CEC — Annual Report 2014

Nov 16, 2015

Stock Code: 1535

China Ecotek Corporation

Handbook for the 2015 Annual Meeting of Shareholders

JUNE 25, 2015

Shangdao Room, Kaohsiung Business Convention Center 3F, No.5, Zhongshan 2nd Rd, Kaohsiung 80661, Taiwan, R.O.C.

Reports and Discussion

(1)Report proposal: Adoption of the 2014 Business Report and Financial Statements.

(2)Report proposal: Adoption of the Proposal for Distribution of 2014 Profits.

(3)Discussion proposal: Amendments to Articles of incorporation.

1

Agenda 1-proposed by the board of directors

Explanatory Note:

To adopt the report proposal of 2014 business report and financial statements Please refer to Attachment 1 and Attachment 2 for business report and financial statements.

Resolution:

2

Agenda 2-proposed by the board of directors

Explanatory Note:

To adopt the report proposal for Distribution of 2014 Profits

1. The Company’s earnings distribution, as shown below, is proposed in accordance with the provisions in Article 32 of the Articles of Incorporation of the Company: Please refer to attachment 3

2. For year 2014, the proposed dividend appropriation for common shares totaled NT$556,841,484, NT$4.5 per share. Compensation for the Board of Directors and Supervisors totaled NT$1,800,000 and Employee Bonus totaled NT$29,402,183 to be distributed entirely in cash.

3. Upon approval of this earnings appropriation plan by resolution of the meeting of shareholders, Chairman of the Board will be authorized to set the record date for cash dividend distribution. When distributing cash dividends, the total amount paid to each shareholder shall be in whole NT dollars and any fractional amount less than a NT dollar shall be rounded to the next NT dollar. The resulting difference shall be recognized as a Company expense

4. In accordance with Income Tax Integration regulation, the priority is to distribute earning after 1998 when estimate Imputation Credit Account according to Paragraph 6 of Article 66 of Income Tax Act. The priority is to distribute earning of the nearest year while estimate 10% of Undistributed earnings of Enterprise Income Tax according to Paragraph 9 of Article 66 of Income Tax Act.

Resolution:

3

Agenda 3-proposed by the board of directors

Explanatory Note:

Amendments to Articles of Incorporation of the Company are proposed. Please refer to Attachment 4.

Resolution:

4

Attachment 1

Business Report

1. Operational Policy

2. (1) Participate in Engineering Expansion of CSC group.

3. (2) Open up Overseas Engineering Projects.

4. (3) Develop and Expand Engineering Projects of Foreign Subsidiaries.

5. (4) Step up Water Treatment, Air Pollution Control and Energy Consuming Saving Technology, and Expand Application Field.

6. (5) Expand the Engineering Business of Biotechnology Industry.

2. Operational Profile

After the Chinese Exclusion Insurrection has caused engineering schedule of Formosa Ha Tinh Steel Corporation lagged behind the plan, we negotiated and integrated related resources to recovery. It will be expected to be finished in 2017. In previous year, we acquired CSC No. 2 Sinter Plant Desulfurization and de-NOx Construction Project and CSC Desulfurization Slag Processing Plant Project which are belonging to CSC group. About the non-CSC group business, we acquired New Taipei City ShanYing Water Recycling Center Construction Project, Parenteral Drug Manufacturing Plant Facilities Project, Taiwan Liposome Company, Ltd, MVBC utility hook up engineering for process equipment and Injectable Filling Facility Project, ScinoPharm Taiwan Ltd. At the overseas market, we acquired Vietnam Tan-Thuan Industrial District Wastewater Treatment Turnkey Project, Engineering Design and Equipment Purchasing and Construction of A Modular Factory, PT SHS International; in O&M market, we take responsible for Chen-chin Lake Water Treatment Plant and CSC Industrial Waste Water Purification Plant, which is a long-term stable business. For the future prospect, we will execute the strategy of ‘To move out of CSC Group, to move on toward Globalization.’ and set up the subsidiaries of foreign business accordingly. We are planning to transfer profits back to maintain sufficient working capital. That is an advantage for us to expand overseas markets and keep to go growth.

