Altek — Annual Report 2013

Nov 13, 2013

ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2013 AND 2012

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For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR13000207

To the Board of Directors and Stockholders of Altek Corporation

We have audited the accompanying consolidated balance sheets of Altek Corporation and its subsidiaries (the “Group”) as of December 31, 2013, December 31, 2012, and January 1, 2012, the related consolidated statements of comprehensive income, of changes in stockholders' equity and of cash flows for the years ended December 31, 2013 and 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the “Rules Governing the Examination of Financial Statements by Certified Public Accountants” and generally accepted auditing standards 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 accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2013, December 31, 2012 and January 1, 2012, and their financial performance and their cash flows for the years ended December 31, 2013 and 2012, in conformity with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

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We have also audited the non-consolidated financial statements of Altek Corporation (not presented herein) as of and for the years ended December 31, 2013 and 2012, on which we have expressed an unqualified opinion on these consolidated financial statements.

PricewaterhouseCoopers, Taiwan Hsinchu, Taiwan Republic of China March 21, 2014

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The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

1100 1110 1150 1170 1200 1220 130X 1410 1470 11XX 1543 1550 1600 1780 1840 1900 15XX 1XXX	Assets	Notes	December 31, 2013 AMOUNT % $ 4,619,412 29 442,167 3 101,802 1 2,319,220 15 58,198 - 5,887 - 1,342,629 9 177,712 1 11,829 - 9,078,856 58 156,108 1 329,654 2 5,656,784 36 110,413 1 298,633 2 88,012 - 6,639,604 42 $ 15,718,460 100	December 31, 2012 AMOUNT % $ 4,698,800 29 428,282 3 - - 2,883,695 18 25,176 - 27,411 - 1,715,321 10 228,957 1 4,391 - 10,012,033 61 235,953 1 351,419 2 5,297,892 33 73,079 - 367,473 2 79,870 1 6,405,686 39 $ 16,417,719 100	January 1, 2012	January 1, 2012
			AMOUNT $ 4,619,412 442,167 101,802 2,319,220 58,198 5,887 1,342,629 177,712 11,829 9,078,856 156,108 329,654 5,656,784 110,413 298,633 88,012 6,639,604 $ 15,718,460	AMOUNT $ 4,698,800 428,282 - 2,883,695 25,176 27,411 1,715,321 228,957 4,391 10,012,033 235,953 351,419 5,297,892 73,079 367,473 79,870 6,405,686 $ 16,417,719	AMOUNT $ 6,303,846 497,652 9 3,415,357 19,195 - 2,047,877 296,694 15,983 12,596,613 236,174 417,111 5,297,001 84,835 372,867 83,973 6,491,961 $ 19,088,574	%
	Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable, net Accounts receivable, net Other receivables Current income tax assets Inventories Prepayments Other current assets Current Assets Non-current assets Financial assets carried at cost - noncurrent Investments accounted for under the equity method Property, plant and equipment Intangible assets Deferred income tax assets Other non-current assets Non-current assets Total assets	6(1) 6(2) 6(4) 6(5) 6(3) 6(6) 6(7) 6(8) 6(23) 6(9)				33 3 - 18 - - 11 2 -
						67
						1 2 28 - 2 -
						33
						100

(Continued)

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ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

					December 31, 2013	December 31, 2013			December 31, 2012	December 31, 2012			January 1, 2012
	Liabilities and Equity	Notes			AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(10)		$	1,000,000		6	$	-		-	$	-		-
2150	Notes payable	12(2)			-		-		40		-		957		-
2170	Accounts payable	12(2)			2,511,106	16			3,144,953	19			5,186,498	27
2180	Accounts payable - related	7
	parties				-		-		97		-		14,826		-
2200	Other payables	12(2)			637,671		4		1,230,200		7		1,155,796		6
2230	Current income tax liabilities				17,369		-		81,373		1		54,630		-
2250	Provisions for liabilities -	6(13)
	current				155,014		1		152,537		1		181,057		1
2300	Other current liabilities				602,568		4		702,245		4		614,363		3
21XX	Current Liabilities				4,923,728	31			5,311,445	32			7,208,127	37
	Non-current liabilities
2550	Provisions for liabilities -	6(13)
	noncurrent				120,417		1		142,454		1		105,751		1
2570	Deferred income tax liabilities	6(23)			746,845		5		783,237		5		929,135		5
2600	Other non-current liabilities	6(11)			27,562		-		28,188		-		38,880		-
25XX	Non-current liabilities				894,824		6		953,879		6		1,073,766		6
2XXX	Total Liabilities				5,818,552	37			6,265,324	38			8,281,893	43
	Equity attributable to owners of
	parent
	Share capital	6(14)
3110	Common stock				3,902,653	25			3,961,013	24			3,955,214	21
	Capital surplus	6(15)
3200	Capital surplus				2,028,690	13			2,377,444	15			2,354,615	12
	Retained earnings	6(16)
3310	Legal reserve				1,319,477		9		1,291,466		8		1,272,282		7
3320	Special reserve				339,267		2		-		-		488,347		3
3350	Unappropriated retained
	earnings				2,715,960	17			3,621,302	22			3,450,925	18
	Other equity interest
3400	Other equity interest	6(17)			27,904		- (		340,799)(		2)		-		-
3500	Treasury stocks	6(14)	(		440,573)(		3)(		768,094)(		5)(		714,702)(		4)
31XX	Equity attributable to
	owners of the parent				9,893,378	63			10,142,332	62			10,806,681	57
36XX	Non-controlling interest				6,530		-		10,063		-		-		-
3XXX	Total equity				9,899,908	63			10,152,395	62			10,806,681	57
	Significant contingent liabilities	9
	and unrecognised contract
	Total liabilities and equity			$	15,718,460	100		$	16,417,719	100		$	19,088,574	100

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

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share amount)

Items

Forthe years endedDecember31 2013 2012 Notes AMOUNT % AMOUNT % $ 19,165,825 100 $ 24,575,459 100 6(21)(22) and 7 ( 18,006,989) ( 94) ( 22,808,808) ( 93) 1,158,836 6 1,766,651 7 6(21)(22) ( 112,037) - ( 115,194) - ( 202,593) ( 1) ( 270,693) ( 1) ( 908,046) ( 5) ( 1,197,213) ( 5) ( 1,222,676) ( 6) ( 1,583,100) ( 6) ( 63,840) - 183,551 1 6(18) 85,858 - 154,909 - 6(19) ( 336,460) ( 2) 28,370 - 6(20) ( 10,972) - ( 1,762) - ( 42,087) - ( 35,708) - ( 303,661) ( 2) 145,809 - ( 367,501) ( 2) 329,360 1 6(23) 36,986 - ( 49,257) - ($ 330,515) ( 2) $ 280,103 1 $ 423,312 2 ($ 393,952) ( 1) - - ( 2,484) - 20,908 - ( 16,649) - 6(23) ( 75,517) - 69,802 - $ 368,703 2 ($ 343,283) ( 1) $ 38,188 - ($ 63,180) - ($ 332,012) ( 2) $ 280,103 1 1,497 - - - ($ 330,515) ( 2) $ 280,103 1 $ 36,691 - ($ 63,180) - 1,497 - - - $ 38,188 - ($ 63,180) - 6(24) ($ 0.88) $ 0.75 6(24) ($ 0.88) $ 0.74

4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General & administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating (loss) profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of loss of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 (Loss) profit before income tax 7950 Income tax (benefit) expense 8200 (Loss) profit for the year Other comprehensive income 8310 Cumulative translation differences of foreign operations 8360 Actuarial loss on defined benefit plan 8370 Share of other comprehensive income of associates and joint ventures accounted for under equity method 8399 Income tax relating to the components of other comprehensive income 8300 Total other comprehensive (loss) income for the year 8500 Total comprehensive income (loss) for the year (Loss) profit, attributable to: 8610 Owners of the parent 8620 Non-controlling interest (Loss) profit for the yaer Comprehensive income (loss) attributable to: 8710 Owners of the parent 8720 Non-controlling interest Total comprehensive income (loss) for the yaer Basic (losses) earnings per share 9750 Total basic (losses) earnings per share Diluted (losses) earnings per share 9850 Total diluted (losses) earnings per share

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

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

(Expressed in thousands of New Taiwan dollars)

For the year ended December 31, 2012 Balance at January 1, 2012 Appropriation of 2011 earnings Legal reserve Special reserve Cash dividends Share-based payment transaction Effect of associates under the equity method Purchase of treasury shares Profit for the year Other comprehensive loss for the year Non-controlling interest Balance at December 31, 2012 For the year ended December 31, 2013 Balance at January 1, 2013 Appropriation of 2012 earnings Legal reserve Special reserve Cash dividends and appropriated cash of additional paid-in capital Share-based payment transaction Disposal of treasury shares Loss for the year Other comprehensive income for the year Non-controlling interest Balance at December 31, 2013	Notes							Equityattributable t	o owners of theparent	o owners of theparent				Non-controlling interest	Total equity
			Common stock		Additional paid-in capital			Retained earnings		Currency translation differences of foreign operations	Treasurystocks	Total
							Legal reserve	Special reserve	Unappropriated retained earnings
	6(16) 6(12)(15) 6(15) 6(14) 6(16)(23) 6(17) 6(16) 6(15) 6(12)(15) 6(14)(15) 6(16)(23) 6(17) 6(15)(25)	$ 3,955,214 - - - 5,799 - - - - - $ 3,961,013 $ 3,961,013 - - - - ( 58,360 ) - - - $ 3,902,653		$ 2,354,615 - - - 21,016 1,813 - - - - $ 2,377,444 $ 2,377,444 - - ( 335,701 ) 14,488 ( 28,499 ) - - 958 $ 2,028,690			$ 1,272,282 19,184 - - - - - - - - $ 1,291,466 $ 1,291,466 28,011 - - - - - - - $ 1,319,477	$ 488,347 - ( 488,347 ) - - - - - - - $ - $ - - 339,267 - - - - - - $ 339,267	$ 3,450,925 ( 19,184 ) 488,347 ( 564,809 ) ( 8,953 ) - - 280,103 ( 2,484 ) ( 2,643 ) $ 3,621,302 $ 3,621,302 ( 28,011 ) ( 339,267 ) ( 37,300 ) ( 61,564 ) ( 107,188 ) ( 332,012 ) - - $ 2,715,960	$ - - - - - - - - ( 340,799 ) - ($ 340,799 ) ($ 340,799 ) - - - - - - 368,703 - $ 27,904	($ 714,702 ) - - - 32,779 - ( 86,171 ) - - - ($ 768,094 ) ($ 768,094 ) - - - 133,474 194,047 - - - ($ 440,573 )	$ 10,806,681 - - ( 564,809 ) 50,641 1,813 ( 86,171 ) 280,103 ( 343,283 ) ( 2,643 ) $ 10,142,332 $ 10,142,332 - - ( 373,001 ) 86,398 - ( 332,012 ) 368,703 958 $ 9,893,378	$ - - - - - - - - - 10,063 $ 10,063 $ 10,063 - - - - - 1,497 - ( 5,030 ) $ 6,530		$ 10,806,681 - - ( 564,809 ) 50,641 1,813 ( 86,171 ) 280,103 ( 343,283 ) 7,420 $ 10,152,395 $ 10,152,395 - - ( 373,001 ) 86,398 - ( 330,515 ) 368,703 ( 4,072 ) $ 9,899,908

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

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Consolidated (loss) profit before tax for the year Adjustments to reconcile (loss) profit before tax to net cash used in operating activities Income and expenses having no effect on cash flows Depreciation Amortisation Provision for doubtful accounts Net gains on financial assets at fair value through profit or loss Impairment of financial assets Interest expense Interest income Cash dividend income Share-based payment compensation cost Adjustment due to change of investees' equity under the equity method Loss (gain) on disposal of property, plant and equipment Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets at fair value through profit or loss - current Notes receivable, net Accounts receivable, net Other receivables Inventories Prepayments Other current assets Net changes in liabilities relating to operating activities Notes payable Accounts payable Accounts payable - related parties Other payables Provisions for liabilities Other current liabilities Other non-current liabilities Cash used in operations Interest received Cash dividend received Interest expense Income tax paid Net cash used in operating activities

Notes 2013 2012 ($ 367,501 ) $ 329,360 6(7)(21) 321,504 285,025 6(21) 16,408 13,611 6(4) - 17,061 6(2)(19) ( 11,003 ) ( 6,462 ) 6(19) 24,369 - 6(20) 10,972 1,762 6(18) ( 63,991 ) ( 117,661 ) 6(18) ( 477 ) ( 477 ) 6(12) 17,233 21,717 42,087 35,708 6(19) 30,462 ( 469 ) ( 2,882 ) 75,832 ( 101,802 ) 9 564,475 514,601 ( 31,946 ) ( 4,304 ) 372,692 332,556 55,162 41,001 ( 7,438 ) 11,592 ( 40 ) ( 917 ) ( 633,847 ) ( 2,041,545 ) ( 97 ) ( 14,729 ) ( 524,764 ) 142,210 ( 19,560 ) 8,183 ( 99,677 ) 87,882 ( 626) 992 ( 410,287 ) ( 267,462 ) 62,915 115,984 477 14,311 ( 10,726 ) ( 1,762 ) ( 48,563) ( 93,216) ( 406,184) ( 232,145)

(Continued)

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from capital reduction in financial assets measured at cost Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in intangible assets (Increase) decrease in deposits-out Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Decrease in deposits-in Employee stock options exercised Proceeds from employees' purchase of treasury stock Payments of cash dividends Purchase of treasury stock Capital increase of subsidiaries by cash from minority share Changes in non-controlling interest Net cash provided by (used in) financing activities Effect of exchange rate Decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Notes 2013 2012 $ 55,797 $ - 6(27) ( 643,643 ) ( 477,455 ) 6(7)(19) 31,660 7,989 6(8) ( 43,491 ) ( 3,650 ) ( 6,899 ) 1,593 ( 606,576 ) ( 471,523 ) 6(10) 1,000,000 - - ( 14,168 ) - 13,752 69,165 16,985 6(16) ( 373,001 ) ( 564,809 ) - ( 86,171 ) - 7,420 6(25) ( 4,072 ) - 692,092 ( 626,991 ) 241,280 ( 274,387 ) ( 79,388 ) ( 1,605,046 ) 6(1) 4,698,800 6,303,846 6(1) $ 4,619,412 $ 4,698,800

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

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ALTEK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of New Taiwan dollars, unless stated otherwise)

1. HISTORY AND ORGANIZATION

Altek Corporation (the “Company”) was incorporated as company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the development, manufacturing and sale of digital image technology application, related export and import trade.

