other comprehensive Income.

In case of the loss of control, joint control or material influences arising from the

punishment on foreign operating organizations, the accumulated conversion differences

related to the foreign operating organizations shall be fully reclassified as gains and

losses. In case of subsidiary company of foreign operating organizations involved in the

punishment, the related accumulated conversion differences shall be reclassified as

non-controlling interests in proportion. In case of affiliated company or joint ventures of

foreign operating organizations involved in some of the punishment, related accumulated

conversion differences shall be fully reclassified as gains and losses in proportion.

As to the receivable and payable monetary items of foreign operating organizations,

if without the repayment plan or the possibility of repayment in foreseeable future, the

resultant gains and losses from foreign currency conversion shall be regarded as a part of

net investments to the foreign operating organizations as recognized as other

comprehensive income.

(Ⅴ) Standards for Classifying Current and Non-current Assets and Liabilities

Assets meeting one of the following conditions are recognized to be current assets,

and other assets not belonging to current assets are recognized to be non-current assets:

1. Those that are expected to be realized during the normal operating period of the

Consolidated Company or intended to be sold or consumed.

2. Those held mainly for the purpose of transaction.

3. Those expected to be realized within 12 months after the balance sheet.

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4. Cash or cash equivalents, but not including those used for exchange, liquidation of

liabilities or those with other restrictions.

The liabilities meeting any one of the following conditions are current liabilities, and

other liabilities not belonging to current liabilities are recognized to be non-current

liabilities:

1. Those expected to be paid off during the normal operating period of the Consolidated

Company.

2. Those held mainly for the purpose of transaction.

3. Those expected to be paid off within 12 months after the balance sheet.

4. Those that shall not allow the Consolidated Company to unconditionally extend the

liquidation period to at least 12 months. Liabilities for liquidation arising from the

issuing of equity instruments in accordance with the clauses chosen by the other party of

transaction will not affect their classification.

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(Ⅵ) Cash and cash equivalents

Cash includes cash on hand and demand deposits. Cash equivalents are the

investments which are allowed to be converted into normed cash with few value change

risks and short-term high flow ability. Certificate of deposit which satisfy the foregoing

definition and with the holding purpose of meeting the short-term cash pledges rather than

investment or others shall be recognized as cash equivalents.

(Ⅶ)Financial Instruments

Financial assets and financial liabilities can be recognized when the Consolidated

Company becomes one party stipulated under the conditions of the Financial Instrument.

1. Financial assets

Financial assets of the Consolidated Company are classified into: financial assets at

fair value through profit or loss, loans, account receivables and available-for-sale

financial assets.

(1) Financial assets at fair value through profit or loss

Such financial assets refer to those held for trading or designated to be financial

assets at fair value through profit or loss.

Financial assets held for trading are sold or re-purchased within a short period

due to the main purpose of obtaining or incurring. In case of any of the following

conditions for the Consolidated Company, the financial assets excluding those held for

trading are designated to be those measured at fair value through profit or loss at the

original recognition:

A. Eliminate and greatly reduce the inconsistent measure or recognition arising from

the measurement on assets or liabilities on different basis and recognition of

relevant gains and losses.

B. Financial assets assess the performance based on fair value.

C. Composite instruments include embedded derivative.

Such financial assets are measured with fair value at the original recognition and

the transaction costs are recognized as gains and losses when they occur; the

subsequent assessment is measured with fair value and the re-measurement gains or

losses (including relevant dividends income and interest income) are recognized as

gains and losses, which are then listed under non-operating income and expenses.

When purchasing or selling financial assets on the basis of the trade practices,

accounting treatment on the trading day will be adopted.

If such financial assets belong to the equity investment of Tight Market Public

Offer and Unreliable Fair Value Measurement, they shall be measured with costs

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deducting impairment loss and recognized as Financial Assets Measured with Costs.

(2)Available-for-sale financial assets

Such financial assets refer to non-derivative financial assets available for sale or

belonging to other categories. Such assets are measured with fair value plus the trading

cost which can be directly attributable at original recognition; in subsequent

assessment, they are measured with fair value and except the impairment loss, interest

income, dividends income and monetary financial assets foreign currency conversion

calculated according to effective interest rate method which are recognized as gains

and losses, the changes of other carrying amount are recognized as other

comprehensive income and accumulated to be the unrealized gains and losses of

available-for-sale financial assets under equity. In de-recognition, the accumulated

amount of interests or losses under equity is re-classified to be gains and losses, and

recognized under non-operating income and expenses. When purchasing or selling

financial assets on the basis of the trade practices, accounting treatment on the trading

day will be adopted.

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If such financial assets belong to the equity investments of Tight Market Public

Offer and Unreliable Fair Value Measurement, they shall be measured with costs

deducting impairment losses and recognized as Financial Assets Measured with Costs.

Dividends income of equity investment is recognized on the day when the

Consolidated Company is entitled to receive dividends (generally the ex-dividend date)

and listed under non-operating income and interest.

(3) Loans and account receivables

Loans and account receivables shall be public offer in tight market, and be the

financial assets with fixed or decidable payment amount, including account

receivables and other receivables. At original recognition, they shall be measured with

fair value plus the trading costs which can be directly attributable, and in subsequent

assessment, they are measured with post-amortization costs deducting impairment

losses according to effective interest rate method, except short-term receivables

recognized as those without materiality. When purchasing or selling financial assets on

the basis of the trade practices, accounting treatment on the trading day will be

adopted.

Interest income is recognized under non-operating income.

(4) Financial assets impairment

As to financial assets or financial liability not measured at fair value through

profit or loss, impairment loss shall be assessed on each report day. When there is

objective evidence showing single or multiple events happen on financial assets after

original recognition which give rise to losses to the estimated future cash flow of the

financial assets, the impairment has occurred.

The object evident of financial asset impairment includes major financial

difficulties of issuers or debtors, default (such as the delay payment or default of

interest or non-payment), the greater possibility of debtors’ going bankrupt or other

financial re-organization and the disappearance of activated market of financial assets

due to financial difficulties. In addition, when the fair value of equity investment

available for sale greatly or continuously declines to below the costs, it also belong to

objective impairment evidence.

If there is no impairment arising from the individual evaluation on the accounts

receivables, combined basis shall be adopted to evaluate the impairment. The objective

impairment evidence of receivables combination possibly includes the past receivables

experience of the Consolidated Company, the increase in delayed payment exceeding

the loan period and national or regional economic situation changes related to the

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default of receivables.

The impairment loss amount measured and recognized with post-amortization

costs is the difference between the carrying amount of the assets and the present value

of the estimated future cash flow discounted according to the original effective rate of

the financial assets.

All financial asset impairment losses are directly deducted from the carrying

amount of the financial assets, and only the carrying amount of the accounts receivable

shall be lowered through the provision accounts. When the accounts receivables are

judged to be uncollectible, they are used to offset the provision accounts. The

originally offset but later receivable amount can credit the provision accounts. The

changes of the carrying amount of the provision accounts are recognized to be gains

and losses.

In case of the impairment of available-for-sale financial assets, the accumulated

interests and losses that originally recognized as other comprehensive income will be

re-classified to be gains and losses.

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When the financial assets are measured with post-amortization costs, in case of

the reduction in subsequent impairment loss and such reduction occurring after the

recognition of impairment loss, the impairment losses previously recognized are

allowed to re-recognized as gains and losses, and accumulated under other equity

interest, but the carrying amount of the investment on the impairment re-recognition

date shall not be higher than the post-amortization costs when the impairment losses

are not recognized.

The impairment loss previously recognized by the equity instruments available

for sale under the gains and losses shall not re-recognized to be gains and losses. The

increased amount of fair value after being recognized as impairment losses shall be

recognized as other comprehensive income and accumulated under other equity items.

If the increased amount of the debt instruments available for sale can be objectively

considered to be the events after the impairment losses are recognized to be gains and

losses, they are allowed to be re-recognized as gains and losses.

The bad debts loss of accounts receivable and increased amount shall be

recognized under administrative expenses.

(5) Financial assets de-recognition

When the Consolidated Company only terminates the contractual rights from the

cash flow of such assets or has transferred the financial assets and almost all risks and

returns of the asset ownership have been transferred to other enterprises, the financial

assets shall be de-recognized.

When de-recognizing the overall single financial asset, the difference between the

carrying amount and the sum of the total of the received or receivable consideration

and the amount recognized as other comprehensive income and accumulated under

Other Equities – Unrealized Gains and Losses of available-for-sale financial assets

shall be recognized as gains and losses and listed under non-operating income and

expenses.

When not de-recognizing the overall single financial asset, the Consolidated

Company takes the relative fair value of each part on the transferring date as basis to

apportion the original carrying amount of the financial assets to the parts that is

continuously recognized and de-recognized due to continuous participation. The

difference between the carrying amount that is apportioned to the de-recognition part

and the sum of consideration collected for de-recognition part and the part of any

accumulated gains or losses recognized as other comprehensive income that is

apportioned to be de-recognition part shall be recognized as gains and losses and listed

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under non-operating income and expenses. The accumulated profits and losses

recognized as other comprehensive income shall be apportioned to continuously

recognized part and de-recognized part in accordance with their relative fair value.

2. Financial Liabilities and Equity Instruments

(1) Classification of Liabilities and Equity

The liabilities and equity instruments issued by the Consolidated Company shall

be classified as financial liabilities or equity instruments in accordance with the

essence of the contract the definitions of financial liabilities and equity.

Equity instruments shall refer to any contract recognizing the remaining equities

of the Consolidated Company after deducting all liabilities from assets. The equity

instruments issued by the Consolidated Company shall be recognized as the amount

after directly deducting issuing costs from the obtained prices.

As to the composite financial instruments issued by the Consolidated Company,

the owner has the right of choice, and the instruments can be converted to be

convertible bond of capital, with the quantity of outstanding shares not to be changed

as their fair value varies.

As to the liabilities of composite financial instruments, the original recognition

amount shall be measured with fair value of similar equities excluding equity

conversion right. The original recognition amount of equities shall be measured with

the difference between the overall composite financial instrument fair value and

liabilities fair value. Any trading costs which can be directly attributable shall be

apportioned to liabilities and equities according to the proportions of carrying amount

of original liabilities and equities.

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After original recognition, the liabilities of composite financial instruments shall

be measured with the costs after apportions according to the effective interest method.

The equities of composite financial instruments are not required to be re-measured

after original recognition.

Interests and losses or profits related to financial liabilities shall be recognized as

gains or losses and listed under non-operating income and expenses.

Financial liabilities are re-classified as equities during conversion, and the

conversion doesn’t generate gains and losses.

(2)Financial assets or financial liabilities at fair value through profit or loss

Such financial liabilities refer to financial liabilities held for trading or measured

with financial assets or financial liabilities at fair value through profit or loss.

Financial liability held for trading refer to those with main purpose for obtaining

or occurring being sold or re-purchased within a short period. In case of any of the

following conditions, the Consolidated Company designates the financial liabilities

excluded from the financial assets held for trading to be measured with fair value

according to gains and losses:

A. Eliminate and greatly reduce the inconsistent measure or recognition arising from

the measurement on assets or liabilities on different basis and recognition of

relevant gains and losses.

B. Financial assets assess the performance based on fair value.

C. Composite instruments include embedded derivatives.

Such financial assets are measured with fair value at the original recognition and

the trading costs are recognized as gains and losses when they occur; the subsequent

assessment is measured with fair value and the re-measurement gains or losses

(including relevant dividends income and interest income) are recognized as gains and

losses, which are then listed under non-operating income and expenses.

If financial assets or financial liabilities at fair value through profit or loss belong

to unquoted equity investments unreliably measured with selling borrowed fair value

and shall deliver such equity investments, they are measured with costs and listed

under Financial Liabilities Measured with Costs.

The interests or losses of financial guarantee contract and loan pledge measured

with fair value designated and issued by the Consolidated Company shall be

recognized as gains and losses and listed under non-operating income and expenses.

(3) Other Financial Liabilities

The financial liabilities which do not belong to those held for trading and are not

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designated to be measured with fair value according to gains and loss (including

long-term and short-term borrowings, accounts payable and other payables) shall be

measured with fair value plus directly attributable trading costs at original recognition;

and they are measured with post-apportion costs according to the effective interest

method at subsequent evaluation. The interest expense which hasn’t capitalized as

capital costs shall be listed under non-operating expense and loss of financial costs.

(4) De-recognition of Financial Liabilities

The Consolidated Company shall de-recognize financial liabilities when the

contract obligations have been performed, canceled or terminated.

When de-recognizing financial liabilities, the difference between carrying amount

and the sum of paid or payable considerations (including any transferred non-cash

capital or assumed liabilities) shall be recognized as gains and losses and listed as the

financial assets (liabilities) gains and losses measured with fair value according to

gains and losses under non-operating income and expenses.

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(5) Offset between Financial Assets and Liabilities

Financial assets and financial liabilities can be offset with each other and

represented on the balance sheet with net value only when the Consolidated Company

has legal rights to offset and has the intention to deliver with net value as well as

realize capital and liquidate the liabilities.