3. Operational Performance

Our target markets are such multiple areas as environmental engineering, electromechanical engineering, bio-technology plants construction, O&M and recycling. The main business in 2014 is as following:

(1) Environmental engineering

About 1.47 billion accounted for 14.17% of total revenue in 2014, such as Kinmen Taihu Lake Drinking Water Treatment Plant Advanced Treatment Project, CSC No.3 Cold Roll Mill Water Treatment System, Formosa Ha Tinh Steel Corp. Vietnam Hot Strip Mill Plant Cooling Water Treatment System and CSC No. 3 Sinter Plant Flue-gas Desulfurization Improvement Project.

(2) Electromechanical engineering

About 6.45 billion accounted for 62.3% of total revenue in 2014, such as Coke Oven Door and Oven Iron Parts, ELECTROSTATIC TAR PRECIPITATOR 41F001 and CSCI Cold Roll Mill Main Substation Turnkey Project.

(3) O&M

About 2.44 billion accounted for 25.53% of total revenue in 2014, such as Electromechanical Engineering maintenance of China Steel Corporation and Dragon Corporation, Kinmen Tai Lake and Chen-chin Lake Water Treatment Plant Advanced Treatment Extension Project.

4. Financial Performance

(In Thousands of New Taiwan Dollars)

Year Item	2014	2013	Increase (Decrease) amount	Percentage Increase (Decrease)
Net Revenue	10,351,517	10260,709	90,808	0.89
OperatingCost	9,322,991	9,281,814	41,177	0.44
Gross Profit	1,028,526	978,895	49,631	5.07
Operating Expenses	493,531	443,534	49,997	11.27
Income From Operations	534,995	535,361	(366)	(0.07)
Non-Operating Income And Expenses	322,535	213,228	109,307	51.26
Income Before Income Tax	857,530	748,589	108,941	14.55
Net Income	680,646	614,803	65,843	10.71

• (1) Comparing to 2013, revenues in 2014 increased NT$ 90,808 thousand. It is because new engineering projects turned into construction period and saving cost properly. The gross profit rates are 9.9% and 9.5% respectively which is minor difference. The increasing operating expense is derived from the overhead occurred on overseas projects aggressively.

• (2) In 2014, the non-operating income and expenses increase NT$ 109,307 thousand than 2013. It is mainly resulted from the interest income increase NT$ 28,175 thousand in 2014 which is more than 2013. Exchange gains increase NT$ 56,502 thousand and equity investments gains increase NT$ 32,889 thousand.

• (3) In summary, the income before income tax in 2014 increase NT$ 108,941 thousand than 2013 resulted in income tax expense increase NT$ 43,098

thousand. Net income increase NT 65,843 thousand comparing to 2013 at the end of last year.

5. Research And Development

We keep reinforcing the design of engineering and integrating the ability such as developing and establishing water treatment technology for plant, bag house and electric static precipitator and conveyor system, enhancing efficiency design of engineering and effectiveness of project management, developing technology of De-SOx and De-NOx Systems, development and research.

Attachment 2

China Ecotek Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2014 and 2013 and Independent Auditors’ Report

AUDITOR’S REPORT

TO: CHINA ECOTEK CORPORATION

We have audited the accompanying consolidated balance sheets of CHINA ECOTEK CORPORATION and its subsidiaries as of December 31, 2014, December 31, 2013, and January 1, 2013, and the related consolidated statements of comprehensive income, consolidated statements of changes in shareholders’ equity, and consolidated statements of cash flows for the year from January 1 to December 31, 2014 and from January 1 to December 31, 2013. It is the responsibility of the Corporation’s management to compile the financial statements mentioned above, and our responsibility is to express our opinions about the financial statements based on the auditing results.

The audit of the said financial statements was planned and carried out by us in accordance with the the Rules Governing Auditing & Attestation of Financial Statements by Certified Public Accountants and the generally accepted auditing standards in order to reasonably assure that there is no major untrue expression in the consolidated financial statements. The auditing procedures include test audit by sampling for obtaining proofs of the amounts listed and the matters disclosed in the consolidated financial statements, evaluation of the accounting principles adopted for compilation of the financial statements and the major accounting estimate made by the Corporation’s management, and evaluation of the entire expression of the consolidated financial statements. We believe that such auditing will provide a reasonable basis for the opinions expressed herein.