The Company was listed in the Taiwan Stock Exchange on December 24, 2002, as approved by the Tai-Tz (91) Letter No. 024976 of the former Securities and Futures Commission, Ministry of Finance, R.O.C., dated September 27, 2002.

1. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

• These consolidated financial statements were authorized for issuance by the Board of Directors on March 21, 2014.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

• (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRSs”) as endorsed by the Financial Supervisory Commission (“FSC”) Not applicable as it is the first-time adoption of IFRSs by the Group this year.

• (2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group

• IFRS 9, ‘Financial Instruments’: Classification and measurement of financial instruments

• A.The International Accounting Standards Board (“IASB”) published IFRS 9, ‘Financial Instruments’, in November, 2009, which will take effect on January 1, 2013 with early application permitted (Through the amendments to IFRS 9 published on November 19, 2013, the IASB has removed the previous mandatory effective date, but the standard is available for immediate application). Although the FSC has endorsed IFRS 9, FSC does not permit early application of IFRS 9 when IFRSs are adopted in R.O.C. in 2013. Instead, enterprises should apply International Accounting Standard No. 39 (“IAS 39”), ‘Financial Instruments: Recognition and Measurement’ reissued in 2009.

• B.IFRS 9 was issued as the first step to replace IAS 39. IFRS 9 outlines the new classification and measurement requirements for financial instruments, which might affect the accounting treatments for financial instruments of the Group.

• C.The Group has not yet evaluated the overall effect of the IFRS 9 adoption. However, the Group considers there is no significant effect based on preliminary evaluation.

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(3) IFRSs issued by IASB but not yet endorsed by the FSC

A.The following are the assessment of new standards, interpretations and amendments issued by IASB but not yet endorsed by the FSC (application of the new standards and amendments should follow the regulations of the FSC):

New standards, Interpretations and Amendments	Major Amendments	IASB Effective Date
Limited exemption from comparative IFRS 7 disclosures for first-time adopters (amendment to IFRS 1)	The amendment provides first-time adopters of IFRSs with the same transition relief that existing IFRS preparer received in IFRS 7, ‘ Financial Instruments: Disclosures’ and exempts first-time adopters from providing the additional comparative disclosures.	July 1, 2010
Improvements to IFRSs 2010	Amendments to IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 34 and IFRIC 13.	January 1, 2011
IFRS 9 ‘Financial instruments: Classification and measurement of financial liabilities’	IFRS 9 requires gains and losses on financial liabilities designated at fair value through profit or loss to be split into the amount of change in the fair value that is attributable to changes in the credit risk of the liability, which shall be presented in other comprehensive income, and cannot be reclassified to profit or loss when derecognising the liabilities; and all other changes in fair value are recognised in profit or loss. The new guidance allows the recognition of the full amount of change in the fair value in the profit or loss only if there is reasonable evidence showing on initial recognition that the recognition of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch (inconsistency) in profit or loss. (That determination is made at initial recognition and is not reassessed subsequently.)	November 19,2013 (Not mandatory)
Disclosures - transfers of financial assets (amendment to IFRS 7)	The amendment enhances qualitative and quantitative disclosures for all transferred financial assets that are not derecognised and for any continuing involvement in a transferred assets, existing at the reporting date.	July, 1, 2011

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New standards, Interpretations and Amendments	Major Amendments	IASB Effective Date
Severe hyperinflation and removal of fixed dates for the first-time adopters (amendment to IFRS 1)	When an entity’s date of transition to IFRSs is on, or after, the functional currency normalisation date, the entity may elect to measure all assets and liabilities held before the functional currency normalisation date at fair value on the date of transition to IFRSs. First-time adopters are allowed to apply the derecognition requirements in IAS 39, ‘ Financial Instruments: Recognition and measurement’, prospectively from the date of transition to IFRSs, and they are allowed not to retrospectively recognise related gains on the date of transition to IFRSs.	July 1, 2011
Deferred tax: recovery of underlying assets (amendment to IAS 12)	The amendment gives a rebuttable presumption that the carrying amount of investment properties measured at fair value is recovered entirely by sale, unless there exists any evidence that could rebut this presumption. The amendment also replaces SIC 21, ‘Income taxes—recovery of revalued non-depreciable assets’.	January 1, 2012
IFRS 10 ‘Consolidated financial statements’	The standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where it is difficult to assess.	January 1, 2013
IFRS 11 ‘Joint arrangements’	Judgments applied when assessing the types of joint arrangements-joint operations and joint ventures, the entity should assess the contractual rights and obligations instead of the legal form only. The standard also prohibits the proportional consolidation for joint ventures.	January 1, 2013
IFRS 12 ‘Disclosure of interests in other entities’	The standard requires the disclosure of interests in other entities including subsidiaries, joint arrangements, associates and unconsolidated structured entities.	January 1, 2013
IAS 27, ‘Separate financial statements’ (as amended in 2011)	The standard removes the requirements of consolidated financial statements from IAS 27 and those requirements are addressed in IFRS 10,‘Consolidated financial statements’.	January 1, 2013
IAS 28,‘Investments in associates and joint ventures’ (as amended in 2011)	As consequential amendments resulting from the issuance of IFRS 11 , ‘Joint arrangements’, IAS 28 (revised) sets out the requirements for the application of the equity method when accounting for investments in joint ventures.	January 1, 2013

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New standards, Interpretations and Amendments	Major content	Effective date
IFRS 13,‘ Fair Value Measurement’	IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs.	January 1, 2013
IAS 19 revised, ‘Employee benefits’ (as amended in 2011)	The revised standard eliminates corridor approach and requires actuarial gains and losses to be recognised immediately in other comprehensive income. Past-service costs will be recognised immediately in the period incurred. Net interest expense or income, calculated by applying the discount rate to the net defined benefit asset or liability, replace the finance charge and expected return on plan assets. The return of plan assets, excluding net interest expenses, is recognised in other comprehensive income.	January 1, 2013
Presentation of items of other comprehensive income (amendment to IAS 1)	The amendment requires profit or loss and other comprehensive income (OCI) to be presented separately in the statement of comprehensive income. Also, the amendment requires entities to separate items presented in OCI into two groups based on whether or not they may be recycled to profit or loss subsequently.	July 1, 2012
IFRIC 20, ‘ Stripping costs in the production phase of a surface mine’	Stripping costs that meet certain criteria should be recognised as the ‘stripping activity asset’. To the extent that the benefit fromthe stripping activity is realised in the formof inventory produced, the entity shall account for the costs of that stripping activity in accordance with IAS 2, ‘Inventories’.	January 1, 2013
Disclosures—Offsetting financial assets and financial liabilities (amendments to IFRS 7)	The amendment requires disclosures to include quantitative information that will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements.	January 1, 2013
Offsetting Financial assets and financial liabilities (amendment to IAS 32)	The amendments clarify the requirements for offsetting financial instruments on the statement of financial position: (i) the meaning of 'currently has a legally enforceable right to set off the recognised amounts'; and (ii) that some gross settlement mechanisms with certain features may be considered equivalent to net settlement.	January 1, 2014

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New standards, Interpretations and Amendments	Major Amendments	IASB Effective Date
Government loans (amendment to IFRS 1)	The amendment provides exception to first- time adopters to apply the requirements in IFRS 9, ‘Financial instruments’, and IAS 20, ‘ Accounting for government grants and disclosure of government assistance’, prospectively to government loans that exist at the date of transition to IFRSs; and first-time adopters should not recognise the corresponding benefit of the government loan at a below-market rate of interest as a governmentgrant.	January 1, 2013
Improvements to IFRSs 2009-2011	Amendments to IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34.	January 1, 2013
Consolidated financial statements, joint arrangements and disclosure of interests in other entities: Transition guidance (amendments to IFRS 10, IFRS 11 and IFRS 12)	The amendment clarifies that the date of initial application is the first day of the annual period in which IFRS 10, 11 and 12 is adopted.	Janaury 1, 2013
Investment entities (amendments to IFRS 10, IFRS 12 and IAS 27)	The amendments define ‘Investment Entities’ and their characteristics. The parent company that meets the definition of investment entities should measure its subsidiaries using fair value through profit of loss instead of consolidating them.	January 1, 2014
IFRIC 21, ‘Levies’	The interpretation addresses the accounting for levies imposed by governments in accordance with legislation (other than income tax). A liability to pay a levy shall be recognised in accordance with IAS 37,‘Provisions, contingent liabilities and contingent assets’.	January 1, 2014
Recoverable amount disclosures for non-financial assets (amendments to IAS 36)	The amendments remove the requirement to disclose recoverable amount when a cash generating unit (CGU) contains goodwill or intangible assets with indefinite useful lives that were not impaired.	January 1, 2014
Novation of derivatives and continuation of hedge accounting (amendments to IAS 39)	The amendment states that the novation of a hedging instrument would not be considered an expiration or termination giving rise to the discontinuation of hedge accounting when the hedging instrument that is being novated complies with specified criteria.	January 1, 2014

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New standards, Interpretations and Amendments	Major Amendments	IASB Effective Date
IFRS 9 "Financial assets: hedge accounting" and amendments to IFRS9, IFRS7 and IAS39	1. IFRS 9 relaxes the requirements for hedged items and hedging instruments and removes the bright line of effectiveness to better align hedge accounting with the risk management activities of an entity. 2. An entity can elect to early adopt the requirement to recognise the changes in fair value attributable to changes in an entity's own credit risk from financial liabilities that are designated under the fair value option in ‘other comprehensive income’.	November 19, 2013 (Not mandatory)
Services related contributions from employees or third-party (amendments to IAS 19)	The amendment allows contributions from employees or third parties that are linked to service, and do not vary with the length of employee service, to be deducted from the cost of benefits earned in the period that the service is provided. Contributions that are linked to service, and vary according to the length of employee service, must be spread over the service period using the same attribution method that is applied to the benefits.	July 1, 2014
Improvements to IFRSs 2010-2012	Amendments to IFRS 2, IFRS 3, IFRS 8, IFRS 13,IAS 16,IAS 24 and IAS 38.	July 1, 2014
Improvements to IFRSs 2011-2013	Amendments to IFRS 1, IFRS 3, IFRS 13 and IAS 40.	July 1, 2014

The Group is assessing the potential impact of the new standards, interpretations and amendments above and has not yet been able to reliably estimate their impact on the consolidated financial statements.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

• A.These consolidated financial statements are the first year-end consolidated financial statements prepared by the Group in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

• B.In the preparation of the balance sheet as of January 1, 2012 (the Group’s date of transition to IFRSs) (“the opening IFRS balance sheet”), the Group has adjusted the amounts that were

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reported in the consolidated financial statements in accordance with previous R.O.C. GAAP. Please refer to Note 15 for the impact of transitioning from R.O.C. GAAP to IFRSs on the Group’s financial position, financial performance and cash flows.

(2) Basis of preparation

• A.Except for the following items, these consolidated financial statements have been prepared under the historical cost convention:

• a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

• b) Defined benefit liabilities recognised based on the net amount of pension fund assets plus unrecognised past service cost and unrecognised actuarial losses, and less unrecognised actuarial gains and present value of defined benefit obligation.

• B.The preparation of financial statements in compliance with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

• A.Basis for preparation of consolidated financial statements:

• a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies. In general, control is presumed to exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. The existence and effect of potential voting rights that are currently exercisable or convertible have been considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

• b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

• d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.

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• e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss, on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

(Blank below)

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B.Subsidiaries included in the consolidated financial statements:

Name of Investor	Name ofSubsidiaries	Main Business Activities		Ownership (%)		Note
			December31,2013	December31,2012	January1,2012
Altek Corporation " " " Altek International Investment Co., Ltd. " " " " " " " Leading Tech. Co., Ltd. Toptek Investment Cayman Co., Ltd.	Altek International Investment Co., Ltd. Altek Japan Corporation Altek Investment Co., Ltd. Altek Autotronics Corporation Altek Lab Inc. Leading Tech. Co., Ltd. Toptek Investment Cayman Co., Ltd. Altek Imaging Technology (Cayman) Co., Ltd. Altek Optical (Cayman) Co., Ltd. Altek Trading (Cayman) Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek Optical Technology (Cayman) Co., Ltd. Altek (Kunshan) Co., ltd. Altek EMS (Kunshan) Co., Ltd.	Investments and general business operations Sales and design of digital camera and its optical instruments Investments Research design, manufacture and sales of car electronic components Design and sales of engineering and optical components Investments and general business operations " " Investments and general business operations " " " Manufacture and sales of digital still camera and its accessories SMT processing and related engineering services	100% 100% 100% 97.96% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	100% 100% 100% 96.29% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	Note 1

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Name of Investor	Name of Subsidiaries	Main Business Activities		Ownership (%)		Note
			December 31,2013	December 31,2012	January1,2012
Altek Imaging Technology (Cayman) Co., Ltd. " Altek Trading (Cayman) Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek Trading (Shanghai) Limited Altek Optical Technology (Cayman) Co., Ltd.	Altek Imaging Technology (Shanghai) Limited Altek Precision (Kunshan) Co., Ltd. Altek Trading (Shanghai) Limited Altek Semiconductor Corporation Beijing Altek Image Communication Technology Co., Ltd. Altek Optical Technology (Kunshan) Co., Ltd.	Manufacture and sales of optical components Design, manufacture and sales of digital camera parts Wholesale, import and export of digital cameras, digital video cameras and their associated accessories Research design and sales of ASIC Sales of digital camera, handheld device and their related accessories Manufacture and sales of digital camera and its accessories and optical components	100% 100% 100% 100% 100% 100%	100% 100% 100% 100% 100% 100%	100% 100% 100% 100% 100% 100%

Note 1: The non-controlling interest was acquired through employees’s subscriptions of Altek Autotronics Corporation.