(6) Financial Guarantee Contract

As to financial guarantee contract, it means the issuer must reimburse the losses

of the holder with special amount when the specific debtor fails to make payment on

due date in accordance with the clauses of liability instruments.

The financial guarantee contract issued and designated by the Consolidated

Company to be measured with fair value according to gains and losses shall be

originally measured with fair value deducting directly attributable trading costs, and

subsequently measured with the higher of the following amount: (a) the contract

obligation amount determined under IAS 37 Provisions or Contingent Liabilities or

Contingent Assets; and (b) original recognition amount deducting the amount

appropriately accumulate charged for amortization recognized according to income

accounting policy.

3. Derivative Financial Instrument

The Consolidated Company holds derivative financial instruments to avoid foreign

currency and interest rate risks. They are measured with fair value in original recognition,

and the trading costs are recognized to be gains and losses; in subsequent evaluation,

they are measured with fair value, and the profits or losses due to re-measurement are

directly recognized as gains and losses and listed under non-operating income and

expenses, while the derivative instruments designated to the instruments effectively

avoiding risks shall be determined according to the nature of the hedging relationship

when they are recognized as gains and losses. When the fair value of the derivative

instruments is positive, they are recognized as financial assets; when it is negative, they

are recognized as financial liabilities.

The risks and features of embedded derivative instruments are not closely related

with those of host contract, and when the host contract is not measured with fair value

according to gains and losses, the derivative instruments are regarded as single derivative

instruments.

The Consolidated Company designates some hedging instruments (including

derivative instruments, embedded derivative and non derivative instruments for avoiding

exchange rate risk) for fair value hedging. The determined hedge risk of exchange rate

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shall be taken as hedge risk with fair value.

At the start of hedging relationship, the Consolidated Company records the hedging

instruments and the relationship among the items to be hedged, the purpose of risk

management and the strategies responding to different hedging trading in written. In

addition, the Consolidated Company shall continuously record in written upon the

starting of hedge risk whether the hedging instruments can effectively offset the fair

value or cash flow variance of the items to be hedged arising from the hedging risks.

The variances of fair value of the hedging instruments designated to meet the fair

value hedging and those of fair value arising of the assets to be hedged or liabilities

arising from the hedging risks shall be immediately recognized as gains and losses and

listed under non-operating income and expenses.

When the Consolidated Company cancels the hedging relationship or the hedging

instruments are mature, sold, terminated, executed or no longer meet hedging accounting,

hedging accounting shall be immediately terminated. When the hedged financial

instruments adopting the effective interest method have fair value adjustment due to the

hedged risks, the instruments shall be amortized to gains and losses from the date of the

termination of hedging accounting. Such amortization is the effective interest rate that

shall be re-calculated from the starting date of amortization and can ensure the

adjustment amount to be fully amortized on the due date.

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(Ⅷ) Inventory

Inventory shall be measured with the lower of the costs and net realizable value. The

costs include the acquisition, production and processing costs enabling them to arrive at the

available places and status and other costs, which are calculated according to the standard

cost method, and priced at cost transferring according to weighted mean method. The costs

of the inventory of finished products and products in process include the manufacturing

costs amortized based on normal production capacity according to proper percentage.

Net realizable value refers to the estimated prices under normal operation deducting

estimated costs to be needed for estimated completion and estimated costs to be needed for

completing selling.

(Ⅸ) Investment Affiliated company

Affiliated companies refer to the enterprises which the Consolidated Company has

great influence on their financial and operation policies but doesn’t control or jointly

control.

The Consolidated Company adopts equity method to treat the equities of its affiliated

companies. Under the equity method, the equities are recognized originally with costs, and

the costs of an investment include the trading costs. The carrying amount of investment

affiliated company include the business reputation recognized at the original investment

deducting any accumulated impairment losses.

The Consolidated Finance Report includes the amount of gains and losses of

investment affiliated company recognized by the Consolidated Company according to

equity percentage and other comprehensive income after the accounting policy consistence

adjustment with the Consolidated Company from the date of having significant influence

till the date of losing influence.

The unrealized profits generated from the trading between the Consolidated Company

and its affiliated companies have been eliminated from the equity scope of the Consolidated

Company on the investee company. The elimination method of the unrealized losses is the

same as that of the unrealized profits, but limited to the situation without impairment

evidence.

When the loss share of affiliated companies recognized by the Consolidated Company

according to percentage is equal to or exceeds the equity of affiliated companies, loss

recognition shall be terminated immediately. However, when legal obligations or

constructive obligations occur or the Consolidated Company has made payments on the

behalf of the investee company, the extra losses and relevant liabilities shall be recognized.

(Ⅹ) Real Estate, Plant and Equipment

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1. Recognition and Measurement

The recognition and measure of real estate, plant and equipment adopt cost mode,

and are measured with the costs deducting accumulated depreciation and accumulated

impairment. Costs include the expenditure which can be directly attributed to assets.

Self-constructed assets costs include raw materials and direct labor costs, any other

directly attributable costs which make assets reach the serviceable condition for expected

usage, costs of dismantling and removing the items and relocating to the original places

and borrowing costs meeting essential asset capitalization. In addition, costs also include

real estate, plant and equipment procurement arising from foreign currency denomination.

The software purchased for integrating the functions of relevant equipment is also

capitalized to be one part of the equipment.

When real estate, plant and equipment include different components which belong

to major items compared with the overall costs of the project and are appropriate to adopt

different depreciation rate or depreciation methods, these components are processed as

individual items (major components) of real estate, plant and equipment.

The gains and losses from the processing of real estate, plant and equipment are

determined by the difference between the carrying amount of real estate, plant and

equipment and the processing prices, and recognized with net value to be Other Gains

and Losses.

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2. Subsequent Costs

If the future economic benefits forecast in subsequent expenditure of real estate,

plant and equipment items possibly flow into the Consolidated Company and the amount

can be reliably measured, the expenditure is recognized as one part of the carrying

amount of the project and the reset carrying amount shall be de-recognized. The daily

maintenance costs of real estate, plant and equipment are recognized as gains and losses

when they occur.

3. Depreciation

Depreciation is calculated with costs deducting salvage based on the durable years

according to the straight-line method, and evaluated according to the major components

of assets. If the durable years of certain component are different from others, the

depreciation of the component shall be adjusted separately. The adjustment of

depreciation is recognized as gains and losses.

Land is not required to make depreciation adjustment.

The estimated durable life in the current and comparison periods is as follows:

(1)Buildings (Structures) 3～56 years

(2)Machinery and equipment 3～19 years

(3)Other facilities 2～14 years

Depreciation methods, durable years and salvage are inspected at the closing day of

each fiscal year, and if the expected value is different from the previously estimated

value, make adjustments if necessary and such changes will be processed according to

the provisions on accounting estimate changes.

(Ⅺ) Intangible Assets

Other intangible assets obtained by the Consolidated Company are measured with

costs deducting accumulated amortization and accumulated impairment. The subsequent

expenditure can be capitalized only when they can increase the future economic benefits of

relevant specific assets, and all of other expenditures are recognized as gains and losses

when they occur. In amortization, the assets costs deducting salvage are amount available

for amortization.

Intangible assets are amortized with the straight-line method according to the

following estimated durable years from the date when they can be available for using, and

the amount available for amortization is recognized as gains and losses:

1.Option Premium 5 years

2.Computer software 2～5 years

It is required to inspect the salvage, amortization period and amortization methods of

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the intangible assets at least on the closing date of fiscal year, and any changes are regarded

to be accounting estimated changes.

(Ⅻ) Non Financial Asset Impairment

As to the non financial assets not coming from stocks, deferred income tax asset and

employee benefits, the Consolidated Company assesses whether there is impairment on the

closing date of every report period, and estimates the recoverable amount of the assets with

signs of impairment. In case of the failure in estimating the recoverable amount of some

assets, the Consolidated Company estimates the recoverable amount of cash-generating unit

where the asset belong to evaluate the impairment.

The recoverable amount is subject to the fair value of the higher of individual asset or

cash-generating unit deducting the cost of sale and their use value. If the recoverable

amount of individual asset or cash-generating unit is lower than the carrying amount,

reduce the carrying amount of individual asset or cash-generating unit to the recoverable

value and recognize it as impairment loss. The impairment loss shall be immediately

recognized as the current gains and losses.

208

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Footnotes to Consolidated Financial Statement

The Consolidated Company re-assesses at the closing date of every report period

whether there are signs showing that the impairment loss recognized by the non financial

assets excluding business reputation in the previous year might not exist or reduce. If there

are any changes to the estimates that determine the recoverable amount, covert the

impairment loss to increase the carrying amount of individual asset or cash-generating unit

to recoverable amount but not exceeding the carrying amount after amortization or

deducting the depreciation expected to be adjusted if the individual asset or cash-generating

unit didn’t recognize the impairment loss in the previous year.

Business reputation, intangible assets with non-deterministic durable years and

intangible assets not available shall be tested on impairment regularly every year, and the

difference between the recoverable amount and carrying amount is recognized as

impairment losses.

(ⅩⅢ) Provisions

By the recognition of provisions, it means the Consolidated Company is likely to

reserve the resources with economic benefits to liquidate the current obligations arising

from the past events and the amount of such obligations can be reliably estimated.

Provisions is discounted according to the pre-tax discount rate reflecting the time value of

money and liabilities specific risk evaluation in the current market, and the amortization of

discount is recognized as interest expense.

The provisions of discounts due to the defective goods sold by the Consolidated

Company is recognized when the goods is sold. Such provisions is measured and estimated

with the relevant probability in accordance with the historical experience data and all

possible results.

(ⅩⅣ) Income Recognition

The incomes from normal goods sales are measured with fair value of paid or payable

considerations after taking into account the return, commercial discounts and quantity

discounts. Incomes are recognized when there are persuasive evidence (generally the

signed sales agreement), major risks and returns of ownership have been transferred to the

buyer, the price is likely to be taken back, relevant costs and possible goods return can be

reliably estimated, management and income amount of uncontinuous goods can be reliably

measured. If discounts are in all possibility and the amount can be reliably measured, they

can be recognized at the sales recognition as the deductions of incomes.

The time of risk and return transfer is determined based on the individual provisions of

sales contract. Export sales mainly adopts free on board shipping point, and risks and

returns are transferred to the buyer when loading the goods at the port; as to import sales,

209

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Footnotes to Consolidated Financial Statement

risks and returns are usually transferred upon the arrival of goods at the warehouse of the

client for acceptance.

(XV) Employee Benefits

1. Defined Contribution Plan

Contribution obligations of defined contribution plan are employee benefit expense

recognized under gains and losses during the service period of employees.

2. Defined benefit plans

Post-employment benefit plan not belonging to the defined contribution plan is

defined benefit plan. Net obligations of the Consolidated Company under the defined

benefit and pension plans are calculated for various benefit plans by discounting the

future benefit amount earned by employees through current or past service to be present

value. The fair value of any plan capital shall be deducted. Discount rate is subject to the

interest rate of market yield rate of high quality corporate bonds or government bonds

with due date close to the net obligation term of the Consolidated Company and

valuation currency same as the expected payment benefit funds on the financial report

day.

210

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

Enterprise net obligations are calculated actuarially annually by qualified actuaries

according to the projected unit credit method. When the calculation results are good for

the Consolidated Company, the recognized capital is limited to the capital able to be

returned from the plan in the future or the sum of the present value of economic benefits

able to be obtained through the ways such as the future contribution to this plan. It is

supposed to consider the minimum capital contribution needs applicable to any plans of

the Consolidated Company when calculating the present value of economic benefits. One

benefit which is able to be realized within the plan period or when the plan liabilities are

liquidated is with economic benefits for the Consolidated Company.

When the benefits of the plan improve, the relevant expenses from the part of

benefits increased due to the past services of employees are recognized as gains and

losses.

The re-measured number of the net defined benefit liabilities (assets) includes (1)

actuarial gains and losses; (2) return on plan assets but excluding the amount included in

the net interest of the net defined benefit liabilities (assets); and (3) any changes to the

influence number of the capital upper limit, but excluding the amount included in the net

interest of the net defined benefit liabilities (assets). The re-measured number of the net

defined benefit liabilities (assets) is recognized under other comprehensive income. The

Consolidated Company recognizes the remeasurement from defined benefit plants to be

retained earnings.

The Consolidated Company recognizes the deductions and liquidated gains and

losses of the defined benefit plan when deductions and liquidations occur. Deductions

and liquidated gains include any changes in fair Value of Plan Assets and changes in

present value of the defined benefit obligation.

3. Short-term employee benefits

Short-term employee benefits are measured according to the undiscounted basis and

recognized as expenses in the supply of relevant services.

As to short-term cash dividends or the amount expected to be paid under the

dividend plan, if current legal or constructive obligations assumed by the Consolidated

Company are attributed to the past services of employees and can be reliably estimated,

the amount is recognized to be liabilities.

(XVI) Stock-based Payment Transaction

Share-based payment rewards for employees are recognized as compensation costs

and increase relevant equities with fair value on the grant date during the period when

employees can get payment unconditionally. The recognized compensation costs are

211

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

adjusted according to the reward amount expected to meet the service conditions and non

market price vested conditions; the final recognized amount is measured based on the

vested reward amount meeting the service conditions and non market price vested

conditions.