In our opinion, the financial statements mentioned in the first paragraph above were compiled according to the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC interpretations endorsed by the Financial Supervisory Commission of the Republic of China in all material aspects, and they are sufficient to present fairly the consolidated financial position of CHINA ECOTEK CORPORATION and its subsidiaries as of December 31, 2014, December 31, 2013 and January 1, 2013, and their consolidated financial performance and consolidated statements of cash flows for the years from January 1 to December 31, 2014 and from January 1 to December 31, 2013

We have also audited the parent company only financial statements prepared by CHINA ECOTEK CORPORATION for the year 2014 and the year 2013 and have expressed an unqualified opinion thereon in our report for reference only.

March 24, 2015

CHINA ECOTEK CORPORATION AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

As of December 31, 2014and December 31, 2013

Unit: Thousands of NT Dollars

CODE 1100 1125 1150 1170 1180 1190 1200 1210 1220 1310 1476 1479 11XX 1523 1550 1600 1780 1840 1915 1920 1995 15XX 1XXX	ASSETS Current Assets Cash and cash equivalents Financial assets at fair value through profit or loss-current Available-for-sale financial assets－current Notes receivable Accounts receivable Accounts receivable－related parties Amounts due from customers for construction contracts Other accounts receivable Other accounts receivable－related parties Current tax assets Inventories Other financial assets－current Other current assets Total current assets Non-current Assets Available-for-sale financial assets－non-current Investments accounted for using equity method Property, plant and equipment Intangible assets Deferred income tax assets Prepayments for equipment Rdfundable deposits Other non-current assets Total non-current assets Total Assets		DECEMBER 31, 2014 AMOUNT % $ 1,560,457 21 21,100 - 75,139 1 - - 319,579 5 514,613 7 753,396 10 21,161 - 1,360 - 18,018 - 60,316 1 2,021,453 27 544,868 8 5,911,460 80 202,617 3 1,040,840 14 175,696 2 11,715 - 36,848 1 12,749 - 1,922 - 5,656 - 1,488,043 20 $ 7,399,503 100		DECEMBER 31, 2013 AMOUNT % $ 2,963,614 38 - - 58,653 1 25 - 33,583 1 740,889 10 689,617 9 9,308 - 158 - 13,325 - 94,904 1 1,114,916 14 631,633 8 6,350,625 82 126,977 1 1,001,482 13 149,526 2 10,361 - 52,874 1 2,975 - 58,750 1 5,577 - 1,408,522 18 $ 7,759,147 100	CODE 2100 2120 2150 2170 2180 2230 2213 2219 2250 2190 2399 21XX 2530 2550 2570 2640 2670 25XX 2XXX 3110 3200 3300 3400 3XXX	LIABILITIES & EQUITY Current Liabilities Short-term borrowings Accounts payable Accounts payable－related parties Current income tax liabilities Payables on equipment Other accounts payable Provisions－current Amounts due to customers for construction contracts Other current liabilities Total current liabilities Non-current Liabilities Provisions－non-current Deferred income tax liabilities Accrued pension liabilities Other non-current Liabilities Total non-current liabilities Total liabilities Equity Attributable to Owners of the Company Common shares Capital surplus Retained earnings Other equity Total equity Total Liabilities and Equity		DECEMBER 31, 2014 AMOUNT % $ - - 220,270 3 54,769 1 72,374 1 - - 439,703 6 35,160 - 2,485,246 34 88,616 1 3,396,138 46 48,346 1 132,678 2 183,157 2 - - 364,181 5 3,760,319 51 1,237,426 17 628,374 8 1,541,957 21 231,427 3 3,639,184 49 $ 7,399,503 100		DECEMBER 31, 2013	DECEMBER 31, 2013
			AMOUNT $ 1,560,457 21,100 75,139 - 319,579 514,613 753,396 21,161 1,360 18,018 60,316 2,021,453 544,868 5,911,460 202,617 1,040,840 175,696 11,715 36,848 12,749 1,922 5,656 1,488,043 $ 7,399,503		AMOUNT $ 2,963,614 - 58,653 25 33,583 740,889 689,617 9,308 158 13,325 94,904 1,114,916 631,633 6,350,625 126,977 1,001,482 149,526 10,361 52,874 2,975 58,750 5,577 1,408,522 $ 7,759,147				AMOUNT $ - 220,270 54,769 72,374 - 439,703 35,160 2,485,246 88,616 3,396,138 48,346 132,678 183,157 - 364,181 3,760,319 1,237,426 628,374 1,541,957 231,427 3,639,184 $ 7,399,503		AMOUNT $ 806 239,169 14,190 80,785 - 429,832 43,479 3,269,782 81,070 4,159,113 40,705 98,126 186,370 - 325,201 4,484,314 1,237,426 628,374 1,291,741 117,292 3,274,833 $ 7,759,147	%
												- 3 - 1 - 6 1 42 1 54 1 1 2 - 4 58 16 8 17 1 42 100