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• C.Subsidiaries not included in the consolidated financial statements: None.

• D.Adjustments for subsidiaries with different balance sheet dates: None.

• E.Nature and extent of the restrictions on fund remittance from subsidiaries to the parent company: None.

(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan dollars, which is the Company’s functional and the Group’s presentation currency.

• A.Foreign currency transactions and balances

• a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

• b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

• c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss as part of the fair value gain or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

• d) All foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within ‘other gains and losses’.

• B.Translation of foreign operations

• a) The operating results and financial position of all the group entities, affiliate companies and jointly controlled entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  • i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

  • ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

  • iii. All resulting exchange differences are recognised in other comprehensive income.

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• b) When a foreign operation is partially disposed of or sold to the affiliate companies and jointly controlled entities, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. However even if the Group still retains partial interest in the former foreign subsidiary, associate or jointly controlled entity after losing control of the former foreign subsidiary, losing significant influence over the former foreign associate, or losing joint control of the former jointly controlled entity, such transactions should be accounted for as disposal of all interest in these foreign operations.

• c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even if the Group still retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.

• d) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

(5) Classification of current and non-current items

• A.Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

• a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

• b) Assets held mainly for trading purposes;

• c) Assets that are expected to be realised within twelve months from the balance sheet date;

• d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

• B.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

• a) Liabilities that are expected to be paid off within the normal operating cycle;

• b) Liabilities arising mainly from trading activities;

• c) Liabilities that are to be paid off within twelve months from the balance sheet date;

• d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(6) Financial assets at fair value through profit or loss

• A.Financial assets at fair value through profit or loss are financial assets held for trading or financial

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assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:

  - a) Hybrid contracts;

  - b) They eliminate or significantly reduce a measurement or recognition inconsistency; or

  - c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

• B.On a regular way purchase or sale basis, financial assets held for trading are recognised and derecognised using settlement date accounting.

• C.Financial assets at fair value through profit or loss are initially recognised at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognised in profit or loss.

• (7) Accounts receivable

• Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. However, for the short-term accounts receivable which bear no interest, the Group subsequently measures it at invoice amount, considering the discounting effects would not be significant.

• (8) Impairment of financial assets

• A.The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

• B.The criteria that the Group uses to determine whether there is objective evidence of an impairment loss is as follows:

  • a) Significant financial difficulty of the issuer or debtor;

  • b) A breach of contract, such as a default or delinquency in interest or principal payments;

  • c) The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granted the borrower a concession that a lender would not otherwise consider;

  • d) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

  • e) The disappearance of an active market for that financial asset because of financial difficulties;

  • f) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the

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decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;

• g) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; or

• h) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.

• C.When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made according to the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at current market return rate of similar financial asset, and is recognised in profit or loss. Impairment loss recognised for this category shall not be reversed subsequently. Impairment loss is recognised by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(9) Derecognition of financial assets

The Group derecognises a financial asset when one of the following conditions is met:

• A. The contractual rights to receive cash flows from the financial asset expire.

• B.The contractual rights to receive cash flows from the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.

• C.The Group neither retains nor transfers substantially all risks and rewards of ownership of the financial asset; however, it has not retained control of the financial asset.

• (10) Leases (lessor)

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

• (11) Inventories

• Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The cost of finished goods and work-in-process comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item-by-item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(12) Investments accounted for using equity method / associates

• A.Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.

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• B.The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

• C.When changes in an associate’s equity that are not recognised in profit or loss or other comprehensive income of the associate and such changes not affecting the Group’s ownership percentage of the associate, the Group recognises the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.

• D.Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• E.In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

• F.Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss.

• G.When the Group disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it still retains significant influence over this associate, then the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

• H.When the Group disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it still retains significant influence over this associate, then the amounts previously recognised as capital surplus in relation to the associate are transferred to

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profit or loss proportionately.

(13) Property, plant and equipment

• A.Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

• B.Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C.Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives.

• D The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change.

The estimated useful lives of property, plant and equipment are as follows:

Buildings 3 years ~ 40 years Machinery 3 years ~ 10 years Test equipment 1 year ~ 10 years Other equipment 1 year ~ 11 years

(14) Intangible assets

• Intangible assets consist of software costs and are amortised on a straight-line basis over its estimated useful life of 2 to 3 years.

(15) Impairment of non-financial assets

• The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist, the impairment loss shall be reversed to the extent of the loss previously recognised in profit or loss. However, impairment loss of goodwill previously recognised in profit or loss shall not be reversed in the following years.

(16) Borrowings

• A.Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the

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borrowings using the effective interest method.

• B.Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(17) Notes and accounts payable

Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at the initial invoice amount as effect of the discounting is immaterial.

• (18) Provisions

Provisions (including warranties and decommissioning liabilities) are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

(19) Employee benefits

• A.Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service.

• B.Pensions

• a) Defined contribution plans

  • For defined contribution plans, the contributions are recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

• b) Defined benefit plans

  • i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit

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obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past service costs. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.

• ii. Actuarial gains and losses arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise.

• iii. Past service costs are recognised immediately in profit or loss if vested immediately; if not, the past service costs are amortised on a straight-line basis over the vesting period.

• C.Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognises termination benefits when it is demonstrably committed to a termination, when it has a detailed formal plan to terminate the employment of current employees and when it can no longer withdraw the plan. In the case of an offer made by the Group to encourage voluntary termination of employment, the termination benefits are recognised as expenses only when it is probable that the employees are expected to accept the offer and the number of the employees taking the offer can be reliably estimated. Benefits falling due more than 12 months after balance sheet date are discounted to their present value.

• D.Employees’ bonus and directors’ and supervisors’ remuneration

  • Employees’ bonus and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. However, if the accrued amounts for employees’ bonus and directors’ and supervisors’ remuneration are different from the actual distributed amounts as resolved by the stockholders at their stockholders’ meeting subsequently, the differences should be recognised based on the accounting for changes in estimates. The Group calculates the number of shares of employees’ stock bonus based on the fair value per share at the previous day of the stockholders’ meeting held in the year following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends.

• (20) Employee share based payment

• For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair

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value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. And ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

• (21) Income tax

• A.The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

• B.The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C.Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

• D.Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.

• E.Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are

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levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

• F.A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from related tax relief under Income Tax Act to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.

• (22) Share capital

• A.Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

• B.When the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. When such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

• (23) Dividends

• Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares the effective date of new shares issuance.

• (24) Revenue recognition

• A.Sales of goods

  • a) The Group manufactures and sells digital image technology application products. Revenue is measured at the fair value of the consideration received or receivable taking into account value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

  • b) The Group offers customers volume discounts and right of return for defective products. The Group estimates such discounts and returns based on historical experience. Provisions for such liabilities are recorded when the sales are recognised. The volume discounts are estimated based on the anticipated annual sales quantities.

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B.Sales of services

  - The Group provides technology services. Revenue from delivering services is recognised under the percentage-of-completion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the percentage of the actual services performed as of the financial reporting date to the total services to be performed. If the outcome of a service contract cannot be estimated reliably, contract revenue should be recognised only to the extent that contract costs incurred are likely to be recoverable.

• C.A sale agreement comprising of multiple components

  • A sale agreement offered by the Group might comprise of multiple components, including sale of goods and subsequent repair services, etc. If a sale agreement comprises of multiple identifiable components, the fair value of the consideration received or receivable in respect of the sale agreement shall be allocated between those components based on the relative fair value of each component. The amount of proceeds allocated to each component is recognised as revenue in profit or loss following the revenue recognition criteria applied to each component. The fair value of each component is determined by its market value when it is sold separately.

• (25) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICALACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Judgements and estimates are continually evaluated and adjusted based on historical experience and other factors. The information is addressed below:

• (1) Critical judgements in applying the Group’s accounting policies: None.

• (2) Critical accounting estimates and assumptions:

• The Group makes estimates and assumptions based on the expectation of future events that are believed to be reasonable under the circumstances at the end of the reporting period. The resulting accounting estimates might be different from the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

• A.Revenue recognition

  • In principle, sales revenues are recognised when the earning process is completed. The Group estimates discounts and returns based on historical results and other known factors. Provisions for such liabilities are recorded as a deduction item to sales revenues when the sales are recognised. The Group reassesses the reasonableness of estimates of discounts and returns

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periodically.

• B.Impairment assessment of tangible and intangible assets (excluding goodwill) The Group assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilised and industry characteristics. Any changes of economic circumstances or estimates due to the change of Group strategy might cause material impairment on assets in the future.

• C.Impairment assessment of investments accounted for using the equity method The Group assesses the impairment of an investment accounted for under the equity method as soon as there any indication that it might have been impaired and its carrying amount cannot be recoverable. The Group assesses the recoverable amounts of an investment accounted for under the equity method based on the present value of expected cash dividends receivable from the investee and expected future cash flows from the disposal of the investee, and analyzes the reasonableness of related assumptions.

• D.Realisability of deferred income tax assets

• Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred income tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. Any variations in global economic environment, industry environment, and laws and regulations might cause material adjustments to deferred income tax assets.

• As of December 31, 2013, the Group recognised deferred income tax assets amounting to $298,633.

• E.Evaluation of inventories

• As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory comsumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

• As of December 31, 2013, the carrying amount of inventories was $1,342,629.

• F.Calculation of accrued pension obligations

• When calculating the present value of defined pension obligations, the Group must apply judgements and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and expected rate of return on plan assets. Any changes in these assumptions could significantly impact the carrying amount of defined pension obligations.

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As of December 31, 2013, the carrying amount of accrued pension obligations was $19,200.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash

Cash
Cash on hand Checking accounts and demand deposits Time deposits	December 31,2013 1,436 $ 142,138 4,475,838 4,619,412 $	December 31,2012 1,007 $ 302,325 4,395,468 4,698,800 $	January1,2012
			948 $ 400,741 5,902,157
			6,303,846 $

• A.The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. The Group’s maximum exposure to credit risk at balance sheet date is the carrying amount of all cash and cash equivalents.

• B.The Group has no cash and cash equivalents pledged to others.

(2) Financial assets at fair value through profit or loss

Items Current items: Financial assets held for trading Valuation adjustment Total	December 31,2013 427,458 $ 14,709 442,167 $	December 31,2012 423,073 $ 5,209 428,282 $	January1,2012 497,634 $ 18 497,652 $

The Group recognised net gain of $11,003 and $6,462 on financial assets held for trading for the years ended December 31, 2013 and 2012, respectively.

• (3) Financial assets measured at cost

Financial assets measured at cost
Items	December	31,2013	December	31,2012		January1,2012
Non-current items:
Unlisted stocks	$	245,260	$	300,736	$	300,957
Less: Accumulated impairment	(	89,152)	(	64,783)	(	64,783)
Total	$	156,108	$	235,953	$	236,174

A.As the Group’s investment in unlisted stocks are not traded in an active market, and no sufficient industry information of companies similar to these stocks financial information can be obtained, the fair value of the investment in unlisted stocks cannot be measured reliably. The Group classified those stocks as ‘financial assets measured at cost’.

• B.As of December 31, 2013, December 31, 2012 and January 1, 2012, no financial assets measured at cost held by the Group were pledged to others.

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(4) Accounts receivable

Accounts receivable
	December 31,2013	December 31,2012		January1,2012
Accounts receivable, net	2,319,220 $	2,883,695 $	$	3,415,357
A.The credit quality of accounts receivable that were		neither past due nor impaired was in the
following categories based	on the Group’s Credit Quality Control Policy:
	December 31,2013	December 31,2012		January1,2012
Group 1	2,285,513 $	2,856,464 $	$	2,997,130
Group 2	8,536	14,440		283,831
	2,294,049 $	2,870,904 $	$	3,280,961

Note:

Group 1: Including domestic and foreign listed companies and their affiliated companies. Group 2: Others.

B.The ageing analysis of accounts receivable that were past due but not impaired is as follows:

Up to 30 days 31 to 90 days 91 to 180 days Over 181 days	December 31,2013 24,988 $ 119 64 - 25,171 $	December 31,2012 10,382 $ 1,052 289 1,068 12,791 $	January1,2012
			126,559 $ 2,546 3,394 1,897
			134,396 $

• C.Movements on the Group’s provision for impairment of accounts receivable are as follows:

Individualprovision At January 1 / December 31 652,675 $ Individualprovision At January 1 635,614 $ Provision for impairment 17,061 At December 31 652,675 $		2013
		Group provision - $ 2012	Total 652,675 $
		Group provision - $ - - $	Total 635,614 $ 17,061 652,675 $

Note: Impaired financial assets refer to the amount the Company estimates that the probability of collecting receivables is remote due to the counterparty, Kodak US, has filed for bankruptcy protection. Thus, the Company recognises the full amount as related impairment.