The non vesting conditions of share-based payment rewards have been reflected on the

fair value measurement on the grant date of share-based payment, and the difference

between the expected and actual results are not required to check and adjust.

(XVII) Income Tax

Income taxes include current and deferred income tax asset. Except those related to

enterprise consolidation and items directly recognized as equities or other comprehensive

income, Current tax and deferred income tax asset shall be recognized as gains and losses.

Current taxes include expected payable income taxes or receivable tax rebates of the

annual taxation (losses) calculated according to the legal tax rate or substantial legal tax

rate on the report day, and any unappropriated retained earnings plus 10% income tax

recognized as tax expense in the shareholders meeting resolution year calculated according

to the adjustments to the payable income taxes in the previous year and the provisions of

income tax laws.

212

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

Deferred income tax assets are measured and recognized according to the temporary

difference between the carrying amount and taxation basis of assets and liabilities with

financial report objectives. In case of any of the following situations, the temporary

differences will not be recognized as deferred income tax assets:

1. Those not belong to the assets or liabilities originally recognized in the transaction of

enterprise consolidation, and not influencing accounting profits and taxation incomes

(losses) during the transaction.

2. Those generated due to investment subsidiary company and joint equities and likely to

not to be returned in the foreseeable future.

3. Original recognition of business reputation

Deferred income tax assets are measured according to the tax rate in the current period

when the expected capital is realized or liabilities are liquidated, and based on the legal tax

rate or substantial legal tax rate on the report day.

Only when the Consolidated Company shall meet the following conditions at the same

time, can the deferred income tax assets and deferred tax liabilities offset with each other:

1. Having the legal execution right to make the current income tax assets and the current

tax liabilities offset with each other: and

2. Deferred income tax assets and deferred tax liabilities are related to one of the subjects

of tax payment from which the same tax authority levies income tax;

(1) Same subject of tax payment; or

(2) Different subjects of tax payment, but all subjects intend to liquidate the current tax

liabilities and assets based on net amount or at the same time realize assets and

liquidate liabilities in each of the future periods when deferred income tax assets of

major amounts are expected to be recovered and deferred tax liabilities expected to be

liquidated.

Carry forward of unused taxation losses and unused income tax and deductible

temporary differences are recognize as deferred income tax assets within the scope where

the possible future taxable incomes are available. They are re-evaluated on each report day

and deduct the income tax benefits which are not possible to be realized.

(XVIII) Earnings Per Share

The Consolidated Company lists the basic and diluted earnings per share of holders of

common stock equity of the Company. The basic earnings per share of the Consolidated

Company shall be calculated with the gains and losses of the holders of common stock

equity of the Company divided by the weighted mean of ordinary shares outstanding.

Diluted earnings per share shall be calculated after adjusting the influence of all potential

213

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

diluted common shares of the gains and losses of the holders of common stock equity of the

Company and the weighted mean of ordinary shares outstanding. The potential diluted

common shares of the Consolidated Company include convertible bonds and stock options

for employees.

(XIX) Department

As an integral part of the Consolidated Company, operation departments are engaged

in the operating activities which might earn incomes and incur expenditures (including the

incomes and expenditures incurred from the transactions with other internal departments of

the Consolidated Company). All operation results of operation departments are regularly

reviewed by the chief operating decision maker of the Consolidated Company, so as to

make decisions of allocating resources to operation departments and assess its performance.

All operation departments have separate financial information.

Ⅴ. Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties

When compiling the Consolidated Financial Statement under IFRS approved by the

Financial Supervisory Commission, the management must make judgment, estimate and

assumption, which will influence the adoption of accounting policies and the report amount of

assets, liabilities, incomes and expenditures. There may be differences between the actual results

and estimate.

214

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

The management authority continuously inspects the estimate and basic assumption, and

accounting changes are recognized during the period of changes and the period of future to be

influenced.

The relevant information about the major adjustments for the coming year arising from the

major risks of the estimate and assumption uncertainties is seen in the following attachments:

(1) Attachment Ⅵ (Ⅲ): Assessment on Accounts Receivable Impairment

(2)Attachment Ⅵ (Ⅳ): Inventory Evaluation

Ⅵ. Description of Major Accounting Items

(Ⅰ)Cash and cash equivalents Dec.31, 2015 Dec. 31, 2014

Cash $ 604 659

Demand deposits 3,705,297 1,924,481

Certificate of Deposit 104,803 72,155

Cash equivalents 100,566 171,624

$ 3,911,270 2,168,919

Disclosures of interest rate risks and sensitivity analysis on financial assets and

liabilities of the Consolidated Company are seen in Footnote Ⅵ (20).

(Ⅱ) Financial assets at fair value through profit or loss and loss

1. Details are as follows:Dec.31, 2015 Dec. 31, 2014

Financial assets at fair value through profit or

loss

Financial asset held for trading:

Forward Exchange Agreement-USD $ - 1,427

Available-for-sale financial assets

Stock investment

Proud Star International Limited

(At the end of 2014, initial investment

costs are 561 thousand dollars(USD))

$ 18,544 17,890

Financial liabilities at fair value through profit

or loss

Financial liability held for trading

Forward Exchange Agreement-USD $ 18,325 -

215

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

2. Information on Foreign Currency Equity InvestmentsInformation related to major foreign currency equity investments on the report day

is as follows: Dec.31, 2015 Dec. 31, 2014

Foreign currency

Exchange rate

TWD Foreign currency

Exchange rate

TWD

USD $ 565 32.825 18,554 565 31.65 17,890

3. Non Hedge Derivative InstrumentsTransaction on derivative financial instruments is designed for avoiding the exchange

rate risks exposed from operating activities, and the derivative instruments of financial assets reported by the Consolidated Company as financial asset held for trading due to non hedge accounting on December 31 of year 103 and 104 in Republic of China. Details are as follows:

Dec.31, 2015 Contract

Amount(In Thousand)

Currency Maturity

Forward ExchangeSold

USD 19,000 USD against RMB 105.01~105.05

Dec. 31, 2014 Contract

Amount(In Thousand)

Currency Maturity

Forward ExchangeSold

USD 17,000 USD against RMB 103.12~104.08

The Consolidated Company has disclosed the credit, currency and interest risks related to financial instruments in Footnote Ⅵ (20).

As of December 31 of year 103 and 104 in Republic of China, the financial assets of the Consolidated Company hadn’t been used for pledge guarantee.

(III)Notes Receivable, Accounts receivable and Other Receivables Dec.31, 2015 Dec. 31, 2014

Notes Receivable $ 245,506 228,729 Accounts Receivable 6,567,369 6,759,901Other Receivables 16,490 63,865Deduction:Allowance for impairment loss (40,147) (44,948)

$ 6,789,218 7,007,547

Aging analysis of notes receivable, accounts receivable and other receivables of the Consolidated Company is as follows:

Dec.31, 2015 Dec. 31, 2014 Not overdue $ 6,710,446 6,695,498 Overdue 1~30 days 71,089 275,044 Overdue 31~120 days 5,500 24,102 Overdue over 121 days 42,330 57,851

$ 6,829,365 7,052,495

216

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

Statement of Changes to the allowance for bad debt of notes receivable, accounts receivable and other receivables of the Consolidated Company for year 103 and 104 in Republic of China is as follows:

Individual Impairment

loss

Consolidated Impairment

loss Total

Jan.1, 2015Balance $ 41,662 3,286 44,948

Reversed Impairment loss (1,591) (1,356) (2,947)

Amount not to be written off for not

received for the year

(1,059) - (1,059)

Foreign currency translation gains or losses (770) (25) (795)

Dec.31, 2015 Balance $ 38,242 1,905 40,147

Jan.1, 2014 Balance $ 6,451 7,306 13,757

Recognized (reversed) Impairment loss 40,262 (3,911) 36,351

Amount not to be written off for not

received for the year

(6,596) - (6,596)

Foreign currency translation gains or losses 1,545 (109) 1,436

Dec. 31, 2014 Balance $ 41,662 3,286 44,948

The Consolidated Company and financial institutions sign a contract on accounts receivable factoring without recourse, under which the Consolidated Company is not required to bear the risk of inability to recover receivables, but only required to assume the losses arising from commercial disputes, so the accounts receivable meets the conditions of financial assets de-recognition. The information related to undue accounts receivable factoring on the report date is as follows:

Dec. 31, 2014 Sales objects Derecogniti

on Credit(thou

sand dollars)

Advanced amount

Interest rate range

Bank credit

Taipei Fubon

Commercial Bank

Co., Ltd.

$ 54,834 USD 4,000 - - None

(VI) Inventory Dec.31, 2015 Dec. 31, 2014

Raw Materials and Supplies $ 875,336 955,605

Work in Process 122,272 145,239

Finished Goods 789,378 740,553

Goods in Transit 3,392 4,544

$ 1,790,378 1,845,941

217

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

The details of the cost of sales sold of the Consolidated Company for year 103 and

104 in Republic of China are as follows: 2015 2014

Cost of sales $ 15,955,559 15,672,859

Loss on obsolete inventory 4,103 5,650

Inventory Valuation and Obsolescence Losses 22,834 5,521

Revenue from sale of scraps (177,109) (229,857)

Total $ 15,805,387 15,454,173

218

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Footnotes to Consolidated Financial Statement

As of December 31 of year 103 and 104 in Republic of China, the inventory of the Consolidated Company hadn’t been used for pledge guarantee.

(Ⅴ) Investments Accounted for Using Equity Method The investments of the Consolidated Company made by adopting equity method on

the closing date during the financial reporting period are listed as follows: Dec.31, 2015 Dec. 31, 2014

Affiliated company－Li Cheng Tech Co., LTD.

(Originally was ELITE IONERGY CO. LTD.,

Cost of an investment:173,694 thousand dollars)

$ - -

The Consolidated Company approved at the end of year 94 in Republic of China that the investee company Licheng Technology (Stock) Company (the former ELITE IONERGY CO., LTD., with cost of an investment of TWD 173.694 million) had been shut down, whose assets could repay the liabilities and investment value had been impaired, so the investments were all recognized as losses in year 94 in Republic of China and book value was offset to zero.

(Ⅵ) Real Estate, Plant and Equipment Changes to costs and depreciation of real estate, plant and equipment of the

Consolidated Company for year 103 and 104 in Republic of China are as follows:

Land Buildings (Structur

es) Machiner

y and equipmen

t

Other facilities

Unfinished Constructio

n and Prepayment

s for Business Facilities

Total

Cost or Deemed cost:

Jan.1, 2015 Balance $ 470,621 1,896,835 6,284,313 955,816 265,374 9,872,959

Add - - 474 4,924 164,576 169,974

Disposal - (2,185) (53,403) (23,934) - (79,522)

Reclassification - 9,847 240,955 51,035 (301,837) -

Effects of Changes in

Foreign Exchange

- (23,897) (101,102) (7,355) 5,930 (126,424)

Dec.31, 2015 Balance $ 470,621 1,880,600 6,371,237 980,486 134,043 9,836,987

Jan.1, 2014 Balance $ 470,621 1,749,611 5,884,917 865,495 302,241 9,272,885

Add(return) - (482) 3,705 5,215 413,416 421,854

Disposal - (700) (14,600) (7,577) - (22,877)

Reclassification - 105,819 295,145 74,533 (475,497) -

Effects of Changes in

Foreign Exchange

- 42,587 115,146 18,150 25,214 201,097

Dec. 31, 2014 Balance $ 470,621 1,896,835 6,284,313 955,816 265,374 9,872,959

219

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

Land Buildings (Structur

es) Machiner

y and equipmen

t

Other facilities

Unfinished Constructio

n and Prepayment

s for Business Facilities

Total

Depreciation:

Jan.1, 2015 Balance $ - 522,899 3,640,783 609,699 - 4,773,381

Depreciation of the year - 79,304 350,794 105,131 - 535,229

Disposal - (2,185) (47,519) (22,564) - (72,268)

Effects of Changes in

Foreign Exchange

- (5,455) (45,389) (5,313) - (56,157)

Dec.31, 2015 Balance $ - 594,563 3,898,669 686,953 - 5,180,185

Jan.1, 2014 Balance $ - 439,443 3,232,957 507,483 - 4,179,883

Depreciation of the year - 75,367 354,253 98,671 - 528,291

Disposal - (700) (11,313) (6,915) - (18,928)

Effects of Changes in

Foreign Exchange

- 8,789 64,886 10,460 - 84,135

Dec. 31, 2014 Balance $ - 522,899 3,640,783 609,699 - 4,773,381

Book value:

Dec.31, 2015 $ 470,621 1,286,037 2,472,568 293,533 134,043 4,656,802

Jan.1, 2014 $ 470,621 1,310,168 2,651,960 358,012 302,241 5,093,002

Dec. 31, 2014 $ 470,621 1,373,936 2,643,530 346,117 265,374 5,099,578

As of December 31 of year 103 and 104 in Republic of China, they had been used for long-term borrowings and financing credit guarantee, with details seen in Footnote Ⅷ.