President: HUNG-NAN LIN

Accounting Supervisor: YA-MIN CHUANG

Manager: TSAN-YING HO

CHINA ECOTEK CORPORATION AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

From January 1 to December 31, 2014& from January 1 to December 31, 2013

Unit: Thousands of NT Dollars (Except Earnings per Share)

CODE Operating Income (Notes 13 & 26) 4100 Sales revenue 4520 Engineering service revenue 4650 Technical service revenue 4000 Total operating income Operating costs (Notes 10, 13,19, 21 & 26) 5110 Sales cost 5520 Engineering cost 5650 Technical service cost 5000 Total operating costs 5900 Gross Operating Costs Operating Expenses (Notes 19 & 21) 6100 Marketing expenses 6200 Administration expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Net Operating Profits Non-operating Income & Expenses (Note 21) 7010 Other income 7020 Other gains and losses (Note 11)		YEAR 2014	YEAR 2014	% 2 96 2 100 1 87 2 90 10 1 4 - 5 5 1 1		YEAR 2013	YEAR 2013
		AMOUNT $ 151,074 9,976,449 223,994 10,351,517 100,121 9,037,654 185,216 9,322,991 1,028,526 44,974 420,852 27,705 493,531 534,995 103,492 57,891				AMOUNT $ 251,465 9,815,851 193,393 10,260,709 184,098 8,950,510 147,206 9,281,814 978,895 34,260 390,538 18,736 443,534 535,361 77,455 13,740		%
								2 96 2 100 2 87 2 91 9 - 4 - 4 5 1 -

(carried forward)

(brought forward)

(brought forward)
CODE 7050 Financial costs 7060 Shares of gains (losses) of associates accounted for using equity method 7000 Total 7900 Net Profit before Tax 7950 Income Tax Expense (Note 22) 8200 Consolidated Net Income Other Comprehensive Income (Note 20) 8310 Exchange differences on translating foreign operations 8325 Unrealized gains (losses) on available-for-sale financial assets 8330 Cash flow hedge 8360 Actuarial losses on defined benefit plans 8373 Share of other comprehensive income of associates accounted for using equity method 8399 Income tax related to components of other comprehensive income 8300 Other comprehensive gains (losses) of current year (net profit after tax) 8500 Consolidated Comprehensive Net Profit of Current Year 8610 Net Profit Attributable to Owners of the Company			YEAR 2014		% - 1 3 8 1 7 1 - - - - - 1 8		YEAR 2013
			AMOUNT				AMOUNT		%
			( 122)				( 6,352)		-
			161,274				128,385		1
			$322,535 857,530 176,884 680,646 55,220 35,362 31,769 3,490 16 ) 9,021) 116,804 $ 797,450 $ 680,646						2
	( (								7 1 6 - - - - - - - 6

8710 Comprehensive Net Profit Attributable to Owners of the Company Earnings Per Share (Note 23) 9710 Basic 9810 Dilluted	$ 797,450 $ 5.50 5.47	$ 631,903 $ 5.06 4.87

President: HUNG-NAN LIN Manager: TSAN-YING HO Accounting Supervisor: YA-MIN CHUANG

CHINA ECOTEK CORPORATION AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

From January 1 to December 31, 2014 & from January 1 to December 31, 2013

Unit: Thousands of NT Dollars (Except Earnings per Share)