• D.The maximum exposure to credit risk at December 31, 2013, December 31, 2012 and January 1, 2012 was the carrying amount of each class of accounts receivable.

• E.The Group does not hold any collateral as security.

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(5) Inventories

nventories
Raw materials Work-in-process Finished goods Total Raw materials Work-in-process Finished goods Total Raw materials Work-in-process Finished goods Total			December 31,2013
		Cost 630,832 $ 185,181 672,496 1,488,509 $	Allowance for valuation loss 94,354) ($ 30,012) ( 21,514) ( 145,880) ($ December 31,2012	Book value 536,478 $ 155,169 650,982 1,342,629 $
		Cost 753,204 $ 333,103 838,484 1,924,791 $		Book value 612,812 $ 306,142 796,367 1,715,321 $
		Cost 1,180,729 $ 528,597 660,812 2,370,138 $		Book value 1,005,515 $ 445,046 597,316 2,047,877 $

The cost of inventories recognised as expense for the years ended December 31, 2013 and 2012 was $18,006,989 and $22,808,808, respectively, including the amounts of ($16,503) and ($24,082), respectively, that the Group wrote down from cost to net realizable value accounted for as ‘cost of goods sold’ or that the Group reversed from a previous inventory write-down and accounted for as reduction of ‘cost of goods sold’.

(6) Investments accounted for under the equity method

	December	31,2013	December	31,2012		January1,2012
JinJing Optical Technology Co., Ltd.	$	59,418	$	54,332	$	57,295
Phoenix Optical (Shanghai) Co., Ltd.		293,823		320,674		383,403
		353,241		375,006		440,698
Less:accumulated impairment loss	(	23,587)	(	23,587)	(	23,587)
	$	329,654	$	351,419	$	417,111

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• The financial information of the Group’s principal associates is summarised below:

December 31, 2013 December 31, 2012 January 1, 2012	Assets 1,372,933 $ 1,474,010 $ 1,839,269 $	Liabilities 391,595 $ 451,496 $ 643,640 $	Revenue Profit/(Loss) 1,167,607 $ 98,396) ($ 1,587,918 $ 94,435) ($	% interest held
				note note note

Note: The shareholding ratio to the JinJing Optical Technology Co., Ltd. and Phoenix Optical (Shanghai) Co., Ltd. was 23.33% and 40%, respectively.

(Blank below)

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(7) Property, plant and equipment

At January 1, 2013 Cost Accumulated depreciation and impairment 2013 Opening net book amount Additions Disposals Reclassifications Depreciation charge Net exchange differences Closing net book amount At December 31, 2013 Cost Accumulated depreciation and impairment	Land Buildings 1,042,216 $ 3,441,708 $ - 280,986) ( 1,042,216 $ 3,160,722 $ 1,042,216 $ 3,160,722 $ - 55,985 - - - 13,326 - 91,144) ( - 113,692 1,042,216 $ 3,252,581 $ 1,042,216 $ 3,637,511 $ - 384,930) ( 1,042,216 $ 3,252,581 $	Machinery	Test equipment
		1,727,766 $ 1,053,271) ( 674,495 $ 674,495 $ 449,655 62,658) ( 88,736 122,171) ( 46,365 1,074,422 $ 2,297,655 $ 1,223,233) ( 1,074,422 $	193,969 $ 118,059) ( 75,910 $ 75,910 $ 15,087 277 1,145 27,560) ( 2,668 67,527 $ 211,774 $ 144,247) ( 67,527 $

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At January 1, 2012 Cost Accumulated depreciation and impairment 2012 Opening net book amount Additions Disposals Reclassifications Depreciation charge Net exchange differences Closing net book amount At December 31, 2012 Cost Accumulated depreciation and impairment	Land Buildings 1,042,216 $ 3,487,894 $ - 199,025) ( 1,042,216 $ 3,288,869 $ 1,042,216 $ 3,288,869 $ - 35,292 - - - 3,650 - 88,830) ( - 78,259) ( 1,042,216 $ 3,160,722 $ 1,042,216 $ 3,441,708 $ - 280,986) ( 1,042,216 $ 3,160,722 $	Machinery	Test equipment
		1,506,120 $ 1,004,668) ( 501,452 $ 501,452 $ 149,231 1,336) ( 125,991 78,846) ( 21,997) ( 674,495 $ 1,727,766 $ 1,053,271) ( 674,495 $	172,683 $ 99,925) ( 72,758 $ 72,758 $ 31,868 1,101) ( 2,378 28,474) ( 1,519) ( 75,910 $ 193,969 $ 118,059) ( 75,910 $

For the years ended December 31, 2013 and 2012, there was no capitalisation of borrowing interests attributable to the property, plant and equipment and the Group did not pledge it as collateral.

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(8) Intangible assets

					2013		2012
	At January 1
	Cost			$	100,428	$	146,495
	Accumulated amortisation and impairment			(	27,349)	(		61,660)
				$	73,079	$		84,835
	Years ended December 31
	Opening net book amount			$	73,079	$	84,835
	Additions				50,229			3,650
	Reclassifications				92			159
	Amortisation charge			(	15,437)	(		12,662)
	Net exchange differences				2,450	(		2,903)
	Closing net book amount			$	110,413	$		73,079
	At December 31
	Cost			$	141,213	$	100,428
	Accumulated amortisation and impairment			(	30,800)	(		27,349)
				$	110,413	$		73,079
	The Group has no intangible assets pledged to others.
	Long-term prepaid rents ( shown as‘Other non-current			assets’)
		December	31,2013	December 31,2012			January1,	2012
	Land-use right	$	39,700	$	38,457	$		40,967

(9) Long-term prepaid rents ( shown as ‘Other non-current assets’)

The Group recognized amortization expenses for the years ended December 31, 2013 and 2012 amounting to $971 and $949, respectively.

(10)Short-term borrowings

Type of borrowings December 31, 2013 Interest rate range Collateral Bank borrowings Unsecured borrowings $ 1,000,000 1.17%~1.32% None

The Group had no short-term borrowings during the following periods: December 31, 2012, and January 1, 2012.

(11)Pensions

A.

a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly

~37~

salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

b) The amounts recognised in the balance sheet are determined as follows:

	December 31,2013	December 31,2013	December 31,2012	December 31,2012	December 31,2012		January1,	2012
Present value of funded obligations	$	58,795	$		65,167	$		61,904
Fair value of plan assets	(	46,571)	(		45,967)	(		45,554)
Subtotal		12,224			19,200			16,350
Adjustment for the next
period		6,976			625			-
Net liabilitity in the balance sheet	$	19,200		$	19,825	$		16,350
Changes in present value of	funded obligations are			as	follows:
					2013		2012
Present value of funded obligations
At January 1			$		65,167		$	61,904
Current service cost					72			89
Interest expense					978			1,083
Actuarial profit and loss			(		7,422)			2,091
At December 31			$		58,795	$		65,167
Changes in fair value of plan assets are as follows:
					2013		2012
Fair value of plan assets
At January 1			$		45,967		$	45,554
Expected return on plan assets					690			797
Actuarial profit and loss			(		100)	(		393)
Employer contributions					14			9
At December 31			$		46,571	$		45,967
Amounts of expenses recognised in statements of			comprehensive income are as follws:
					2013		2012
Current service cost			$		72	$		89
Interest cost					978			1,083
Expected return on plan assets			(		690)	(		797)
Current pension costs			$		360		$	375

c) Changes in present value of funded obligations are as follows:

d) Changes in fair value of plan assets are as follows:

e) Amounts of expenses recognised in statements of comprehensive income are as follws:

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Details of cost and expenses recognised in statements of comprehensive income are as follows:

			2013		2012
Cost of sales	($		15)	$		27
Selling expenses	(		45)			60
General and administrative expenses	(		60)			102
Research and development expenses	(		490)			811
Adjustment from the previous period			625			-
Adjustment for the next period			345	(		625)
		$	360	$		375
Amounts recognised under other comprehensive	income		are as follows:
			2013		2012
Recognition for current period	$		-	($		2,484)
Accumulated amount	($		2,484)	($		2,484)

• f) Amounts recognised under other comprehensive income are as follows:

• g) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitisation products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. The constitution of fair value of plan assets as of December 31, 2013 and 2012 is given in the Annual Labor Retirement Fund Utilisation Report published by the government. Expected return on plan assets was a projection of overall return for the obligations period, which was estimated based on historical returns and by reference to the status of Labor Retirement Fund utilisation by the Labor Pension Fund Supervisory Committee and taking into account the effect that the Fund’s minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks.

For the years ended December 31, 2013 and 2012, the Company’s actual return on plan assets was $590 and $404, respectively.

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h) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases Expected return on plan assets	2013 2.00% 3.00% 2.00%	2012 1.50% 3.00% 1.50%	2011
			1.75%
			3.00%
			1.75%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in Taiwan.

Note : Age range as the assessment of segment.

• i) Historical information of experience adjustments was as follows:

accordance with published statistics and experience in Taiwan. Note : Age range as the assessment of segment. Historical information of experience adjustments was as follows:
2013 Present value of defined benefit obligation 58,795) ($ Fair value of plan assets 46,571 Surplus/(deficit) in the plan 12,224) ($ Experience adjustments on plan liabilities 3,419) ($ Experience adjustments on plan assets 100) ($	2012
	65,167) ($ 45,967 19,200) ($ 645) ($ 393) ($

• j) Expected contributions to the defined benefit pension plans of the Group within one year from December 31, 2013 amounts to $12.

B.

• a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. For the years ended December 31, 2013 and 2012, the Group had recognized pension costs of $35,677 and $40,334, respectively, under the above pension scheme.

• b) The subsidiaries provided defined contribution plans for its employees. Pursuant to local regulations, such employees and the subsidiaries each make contributions based on a certain percentage based of the salaries and wages to the pension funds. The subsidiaries had recognised pension costs of $57,718 and $72,559 for the years ended December 31, 2013 and 2012, respectively.

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(12) Share-based payment

• A.As of December 31, 2013 and 2012, the Company’s share-based payment arrangements were as follows:

follows:
Type ofarrangement	Grant date	Quantity granted	Contract period	Vesting conditions
Employee stock options " " " " Treasury stock transferred to employees at the sixth time Treasury stock transferred to employees at the seventh time Treasury stock transferred to employees at the eighth time	June 13, 2008 October 31, 2008 March 23, 2009 October 28, 2011 March 21, 2012 December 28, 2012 March 15, 2013 April 9, 2013	8,000 1,000 3,000 3,000 3,000 986 2,196 1,818	9.6 years 9.2 years 8.8 years 9.2 years 8.9 years - - -	Note Note Note Note Note Vested immediately Vested immediately Vested immediately

Note: 2 years’ service vest 40%, 3 years’ service vest 70%, 4 years’ service vest 100%.

B.Details of the share-based payment arrangements are as follows:

Options outstanding at beginning of the period Options granted Options forfeited Options exercised Options outstanding at end of the period Options exercisable at end of the period Approved and not yet issued options at the end of the period	For the year ended December 31,2013	For the year ended December 31,2013	For the year ended December 31,2012	For the year ended December 31,2012
	No. of options	Weighted-average exercise price (in dollars)	No. of options	Weighted-average exercise price (in dollars)
	16,008 - 300) ( - 15,708 11,148 -	24.00 $ - - - 22.60 22.00	13,788 3,000 200) ( 580) ( 16,008 9,344 -	25.80 $ 25.40 - 23.71 24.00 23.50

• C.The weighted-average stock price of stock options at exercise dates for the years ended December 31, 2013 and 2012 was $18.72 and $20.47(in dollars), respectively.

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• D.The expiry date and exercise price of stock options outstanding at balance sheet date are as follows:

follows:
Issue date approved	Expirydate	December	31,2013	December	31,2012	January	1,2012
		No. of shares (in thousands) 8,000 1,000 3,000 3,000 3,000	Exercise price (in dollars) $ 23.20 19.40 18.30 24.10 23.90	No. of shares (in thousands) 8,000 1,000 3,000 3,000 3,000	Exercise price (in dollars) $ 24.60 20.60 19.40 25.60 25.40	No. of shares (in thousands) 8,000 1,000 3,000 3,000 -	Exercise price (in dollars) $ 26.90 22.60 21.20 28.00 -
June 13, 2008 October 31, 2008 March 23, 2009 October 28, 2011 March 21, 2012	December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2020 December 31, 2020

• E.The fair value of stock options granted after January 1, 2008 is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Type of arrangement	Grant date	Stock price	Exercise price (Note 1)	Expected price volatility	Expected option life	Expected dividends	Risk-free interest rate	Fair value per unit
Employee stock options " " " " Treasury stock transferred to employees at the sixth time Treasury stock transferred to employees at the seventh time Treasury stock transferred to employees at the eighth time	June 13, 2008 October 31, 2008 March 23, 2009 October 28, 2011 March 21, 2012 December 28, 2012 March 15, 2013 April 9,2013	$45.50 32.60 30.90 30.65 27.85 17.05 18.05 17.75	$ 23.20 19.40 18.30 24.10 23.90 17.23 17.23 17.23	24.45% 22.11% 22.63% 30.27% 33.54% - - -	6 years 6 years 6 years 5 years 4.9 years - - -	1.5% 1.5% 1.5% 1.4% 1.4% - - -	2.40% 1.88% 0.96% 1.18% 1.08% - - -	10.56 6.54 5.73 7.42 7.35 Note 2 Note 2 Note 2

• Note 1: The exercise price of stock options was adjusted based on the cash dividends and stock dividends per share distributed.

• Note 2: Given that the exercise was close to the grant date, the fair value per unit was estimated using the intrinsic value method.