(VII)Short-Term Borrowings Dec.31, 2015 Dec. 31, 2014

Unsecured loans $ 12,605 459,393Secured Loan - 443,100Total $ 12,605 902,493

Unused credits $ 2,917,087 2,045,113

Interest rate range 1.18%~1.50% 0.99%~2.33%

(VIII)Short-Term Notes and Bills Payable Dec.31, 2015 Dec. 31, 2014

Commercial paper payable $ - 200,000 Deduction: Unamortized discount - (374)Net Amount $ - 199,626

Interest rate range - 0.95%~0.97%

220

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(IX)Long-term borrowings

Consolidated details of the long-term borrowing of the Company: Dec.31, 2015 Dec. 31, 2014

Unsecured loans $ 987,500 900,000

Secured Loan 550,000 337,500

Deduction: Discount On Long-term Borrowings (5,300) (3,281)

Current Portion (312,500) (712,500)

Total $ 1,219,700 521,719

Unused credits $ 462,500 -

Interest rate range 1.8% 1.8%~1.91%

Due year 2020 2017

Please see Footnote Ⅵ (20) for exposure of interest rate, foreign currency and liquidity risks of the Consolidated Company. 1. Securities for Bank Loans

Please see Footnote Ⅷ for mortgage based securities of the Consolidated Company for bank loans.

2. Loan ContractUnder the loan contract, before the guaranteed loans of the Consolidated Company

during the duration of the joint loan right or joint credit liabilities are in full settlement, the Consolidated Company is required to abide by specific accounting ratio in annual and semi-annual reporting, such as current ratio, liabilities ratio and interest cover ratio. The Consolidated Company hasn’t violated relevant provisions.

(Ⅹ)Unsecured Convertible Debentures Dec.31, 2015 Dec. 31, 2014

Total issuing amount of convertible bonds $ 400,000 400,000

Bonds payable discount not amortized - (99)

Bonds redemption (6,700) -

Total converted amount (393,300) (390,100)

$ - 9,801

Equity component－Transfer right

(Listed in Capital Surplus－Transfer right)

$ - 1,808

2015 2014

Embedded derivative－The gain or loss of the

right of redemption and sell back assessed by fair

value(The financial asset or liability listed as

non-operational revenue or expense )

$ - 85

Interest expense $ 83 741

221

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

The Company issued the third 5-year unsecured convertible bonds with 0% nominal

interest rate on June 22 of the year 99 in the Republic of China, with total amount of TWD

400 million, maturity date on June 22 of the year 104 in the Republic of China and bond

discount rate of 1.85%. The creditor should ask the Company to redeem all convertible

corporate bonds with cash with the sum of bond denomination and interest compensation

when the bonds have been issued for two years or there are 30 days left before the third

year, with the conversion price of convertible bonds is based on the issuance contract of the

Company.

1. Date and Terms of Principal Repayment:

Except those converted into common stock of the Company in advance or redeem

by the Company or put by the creditor in advanced, the principal is required to repaid at

one time on the due date.

2. Conversion Price and Adjustment:

The conversion price when issued is TWD 28.50 per share, which shall be adjusted

when the total volume of common stocks of the Company changes or there are

negotiable securities with common stock conversion rights re-issued at the conversion

price lower than the market value per share. As the Company conducted stock grants on

September 3 of the year 103 in the Republic of China as stock granting base date, the

conversion price is adjusted from TWD 21.10 to TWD 20 in accordance with Article 11

of the Measures on the Issuance and Conversion of the Third Unsecured Convertible

Debentures at Home of the Company. There are no reset clauses on the bonds.

3. Redemption Right of the Company on the Convertible Corporate Bonds:

(1) From the next day from one month after issuing to 40 days before the expiration of

issuance period, when:

A. the closing price of the corporate common stock at the over-the-counter center

exceeds 30% of the current conversion price on the thirty business day in

succession;

B. total value of the unconverted bonds is lower than 10% of the total stock issued

after convertible corporate bonds are converted as required by the creditor;

The Company should send a registered letter to the creditor with a Notice of Bonds

Recall with one-month expiry (the foregoing period is calculated from the date of

mailing by the Company and takes the expiry date of the period as bonds recall base

date), and should write a letter to invite the over-the-counter center to announce to

recall all bonds in cash on the expiry date of the period at the recall price calculated

in accordance with the interest rate of bonds redemption listed in (B).

222

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Footnotes to Consolidated Financial Statement

(2) Redemption Yield:

Convertible corporate bonds are required to be redeemed with the bonds

denomination from the following day after issuing for one month to 40 days before the

expiry date.

(3) In case of the failure in replying the stock service agency of the Company in written

before the credit receives the bonds recall base date named in the Notice of Bonds

Recall (which becomes effective upon the arrival, and mailed reply is based on the

postmark date), the Company shall take the expiry date of the notice period to convert

the convertible corporate bonds to the new common stocks of the Company at the

current conversion price.

4. Put Right of Creditor:

The creditor shall ask the Company to redeem all convertible corporate bonds in

cash with the sum of bond denomination and interest compensation when the bonds have

been issued for two years or there are 30 days left before the third year. The interest

compensation for bonds having been issued for two years is 2.01% of bond

denomination, and for three years is 3.0301% of bond denomination. The Company

accepts the put request and shall redeem the convertible bonds in cash within 5 business

days after the put base date.

223

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

The repayment of the Company due to the expiry of convertible bonds in the year

104 in the Republic of China was TWD 6.7 million and the interest compensation

recognized due to expiry was TWD 1.224 million.

(Ⅺ)Provisions Allowance for

Sales Returns and Discoutns

Jan.1, 2015 Balance $ 28,555

Reversed Provisions for the year (8,072)

Foreign currency translation gains or losses (382)

Dec.31, 2015 Balance $ 20,101

Jan.1, 2014 Balance $ 14,260

Added Provisions for the year 13,516

Foreign currency translation gains or losses 779

Dec. 31, 2014 Balance $ 28,555

Liabilities due to goods return and discounts refer to the products return and discounts

estimated by the Company based on historical experience, management judgment and other

known reasons, and are recognized as operating revenue deduction in the year when the

relevant products are sold.

(Ⅻ)Employee Benefits

1. Defined benefit plans

Present Value of the Defined Benefit Obligation and Assets adjusted by fair value

principle: Dec.31, 2015 Dec. 31, 2014

Present Value of the Defined Benefit

Obligation

$ 114,438 136,110

Fair Value of Plan Assets (106,467) (100,273)

Net Defined benefit liability $ 7,971 35,837

The defined benefit plan of the Consolidated Company is contributed to special

account of contribution for retirement of Bank of Taiwan. The retirement payment of

each employee applicable to Labor Standards Law is calculated in accordance with the

base obtained based on the length of service and the average salaries within six months

before retirement.

(1) Composition of Plan Assets

The retirement fund contributed by the Consolidated under the Labor Standards

224

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

Law shall be controlled by the Labor Funds Operation Bureau of the Ministry of Labor

(hereinafter referred to as the Labor Funds Bureau), and under the provisions of

Measures on the Management and Application of Labor Retirement Funds, the annual

minimum return settled and distributed from the funds operation shall not be lower

than the incomes calculated in accordance with the 2-year time certificate of deposit

rate of the local banks.

As of the reporting date, the balance of the Consolidated Company in the special

account of contribution for retirement of Bank of Taiwan amounts to TWD 106.467

million. The data of the application of the labor retirement funds include funds yield

and funds asset allocation, with details to be seen in the information released on the

website of the Labor Funds Bureau.

225

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(2)Changes in Present Value of the Defined Benefit Obligation

2015 and 2014Present Value of the Defined Benefit Obligation Alteration: 2015 2014

Defined Benefit Obligation-Jan.1 $ 136,110 145,174 Current service cost and interest 3,497 3,786Remeasurements of Net Defined benefitliability

－Actuarial gains and losses occurred from adjustment

(8,254) (6,434)

－Actuarial gains and losses occurred from demographical adjustment

973 2,027

－Actuarial gains and losses occurred from financial assumptive adjustment

(13,656) -

Benefits paid by the plan (4,232) (8,443)Defined Benefit Obligation-Dec.31 $ 114,438 136,110

(3)Changes in Fair Value of Plan Assets

2015 and 2014 Consolidated Defined Benefit Plans evaluated by fair value:: 2015 2014

Fair Value of Plan Assets-Jan.1 $ 100,273 99,063 Interest Income 1,504 1,734Remeasurements of Net Defined benefitliability

－ Return on plan assets(Not including interest for this term)

1,174 551

Amount allocated to the plan 7,748 7,368 Benefits paid by the plan (4,232) (8,443)Fair Value of Plan Assets-Dec.31 $ 106,467 100,273

(4)Expenses Recognized as Gain or Loss

2015 and 2014 Consolidated Expenses Details are as follows: 2015 2014

Current service cost $ 1,455 1,245 Net interest of the Net Defined benefitliability

538 807

$ 1,993 2,052

Operating Costs $ 1,594 1,487 Selling Expenses 94 90Administrative expenses 204 395Research and Development Expenses 101 80

$ 1,993 2,052

226

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(5)The Remeasurements of the net defined benefit liability recognized as Other

Comprehensive Income

The Remeasurements of the 2014 and 2015 net defined benefit liability

recognized as Other Comprehensive Income: 2015 2014

Jan.1-Accumulated balance $ 6,073 11,031

Amounts recognized (22,110) (4,958)

Dec.31-Accumulated balance $ (16,037) 6,073

(6)Actuarial Assumption

Major Actuarial Assumption used at the end date of the statement to determine

the Present Value of the Defined Benefit Obligation: Dec.31, 2015 Dec. 31, 2014

Discount rate 1.88% 1.50%

Future salary increases 1.00% 1.50%

The contribution amount expected to be paid for defined benefit plan within one

year after the reporting date of the year 104 in the Republic of China is TWD 1.176

million.

The weighted average duration of the defined benefit plan is 17.62 years.

(7) Sensitivity Analysis

During the calculation of the present value of the defined benefit obligations, the

Consolidated Company is required to determine the actuarial assumption related to the

balance sheet with the application of judgment and estimate, including discount rate

and future salary changes. Any changes to actuarial assumption may significantly

influence the amount of the defined benefit obligations of the Consolidated Company.

The influences of major changes to the actuarial assumption adopted in year 103

and 104 in Republic of China (seeing the notices below for details) on the present

value of the defined benefit obligations are as follows: Effects on the Defined Benefit

Obligation Increase Decrease

Dec.31, 2015

Discount rate (0.25%) (3,575) 3,730

Future salary increases (0.25%) 3,693 (3,556)

The above sensitivity analysis refers to the analysis on the influence of single

assumption change based on the situation that other assumptions keep unchanged. In

227

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

practice, many changes to the assumptions may be linked. The calculation method of

sensitivity analysis shall be consistent with that of net defined benefit liabilities of the

balance sheet.

The method and assumption applied in current sensitivity analysis is consistent

with those adopted in early stage.

2. Defined Contribution Plan

As to the defined contribution plan, the Consolidated Company shall contribute the

retirement funds of employees to the individual accounts for labor retirement funds of

the Bureau of Labor Insurance according to 6% of the monthly salaries of labors under

the provisions of Labor Pension Act. Under this plan, after contributing fixed amount to

the Bureau of Labor Insurance, the Consolidated Company will not assume the legal or

constructive obligations of paying extra amount.

228

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

The pension expense under the defined contribution retirement funds of the

Consolidated Company in the year of 104 and 103 in the Republic of China are TWD

21.709 million and TWD 26.689 million respectively, which have been contributed to

the Bureau of Labor Insurance. The retirement funds recognized by Elite Electronic

Material (Zhongshan) Co., Ltd. and Elite Electronic Material (Kunshan) Co. Ltd. in year

103 and 104 in Republic of China under local laws are TWD 32.761 million and TWD

34.414 million as well as TWD 16.917 million and TWD 24.237 million respectively.