Code A1 Balance as of January 1, 2013 Appropriation and distribution of 2012 earnings B1 Legal reserve B3 Special reserve B5 Cash dividends distributed to shareholders of the Corporation－$4.0 per share C7 Changes in capital surplus from investments in associates accounted for using equity method D1 Net profit for 2013 D3 Other comprehensive income (loss) after tax for 2013 D5 Total comprehensive income for 2013 I1 Corporate bonds converted into common shares Z1 Balance as of December 31, 2013 Appropriation and distribution of 2013 earnings B1 Legal reserve B3 Special reserve B5 Cash dividends distributed to shareholders of the Corporation－$3.5 per share D1 Net profit for 2014 D3 Other comprehensive income (loss) after tax for 2014 D5 Total comprehensive income for 2014 Z1 Balance as of December 31, 2014				EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY	EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY	EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY	EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY	EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY	EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY	EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY						Subtotal $ 86,808 - - - - - - 30,484 30,484 - 117,292 - - - - - 114,135 114,135 $ 231,427		Total Equity
	Capital – Common Stock No. of Share (1,000 shares) Amount 116,137 $ 1,161,369 - - - - - - - - - - - - - - - - 7,606 76,057 123,743 1,237,426 - - - - - - - - - - - - - - 123,743 $ 1,237,426		Capital Surplus $ 288,328 - - - - 81 - - - 340,127 628,374 - - - - - - - $ 628,374		Retained	Earnings		Subtotal $ 1,164,627 - - 474,305) 474,305) - 614,803 13,384) 601,419 - 1,291,741 - - 433,099) 433,099) 680,646 2,669 683,315 $ 1,541,957			Other Equity
										Exchange differences on translating foreign operations ($ 12,033) - - - - - - 23,314 23,314 - 11,281 - - - - - 55,220 55,220 $ 66,501	Unrealized Gains on Available-for- sale Financial Assets $ 107,403 - - - - - - 24,971 24,971 - 132,374 - - - - - 32,547 32,547 $ 164,921		Cash Flow Hedge 8,562) - - - - - - 17,801) 17,801) - 26,363) - - - - - 26,368 26,368 $ 5
	No. of Share (1,000 shares) 116,137 - - - - - - - - 7,606 123,743 - - - - - - - 123,743			Legal Reserve $ 304,517 62,717 - - 62,717 - - - - - 367,234 61,480 - - 61,480 - - - $ 428,714	Special Reserve $ 8,614 - 27,460 - 27,460 - - - - - 36,074 - ( 36,074 ) - (36,074 ) - - - $ -	Unappropriated Earnings $ 851,496 ( 62,717 ) ( 27,460 ) ( 474,305) ( 564,482) - 614,803 ( 13,384) 601,419 - 888,433 ( 61,480 ) 36,074 ( 433,099) ( 458,505) 680,646 2,669 683,315 $ 1,113,243
					( (	( ( ( ( ( ( ( (	( ( ( ( (					($ ( ( ($					( ( ( ( (	$ 2,701,132 - - 474,305) 474,305) 81) 614,803 17,100 631,903 416,184 3,274,833 - - 433,099) 433,099) 680,646 116,804 797,450 $ 3,639,184

The notes attached herebelow shall constitute an integral part of these consolidated financial statements.