• F.Expenses incurred on share-based payment transactions are shown below:

Equity-settled Cash-settled Total		For the year ended December 31,2013		For the year ended December 31,2012
		17,233 $ - 17,233 $		21,717 $ - 21,717 $

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(13)Provisions

At January 1, 2013 Additional provisions Used during the period Exchange differences At December 31, 2013 Current Non-current	December 31,2013 155,014 $ 120,417 $	Warranty 294,991 $ 25,965 46,213) ( 688 275,431 $ December 31,2012 January1,2012 152,537 $ 181,057 $ 142,454 $ 105,751 $

The Group gives warranties on digital image technology application products sold. Provision for

warranty is estimated based on historical warranty data of digital image technology application products.

(14)Share capital

A.As of December 31, 2013, the Company’s authorized capital was $5,000,000, consisting of 500,000 thousand shares of ordinary stock (including 30,000 thousand shares reserved for stock options), and the paid-in capital was $3,902,653 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

Movements in the number of the Company’s ordinary shares outstanding are as follows:

At January 1 Employee stock options exercised (including treasury shares transferred to employees) Purchase of treasury shares At December 31		2013	2012	2012
		373,001 4,014 - 377,015	376,435 1,566 5,000) ( 373,001
				373,001

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B.Treasury shares

• a) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

Shares held by	Reason for reacquisition		Decmeber 31, 2013 (in thousands of shares)	Decmeber 31, 2013 (in thousands of shares)
			Number of shares 13,250	Book Value 440,573 $
Altek Corporation

December 31, 2012 (in thousands of shares) Number Shares held by Reason for reacquisition of shares Book Value Altek Corporation[To be reissued to employees] 23,100 $ 768,094

January 1, 2012

			January 1, 2012	January 1, 2012
Shares held by	Reason for reacquisition		(in thousands of shares)
			Number of shares 19,086	Book Value 714,702 $
Altek Corporation

• b) Pursuant to the R.O.C. Securities and Exchange Law, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital surplus.

• c) Pursuant to the R.O.C. Securities and Exchange Law, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued.

• d) Pursuant to the R.O.C. Securities and Exchange Law, treasury shares should be reissued to the employees within three years from the reacquisition date and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

• e) The cancellation of treasury shares was approved by the Board of Directors’ resolution on August 5, 2013, amounting to $194,047 consisting of 5,836 thousand shares. The capital reduction date is on September 2, 2013, and the registration for cancellation of treasury shares had been completed.

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(15)Capital surplus

Pursuant to the R.O.C. Company Law, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

At January 1, 2013 Employee stock options exercised Capital surplus used to issue cash to shareholders Cancellation of treasury shares Difference between acquisition of equity interest in a subsidiary and its carrying amount At December 31, 2013 At January 1, 2012 Employee stock options Changes in subsidiaries recognised under the equity method Treasury shares transferred to employees At December 31, 2012	Share premium	Treasury share transactions	Employee restricted shares	Difference between proceeds from disposal of subsidiary and bookvalue	Amount
	2,267,949 $ - 335,701) ( 28,469) ( - 1,903,779 $ Sharepremium	- $ - - - - - $ Treasury share transactions	109,495 $ 14,488 - 30) ( - 123,953 $ Employee restricted shares	- $ - - - 958 958 $ Difference between proceeds from disposal of subsidiary and book value	2,377,444 $ 14,488 335,701) ( 28,499) ( 958 2,028,690 $ Amount
	2,253,964 $ 12,461 1,524 - 2,267,949 $	6,841 $ - - 6,841) ( - $	93,810 $ 15,396 289 - 109,495 $	- $ - - - - $	2,354,615 $ 27,857 1,813 6,841) ( 2,377,444 $

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(16)Retained earnings

Retained earnings
		2013			2012
At January 1	$	4,912,768	$		5,211,554
Profit for the period	(	332,012)			280,103
Appropriation of earnings	(	37,300)	(		564,809)
Share-based payment transactions	(	61,564)	(		8,953)
Actuarial gain/loss on post employment benefit
obligations		-	(		2,484)
Changes in subsidiaries recognised under the
equity method		-	(		2,643)
Cancellation of treasury shares	(	107,188)			-
At December 31	$	4,374,704		$	4,912,768

• A. According to the Company’s Articles of Incorporation, the annual earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. Special reserve shall be set aside in accordance with the rules set forth in the Securities and Exchange Law, and remaining amount shall be distributed in the following order:

• (a) allocating 10% to 20% as employees’ bonus;

• (b)allocating 2% as directors’ and supervisors’ remuneration; and

• (c)distributing the remaining amount as common stockholders’ dividends in accordance with the resolution adopted by the Board of Directors and approved at the stockholders’ meeting.

• B. The amount of dividends appropriated is based on the Company’s current year’s net income and prior years’ retained earnings, taking into account the Company’s financial structure and future operating plans. The distribution ratio of cash dividends to stock dividends is based on the Company’s funding status, diluted earnings per share and other factors. According to the dividend policy adopted by the Board of Directors, cash dividends shall account for at least 20% of the total dividends distributed. Dividends appropriation shall be resolved by the stockholders at the stockholders’ meeting.

• C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve excess of 25% of the Company’s paid-in capital.

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D.

• a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

• b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.

• E. The appropriation of 2012 earnings had been resolved at the stockholders’ meeting on June 24, 2013 and the appropriation of 2011 earnings had been resolved at the stockholders’ meeting on June 13, 2012. Details are summarized below:

Legal reserve Special reserve Cash dividends	Dividends per share Dividends per share Amount (in NT dollars) Amount (in NT dollars) 28,011 $ - 19,184 $ - 196,811 - 488,347) ( - 37,300 Around $0.1 564,809 Around $1.5 262,122 $ 95,646 $ 2012 earnings 2011 earnings	2011 earnings	2011 earnings
	Amount 28,011 $ 196,811 37,300 262,122 $		Dividends per share (in NT dollars)
			- - Around $1.5

The appropriation of 2012 earnings was the same as that approved by the Board of Directors on March 18, 2013.

The 2012 directors’ and supervisors’ remuneration and employees’ cash bonus as appropriated during the stockholders’ meeting on June 24, 2013 were $1,106 and $8,292, respectively, and appropriated $335,701 (around $0.9 per share) of the additional paid-in capital to stockholders. The 2011 directors’ and supervisors’ remuneration and employees’ cash bonus as appropriated during the stockholders’ meeting on June 13, 2012 were $13,220 and $99,151, respectively.

• F. The estimated amounts of employees’ bonus were $0 and $8,292 and the estimated amounts of directors’ and supervisors’ remuneration were $0 and $1,106 for the years ended December 31, 2013 and 2012, respectively, and were recognised as operating costs and operating expenses. The estimation was based on the net operating income for the current period, legal reserve, and the percentage stated in the Company’s Articles of Incorporation. However, the Company has a net operating loss for the year ended December 31, 2013, so the Company did not make an estimation on employees’ bonus and directors’ and supervisors’ remuneration. Information on the appropriation of the Company’s earnings as resolved by the Board of Directors and approved by the stockholders will be posted in the “Market Observation Post System” at the

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website of the Taiwan Stock Exchange.

(17) Other equity items

(18) (19)	Other income Other gains and losses 2013 2012 At January 1 340,799) ($ - $ Currency translation differences: Group 351,349 326,980) ( Associates 17,354 13,819) ( At December 31 27,904 $ 340,799) ($ For the year ended For the year ended December 31,2013 December 31,2012 Rental revenue $ 20,555 $ 29,171 Dividend income 477 477 Interest income: Interest income from bank deposits 63,890 117,564 Others 101 97 Other income - others 835 7,600 Total $ 85,858 $ 154,909 For the year ended For the year ended December 31,2013 December 31,2012 Net gains on financial assets at fair value through profit or loss 11,003 $ 6,462 $ Net currency exchange gains 6,214 21,623 Loss (gain) on disposal of property, plant and equipment 30,462) ( 469 Impairment loss 24,369) ( - Other expenses (Note) 298,846) ( 184) ( Total 336,460) ($ 28,370 $	2012
		340,799) ($
		For the year ended December 31,2012
		$ 29,171 477 117,564 97 7,600
		$ 154,909
		For the year ended December 31,2012
		6,462 $ 21,623 469 - 184) (
		28,370 $

Note: The Company has reached a settlement on the patent litigation case with Kodak US. The litigation was resolved by both sides in December 2013, and the settlement expense recognised by the Company was $298,200.

(20) Finance costs

the Company was $298,200. Finance costs
Interest expense: Bank borrowings	For the year ended December 31,2013 10,972 $	For the year ended December 31,2012
		1,762 $

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(21) Expenses by nature

Expenses by nature
			For the year ended				For the year ended
		December 31,2013				December 31,2012
Employee expense	$		1,828,550	$			2,256,959
Depreciation charges on property,
plant and equipment			321,504				285,025
Amortisation charges on intangible
assets			16,408				13,611
Total	$		2,166,462		$		2,555,595
Employee expense
			For the year ended				For the year ended
		December 31,2013				December 31,2012
Wages and salaries	$		1,548,957	$			1,912,907
Employee stock options			17,233				21,717
Labor and health insurance fees			85,124				97,327
Pension costs			93,410				113,893
Other personnel expenses			83,826				111,115
Total	$		1,828,550		$		2,256,959
Income tax
A.Income tax (benefit) expense
a) Components of income tax (benefit) expense:
			For the year ended				For the year ended
			December31,2013				December31,2012
Current tax:
Current tax on profits for the period		$	17,599			$	99,074
Adjustments in respect of prior years	(		11,516)				20,885
Total current tax			6,083				119,959
Deferred tax:
Origination and reversal of temporary
differences	(		43,069)		(		70,702)
Total deferred tax	(		43,069)		(		70,702)
Income tax (benefit) expense	($		36,986)			$	49,257
b) The income tax charged / (credited) to equity during the period is					as		follows:
			For the year ended				For the year ended
			December 31,2013				December 31,2012
Translation differences of foreign
operations		$	75,517		($		69,802)

(22) Employee expense

(23) Income tax

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B.The relationship between tax (benefit) expense and accounting profit is shown below:

		For the year ended		For the year ended
		December31,2013		December31,2012
Tax on pretax income at statutory tax rate	$	18,092	$	133,654
Temporary differences	(	652)	(	9,491)
Estimated 10% corporate income tax on
unappropriated earnings		1,052		11,820
Changes in reassessment of deferred tax
assets	(	40,440)	(	72,513)
Adjustment of income tax expense in
prior years	(	11,516)		20,885
Tax effect of tax-exempt income	(	3,400)	(	5,100)
Increase in investment tax credit	(	903)	(	30,471)
Effect from alternative minimum tax		781		473
Income tax (benefit) expense	($	36,986)	$	49,257

C.Amounts of deferred tax assets or liabilities as a result of temporary difference, loss carryforward and investment tax credit are as follows:

For the year ended December 31, 2013

								Recognised	Recognised
									in other
				Recognised in			comprehensive
		January1			profit	or loss			income	December 31
Temporary differences:
-Deferred tax assets:
Cost of after-sales service and other		$	296,308	($		53,384)		$	-		$	242,924
estimated expenses
Currency translation differences			40,311			-	(		40,311)			-
Net operating loss carryforward			-			55,709			-			55,709
Investment tax credit			30,854	(		30,854)			-			-
Subtotal			367,473	(		28,529)	(		40,311)			298,633
-Deferred tax liabilities:
Gain on foreign investment under the
equity method	(		779,287)			67,648			-	(		711,639)
Currency translation differences			-			-	(		35,206)	(		35,206)
Others	(		3,950)			3,950			-			-
Subtotal	(		783,237)			71,598	(		35,206)	(		746,845)
Total	($		415,764)	$		43,069	($		75,517)	($		448,212)

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For the year ended December 31, 2012

							Recognised	Recognised
								in other
				Recognised in			comprehensive
		January1		profit or loss				income	December 31
Temporary differences:
-Deferred tax assets:
Cost of after-sales service and other		$	282,841		$	13,467	$	-		$	296,308
estimated expenses
Currency translation differences			-			-		40,311			40,311
Investment tax credit			90,026	(		59,172)		-			30,854
Subtotal			372,867	(		45,705)		40,311			367,473
-Deferred tax liabilities:
Gain on foreign investment under the
equity method	(		899,644)			120,357		-	(		779,287)
Currency translation differences	(		29,491)			-		29,491			-
Others			-	(		3,950)		-	(		3,950)
Subtotal	(		929,135)			116,407		29,491	(		783,237)
Total	($		556,268)	$		70,702	$	69,802	($		415,764)

D.According to Act for Industrial Innovation and Statute for Upgrading Industries (before its abolishment), details of the amount the Company is entitled as investment tax credit and unrecognised deferred tax assets are as follows:

December 31, 2013 ： None.

December 31, 2012

	December31,2012	December31,2012
Qualifyingitems Research and developments Qualifyingitems Research and developments Research and developments	Unrecognised Unused tax credits deferred tax assets 182,854 $ 152,000 $ January1,2012		Final year tax credits are due
			2013
	Unused taxcredits 59,060 $ 250,627	Unrecognised deferred taxassets - $ 219,661	Final year tax credits are due
			2012 2013

• E.Expiration dates of unused net operating loss carryfoward and amounts of unrecognised deferred tax assets are as follows:

December 31, 2013

Year incurred 2013	Amount filed / assessed 55,709 $	Unused amount 55,709 $	Unrecognised deferred tax assets - $	Usable untilyear
				2022

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F.The amounts of deductible temporary difference that are not recognized as deferred tax assets are as follows:

are as follows:
December 31,2013	December 31,2012		January1,2012
Deductible temporary
differences - $	152,000 $	$	219,661
G.As of December 31, 2013, the Company’s income	tax returns through 2011		have been assessed
and approved by the Tax Authority.