(13) Income Tax

1. Tax expense (Income)

2015 and 2014 Tax expense Details are as follows: 2015 2014

Tax expense of the current term Expense for current term $ 633,221 306,039 Adjusted Current tax 1,166 (2,270)

634,387 303,769Deferred Income Tax Expense

The reverse and occurrence of temporarydiscrepancy

304,076 (7,151)

Tax expense of Continuing operations $ 938,463 296,618

2015 and 2014 Other Comprehensive Income Tax(Expense)interest: 2015 2014

Items that will not be reclassified subsequentlyto profit or loss: Remesaurement from defined benefit plants $ (3,758) 8,825

Items that will be reclassified subsequently toprofit or loss: Exchange differences on translation of

foreign operations $ 26,833 (43,596)

2015 and 2014Tax expense(Income) Profit before tax : 2015 2014

Profit Before Tax $ 3,330,650 1,838,251

Income Tax calculated by the local tax rate $ 566,211 312,503 Income tax influenced by foreign administration (53,386) (29,041) Non-deductible expenses 386,558 12,767 Exempt income (22,904) (16,335)Unrecognized temporary alteration - 42 Under(over)estimate for the term 1,166 (2,270) Retained earnings+10% 60,818 18,952Tax expense $ 938,463 296,618

229

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

2. Deferred Income Tax Asset and Liability(1)Unrecognized Deferred Tax Liabilities

From January 1 to December 31 of year 103 and 104 in Republic of China, the temporary differences related to the investment subsidiaries are recognized as unrecognized deferred tax liabilities as the Consolidated Company controls the turning time of such temporary differences and such difference are determined not to be turned in the foreseeable future. The relevant amount is as follows:

Dec.31, 2015 Dec. 31, 2014Total temporary difference amount related tothe investment in subsidiary company

$ 5,074,438 5,074,438

Unrecognized Deferred Tax Liabilities $ 862,654 862,654

(2)Recognized Deferred Income Tax Asset and Liability 2014 and 2015 Deferred Income Tax Asset and Liability :

Defined benefit plans

Cumulative

Translation

Adjustments

Overseas Investment Income

Others Total

Deferred Tax Liabilities:Jan.1, 2015 Balance $ (3,327) (123,295) (72,876) (117) (199,615)Debit ( credit ) Income

Statement 1,452 - (306,986) (738) (306,272)

Debit ( credit ) Equity 1,875 - - - 1,875Exchange differences on

translation of foreign operations

- 26,833 - - 26,833

Dec.31, 2015 Balance $ - (96,462) (379,862) (855) (477,179)

Jan.1, 2014 Balance $ (540) (79,699) (72,876) (350) (153,465)Debit ( credit ) Income

Statement (912) - - 233 (679)

Debit ( credit ) Equity (1,875) - - - (1,875)Exchange differences on

translation of foreign operations

- (43,596) - - (43,596)

Dec. 31, 2014 Balance $ (3,327) (123,295) (72,876) (117) (199,615)

230

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

Defined benefit plans

ProvisionsAllowance for inventory valuation and obsolescence loss

Others Total

Deferred Income Tax Asset:Jan.1, 2015 Balance $ 10,699 4,393 6,500 6,383 27,975Debit ( credit ) Income

Statement (2,400) (1,242) 3,880 1,958 2,196

Debit ( credit ) Equity (5,633) - - - (5,633)Exchange differences on

translation of foreign operations

- (57) (55) (140) (252)

Dec.31, 2015 Balance $ 2,666 3,094 10,325 8,201 24,286

231

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

Defined benefit plans

Provisions

Allowance for

inventory valuation

and obsolescen

ce loss Others Total

Jan.1, 2014 Balance $ - 2,253 5,558 1,635 9,446

Debit ( credit ) Income

Statement

- 2,140 942 4,748 7,830

Debit ( credit ) Equity 10,699 - - - 10,699

Dec. 31, 2014 Balance $ 10,699 4,393 6,500 6,383 27,975

3. Income Tax Approval

The approval on the filing of final income tax return of the Consolidated Company

has lasted till the year 102 in the Republic of China as required by the taxing authority.

4. Relevant Data of Income Tax Integration

Relevant data of income tax integration is as follows: Dec.31, 2015 Dec. 31, 2014

Unappropriated retained earnings after 1998 $ 4,876,106 3,412,810

Balance of imputation credit account $ 165,344 130,137

2014 (anticipated)

2013 (Actual)

Tax deduction ratio for the profit distributed to ROC

residents

7.61% 5.68%

The foregoing relevant data of income tax integration shall be the amount disposed

in accordance with the provisions of Taiwan Finance and Taxation No. 10204562810 of

the Ministry of Finance on October 17 of the year 102 in the Republic of China.

232

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(XIV) Capital and Other Equity

1. The issuing of common stocks

On December 31 of year 104 and 103 in the Republic China, the total nominal share

capitals of the company are both TWD 4,000 million, with a denomination of TWD 10

per share and 400,000,000-share lot. The outstanding common stocks were divided into

ordinary share with 317,505,000-share lot and 315,994,000-share lot, share payment of

both of which has been charged.

The regulation table of number of outstanding shares in year 104 an 103 in the

Republic China is as follows: (Shown by the unit of 1000-share lot)

Common Stock

2015 2014

Beginning balance-Jan.1 $ 315,994 312,414

Exercise Employee Stock Warrants 1,351 1,961

The transfer of convertible bond 160 1,619

Ending balance-Dec.31 $ 317,505 315,994

On December 31 of year 104 and 103 in the Republic China, subscription right was

exercised based on Employee stock option certificates and new shares were issued in

numbers of 1,351,000-share lot and 1,961,000-share lot in denomination respectively,

with a total amount of money of TWD 24.654 million and TWD 36.884 million, of

which legal registration procedures of 1,351,000-share lot and 1,961,000-share lot have

been already completed, and the share payment of all the share issued has been charged.

233

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

On December 31 of year 104 and 103 in the Republic China, based on exercising of

conversion right of convertible bond holders, new shares were issued in numbers of

160,000-share lot and 1,619,000-share lot in denomination respectively, with a total

amount of money of TWD 3.2 million and TWD 16.193 million, of which legal

registration procedures of 160 thousand shares and 1.619 million shares have been

already completed.

2. Capital Surplus

The balance of capital surplus of the company is as follows: Dec.31, 2015 Dec. 31, 2014

Additional paid-in capital in excess of par -

common stock

$ 69,049 49,067

The transfer of convertible bond premium 349,553 347,385

Employee Stock Option 13,947 21,045

Transfer right - 1,808

$ 432,549 419,305

According to the former share holding proportion of shareholders, corresponding to

the capital surplus that has been realized, new shares shall be issued or cash be released

after the capital surplus covers losses in priority. The realized capital surplus mentioned

above includes the overage of issued shares exceeding the denominational value and the

earnings from the gift recipient. As specified in the handling guidelines on raising of

issuers and issuing of securities, as to the capital surplus necessary for appropriation of

capital, the amount of the total annual appropriation shall not exceed 10% of the paid-in

capital.

3. Retained Earnings

According to the rules of the company, when the annual total final accounts have a

surplus, it should be first used to pay income tax and make up for previous losses, and

10% of the statutory reserve shall be drawn in line with laws, and as needed by the

Article 41 of the Securities Exchange Act or in accordance with the shareholders’

resolution, the special surplus reserve shall be drawn or part of surplus shall be retained

without distribution. In the case of modification of act or extermination of legal articles

based on which special surplus reserve can be drawn, the special surplus reserve drawn

in line with laws must be returned back to the distribution of retained earnings.

Considering the characteristics of industrial growth and improvement of the

company’s financial structure, if annual distribution of surplus is not carried out when

there are losses during the year, then the dividend policy will give priority to the future

234

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

development of the company, financial situations and shareholder remuneration, then the

company’s future capital expenditure budget will be considered to distribute share

dividend to preserve cash as needed, while other parts will be distributed to shareholders

in cash dividends, but the distribution of cash dividends shall not be less than 20% of the

total dividends to be released as planned.

Taking 10%-70% of the distributable surplus after drawing of all reserves as the

standard, the distribution of surplus is done according to the following ratio:

(1) Employee dividend is 3%-5%, distributed according to the dividend distribution

methods developed by the board of directors. Object of distribution of employees’

dividend shall contain employees of subordinate companies in line with certain

conditions, which will be separately prescribed by the board of directors.

(2) Remuneration of the directors and supervisors is 2%.

(3) Varying to performance of the company, the board of directors shall draft a

distribution proposal of shareholders’ dividends, which shall then be distributed

according to the resolution of shareholders.

As to other dividends as well as remaining undistributed surplus in the past years,

the board of directors shall draft a distribution proposal and apply for shareholder’s

resolution, then they can be distributed.

235

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

According to the Companies Act amended in May, year of 104 in the Republic China, employees’ dividend and remuneration of directors and supervisors were not part of the surplus distribution item, so the Company will amend the provisions of the company under guidance of authorities before the deadline. (1)Legal Reserve

The Company determines the 10% of the after-tax net income as the legal reserve until it is equal to the total capital. When there are no losses, after the resolution of shareholders meeting, the legal reserve shall be used to issue new shares or cash, but shall not be more than the amount of reserve that exceeds 25% of the paid-in capital.

(2) Distribution of surplus In year of 103 in the Republic China, the actually released dividend amount of

employees was TWD 42.496 million, while that of directors and supervisors was TWD 16.998 million. The actual distribution of staff dividend and remuneration of directors and supervisors differed from that of the annual financial reports in year of 103 in the Republic China, with differences of TWD 2,000 and TWD 1,000 respectively, which was included in the annual loss in year of 104 in the Republic China.

On June, 15 of year of 104 and June, 9 of year of 103 in the Republic China, the annual surplus distribution plans in year of 103 and 102 in the Republic China were respectively determined in the shareholder’s standing meeting, and the amount of dividend of relevant holders was as follows:

2014 2013

Placing rate(dollars)

Amount Placing rate(dollars

)

Amount

Dividends distributed to the

common share holders:

Cash $ 2.50 790,425 $ 1.80 562,897

4. Other EquityExchange

differences on translation of

foreign operations

Jan.1, 2015 $ 587,189

Exchange differences on translation of foreign operations (131,014)

Dec.31, 2015 Balance $ 456,175

Jan.1, 2014 $ 374,338

Exchange differences on translation of foreign operations 212,851

Dec. 31, 2014 Balance $ 587,189

236

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(XV) share-based payment

As of Dec.31, 2015, 2 Stock-based Payment Transaction are as follows: Equity transfer

Employee Stock Option Plan

Employee Stock Option Plan

Grant date 101.07.06 100.08.09

Offering quantity 1,500 6,000

Contract Duration 5 years 5 years

Condition and term Service in four

years in the future

Service in four

years in the future

Actual employee turnover rates 2.44% 0%

Estimated employee turnover rates - -

1.Fair value on the grant date variables

Adopting Hull & White and Ritchken option evaluation model to estimate the fair

value of Grant date share-based payment: 2015 2014

Employee share purchase plan issued in 2012

Employee share purchase plan issued in 2011

Employee share purchase plan issued in 2012

Employee share purchase plan issued in 2011

Fair value on the grant date 9.285 5.937 9.285 5.937

Stock price of Grant date 27.750 21.350 27.750 21.350

Exercise Price 22.200 17.100 23.000 17.700

Dividend yield - - - -

Anticipated fluctuating ratio (%) 38.08% 30.67% 38.08% 30.67%

Share warrant period 5.00 5.00 5.00 5.00

Risk-free interest rate (%) 1.05% 1.17% 1.05% 1.17%

The expected volatility rate was estimated with reference from the annualized

standard deviation of the company’s past daily remuneration rate of share price; in the

duration period of subscription right, the date specified in the Consolidated Company’ s

subscription right methods was called due date while the date difference from the

measurement date was called duration period; risk-free interest rate was based on

government bonds. In the determining of the fair value, the services contained in the

transaction and non-market price performance conditions were not taken into account.

When calculating the fair value of subscription rights, in order to take into account

the effect of early implementation, it is assumed that employees will exercise the

subscription rights when the share price is 2.14 times the exercise price after they obtain

the shares.

237

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

2. Employee share purchase plan

Details of Employee stock option certificates: (Expressed in thousand dollars)

2015 2014

Weighted Average Exercise

Price(TWD)

The number of

stock options

Weighted Average Exercise

Price(TWD)

The number of

stock options

Jan.1-Outstanding $ 18.80 2,976 19.83 5,291

Executed in the term 18.25 (1,351) 18.81 (1,961)

Expired in the term 17.10 (16) 21.68 (354)

Dec.31-Outstanding 18.29 1,609 18.80 2,976

Dec.31-Executable 17.61 1,370 18.34 1,176

Outstanding optional compensation plan: As of Dec.31, 2015outstanding stock options Exercisable stock option

Approval Date

Issue date Exercise

price

Number of outstanding

options

Anticipated remaining

period

Weighted average Exercise

price

Dec.31, 2015 Number of exercisable

options

Weighted average Exercise

price

100.07.07 100.08.09 $ 17.10 1,233 8 months 17.10 1,233 17.10

100.07.07 101.07.06 22.20 376 1 years and 7

months

22.20 137 22.20

1,609 18.29 1,370 17.61

As of Dec. 31, 2014outstanding stock options Exercisable stock option Approva

l Date Issue date

Exercise price

Number of outstanding

options

Anticipated remaining

period

Weighted average exercise

price

Dec. 31, 2014 Number of exercisable

options

Weighted average exercise

price

100.07.07 100.08.09 $ 17.70 2,356 1 years and 8

months

17.70 1,033 17.70

100.07.07 101.07.06 23.00 620 2 years and 7

months

23.00 143 23.00

2,976 18.80 1,176 18.34

3. Employee-related expense and liabilities

2015 and 2014 Expenses for share-based payment: 2015 2014

Expenses for the issuance of Employee stock

option certificates

$ 1,740 4,368

238

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(XVI) Earnings Per Share

1. Earnings Per Share

In the year of 104 and 103 in Republican of China, the basic earnings per share of

the Consolidated Company was a part of the net profit attributable to the equity holders

of the company, calculated by the weighted average outstanding ordinary shares as

follows:

(1)Net profit attributable to the equity holders of our company 2015 2014

Net profit attributable to the equity holders of our

company

$ 2,389,239 1,538,696

239

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(2)Weighted average outstanding ordinary shares (1000-share lot) 2015 2014

Jan.1-Ordinary shares outstanding 315,994 312,414

Effects of Convertible Securities Conversion 120 253

Amounts influenced by Conversion of

convertible bonds

521 530

Dec.31-Weighted average outstanding

ordinary shares

316,635 313,197

2. Diluted Earnings Per Share

In the year of 104 and 103 in Republican of China, the diluted earnings per share

was a part of the net profit attributable to the equity holders of our company, calculated

based on the weighted average outstanding ordinary shares after adjusting the dilution

effect of all the potential common stocks as follows:

(1)Net profit attributable to the equity holders of our company (Dilution) 2015 2014

Net profit attributable to the equity holders of the

parent company(Basic)

$ 2,389,239 1,538,696

Convertible bonds influenced by related taxation 69 686

Net profit attributable to the equity holders of the

parent company (Dilution)

$ 2,389,308 1,539,382

(2)Weighted average outstanding ordinary shares (Dilution)(1000-share lot) 2015 2014

Weighted average outstanding ordinary

shares (Basic)

316,635 313,197

Effects of Convertible Securities Conversion 40 1,860

The effects of employee profit sharing 2,009 1,528

Impact of Employee Stock Options 1,661 1,764

Balance on Dec.31-Weighted average

outstanding ordinary shares (Dilution)

320,345 318,349

When calculating the diluted effect of share options, the average market value

was determined on the basis of the Company’s share market price during the

outstanding of the option rights.