President: HUNG-NAN LIN

Manager: TSAN-YING HO

Accounting Supervisor: YA-MIN CHUANG

CHINA ECOTEK CORPORATION AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

From January 1 to December 31, 2014 & from January 1 to December 31, 2013

Unit: Thousands of NT Dollars

CODE Cash Flows from Operating Activities A10000 Net profit before tax of current year Adjustments to reconcile profit (loss) A20100 Depreciation expenses A20200 Amortization expenses A20300 Debit expenses A20400 Net gains on financial assets and liabilities at fair value through profit or loss A20900 Interest expenses A21200 Interest income A21300 Dividend income A23100 Net gains on disposal of investments A22500 Gains on disposal of property, plant and equipment A22300 Shares of gains (losses) of associates accounted for using equity method A29900 Recognition of provisions A29900 Others A30000 Net changes in operating assets and liabilities A31110 Financial instruments held for trading A31130 Notes receivable A31150 Accounts receivable A31160 Accounts receivable－related parties A31170 Amounts due from customers for construction contracts A31180 Other accounts receivable A31190 Other accounts receivable－related parties A31200 Inventories A31240 Other current assets A31250 Other financial assets A32130 Notes payable A32150 Accounts payable A32160 Accounts payable－related parties A32170 Amounts due to customers for construction contracts A32180 Other accounts payable A32200 Provisions A32230 Other current liabilities A32240 Accrued pension liabilities A33000 Cash generated from operations A33500 Income tax paid AAAA Net cash generated from operating activities Cash Flows from Investing Activities B00300 Acquisition of available-for-sale financial assets B00400 Proceeds from disposal of available-for-sale financial assets B01800 Acquisition of investments accounted for using equity method B01900 Proceeds from disposal of investments accounted for using equity method B02700 Acquisition of property, plant and equipment B02800 Proceeds from disposal of property, plant and equipment B03700 Increase in refundable deposits B03800 Decrease in refundable deposits B04500 Acquisition of intangible assets B06500 Increase in other financial assets B06600 Decrease in other financial assets B06700 Increase in other non-current assets B06800 Decrease in other non-current assets B07500 Interest received B07600 Devidends received from associates B07600 Other dividends received BBBB Net cash inflow (outflow) from investment activities Cash Flows from Financing Activities C00200 Decrease in short-term borrowings C04400 Decrease in other non-current Liabilities C04500 Cash dividends paid C05600 Interests paid	YEAR 2014 $ 857,530 20,113 8,321 4,856 ( 1,100 ) 122 ( 84,719 ) ( 15,869 ) ( 6,100 ) 134 ( 161,274 ) 18,694 ( 7,069 ) ( 20,000) 25 ( 285,996 ) 221,250 ( 63,779 ) ( 2,736 ) ( 1,202 ) 34,588 118,487 ( 1,100,614 ) - ( 18,899 ) 40,579 ( 784,536 ) 4,971 ( 19,372 ) 7,546 277 ( $ 1,235,772 ) ( 148,431) ( 1,384,203) ( 111,146 ) 67,552 - - ( 51,668 ) 419 25,106 ( 9,672 ) - 225,845 ( 79 ) - 75,602 15,869 133,899 371,727 ( 806 ) - ( 433,099 ) ( 122)	YEAR 2013
		$ 748,589 18,209 6,461 - ( 36 ) 6,352 ( 56,544 ) ( 15,310 ) ( 10,831 ) ( 165 ) ( 128,385 ) 16,094 - - ( 25 ) 64,895 43,625 366,673 ( 1,100 ) 2,367 36,163 ( 212,362 ) 42,693 ( 11,707 ) ( 14,459 ) 11,337 1,458,979 52,760 ( 22,504 ) ( 31,062 ) ( 6,632) $ 2,364,075 ( 86,566) 2,277,509 ( 12,394 ) - ( 235,008 ) 37,837 ( 30,269 ) 1,981 ( 67,278) - ( 8,815 ) ( 521,454 ) - - 41 50,777 15,310 41,649 ( 727,623) ( 83,091 ) ( 7,046 ) ( 474,305 ) ( 1,413)

CCCC Net inflow (outflow) from financing activities ( DDDD Effects of Exchange Rate Changes on Cash and Cash Equivalents Held in Foreign Currencies EEEE Increase in Cash and Cash Equivalents of Current Year E00100 Cash and Cash Equivalents at Beginning of Year E00200 Cash and Cash Equivalents at End of Year	434,027) ( 43,346 ( 1,403,157) 2,963,614 $ 1,560,457	565,855) 12,851 996,882 1,966,732 $ 2,963,614

The notes attached herebelow shall constitute an integral part of these consolidated financial statements.

CHINA ECOTEK Corporation

Standalone Financial Statements for the Years Ended December 31, 2014 and 2013 and Independent Auditors’ Report

• 1 -

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders China Ecotek Corporation

We have audited the accompanying standalone balance sheets of China Ecotek Corporation (the “Corporation”) as of December 31, 2014 and 2013, and the related standalone statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2014 and 2013. These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the standalone financial statements referred to in the first paragraph present fairly, in all material respects, the standalone financial position of the Corporation as of December 31, 2014 and 2013, and its standalone financial performance and its standalone cash flows for the years ended December 31, 2014 and 2013, in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers in the Republic of China.