• H.Unappropriated retained earnings:

		December31,	December31,	2013	2013	December31,2012			January1,2012	January1,2012
Earnings generated in and
after 1998	$		2,715,960			3,621,302 $		$		3,450,925
I.As of December 31, 2013,	December 31,			2012		and January 1, 2012,			the balance of the
imputation tax credit account was $221,518, $224,006 and $192,419,										respectively. The
creditable tax rate was estimated to			be 8.16%	for 2013 and was 7.03% for				2012.
(Losses) earnings per share
			Forthe			yearendedDecember31,	2013
					Weighted average number of
					ordinary shares outstanding				Losses per share
	Amount aftertax					(shareinthousands)				(indollars)
Basic losses per share
Losses attributable to ordinary
shareholders of the parent	($		332,012)			376,147		($		0.88)
			For the			year ended December 31,	2012
					Weighted average number of
					ordinary shares outstanding			Earnings per share
	Amount aftertax					(shareinthousands)				(indollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent	$		280,103			375,691		$		0.75
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent	$		280,103				-
Assumed conversion of all
dilutive potential ordinary
shares
Employees’ bonus				-		2,737
Profit attributable to ordinary
shareholders of the parent
plus assumed conversion of
all dilutive potential ordinary
shares	$		280,103			378,428		$		0.74

(24) (Losses) earnings per share

The employees' bonus for the year ended December 31, 2013 have an antidilution effect, thus we don't calculate diluted (loss) earnings per share.

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(25) Transactions with non-controlling interest

Acquisition of additional equity interest in a subsidiary

For the year ended December 31, 2013, the Group acquired an additional 1.67% shares of its － subsidiary Altek Autotronics Corporation for a total cash consideration of $4,072. This transaction resulted in a decrease in the non-controlling interest by $5,030 and an increase in the equity attributable to owners of the parent by $958. The effect of change in ownership interests in Altek Autotronics Corporation on the equity attributable to owners of the parent for the year ended December 31, 2013 are shown below:

			For the year ended
		December 31,2013
Carrying amount of non-controlling interest acquired	$		5,030
Consideration paid to non-controlling interest	(		4,072)
Capital surplus-difference between proceeds on acquisition of or disposal
of equity interest in a subsidiary and its carrying amount		$	958

(26) Operating leases

The Group acquired a Taipei building for operating use at the end of 2013. However, since this building is still under a certain unexpired lease agreement, the Company continuously leases the building to the lessee. Contingent rents of $31,855 and $37,307 were recognised for these leases in profit or loss and for the years ended December 31, 2013 and 2012, respectively. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:

2013 2014 2015	December 31,2013 - $ 29,825 14,912 44,737 $	December 31,2012
		33,447 $ 29,825 14,912
		78,184 $

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(27) Non-cash transactions

Investing activies partially paid by cash:

Acquisitions of property, plant, and equipment Add:property and equipment and construction billings payable at end of period Less: property and equipment and construction billings payable at end of period Cash paid	For the year ended December31,2013	For the year ended December31,2012 409,649 $ 151,403 83,597) ( 477,455 $	For the year ended December31,2012 409,649 $ 151,403 83,597) ( 477,455 $
	568,894 $ 83,597 8,848) ( 643,643 $
			477,455 $

7. RELATED PARTY TRANSACTIONS

(1) Significant transactions and balances with related parties:

No significant related party transactions.

(2) Key management compensation

No significant related party transactions. Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Share-based payments Total		For the year ended December 31,2013		For the year ended December 31,2012
		23,917 $ 540 2,783 27,240 $		31,013 $ 756 4,755 36,524 $

8. PLEDGED ASSETS

None.

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

(1) Contingencies

None.

(2) Commitments

For details on operating lease agreements, please refer to Note 6(26).

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

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12. OTHERS

(1) Capital risk management

• The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure. The Group may adjust the amount of dividends, return capital or issue new shares to achieve the optimal capital structure.

(2) Financial instruments

• A. Fair value information of financial instruments

• The carrying amounts of financial instruments (including cash and cash equivalents, notes receivable, accounts receivable, other receivables, refundable deposits (shown as non-current assets), short-term borrowings, notes payable, accounts payable, other payables, and guarantee deposits received (shown as non-current liabilities)) are approximate to their fair value. The fair value information of financial instruments measured at fair value is provided in Note 12(3).

• B.Financial risk management policies

• a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial position and financial performance.

• b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units, as well as provides written principles for overall risk management and policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

• C.Significant financial risks and degrees of financial risks a) Market risk

Foreign exchange risk

• i.The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

• ii.Management has set up a policy to require that group companies hedge their entire foreign exchange risk exposure with Group treasury. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.

• iii.The Group has certain investments in foreign operations, whose net assets are exposed to

~55~

foreign currency translation risk. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies.

• iv.The Group’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD; other certain subsidiaries’ functional currency: USD and RMB). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

December 31, 2013

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB Non-monetary items USD:NTD Financial liabilities Monetary items USD:NTD USD:RMB	Foreign Currency Amount (Inthousands)	Exchange Rate	Book Value	SensitivityAnalysis	SensitivityAnalysis	SensitivityAnalysis
			(NTD)	Extent of Variation	Effect on Profit or Loss	Effect on Other Comprehensive income
	USD 88,682 USD 86,167 USD 11,060 USD 112,262 USD 87,480	29.805 6.0970 29.805 29.805 6.0970	2,643,167 $ 2,568,207 329,654 $ 3,345,969 $ 2,607,341	1% 1% 1% 1% 1%	26,432 $ 25,682 3,297 $ 33,460 $ 26,073	- $ - - $ - $ -

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December 31, 2012

Book Value Sensitivity Analysis

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB Non-monetary items USD:NTD Financial liabilities Monetary items USD:NTD USD:RMB (Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB Non-monetary items USD:NTD Financial liabilities Monetary items USD:NTD USD:RMB		Foreign Currency Amount (In thousands)	Foreign Currency Amount (In thousands)	Exchange Rate		(NTD)	(NTD)	Extent of Variation	Extent of Variation	Effect on Profit or Loss	Effect on Other comprehensive income
		USD 151,968 USD 105,786 USD 12,101 USD 184,530 USD 114,342		29.040 6.2854 29.040 29.040 6.2854		4,413,151 $ 3,072,025 351,419 $ 5,358,751 $ 3,320,492 January1,		1% 1% 1% 1% 1% 2012		44,132 $ 30,720 3,514 $ 53,588 $ 33,205
	Foreign Currency Amount (In thousands)			Exchange Rate		Book Value
						(NTD)		Extent of Variation	Effect on Profit or Loss
	USD 188,356 USD 95,528 USD 13,777 USD 200,803 USD 135,196			30.275 6.3009 30.275 30.275 6.3009		5,702,478 $ 2,892,110 417,111 $ 6,079,311 $ 4,093,059		1% 1% 1% 1% 1%	57,025 $ 28,921 4,171 $ 60,793 $ 40,931

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Interest rate risk

Interest risk arises from the changes of market interest rate causing fluctuation in financial instruments’ fair value or cash received and paid in the future.

The Group is exposed mainly to floating interest rate borrowings; however, the Group raised short-term borrowings at fixed rates durning the year of 2013, and thus had no significant cash flow interest rate risk.

Price risk

The Group is exposed to price risk because of investments held by the Group. The Group sets limits to control the transaction volume and stop-loss amount to reduce it’s market risk.

• b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings, the utilisation of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions.

• ii No credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties.

• iii.The individual analysis of financial assets that had been impaired is provided in the statement for each type of financial assets in Note 6.

• iv.The credit quality information of financial assets that are neither past due nor impaired is provided in the statement in Note 6(4).

• c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, compliance with internal balance sheet ratio targets.

• ii. Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits and marketable securities,

~58~

• choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.

• iii. The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

Non-derivative financial liabilities:
December 31, 2013 Short-term borrowings Accounts payable Other payables Guarantee deposits received Non-derivative financial liabilities: December 31, 2012 Notes payable Accounts payable Other payables Guarantee deposits received Non-derivative financial liabilities: January 1, 2012 Notes payable Accounts payable Other payables Guarantee deposits received	Less than 1year	Over 1year
	1,000,000 $ 2,511,106 637,671 906 Less than 1year	- $ - - 7,456 Over 1year
	40 $ 3,145,050 1,230,200 8,362 Less than 1year	- $ - - - Over 1year
	957 $ 5,201,324 1,155,796 22,530	- $ - - -

(3) Fair value estimation

• A. The table below analyses financial instruments measured at fair value, by valuation method. The different levels have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

• Level 3: Inputs for the assets or liabilities that are not based on observable market data.

The following table presents the Group’s financial assets and liabilities that are measured at fair value at December 31, 2013, December 31, 2012, and January 1, 2012.

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December 31, 2013 Financial assets: Financial assets at fair value through profit or loss Beneficiary Certificate December 31, 2012 Financial assets: Financial assets at fair value through profit or loss Beneficiary Certificate January 1, 2012 Financial assets: Financial assets at fair value through profit or loss Beneficiary Certificate	Level 1 442,167 $ Level 1 428,282 $ Level 1 497,652 $	Level 2 - $ Level 2 - $ Level 2 - $	Level3 - $ Level 3 - $ Level3 - $	Total
				442,167 $
				Total
				428,282 $
				Total
				497,652 $

• B. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise primarily equity instruments classified as financial assets at fair value through profit or loss or available-for-sale financial assets. (Blank below)

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13. SUPPLEMENTARY DISCLOSURES

The following information was expressed in thousand of New Taiwan dollars, unless stated otherwise. The foreign currency amounts of gain or loss was translated into New Taiwan dollars using the exchange rate of 1:29.6854,

remaining foreign currency amounts was translated using the exchange rate of 1:29.805.

(1) Significant transactions information

The details are as follows:

A. Loans to others: None.

B. Provision of endorsements and guarantees to others: None.

C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) :

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of December31,2013	As of December31,2013
				Number of shares 381,438 9,908,257 30 10,000,000 3,124 N/A 254,029	Bookvalue 10,311 $ 22,527 23,954 93,450 102,074 5,866 4,004	Ownership (%) 14.98% 7.06% 4.84% 2% N/A (Note 1) N/A	Marketvalue
Altek Corporation " " " Altek International Investment Co., Ltd. Altek (Kunshan) Co., Ltd. Altek Investment Co., Ltd.	Gianta Co., Ltd. - Common stock Pac-line Opportunity Fund - Common stock Yung Li Investments Inc. - Common stock Hua-chuang Automobile Information Technical Center Co., Ltd. - Common stock Money Market Fund Guangdong Kingding Optical Machine Co., Ltd. Money Market Fund	Director Supervisor None None None None None	Financial assets carried at cost - non-current " " " Financial assets at fair value through profit or loss-current Financial assets carried at cost - non-current Financial assets at fair value through profit or loss-current				$ 10,311 22,527 23,954 93,450 102,074 5,866 4,004

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Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of December31,2013	As of December31,2013
				Number of shares 22,929,057 2,245,760	Bookvalue $ 287,135 48,309	Ownership (%) N/A N/A	Marketvalue $ 287,135 48,309
Altek Autotronics Corporation Altek Semiconductor Corporation	Money Market Fund Money Market Fund	None None	Financial assets at fair value through profit or loss-current "

Note 1: 8% of Guangdong kingding Optical Machine Co.,Ltd.’s capital contribution.

D. Aggregate purchases or sales of the same securities reaching NT$300 million or 20% of paid-in capital or more: None.

E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

G. Purchases or sales of goods from or to related parties reaching 20% of paid-in capital or more:

Purchaser/Seller	Counterparty	Relationship with the counterparty		Transaction	Transaction	Percentage of total Credit Credit notes / accounts term Unitprice term Balance receivable(payable) Net 120 days Approximately the same price with third parties Note ($ 3,335,710) 99% " " " 3,335,710 99% Net 75 days " " ( 164,822) 69% " " " 164,822 22% Differences in transaction terms Notes / accounts compared to thirdpartytransactions receivable(payable)	Notes / accounts receivable(payable)	Notes / accounts receivable(payable)
			Purchases (sales) Amount Purchases $ 9,728,881 Sales ( 9,728,881) Purchases 9,831,725 Sales ( 9,831,725)		Percentages of total purchases(sales) 100% 98% 100% 70%			Percentage of total notes / accounts receivable(payable)
Altek Corporation Altek International Investment Co., Ltd. Altek International Investment Co., Ltd. Altek (Kunshan) Co., Ltd.	Altek International Investment Co., Ltd. Altek Corporation Altek (Kunshan) Co., Ltd. Altek International Investment Co., Ltd.	Affiliated enterprise Parent company Affiliated enterprise Parent company						99% 99% 69% 22%

Note: The payment term with third parties was net 60~120 days, the collection term with third parties was net 45~90 days.

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H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more:

Creditor	Counterparty	Relationship with the counterparty	Balance as at December 31,2013	Amount collected subsequent Allowance for Turnover rate Amount Action taken to the balance sheet date doubtful accounts 2.78 $ - N/A $ 1,629,466 $ - Overdue receivables	Allowance for doubtful accounts
Altek International Investment Co., Ltd.	Altek Corporation	Parent company	$ 3,335,710

I. Derivative financial instruments undertaken for the year ended December 31, 2013: None.

J. Significant inter-company transactions for the year ended December 31, 2013:

Company name Altek Corporation " Altek International Investment Co., Ltd. " " Altek (Kunshan) Co., Ltd.	Counterparty	Relationship (Note 1)			Transaction
			General ledger account Purchases Accounts payable Sales Accounts receivable Purchases Sales	Amount 9,728,881 $ 3,335,710 9,728,881 3,335,710 9,831,725 9,831,725	Transaction terms Net 120 days " " " Net 75 days "	Percentage of consolidated total operating revenues or total assets (Note 2)
	Altek International Investment Co., Ltd. " Altek Corporation " Altek (Kunshan) Co., Ltd. Altek International Investment Co., Ltd.	1 1 2 2 3 3				51% 21% 51% 21% 51% 51%

Note 1: Relationship between transaction and counterparty is classified into the following categories:

(1) Parent company to subsidiary.