3. According to the resolution passed by the Company on June 9, year of 104 in the

Republic of China, cash dividend is distributed per share, and if this cash dividend

240

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

distribution occurs before the releasing of the financial statements, then the retroactive

adjustment of surplus per share is as follows: 2015 2014

Earnings Per Share $ 7.55 4.91

Diluted Earnings Per Share $ 7.46 4.84

241

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(XVII) Revenue

2015 and 2014 Revenue Details are as follows: Continuing operations

2015 2014

Merchandise sales $ 20,869,717 18,884,745

(XVIII) Remuneration of employees and directors and supervisors

According to the rules of the Company passed by the board of directors’ meeting but

not passed the shareholders’ meeting yet, for any annual profit, 3% of it will be

appropriated as the remuneration of employees and not more than 1.2% of it as the

remuneration of directors and supervisors. But if there are accumulated losses of the

company, certain amount should be reserved in advance to make up. The subjects of the

above employees’ remuneration of shares or cash include employees from subordinate

companies in line with certain conditions.

In year of 104 in Republican of China, the estimated appropriated amount of

remuneration of employees, directors and supervisors was respectively TWD 91.422

million and TWD 30.474 million, with an estimated base of the company’s net profit

during the period before deducting employees’ remuneration and that of directors and

supervisors, multiplied by the proportion prescribed in the Company’s rules for employees’

remuneration and that of directors and supervisors, which is reported as operating costs or

operating expenses in year of 104 and the relevant information can be inquired in the public

information inquiry stations. If the actual amount of distributed remuneration differs from

estimated amount, the way to handle depends on changes in accounting reports, and the

differences are recognized and included as gains and losses in year of 105 in the Republic

of China.

(XIX)Non-Operating Income and Expenses

1. Other Income

2015 and 2014 Other Income Details are as follows: 2015 2014

Interest Income $ 7,300 4,267

242

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

2. Other Gains and Losses

2015 and 2014 Other Gains and Losses Details are as follows: 2015 2014

Foreign currency exchange gains $ 112,878 19,979

Proceeds From Disposal of Property, Plant and

Equipment losses

(6,209) (1,461)

Financial assets at fair value through profit or

loss(liability)

(19,904) 1,294

Other income 24,741 29,581

Other Non-Oper. Exp. (1,514) (733)

$ 109,992 48,660

3. Financial Costs

2015 and 2014 Financial Costs Details are as follows: 2015 2014

Interest expense $ 35,792 47,067

243

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(XX) Financial Instruments

1. Credit risk

(1)Credit exposures

The carrying amount of financial assets represents the maximum amount of

credit exposures.

2. Liquidity Risk

The following table shows the expiry date of financial liabilities contract, including

estimated interest but not including the impact of the net agreement.

Carrying amount

Contractual cash flow

Within 6 months

6-12 months 1-2 years

Over 2 years

Dec.31, 2015

Non-derivative

financial liabilities

Secured Loan $ 544,700 585,337 - 69,925 - 515,412

Unsecured loans 1,000,105 1,055,305 150,694 108,065 - 796,546

Accounts Payable 4,474,140 4,474,140 4,474,140 - - -

$ 6,018,945 6,114,782 4,624,834 177,990 - 1,311,958

Dec. 31, 2014

Non-derivative

financial liabilities

Secured Loan $ 777,319 793,464 311,261 248,270 115,954 117,979

Convertible bonds 9,801 9,900 9,900 - - -

Commercial paper

payable

199,626 200,000 200,000 - - -

Unsecured loans 1,359,393 1,375,799 988,188 75,000 154,876 157,735

Accounts Payable 4,714,485 4,714,485 4,714,485 - - -

$ 7,060,624 7,093,648 6,223,834 323,270 270,830 275,714

The Consolidated Company does not expect that analysis of occurring of cash flow

on the maturity date will come significantly earlier, or the actual amount will be

significantly different.

244

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Footnotes to Consolidated Financial Statement

3. Exchange Rate Risk

(1) Exposure of Exchange Rate Risk

The financial assets and liabilities of the Consolidated Company that are

disclosed to significant foreign exchange rate risk are as follows: Dec.31, 2015 Dec. 31, 2014

Foreign currency

Exchange rate

TWD Foreign currency

Exchange rate

TWD

Financial assets

Monetary item

USD $ 168,657 32.825 5,536,166 163,532 31.650 5,175,788

Financial

liabilities

Monetary item

USD 85,165 32.825 2,795,541 107,405 31.650 3,399,368

JPY 797,682 0.2727 217,528 - - -

245

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(2) Sensitivity Analysis

The Consolidated Company’s exchange rate risk primarily comes from foreign

currency-denominated cash and cash equivalents, accounts receivable and other

receivables, loans, accounts payable and other payables, resulting into gains and losses

of conversion of foreign currency when exchanging. On December 31, year of 104 and

103 in the Republic China, TWD depreciated or appreciated by 1% compared with US

dollar, while, when all the other factors remain unchanged, in year of 104 and 103 in

the Republic China, after-tax net income in year 104 and 103 will increase by TWD

20.942 million and TWD 14.744 million, respectively.

Because of the wide range of functional currencies of the Consolidated Company,

the way of currency integration is used to disclose the gains and losses information of

monetary items, and in year of 104 and 103 in the Republic of China, as to the foreign

currency exchange gains and losses (including realized and unrealized), the gains were

TWD 112.878 million and TWD 19.979 million, respectively.

4. Interest rate analysis

The interest rate exposure of the Consolidated Company’s financial assets and

financial liabilities is described in the liquidity risk management in the footnotes.

The following sensitivity analysis is dependent on the interest rate exposure risk of

derivative and non-derivative instruments on the reported date. For liabilities with a

floating interest rate, the way of analysis is to assume the outstanding liabilities on the

reported date will be outstanding in the whole year. The fluctuation rate the internal

workers report to the management staff of the Consolidated Company is to increase or

decrease by 0.5% based on the interest rate, which also shows the evaluation made by

management staff on the reasonable fluctuation range of interest rate.

If the interest rate increases or decreases by 0.5%, in the case of all the other

variables remaining unchanged, the net profit of the Consolidated Company in year of

104 and 103 in the Republic of China will increased or decreased by TWD 25.195

million and TWD 8.666 million, mainly due to the evaluation on the financial assets of

the loans with fluctuation rate of the Consolidated Company and corporate bonds with

risk-free interest rate changes.

5. Fair value information

(1) Type of financial instruments and fair value

The carrying amount and fair value of the Consolidated Company’s financial

assets and financial liabilities (including the hierarchy information of the fair value,

but excluding the financial tools with a carrying amount reasonably approximate to

246

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

fair value measured by fair value, the fair value information of which is not needed to

be disclosed in accordance with the provisions) are as follows: Dec.31, 2015

Fair-Value HierarchyCarrying amount

Level 1 Level 2 Level 3 Total

Available-for-sale financial assets

Stock investment $ 18,554 - - 18,554 18,554

Financial liabilities at fair value through

profit or loss

Non-derivative financial liabilities for

transaction

18,325 - 18,325 - 18,325

247

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Footnotes to Consolidated Financial Statement

Dec. 31, 2014 Fair-Value Hierarchy

Carrying amount

Level 1 Level 2 Level 3 Total

Financial assets at fair value through

profit or loss

Non-derivative financial assets for

transaction

$ 1,427 - 1,427 - 1,427

Available-for-sale financial assets

Stock investment 17,890 - - 17,890 17,890

The financial liabilities evaluated by the

amortizing cost

Convertible bonds － Liability

component

9,801 - 9,801 - 9,801

(2) Evaluation technique of fair value of financial instruments measured at fair value

A. Non-derivative financial instruments

If financial instruments are subject to active market public quotations, their fair

value is taken as the publicly quotations of active market. Market price published in

major exchanges and the trading center of central government bond counters of

popular bonds, is the basis of fair value of equity tools on the market (counter) and

bond tools with public quotations of active market.

If the public quotations of financial instruments can be timely and often

obtained from exchanges, brokers, underwriters, industry associations, pricing

service institutions or regulatory authority, and the quotations represent the actual

and frequently-occuring fair market trading, then the financial instruments have a

publicly quotation of active market. If the above conditions are not met, then the

market is considered not active. In general, those, the bid-ask spread is very large,

significantly increases or is extremely small, are all indicators of a non-active

market.

If the financial instruments held by the Consolidated Company has no active

market indicator, its fair value is shown by category and attributes as follows:

Equity instruments without public quotation: use the net asset value-based

method, main assumption is to take the net value per share of investees as the basic

measurement.

B. Derivative financial instruments

It is evaluated by the model that is widely accepted by the market users, such

248

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

as discounting method and option right pricing model. Forward foreign exchange

contracts are usually evaluated on the basis of the current forward exchange rate.

(3) The Consolidated Company lists in account the available-for-sale financial

assets---the measurement of fair value of equity securities investment classified as the

third grade, i.e. the previous trading price without adjustment is its fair value.

Therefore, when measuring the fair value of the Consolidated Company, the

unobservable input is not considered, and the quantitative information of unobservable

input value and sensitivity analysis are not intended to be disclosed.

(XXI) Financial risk management

1. Summary

Due to usage of financial instruments, the Consolidated Company is disclosed to the

following risks:

(1)Credit risk

(2)Liquidity Risk

249

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Footnotes to Consolidated Financial Statement

(3) Market risk

The footnotes describe the disclosure risk information of the Consolidated

Company and the target, policy and procedures of measurement and management risks

of Consolidated Company. The further quantitative disclosure is seen in the

corresponding footnotes of the merged financial reports.

2. Risk management framework

The board has sole responsibility for the development and control of risk

management policies of the Consolidated Company. The building of risk management

policies of the Consolidated Company is to identify and analyze the risks faced by the

Consolidated Company, and to set appropriate risk limits and controls and supervise the

risks and the conformity to the risk limits. Risk management policies and systems

involve regular review to reflect market situations and changes of the operation of the

Consolidated Company. Through training, management guidelines and operating

procedures, the Consolidated Company develops a disciplined and constructive control

environment in which all employees understand their roles and obligations.

The board of directors of the Consolidated Company supervises how management

staffs supervise and manage the company’s risk management policies and conformity to

procedures, and review the adequacy of risk management framework relevant to risks

faced by the Consolidated Company. Internal audit staff assists the board of directors in

playing the role of supervision. Those personnel review regularly and with exceptions

risk management control and procedures, and report the result of the review to the board

of directors.

3. Credit risk

Credit risk is the risk of financial losses generated from the failure of the

counterpart against the customers or financial instruments to fulfill contractual

obligations of the Consolidated Company, mainly from the accounts receivable from the

customers and securities investment of the Consolidated Company.

(1) Accounts Receivable and Other Receivables

The credit exposure risk of the Consolidated Company is mainly affected by the

situation of each individual customer. But only management staff considers the basic

statistics of customers of the Consolidated Company, including default risks of

industries and countries which customers are engaged in and belong to, all of which

may affect the credit risk.

The Consolidated Company has established credit policies, according to which,

before the Consolidated Company offers standard of payment, shipment conditions

250

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

and articles, individual credit rating analysis for each new customer shall be made. The

review of the Consolidated Company contains, if available, the external ratings, and,

in some cases, the bank’s note. Procurement thresholds’ establishment by individual

customers means the maximum un-received amount without approval of the board of

directors. This threshold is regularly reviewed. Customers without the group’s basic

credit ratings can only do transactions with the Consolidated Company with the basis

of receivables in advance.

The Consolidated Company is available with allowance for doubtful accounts to

reflect the estimation of losses already occurred of accounts receivable and other

receivables and investment. The main component of the allowance account contains

specific losses related to certain significant exposure risks and that part of combined

losses established for losses that have already occurred but yet not been identified in

similar asset group. The allowance account of combined losses is dependent on

statistical materials of historical payment of similar financial assets.