March 24, 2015

Notice to Readers

The accompanying standalone financial statements are intended only to present the standalone financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such standalone financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying standalone financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and standalone financial statements shall prevail. As stated in Note 4 to standalone financial statements, the additional footnote disclosures that are not required under generally accepted accounting principles were not

• 2 -

translated into English.

• 3 -

CHINA ECOTEK CORPORATION

STANDALONE BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4, 6, 14 and 29) Financial assets at fair value through profit or loss - current (Notes 4, 7 and 29) Available-for-sale financial assets - current (Notes 4, 8 and 29) Notes receivable (Notes 4, 9 and 29) Accounts receivable (Notes 4, 9 and 29) Accounts receivable - related parties (Notes 4, 9, 29 and 30) Amounts due from customers for construction contracts (Notes 4, 10, 22 and 30) Other receivables (Note 29) Other receivables - related parties (Note 29) Inventories (Notes 4 and 11) Other financial assets - current (Notes 13 and 29) Other current assets (Notes 27, 31 and 32) Total current assets NONCURRENT ASSETS Available-for-sale financial assets - noncurrent (Notes 4, 8 and 29) Investments accounted for using equity method (Notes 4 and 12) Property, plant and equipment (Notes 14 and 15) Intangible assets (Note 4) Deferred tax assets (Notes 4 and 25) Prepayments for equipment Refundable deposits (Notes 27, 29 and 32) Other noncurrent assets Total noncurrent assets TOTAL		December 31, 2014 Amount % $ 1,161,821 17 21,100 - 75,139 1 - - 318,161 5 391,520 6 701,405 11 12,454 - 1,360 - 5,332 - 1,216,811 18 309,053 5 4,214,156 63 202,617 3 2,023,000 30 174,708 3 9,858 - 36,848 1 12,749 - 773 - 2,442 - 2,462,995 37 $ 6,677,151 100		December 31, 2013 Amount % $ 2,245,532 31 - - 58,653 1 25 - 31,221 - 734,911 10 620,082 9 5,572 - 158 - 3,955 - 1,019,894 14 345,442 5 5,065,445 70 126,977 2 1,787,260 24 147,714 2 10,210 - 52,874 1 2,975 - 57,027 1 2,363 - 2,187,400 30 $ 7,252,845 100

LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 16 and 29) Accounts payable (Notes 18 and 29) Accounts payable - related parties (Notes 18, 29 and 30) Current tax liabilities (Notes 4 and 5 ) Other payables (Notes 14, 19 and 29) Provisions - current (Notes 4, 14, 20 and 22) Amounts due to customers for construction contracts (Notes 4, 10, 22 and 30) Other current liabilities Total current liabilities NONCURRENT LIABILITIES Provisions - noncurrent (Notes 4, 14 and 20) Deferred tax liabilities (Notes 4 and 25) Accrued pension liabilities (Note 21) Guarantee deposits received Total noncurrent liabilities Total liabilities EQUITY (Notes 17, 23 and 25) Common stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		December 31, 2014 Amount % $ - - 196,835 3 13,310 - 33,605 - 436,880 7 35,160 1 1,870,269 28 87,709 1 2,673,768 40 48,346 1 132,676 2 183,157 3 20 - 364,199 6 3,037,967 46 1,237,426 19 628,374 9 428,714 6 - - 1,113,243 17 1,541,957 23 231,427 3 3,639,184 54 $ 6,677,151 100		December 31, 2013
				Amount % $ 806 - 150,120 2 4,499 - 57,258 1 426,686 6 43,479 - 2,890,600 40 79,366 1 3,652,814 50 40,705 1 98,123 1 186,370 3 - - 325,198 5 3,978,012 55 1,237,426 17 628,374 9 367,234 5 36,074 1 888,433 12 1,291,741 18 117,292 1 3,274,833 45 $ 7,252,845 100