(2) Subsidiary to parent company.

(3) Subsidiary to subsidiary.

Note 2: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to

consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

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(2) Information on investees (not including information on investments in Mainland China)

Investor	Investee	Location	Mainbusiness activities	Balance as at Balance as at December31,2013 December31,2012 $ 3,086,363 $ 3,086,363 2,869 2,869 50,000 50,000 177,500 177,500 108,818 108,818 103,495 103,495 200,000 200,000 Initial investment amount	Sharesheld	Net profit (loss) of Investment income (loss) the investee for the recognised by the Company Ownership year ended for the year ended (%) Bookvalue December31,2013 December31,2013 100% $ 10,321,784 ($ 301,622) ($ 290,502) 100% 8,080 2,781 2,781 100% 23,078 ( 57) ( 57) 97.96% 294,404 48,850 47,352 100% 51,549 911 911 23.33% 35,831 11,241 2,462 100% 142,221 ( 40,507) ( 40,507) as atDecember31,2013	Footnote
				Balance as at December31,2013 $ 3,086,363 2,869 50,000 177,500 108,818 103,495 200,000	Number of Shares 94,333,839 1,000 5,000,000 17,750,000 11,311,875 3,500,000 20,000,000	Ownership (%) 100% 100% 100% 97.96% 100% 23.33% 100%
Altek Corporation " " " Altek International Investment Co., Ltd. " Altek Semiconductor (Cayman) Co., Ltd.	Altek International Investment Co., Ltd. Altek Japan Corporation Altek Investment Co., Ltd. Altek Autotronics Corporation Altek Lab Inc. JinJing Optical Technology Co., ltd. Altek Semiconductor Corporation	British Virgin Islands Japan Republic of China Republic of China U.S.A. Samoa Republic of China	Investment and general business operations Sale and design of digital cameras and its optical instruments Investment Research design, manufacture and sales of car electronic components Design and sale of engineering and optical components Investment and general business operations Research design and sales of ASIC				Note 1 Note 2 Note 3

Note 1: The difference is the adjustment of unrealized gain or loss from the upstream inter-company transactions between subsidiaries. Note 2: Ownership (%) on Altek Autotronics Corporation held by Altek Corporation and Altek Investment Co., Ltd. are 88.75% and 9.21%, respectively. Note 3: Common stock of 9,311,875 shares and preferred stock of 2,000,000 shares.

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(3) Information on investments in Mainland China

A.The related information of investments in Mainland China are as follows:

Investee in Mainland China	Main business activities	Paid-in Capital	Investment Method (Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January1,2013	Amount remitted fr Mainland China emitted back to theyear ended Dece	Remitted back to Taiwan $ - - - - - - - om Taiwan to / Amount Taiwan for mber 31,2013	Accumulated amount Net profit of remittance from (loss) of Taiwan to Mainland the investee for China as of the year ended December 31,2013 December 31,2013 $ 1,341,225 $ 17,538 270,719 ( 18,387) 86,435 476 253,343 ( 8,605) 104,318 ( 15,990) 264,192 ( 109,636) - ( 308)	Ownership Investment income Book value of Accumulated amount held by (loss) recognised investments of investment the Company by the Company in Mainland income remitted back (direct or for the year ended China as of to Taiwan as of indirect) December 31,2013 December 31,2013 December 31,2013 100% $ 17,538 $ 4,033,247 $ - 100% ( 18,387) 837,577 - 100% 476 52,129 - 100% ( 8,605) 300,352 - 23.33% ( 3,730) 54,467 - 40% ( 44,549) 293,823 - 100% ( 308) ( 3,371) -	Accumulated amount of investment ncome remitted back to Taiwan as of December 31,2013
					Remitted to Mainland China $ - - - - - - -
Altek (Kunshan) Co., Ltd. (Note 2) Altek EMS (Kunshan) Co., Ltd. (Note 3) Altek Imaging Technology (Shanghai) Limited Altek Trading (Shanghai) Limited Kinko Optical (Suzhou) Co., Ltd. Phoenix Optical (Shanghai) Co., Ltd. Beijing Altek Image Communication Technology Co., Ltd.	Manufacture and sale of digital still cameras and its accessories SMT processing and related engineering services Manufacture and sale of optical components Wholesale, import and export of digital cameras, digital video cameras and their associated accessories Manufacture and sale of optical components Manufacturing and marketing of digital cameras and its key components, photo sensor and optoelectronic equipment Sales of digital camera, cell phone and related accessories and supporting products	$ 1,478,328 149,025 86,435 253,343 447,075 471,605 30,550	1 1 1 1 1 1 1	$ 1,341,225 270,719 86,435 253,343 104,318 264,192 -

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Investee in Mainland China	Main business activities	Paid-in Capital	Investment Method (Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January1,2013	theyear ended Dece Mainland China emitted back to Amount remitted fr	Remitted back to Taiwan $ - - mber 31,2013 / Amount Taiwan for om Taiwan to	Accumulated amount Net profit of remittance from (loss) of Taiwan to Mainland the investee for China as of the year ended December 31,2013 December 31,2013 $ 411,309 ($ 100,254) 447,075 ( 113,174)	Ownership Investment income Book value of held by (loss) recognised investments the Company by the Company for in Mainland (direct or the year ended China as of indirect) December 31,2013 December 31,2013 100% ($ 100,254) $ 162,760 100% ( 113,174) 298,051	Accumulated amount of investment income remitted back to Taiwan as of December 31,2013
					Remitted to Mainland China $ - 89,415
Altek Precision (Kunshan) Co., Ltd. Altek Optical Technology (Kunshan) Co., Ltd.	Design, manufacture and sales of digital camera parts Manufacture and sales of digital camera and its accessories and optical components	$ 411,309 447,075	1 1	$ 411,309 357,660					- -

Note 1: Indirect investment in PRC through existing companies located in the third area.

Note 2: Including retained earnings capitalized of US$4,600.

Note 3: Including retained earnings capitalized of US$3,600.

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2013	Investment amount approved by the Investment Commission of the Ministryof Economic Affairs(MOEA)	Ceiling on investments in Mainland China imposed bythe Investment Commission of MOEA(note)
Altek Corporation	$ 3,178,614	$ 4,260,744	$ -

Note: According to “REGULATIONS GOVERNING THE APPROVAL OF INVESTMENT OR TECHNICAL COOPERATION IN MAINLAND CHINA” on August 29, 2008, Altek Corporation obtained the approval from the Industrial Development Bureau of Ministry of Economics Affairs issued to Headquarters, so there is no need to compute the ceiling amount of the Company.

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• B. Significant transactions with the direct and indirect investments in Mainland China (the amount are the figures prior to eliminating the purchase and sales transactions between the Company and the investee companies in China through its subsidiaries (the middlemen) in other countries).

• (a) Purchases:

  • i. The Company’s net purchases from Altek International Investment Co., Ltd. (“AII”), which indirectly invested in a Mainland China company, are as follows.

Altek International Investment Co., Ltd.	Amount Percentage of netpurchases $ 9,820,116 100% For the year ended December 31,2013	Amount Percentage of netpurchases $ 9,820,116 100% For the year ended December 31,2013
	$ 9,820,116	100%

• ii. AII’s net purchases from Altek (Kunshan) Co., Ltd., which was AII’s indirect investee in Mainland China.

Mainland China.
(b) Accounts payable: i. The Company’s accounts payable to AII (Note) ii. AII’s accounts payable to Altek (Kunshan) Co., Altek (Kunshan) Co., Ltd. Altek International Investment Co., Ltd. Altek (Kunshan) Co., Ltd.	Ltd. (Note) Amount Percentage of netpurchases $ 9,801,310 95% For the year ended December 31,2013 Amount Percentage of accountspayable $ 3,336,591 99% December 31,2013 Amount Percentage of net purchases $ 164,444 69% December31,2013
	Amount
	$ 164,444	69%

(c) Sales:

• i. The Company’s net sales to the consolidated subsidiaries in third countries

• For the year ended December 31, 2013, the net sales to the consolidated subsidiaries in third countries was $32,631, which was less than 10% of the total amount of net sales.

• ii. The consolidated subsidiaries in third countries’ net sales to investee in Mainland China

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For the year ended December 31, 2013, the consolidated subsidiaries in third countries’ net sales to investee in Mainland China was $487,760, which were was less than 10% of the total amount of net sales.

Note: The balance was offset by accounts receivable or accounts payable.

14. SEGMENT INFORMATION

(1) General information

The Group mainly operates in one segment. The chief operating decision-maker reviews the Group’s reporting to assess performance and allocate resources. The Group mainly has a single reportable segment.

(2) Measurement of segment information

• The chief operating decision-maker assesses the segment performance through the consolidated financial statements which are prepared in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC.

(3) Information about segment profit or loss, assets and liabilities

• The Group has a single reportable segment. The revenue from external customers, the related gain or loss, and the assets correspond with the consolidated revenue, consolidated operating income, and consolidated assets.

• (4) Reconciliation for segment income (loss), assets and liabilities ： None.

(5) Information on product and service

• Revenues from external customers are derived from the sale of digital cameras and related export and import trade.

(6) Geographical information

Geographical information for the years ended December 31, 2013 and 2012 is as follows:

For the years ended December 31,

Asia Europe America Taiwan Total	Revenue Non-current assets 17,281,563 $ 3,497,737 $ 938,855 - 523,499 - 421,908 2,269,460 19,165,825 $ 5,767,197 $ 2013	2012	2012
	Revenue 17,281,563 $ 938,855 523,499 421,908 19,165,825 $	Revenue 22,097,360 $ 806,497 1,190,634 480,968 24,575,459 $	Non-current assets
			3,054,121 $ - - 2,316,850
			5,370,971 $

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15. INITIALAPPLICATION OF IFRSs

These consolidated financial statements are the first year-end consolidated financial statements prepared by the Group in accordance with the IFRSs. The Group has adjusted the amounts as appropriate that are reported in the previous R.O.C. GAAP consolidated financial statements to those amounts that should be presented under IFRSs in the preparation of the opening IFRS balance sheet. Information about exemptions elected by the Group, exceptions to the retrospective application of IFRSs in relation to initial application of IFRSs, and how it affects the Group’s financial position, operating results and cash flows in transition from R.O.C. GAAP to the IFRSs is set out below:

(1) Exemptions elected by the Group

A. Business combinations

The Group has elected not to apply the requirements in IFRS 3, ‘Business Combinations’, retrospectively to business combinations that occurred prior to the date of transition to IFRSs (“the transition date”).

• B. Share-based payment transactions

The Group has elected not to apply the requirements in IFRS 2, ‘Share-based Payment’, retrospectively to equity instruments that were vested arising from share-based payment transactions prior to the transition date.

• C. Employee benefits

The Group has elected to recognise all cumulative actuarial gains and losses relating to all employee benefit plans in ‘retained earnings’ at the transition date, and to disclose the information of present value of defined benefit obligation, fair value of plan assets, gain or loss on plan assets and experience adjustments under the requirements of paragraph 120A (P), IAS 19, ‘Employee Benefits’, based on their prospective amounts for financial periods from the transition date.

• D. Cumulative translation differences

The Group has elected to reset the cumulative translation differences arising on the translation of the financial statements of foreign operations under R.O.C. GAAP to zero at the transition date, and to deal with translation differences arising subsequent to the transition date in accordance with IAS 21, ‘The Effects of Changes in Foreign Exchange Rates’.

• E. Compound financial instruments

The Group has elected not to segregate between liability components and equity components of compound financial instruments whose liability components were no longer outstanding at the transition date.

Some of the above differences may not have a material effect on the Group in transition to IFRSs due to the exemption rules in IFRS 1, “First-time Adoption of International Financial

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Reporting Standards”, adopted by the Group.

(2) Except for hedge accounting to which exceptions to the retrospective application of IFRSs specified in IFRS 1 are not applied as they have no relation with the Group, other exceptions to the retrospective application are set out below:

• A. Accounting estimates

Accounting estimates made under IFRSs on January 1, 2012 are consistent with those made under R.O.C. GAAP on that day.

• B. Derecognition of financial assets and financial liabilities

• The derecognition requirements in IAS 39, ‘Financial Instruments: Recognition and Measurement’ shall be applied prospectively to transactions occurring on or after January 1, 2004.

• C. Non-controlling interest

• Requirements of IAS 27 (amended in 2008) that shall be applied prospectively are as follows: Requirements that change in interest ownership of the parent in a subsidiary while control is retained is accounted for as an equity transaction with the parent.