(2) Bank deposits and trading contracts of foreign exchange derivative instruments

Credit risk of bank deposits and trading contracts of foreign exchange derivative

instruments is measured and monitored by the financial department of the

Consolidated Company. Because the trading partners and the other parties in

compliance of the transactions of the Consolidated Company were banks with good

credit, without major concerns of performance, so there is no significant credit risk.

251

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

4. Liquidity Risk

Liquidity risk refers to the risk of the Consolidated Company’s inability to deliver

cash or other financial assets to settle financial liabilities and risk of failure to fulfill

relevant obligations. The method of liquidity management of the Consolidated Company

ensures as far as possible that in general case and cases under pressure, there are enough

liquidity fund to cope with liabilities that are due, so as to avoid unacceptable losses or

the risk of harmed reputation of the Consolidated Company.

The Consolidated Company uses standard cost system to estimate the cost of their

products to help the company to supervise cash flow demands. In general, the

Consolidated Company ensures there is enough cash to cope with expected operating

expenditure need within ninety days, including the fulfillment of financial obligations,

but excluding the potential impact which could not be reasonably expected under

extreme circumstances, such as natural disasters. In addition, on December 31, year of

104 and 103 in the Republic China, the total borrowing amount that had not been used of

the Consolidated Company was TWD 3,379.587 million and TWD 2,045.113 million,

respectively.

5. Market risk

Market risk refers to the risk of affected earnings of the Consolidated Company or

value of financial instruments held by the company due to market price changes, such as

changes of exchange rates, interest rates and equity instrument price. The objective of

market risk management is to control the market risk exposure extent within affordable

range and optimize investment return.

To manage market risks, the Consolidated Company is engaged in transactions on

derivative instruments, and thereby financial liabilities emerge. Performance of all the

transactions is executed under the guidelines of the board of directors.

(1) Exchange Rate Risk

The Consolidated Company is disclosed to exchange rate risk that is not

generated due to sales, procurement and loan exchanges valuated according to the

functional currencies of the companies in the group. The functional currencies are

dominated by TWD, as well as US dollar and RMB, all of which are the main

valuation currencies of these transactions. In addition, under the natural hedge

principle, based on the Consolidated Company’s individual currency demand and net

location (and the difference between foreign currency assets and liabilities location),

and in accordance with the foreign exchange market situation, hedge is done. The

Consolidated Company hedges exchange rate risks of forward foreign currency,

252

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

currency exchange contracts within one year from the maturity date as the report date.

Interest of borrowings is evaluated by the currency of principal of the borrowings.

In general, the currency of borrowings is the same with that of the cash flow generated

from operations the company’s operations, mainly TWD and US dollars, as well as

RMB. In this case, economic hedging does not require entry of derivative instruments;

therefore, hedge accounting is not adopted.

As to other monetary assets and liabilities valuated in foreign currencies, when

the short-term imbalance occurs, the Consolidated Company is buying or selling

foreign currencies in real exchange rates in order to ensure that the net exposure risk is

maintained at an acceptable level.

(2) Interest rate risk

The borrowings of the Consolidated Company are based on a floating rate, and

the circumstance never occurs that the Consolidated Company converts fluctuation

rate into fixed rate via interest rate conversion contract. The Consolidated Company

should take measures corresponding to interest rate changes, dominated by periodic

assessment of banks and currencies’ borrowing rate, and maintaining of good relations

with the financial institutions to secure lower-cost financing, together with the

strengthening of operating capital management at the same time, to reduce dependence

on bank borrowings to disperse the risk of changes in interest rates.

253

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(3) Other price risks

In addition to coping with expected consumption and sales demand of the

Consolidated Company, the Consolidated Company does not sign commodity

contracts; such commodity contracts do not take close-out netting.

(XXII) Capital Management

Policies of board are to maintain a sound capital base, in order to maintain the

confidence of investors, creditors and the market and support the future operation and

development. The capital comprises share capital, capital surplus, retained earnings and

non-controlling interests of the Consolidated Company. Board of directors controls capital

return rate, and also the dividend level of common stocks.

Debt-to-capital ratio on the report date is as follows: Dec.31, 2015 Dec. 31, 2014

Total Liabilities $ 8,020,324 8,528,484

Deduction: Cash and cash equivalents (3,911,270) (2,168,919)

Net Liabilities $ 4,109,054 6,359,565

Total equity $ 9,691,780 8,175,409

Debt-to-Capital Ratio 42.40% 77.79%

Until the December 31, year of 104 in the Republic China, the capital management

mode of the Consolidated Company had not been changed.

VII. Transactions of Related Parties

(1) The parent company and ultimate controller

The company is the ultimate controller of the Consolidated Company.

(2) Transactions of major management personnel

Remuneration of major management personnel includes: 2015 2014

Short-term employee benefits $ 118,782 74,228

Post-employment benefit 6,608 408

Share-based payment 395 1,033

$ 125,785 75,669

The details of description on share-based payment are seen in Footnote VI (15).

254

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

VIII. Collateralization of Assets

The book value of assets of the Consolidated Company to provide pledged security is as

follows:

Assets Pledged object Dec.31, 2015 Dec. 31, 2014

Real Estate, Plant and

Equipment

Land Bank loan Warranty $ 470,621 470,621

Buildings (Structures) 〞 312,229 330,857

Guarantee deposits paid Rental or Mailbox

Deposit

15,674 18,598

$ 798,524 820,076

255

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

IX. Significant unrecognized contractual commitments or those with liabilities

(1) Significant unrecognized contractual commitments:

1. The credit balance of the Consolidated Company that has been opened yet not used is as

follows:Dec.31, 2015 Dec. 31, 2014

LC not being used

TWD $ 85,272 82,212

USD 9,377 25,828

JPY 1,052,251 1,440

2. The significant contracts of engineering construction and machinery and equipment

purchase singed for the expansion of new plant and machinery and equipment and

non-payment amount are as follows: Dec.31, 2015 Dec. 31, 2014

Total contract value

JPY $ 104,500 321,750

RMB - 11,068

TWD - 16,300

Unpaid amount

JPY $ 99,430 301,274

RMB - 2,214

3. According to the option premium contract of environmental-friendly material

technology signed between the Consolidated Company and the Japanese H Company,

the payment of option premium is as follows: 2015 2014

$ 163,864 162,113

4. On December 31, year of 104 and 103 in the Republic China, entrusted by the

Consolidated Company, Mega International Commercial Bank Zhongli Branch issued a

letter of guarantee with TWD 4 million and TWD 5 million granted to the Customs as a

guarantee for tariffs for sales on home market and for hiring foreigners to be employed in

services.

X. Major disaster losses: None.

XI. Significant after-date affairs: None.

256

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

XII. Others

Functions of Employee Benefits, Depreciation, Depletion and Amortization:

Function 2015 2014

Nature

Operation

cost

Operation

expense

Total Operation

cost

Operation

expense

Total

Employee benefit expense

Salary Expense 1,037,559 331,385 1,368,944 891,120 247,074 1,138,194

Insurance Expense 49,876 14,188 64,064 45,792 13,456 59,248

Pension expense 74,887 15,990 90,877 56,040 13,855 69,895

Other employee benefit

expense

70,932 30,920 101,852 57,888 27,837 85,725

Depreciation Expense 507,654 27,575 535,229 501,190 27,101 528,291

Amortization 301 1,466 1,767 393 2,242 2,635

XIII. Other affairs disclosed in the footnotes(1) Information related to significant transactions

In year of 104 in the Republic China, according to the provisions in the development guidelines of financial statements for issuers of securities, the Consolidated Company should disclose the information related to significant transactions as follows: 1. Loans to others: None.2. Endorsement and guarantee for others:

Unit: TWD(IN THOUSANDS) NO

. Name Endorsed

company Limitation

for one Company

Company

name

Relation

(Remark 2) (Remark 3)

Highest balance for this

term

Endorsem

ent

Balance

Actual amount

used

Guaranteed by Ratio in the

financial

statement

Highest limitation

(Remark 3)

For parent

company

For subsidiar

y company

For company in China

0 Elite Material Co., Ltd.

Grand Shanghai Incorporated

3 4,840,309 666,350 655,850 226,534 - 7% 9,680,618 Y

0 〞 Grand Zhongshan Incorporated

3 4,840,309 712,125 640,088 335,146 - 7% 9,680,618 Y

0 〞 Elite Electronic Material (Zhongshan) Co., Ltd.

3 4,840,309 759,600 459,550 - - 5% 9,680,618 Y Y

0 〞 Elite Electronic Material (Kunshan) Co. Ltd.

3 4,840,309 98,610 98,475 - - 1% 9,680,618 Y Y

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Footnotes to Consolidated Financial Statement

Remark 1: 0 indicates the Company.

Remark 2: 1. Companies with business relationship.

2. Subsidiary company’s directly-held aggregated common stocks exceed 50%.

3. Investee companies with aggregated common stocks held by the parent company and subsidiary companies exceeding 50%.

4. Common stocks held directly by the parent company or indirectly through a subsidiary company exceed 50%.

Remark 3: Under the provisions of endorsement assurance measures of the Company:

The total amount of external endorsement and guarantee shall not exceed 100% of the net value in the most recent financial statements of the

Company, the limit of endorsement guarantee for an individual enterprise shall not exceed 50% of the net value in the most recent financial

statements of the Company.

Remark 4: Transactions of the above relevant merged subjects have been written off when the merged statements are developed.

3. Holding securities by the end of the period (exclude subsidiary companies with

investment, affiliated companies and the part controlled in the joint-venture companies):

None.

258

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

4. Accumulative buying or selling the same securities amounting to TWD 300 million or

more than 20% of paid-in capital: None.

5. Acquisition of property amounting to TWD 300 million or more than 20% of paid-in

capital: None.

6. Disposal of property amounting to TWD 300 million or more than 20% of paid-in

capital: None.

7. Purchase and sales from and to related parties amounting to TWD 100 million or more

than 20% of paid-in capital:

Unit: TWD(IN THOUSANDS)

Transaction status Terms of transaction

Receivables (Payables)

Purchase(Sales)

company

Trade object Relation Purchase(S

ales) Amount

Ratio in

total

amount

Loan

period Unit

Price

Loan period Balance

Ratio in

total

amount

Remark

Grand Shanghai Incorporated

Elite Electronic Material (Kunshan) Co. Ltd.

The Investee company evaluated by equitymethod

Sales (1,340,923) (100)% 視subsidiary company財務狀況而

定

- 263,804 81%

〞 〞 〞 Purchase 241,570 100% 〞 - (61,473) 17% Remark 1

Elite Electronic Material (Kunshan) Co. Ltd.

Grand Shanghai Incorporated

The Investee company evaluated by equitymethod

Sales (241,570) (3)% 〞 - 61,473 2% Remark 1

〞 〞 〞 Purchase 1,340,923 23% 〞 - (263,804) 14%

Grand Zhongshan Incorporated

Elite Electronic Material (Zhongshan) Co., Ltd.

The Investee company evaluated by equitymethod

Sales (713,584) (100)% 〞 - 312,076 62%

〞 〞 〞 Purchase 528,349 100% 〞 - (222,750) 52% Remark 2

Elite Electronic Material (Zhongshan) Co., Ltd.

Grand Zhongshan Incorporated

The Investee company evaluated by equitymethod

Sales (528,349) (9)% 〞 - 222,750 10% Remark 2

〞 〞 〞 Purchase 713,584 19% 〞 - (312,076) 22%

〞 Elite Material Co., Ltd

〞 Sales (105,736) (2)% 〞 - (47,970) - %

Elite Material Co., Ltd

Elite Electronic Material (Zhongshan) Co., Ltd.

The Investee company evaluated by equitymethod

Purchase 105,736 3% 〞 - 47,970 3%

Remark 1: This transaction is through the parent company---Grand Shanghai Incorporated for resales to customers, without spread. The relevant

purchase and sales have been shown by the Grand Shanghai Incorporated in the way of elimination.

259

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

Remark 2: This transaction is through the parent company---Grand Zhongshan Incorporated for resales to customers, without spread. The relevant

purchase and sales have been shown by the Grand Zhongshan Incorporated in the way of elimination.

Remark 3: Transactions of the above relevant merged subjects have been written off when the merged statements are developed.

8. Receivables from the related parties amounting to TWD 100 million or more than 20%

of paid-in capital:

Unit: TWD(IN THOUSANDS) Company with notes receivable

Trade object Receivables-Related parties balance

Overdue Receivables-Related parties

Receivables-Related parties

Allowance for Doubtful Accounts

Relation Turnover(times)

Amount Disposition

Grand Shanghai Incorporated

Elite Electronic Material (Kunshan) Co. Ltd.

The Investeecompany evaluated byequity method

263,804 4.18 - 168,524 -

Grand Zhongshan Incorporated

Elite Electronic Material (Zhongshan) Co., Ltd.

〞 312,076 1.90 - 237,592 -

Elite Electronic Material (Zhongshan) Co., Ltd.

Grand Zhongshan Incorporated

對 The Investee company evaluated byequity method

222,750 2.30 - 134,591 -

Note: Transactions of the above relevant merged subjects have been written off when the merged statements are developed.