(3) Requirement to reconcile from R.O.C. GAAP to IFRSs at the time of initial application

IFRS 1 requires that an entity should prepare reconciliations for equity, comprehensive income and cash flows for the comparative periods. The Group’s initial application of IFRSs has no significant effect on cash flows from operating activities, investing activities and financing activities. Reconciliations for equity and comprehensive income for the comparative periods as to transition from R.O.C. GAAP to IFRSs is shown below:

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A.Reconciliation for equity on January 1, 2012:

Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable Accounts receivable Other receivables Deferred income tax assets-current Inventories Prepayments Other current assets Total current assets Financial assets measured at cost - noncurrent Investments accounted for under equity method Property, plant and equipment Intangible assets Deferred income tax assets Other non-current assets Total non-current assets Total assets Current assets Non-current assets	R.O.C. GAAP 6,303,846 $ 497,652 9 3,415,357 19,195 235,716 2,047,877 296,694 15,983 12,832,329 236,174 417,111 5,297,001 84,835 47,125 83,973 6,166,219 18,998,548 $	Effect of transition from R.O.C. GAAP to IFRSs - $ - - - - 235,716) ( - - - 235,716) ( - - - - 325,742 - 325,742 90,026 $	IFRSs 6,303,846 $ 497,652 9 3,415,357 19,195 - 2,047,877 296,694 15,983 12,596,613 236,174 417,111 5,297,001 84,835 372,867 83,973 6,491,961 19,088,574 $	Remark
				(a) (a)

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Effect of transition from R.O.C. GAAP

		R.O.C. GAAP	R.O.C. GAAP		to IFRSs		IFRSs	Remark
Current liabilities
Notes payable	$		957	$	-	$	957
Accounts payable			5,186,498		-		5,186,498
Accounts payable-related parties			14,826		-		14,826
Other payables			1,155,796		-		1,155,796
Current income tax liabilities			54,630		-		54,630
Provisions for liabilities - current			181,057		-		181,057
Other current liabilities			614,363		-		614,363
Total current liabilities			7,208,127		-		7,208,127
Non-current liabilities
Accrued pension liabilities			1,632		14,718		16,350	(b)
Provisions for liabilities - noncurrent			105,751		-		105,751
Deferred income tax liabilities			839,109		90,026		929,135	(a)
Other non-current liabilities			22,530		-		22,530
Total non-current liabilities			969,022		104,744		1,073,766
Total Liabilities			8,177,149		104,744		8,281,893
Equity attributable to owners of
the parent
Share capital
Common stock			3,955,214		-		3,955,214
Capital surplus			2,367,802	(	13,187)		2,354,615	(c)
Retained earnings
Legal reserve			1,272,282		-		1,272,282
Special reserve			488,347		-		488,347
Unappropriated retained earnings			3,308,469		142,456		3,450,925	(b)(c)(d)
Other equity-cumulative
translation adjustments			143,987	(	143,987)		-	(d)
Treasury shares	(		714,702)		-	(	714,702)
Total equity			10,821,399	(	14,718)		10,806,681
Total liabilities and equity	$		18,998,548	$	90,026	$	19,088,574

Explanation for adjustments:

• (a) In accordance with R.O.C. GAAP, a deferred tax asset or liability should, according to the classification of its related asset or liability, be classified as current or noncurrent. However, a deferred tax asset or liability that is not related to an asset or liability for financial reporting should be classified as current or noncurrent according to the expected time period to realize or settle a deferred tax asset or liability. However, under IAS 1, “Presentation of Financial Statements”, an entity should not classify a deferred tax asset or liability as current. Accordingly, the Group should reclassify the account “deferred income tax assets” from current to non-current at the transition date.

• (b) The discount rate used to calculate pensions shall be determined with reference to the factors specified in R.O.C. SFAS 18, paragraph 23. However, IAS 19, “Employee Benefits”, requires an entity to determine the rate used to discount employee benefits with reference to market yields on high quality corporate bonds that match the currency

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at the end day of the reporting period and duration of its pension plan; when there is no deep market in corporate bonds, an entity is required to use market yields on government bonds (at the end day of the reporting period) instead. Besides, in accordance with current accounting standards in the R.O.C., the unrecognised transitional net benefit obligation should be amortised on a straight-line basis over the average remaining service period of employees still in service and expected to receive benefits. However, in accordance with IAS 19, “Employee Benefits”, the unrecognised transitional net benefit obligation should be recognised as an expense immediately at the date of adoption. Due to the above differences and in order to eliminate the difference in employee benefits upon adoption of IFRS, the Group increased the accrued pension liabilities by $14,718 and simultaneously decreased retained earnings by $14,718 at the transition date.

• (c) In accordance with current accounting standards in the R.O.C., if an investee company issues new shares and original shareholders do not purchase or acquire new shares proportionately, but the investor company does not lose its significant influence over the investee company, the investment percentage, and therefore the equity in net assets for the investment that an investor company has invested, will be changed. Such difference shall be used to adjust the “Additional paid-in capital” and the “Long-term equity investments” accounts. However, in accordance with IAS 28, “Investments in Associates”, increases in investment percentage is accounted for as an acquisition of investment; conversely, decreases in investment percentage is accounted for as a disposal of investment and any related disposal gain or loss is recognised. Accordingly, the Group decreased the additional paid-in capital from investee under the equity method by $13,187 and simultaneously increased the retained earnings by $13,187 at the transition date.

• (d) The Group elected to use the exemption of the cumulative translation differences relating to the investment in a foreign operation. The subsequent changes in foreign exchange rate are treated in accordance with IAS 21, “Effects of Changes in Foreign Exchange Rates”. Therefore, the Group decreased the cumulative translation differences and increased retained earnings both by $143,987 at the transition date.

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B.Reconciliation for equity on December 31, 2012:

Effect of transition from R.O.C. GAAP

		Effect of transition from R.O.C. GAAP
Cash and cash equivalents Financial assets at fair value through profit or loss - current Accounts receivable Other receivables Current income tax assets Deferred income tax assets - current Inventories Prepayments Other current assets Total current assets Financial assets measured at cost – noncurrent Investments accounted for under equity method Property, plant and equipment Intangible assets Deferred income tax assets Other non-current assets Total non-current assets Total assets Current assets Non-current assets	R.O.C. GAAP 4,698,800 $ 428,282 2,883,695 25,176 27,411 277,898 1,715,321 228,957 4,391 10,289,931 235,953 351,419 5,297,892 73,079 45,314 79,870 6,083,527 16,373,458 $	to IFRSs - - - - - 277,898) ( - - - 277,898) ( - - - - 322,159 - 322,159 44,261 $	IFRSs 4,698,800 $ 428,282 2,883,695 25,176 27,411 - 1,715,321 228,957 4,391 10,012,033 235,953 351,419 5,297,892 73,079 367,473 79,870 6,405,686 16,417,719 $	Remark
				(a) (a)

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Effect of transition from R.O.C. GAAP

		R.O.C. GAAP	R.O.C. GAAP		to IFRSs		IFRSs	Remark
Current assets
Notes payable	$		40		-	$	40
Accounts payable			3,144,953		-		3,144,953
Accounts payable-related parties			97		-		97
Other payables			1,230,200		-		1,230,200
Current income tax liabilities			81,373		-		81,373
Provisions for liabilities - current			152,537		-		152,537
Other current liabilities			702,245		-		702,245
Total current liabilities			5,311,445		-		5,311,445
Non-current liabilities
Accrued pension liabilities			2,624		17,202		19,826	(b)
Provisions for liabilities
- noncurrent			142,454		-		142,454
Deferred income tax liabilities			738,976		44,261		783,237	(a)
Other non-current liabilities			8,362		-		8,362
Total non-current liabilities			892,416		61,463		953,879
Total liabilities			6,203,861		61,463		6,265,324
Equity attributable to owners of the
parent
Share capital
Common stock			3,961,013		-		3,961,013
Capital surplus			2,387,988	(	10,544)		2,377,444	(c)
Retained Earnings
Legal reserve			1,291,466		-		1,291,466
Special reserve			-		-		-
Unappropriated retained earnings			3,483,973		137,329		3,621,302	(b)(c) (d)
Other equity-cumulative
translation adjustments	(		196,812)	(	143,987)	(	340,799)	(d)
Treasury stock	(		768,094)		-	(	768,094)
Non-controlling interest			10,063		-		10,063
Total equity			10,169,597	(	17,202)		10,152,395
Total liabilities and equity	$		16,373,458	$	44,261	$	16,417,719

Explanation for adjustments:

(a) In accordance with R.O.C. GAAP, a deferred tax asset or liability should, according to the classification of its related asset or liability, be classified as current or noncurrent. However, a deferred tax asset or liability that is not related to an asset or liability for financial reporting should be classified as current or noncurrent according to the expected time period to realize or settle a deferred tax asset or liability. However, under IAS 1, “Presentation of Financial Statements”, an entity should not classify a deferred tax asset or liability as current. Accordingly, the Group should reclassify the account “deferred

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income tax assets” from current to non-current at the transition date.

• (b) The discount rate used to calculate pensions shall be determined with reference to the factors specified in R.O.C. SFAS 18, paragraph 23. However, IAS 19, “Employee Benefits”, requires an entity to determine the rate used to discount employee benefits with reference to market yields on high quality corporate bonds that match the currency at the end day of the reporting period and duration of its pension plan; when there is no deep market in corporate bonds, an entity is required to use market yields on government bonds (at the end day of the reporting period) instead. Besides, in accordance with current accounting standards in the R.O.C., the unrecognised transitional net benefit obligation should be amortised on a straight-line basis over the average remaining service period of employees still in service and expected to receive benefits. However, in accordance with IAS 19, “Employee Benefits”, the unrecognised transitional net benefit obligation should be recognised as an expense immediately at the date of adoption. Due to the above differences and in order to eliminate the difference in employee benefits upon adoption of IFRS, the Group increased the accrued pension liabilities by $14,718 and simultaneously decreased retained earnings by $14,718 at the transition date. In accordance with current accounting standards in R.O.C., actuarial pension gain or loss of the Group is recognised in net pension cost of current period using the “corridor” method. However, IAS 19, “Employee Benefits”, requires that actuarial pension gain or loss should be recognised immediately in other comprehensive income. Accordingly, the actuarial pension gain or loss of the Group was recognised in other comprehensive income. Also, the Group decreased the retained earnings by $2,484 and simultaneously increased the accrued pension liabilities by $2,484.

• (c) In accordance with current accounting standards in the R.O.C., if an investee company issues new shares and original shareholders do not purchase or acquire new shares proportionately, but the investor company does not lose its significant influence over the investee company, the investment percentage, and therefore the equity in net assets for the investment that an investor company has invested, will be changed. Such difference shall be used to adjust the “Additional paid-in capital” and the “Long-term equity investments” accounts. However, in accordance with IAS 28, “Investments in Associates”, increases in investment percentage is accounted for as an acquisition of investment; conversely, decreases in investment percentage is accounted for as a disposal of investment and any related disposal gain or loss is recognised. Accordingly, the Company reduced the additional paid-in capital from investee under the equity method by $13,187 and simultaneously increased the retained earnings by $13,187 at the transition date. In accordance with IAS 27, “Consolidated and Separate Financial Statements”, if an investee company issues new shares and original shareholders do not purchase or acquire

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new shares proportionately, in which an investor company does not lose control over the subsidiary, and therefore the equity in net assets for the investment that an investor company has invested, will be changed. Such difference shall be used to adjust the “Additional paid-in capital” and the “Long-term equity investments” accounts. The Company’s subsidiary issued new shares this period and therefore the equity in net assets for the investment that an investor company has invested decreased. Accordingly, the Group decreased the retained earnings by $2,643, and simultaneously increased the additional paid-in capital from investee under equity method by $2,643.

• (d) The Group elected to use the exemption of the cumulative translation differences relating to the investment in a foreign operation. The subsequent changes in foreign exchange rate are treated in accordance with IAS 21, “Effects of Changes in Foreign Exchange Rates”. Therefore, the Group decreased the cumulative translation differences and increased retained earnings both by $143,987 at the transition date.

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C.Reconciliation for comprehensive income for the year ended December 31, 2012:

Effect of transition from R.O.C. GAAP

			R.O.C. GAAP	R.O.C. GAAP			to IFRSs			IFRSs	Remark
Operating revenue		$		24,575,459			-		$	24,575,459
Operating costs	(			22,808,808)			-	(		22,808,808)
Gross profit				1,766,651			-			1,766,651
Operating expenses
Selling expenses	(			115,194)			-	(		115,194)
General & administrative
expenses	(			270,693)			-	(		270,693)
Research and development
expenses	(			1,197,213)			-	(		1,197,213)
Total operating expenses	(			1,583,100)			-	(		1,583,100)
Operating profit				183,551			-			183,551
Non-operating income and expenses
Other income				154,909			-			154,909
Other gains and losses				28,370			-			28,370
Finance costs	(			1,762)			-	(		1,762)
Share of (loss)/profit of
associates and joint ventures
accounted for under equity
method	(			35,708)			-	(		35,708)
Profit before income tax				329,360			-			329,360
Income tax expense	(			49,257)			-	(		49,257)
Profit for the year				280,103			-			280,103
Other comprehensive income
Currency translation differences	(			393,952)			-	(		393,952)
Actuarial gain (loss) on defined benefit
plan				-	(		2,484)	(		2,484)
Share of other comprehensive
income of associates and
joint ventures accounted for
under equity method	(			16,649)			-	(		16,649)
Income tax relating to the
components of other
comprehensive income				69,802			-			69,802
Other comprehensive loss for the
year, net of tax	(			340,799)	(		2,484)	(		343,283)
Total comprehensive loss for the year	($			60,696)	($		2,484)	($		63,180)
Profit attributable to:
Owners of the parent	$			280,103	$		-	$		280,103
Non-controlling interest				-			-			-
		$		280,103		$	-		$	280,103
Total comprehensive loss attributable to:
Owners of the parent	($			60,696)	($		2,484)	($		63,180)
Non-controlling interest				-			-			-
	($			60,696)	($		2,484)	($		63,180)

Explanation for adjustments: No significant differences.

D.Major adjustments for the consolidated statement of cash flows for the year ended December 31,

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2012:

• (1)The transition from R.O.C. GAAP to IFRSs has no effect on the Group’s cash flows reported.

• (2)The reconciliation between R.O.C. GAAP and IFRSs has no net effect on the Group’s cash

flows reported.

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