9. Engagement in derivative transactions:

The detailed information of the company’s engagement in derivative transactions is

seen in the description about “financial instruments” in Footnote VI (20) in the financial

statements.

260

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

10. The business relation and important business dealings between the parent company and

subsidiary companies: 2015 transaction status

NO.

(Remark 1)

Trade object Business dealings Relation with trade

object(Remark 2)

Subject Amount Terms of transactionRate of Operating

revenue in total assets

1 Grand ZhongshanIncorporated

Elite Electronic Material (Zhongshan) Co., Ltd.

3 Sales revenue 713,584 Remark 3 3%

1 〞 〞 3 Accounts receivable 312,076 〞 1%

2 Elite Electronic Material(Zhongshan) Co., Ltd.

Grand Zhongshan Incorporated

3 Accounts receivable 222,750 〞 1%

2 〞 Elite Material Co., Ltd

2 Sales revenue 105,736 〞 1%

3 Grand ShanghaiIncorporated

Elite Electronic Material (Kunshan) Co. Ltd.

3 Sales revenue 1,340,923 〞 6%

3 〞 〞 3 Accounts receivable 263,804 〞 1%

Remark 1: The number shall be filled in as follows:

1. 0 indicates the parent company.

2. The subsidiary companies are numbered sequentially from the Arabic numerals 1.

Remark 2: The type of relation with trade object is labeled as follows:

1. The parent company with the subsidiary company.

2. The subsidiary company with the parent company.

3. The subsidiary companies with the subsidiary companies.

Remark 3: The sales price is agreed by the seller and the buyer, and payment manner is closed every 90 days or 120 days or determined by the financial

situation of the subsidiary company.

Remark4: Those with a transaction revenue fails to cover 1% of the aggregated total revenue or assets will not be disclosed.

261

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(2) Re-investment business-related information:

The information of re-investment business of the Consolidated Company in year of

104 in the Republic China is as follows (excluding mainland Chinese investee companies):

Unit: TWD (IN THOUSANDS) Investment company

Investee company Region Main Business Item

Initial Investment Amount Share holding in the end of the term Highest share holding or

investing status

Investee company

Amounts

recognized

profit and loss

on

investments

End of the period

End of last year Number of shares(Share)

Ratio Carrying amount

Net income or loss for current

period

Remark

Elite Material Co.,Ltd.

EMC OVERSEAS HOLDING INCORPORATED

Offshore IncorporationsLimited P.O. Box 957,Offshore IncorporationsCentre. Road Town,Tortola, British virginIslands

Investment 1,160,487 1,160,487 35,656,950 100.00% 9,148,028 100.00% 2,220,063 2,220,063 subsidiary company

〞 Li Cheng Tech Co., LTD.

No.11, Gongye 5th Rd.,Guanyin Dist., TaoyuanCity 328, Taiwan(R.O.C.)

Electric equipment 、

Telecom Instruments 、

Wholesale 、

Retail Sale 、

Battery 、

Electricity generation 、

Power Distribution Machinery Manufacturing

173,694 173,694 16,412,918 33.50% - 33.50% - -

EMC OVERSEASHOLDING INCORPORATED

Grand Zhuhai Incorporated

Scotia Centre, 4thFloor,P.O. Box 2804, GeorgeTown, Grand Cayman,Cayman Islands

Import exportbusiness andInvestment

1,109,446 1,109,446 33,798,821 100.00% 9,105,619 100.00% 2,219,965 2,219,965 Invested company

〞 Li Cheng Tech Co., LTD.

No.11, Gongye 5th Rd.,Guanyin Dist., TaoyuanCity 328, Taiwan(R.O.C.)

Electric equipment 、

Telecom Instruments 、

Wholesale 、

Retail Sale 、

Battery 、

Electricity generation 、

Power Distribution Machinery Manufacturing

7,311 7,311 250,000 1.53% - 1.53% - -

Grand ZhuhaiIncorporated

Grand Zhongshan Incorporated

P.O.Box 957, OffshoreIncorporations Centre,Rood Town, Tortola,British Virgin Islands

Import exportbusiness andInvestment

539,545 539,545 16,437,000 100.00% 3,834,714 100.00% 828,938 828,938 Invested company

Grand ZhuhaiIncorporated

Grand Shanghai Incorporated

Offshore IncorporationsLimited P.O. Box 957,Offshore IncorporationsCentre. Road Town,Tortola, British virginIslands

Import exportbusiness andInvestment

1,084,261 1,084,261 18,161,515 99.79% 5,267,426 99.79% 1,394,231 1,391,282 〞

Remark 1: Carrying amount refers to the investment balance recognized under the equity law, including investment gains and losses and cumulative

translation adjustment, etc.

Remark 2: It is required to evaluate with equity method in accordance with the investee company and the financial statements approved by the

accountants.

Remark 3: Transactions of the above relevant merged subjects have been written off when the merged statements are developed.

262

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(3) Mainland China investment-related information:

1. Re-investment business in Mainland China-related information:

Unit: TWD (IN THOUSANDS)

Investee

company in

China

Main

Business

Item

Paid-in

capital

Investm

ent type

Accumulated

investment

amount

remitted out

of Taiwan

from the

beginning of

the term

Investment amount

remitted or

withdrew

Accumulate

amount

remitted out

of Taiwan

Net income

or loss of

investee

company

for current

period

Share holding

rate for direct

or indirect

investment

Highest

share holding

or investing

status

The gain and

loss of

investment

recognized

for the term

Book value

of investment

in the end of

the period

Investment

interest

withdrew

as of this

term

(Remar

k 1)

Remit Withdraw (Remark 2)

Elite Electronic

Material

(Kunshan) Co.

Ltd.

The

manufacturin

g and sales of

CCL and

Bonding sheet

597,415

(2)

650,816 - 414,262 236,554 1,421,176 99.79% 99.79% 1,418,141 5,332,862 414,262

Elite Electronic

Material

(Zhongshan)

Co., Ltd.

〞 663,065

(2)

440,613 - - 440,613 846,006 100.00% 100.00% 846,006 3,772,668 -

2. Limits of re-investment in Mainland China:

Company name

Accumulated amount invested in China remitted

from Taiwan-to the end of the period

Amount approved by MOEA Investment

Commission

Amount invested in China approved by MOEA Investment

Commission

The Company 673,494 1,141,188 5,808,371

Remark 1: Investment methods are divided into:

1. Directly investing in Mainland China.

2. Re-investing through the company in a third region.

3. Other methods.

Remark 2: In the column of gains and losses recognized in the current period:

The recognized basis of investment gains and losses is divided into the following three categories.

(1) Financial statements audited and certified by international CPA firms working with the Accounting Firm of ROC.

(2) Financial statements audited and certified by a certifying CPA from the parent company in Taiwan.

263

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

(3) Other financial statements self-compiled by investee companies.

Remark 3: The difference between paid-in capital and Taiwan remittance is the direct investment of USD6.012 million made by overseas subsidiary companies.

Remark 4: The difference between paid-in capital and Taiwan remittance is the capital increase of USD6.255 million converted by surplus of the Company.

Remark 5: The difference between paid-in capital and Taiwan remittance is the capital increase of USD800 million converted by surplus of the Company.

Remark 6: The difference between paid-in capital and Taiwan remittance is the direct investment of USD110 million made by overseas subsidiary companies.

Remark 7: It is converted according to the exchange rates of 32.825 (assets liabilities) and 31.7562 (gains and losses) on December 31, 2015.

Remark 8: Transactions of the above relevant merged subjects have been written off when the merged statements are developed.

3. Major transactions:

The significant transactions directly or indirectly engaged by the Consolidated Company

with investee companies in Mainland China in year of 104 in the Republic China (had been

written off when the merging report was developed), details of which can be seen in the

description of “major transactions-related information”.

XIV Department Information

(I) General information

The Consolidated Company has three departments to which report should be delivered:

Taiwan department, China department and other sectors; the first covers manufacturing and sales

of various types of printed circuit board, special chemicals for electronics industry and electronic

components goods; the second covers production and sales of adhesive piece and CCL for printed

circuit boards; other sectors cover the engagement in investment and commodity trading business.

The Consolidated Company should report to authorities which are strategic sector-based

institutions to provide different products and services. Since each strategic institution requires

different technologies and marketing strategies, thus they should be administered separately. Most

of the institutions secured and retained the then management team, respectively.

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Footnotes to Consolidated Financial Statement

(2) Departmental gain and loss reportable, assets, liabilities and their measurement basis and

adjustment information of the report-required authorities

The Consolidated Company takes the review result by the chief operating

decision-maker on the department pre-tax loss of the internal management report

(excluding non-recurrent gains and losses and exchange gains and losses) as the basis for

the management resources to be allocated and performances be assessed. Since the income

tax, non-occurrence gains and losses and exchange gains and losses are under group-based

management, the unallocated parts of the above of the Consolidated Company should be

reported to required authorities. Moreover, not all the gains and losses to be reported

contain significant non-cash items beside depreciation and amortization. The amount in the

report is consistent with the amount in the report for operating decision-maker.

Except that pension expense of each operating department is paid in cash and

recognized and measured according to the pension plan, the accounting policies of the

operating departments are the same with the “description on the summary of significant

accounting policies” in Footnote IV.

The Consolidated Company considers sales and transfer among the departments as

transactions with the third party, which are measured with the current market price.

The Consolidated Company’s operating departments and regulations are as follows:

2015 Taiwan department

China departmen

t

Other departmen

t

Adjustments and

eliminations

Total

Revenue:

Revenue from external customers $ 5,652,748 15,217,617 2 - 20,870,367

Interdepartmental Revenue 200,821 84,989 2,068,320 (2,354,130) -

Interest Income 1,452 5,508 340 - 7,300

Total revenue $ 5,855,021 15,308,114 2,068,662 (2,354,130) 20,877,667

Interest expense $ 30,393 4,805 594 - 35,792

Depreciation and amortization 167,094 384,372 - (14,471) 536,995

Share of profit (loss) of associates and joint

ventures accounted for using equity method

2,220,063 - 6,707,317 (8,927,380) -

Departmental gain and loss reportable $ 2,895,689 2,563,146 6,662,224 (8,927,381) 3,193,678

Assets:

Investment recognized under equity method $ 9,146,840 - 27,235,275 (36,382,115) -

Non-current Assets Capital Expenditure 1,586,047 3,464,262 - (79,483) 4,970,826

Departmental asset reportable $ 13,808,708 13,055,602 28,314,622 (37,471,103) 17,707,829

Departmental liability reportable $ 4,128,089 3,938,850 947,672 (998,563) 8,016,048

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Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

2014 Taiwan department

China departmen

t

Other departmen

t

Adjustments and

eliminations

Total

Revenue:

Revenue from external customers $ 5,120,887 13,766,157 7,926 - 18,894,970

Interdepartmental Revenue 237,749 148,172 1,829,330 (2,215,251) -

Interest Income 845 3,208 214 - 4,267

Total revenue $ 5,359,481 13,917,537 1,837,470 (2,215,251) 18,899,237

Interest expense $ 29,774 15,608 1,685 - 47,067

Depreciation and amortization 187,952 356,290 - (13,316) 530,926

Share of profit (loss) of associates and joint

ventures accounted for using equity method

1,236,630 - 3,695,079 (4,931,709) -

Departmental gain and loss reportable $ 1,605,271 1,418,698 3,705,363 (4,931,709) 1,797,623

Assets:

Investment recognized under equity method $ 7,497,714 - 22,243,294 (29,741,008) -

Non-current Assets Capital Expenditure 1,675,504 3,832,574 - (89,619) 5,418,459

Departmental asset reportable $ 12,091,504 12,178,555 23,548,770 (31,114,936) 16,703,893

Departmental liability reportable $ 3,925,392 4,754,073 1,124,441 (1,275,422) 8,528,484

(3) Products and services information

The part of Consolidated Company’s revenue from external customers is as follows: Product and service 2015 2014

CCL $ 10,613,293 9,884,296

Bonding sheet 9,277,723 7,937,969

ML PRESS FITTING OEM 977,927 1,058,542

Others 774 3,938

Total $ 20,869,717 18,884,745

(4) Regional information

The relevant regions of the Consolidated Company are as follows, in which the

revenue is classified based on the customers’ geographic location, while the non-current

assets are classified based on the assets’ geographical location. Area 2015 2014

Revenue from external customers:

Taiwan $ 4,585,433 4,551,426

PRC 14,230,083 12,522,632

Other countries 2,054,201 1,810,687

Total $ 20,869,717 18,884,745

266

Elite Material Co., Ltd.

Footnotes to Consolidated Financial Statement

Area Dec.31, 2015 Dec. 31, 2014

Taiwan $ 1,586,047 1,675,504

China 3,384,779 3,742,955

Total $ 4,970,826 5,418,459

Non-current assets include real estate, plant and equipment, intangible assets and other

assets, but do not include such non-current assets of financial instruments, deferred income

tax assets and guarantee deposits paid.

(5) Information of Major Customers

2015 2014

Customer Operating

revenue amount

The

proportio

n

Customer Operating

revenue amount

The

proportio

n

A $ 2,946,457 14% A 2,459,425 13%

B 1,878,057 9% B 1,521,157 8%

267