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

• 4 -

CHINA ECOTEK CORPORATION

STANDALONE STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUES (Notes 14 and 30) Sales Construction revenue Technical service revenue Total operating revenue OPERATING COSTS (Notes 11 ,14 ,21 ,24 and 30) Cost of goods sold Construction cost Technical service cost Total operating costs GROSS PROFIT OPERATING EXPENSES (Notes 19 and 21) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Note 24) Other income (Note 30) Other gains and losses (Note 12) Finance costs Share of the profit of subsidiaries and associates Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 25) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (Note 23) Exchange differences on translating foreign operations		For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 Amount % $ 62,565 1 8,055,151 96 223,994 3 8,341,710 100 51,089 1 7,390,050 88 185,216 2 7,626,355 91 715,355 9 44,974 1 390,086 5 27,706 - 462,766 6 252,589 3 49,062 1 58,002 1 (122) - 448,274 5 555,216 7 807,805 10 127,159 2 680,646 8 55,220 1		2013
				Amount % $ 62,172 1 7,574,878 97 193,393 2 7,830,443 100 52,179 1 6,894,135 88 147,206 2 7,093,520 91 736,923 9 34,260 - 358,134 5 18,736 - 411,130 5 325,793 4 41,049 1 9,300 - (4,973) - 336,648 4 382,024 5 707,817 9 93,014 1 614,803 8 23,314 - (Continued)

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CHINA ECOTEK CORPORATION

STANDALONE STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Unrealized gain on available-for-sale financial assets Cash flow hedges Actuarial gain (loss) from defined benefit plans Share of the other comprehensive income (loss) of subsidiaries and associates Income tax expense relating to the components of other comprehensive income Total other comprehensive income for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 26) Basic Diluted			For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
			2014 Amount % 35,362 1 31,769 - 3,490 - (16) - (9,021) - 116,804 2 797,450 10 $ 5.50 $ 5.47			2013
		$			$	Amount % 27,103 - (21,447) - (15,397) - 171 - 3,356 - 17,100 - 631,903 8 $ 5.06 $ 4.87
		$			$

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

(Concluded)

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CHINA ECOTEK CORPORATION

STANDALONE STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars, Except Dividends Per Share)

BALANCE AS OF JANUARY 1, 2013 Appropriation of 2012 earnings (Note 23) Legal reserve Special reserve Cash dividends - NT$4.0 per share Change in capital surplus from investments in associates accounted for using equity method Net profit for the year ended December 31, 2013 Other comprehensive income for the year ended December 31, 2013, net of income tax Total comprehensive income for the year ended December 31, 2013 Convertible bonds converted into common stock (Note 17) BALANCE AT DECEMBER 31, 2013 Appropriation of 2013 earnings (Note 23) Legal reserve Special reserve Cash dividends - N$$3.5 per share Net profit for the year ended December 31, 2014 Other comprehensive income for the year ended December 31, 2014, net of income tax Total comprehensive income for the year ended December 31, 2014 BALANCE AT DECEMBER 31, 2014		Equity Attributable to the Owners of the Corporation	Equity Attributable to the Owners of the Corporation			Total $ 86,808 - - - - - - 30,484 30,484 - 117,292 - - - - - 114,135 114,135 $ 231,427	Total Equity $ 2,701,132 - - (474,305) (474,305) (81) 614,803 17,100 631,903 416,184 3,274,833 - - (433,099) (433,099) 680,646 116,804 797,450 $ 3,639,184
	Capital Stock- Common Stock Shares (In Thousands) Amount Capital Surplus 116,137 $ 1,161,369 $ 288,328 - - - - - - - - - - - - - - (81) - - - - - - - - - 7,606 76,057 340,127 123,743 1,237,426 628,374 - - - - - - - - - - - - - - - - - - - - - 123,743 $ 1,237,426 $ 628,374	Retained Earnings	Total $ 1,164,627 - - (474,305) (474,305) - 614,803 (13,384) 601,419 - 1,291,741 - - (433,099) (433,099) 680,646 2,669 683,315 $ 1,541,957	Other Equity
				Exchange Unrealized Differences on Gain on Translating Available-for- Foreign Operations sale Financial Assets $ (12,033) $ 107,403 - - - - - - - - - - - - 23,314 24,971 23,314 24,971 - - 11,281 132,374 - - - - - - - - - - 55,220 32,547 55,220 32,547 $ 66,501 $ 164,921	Cash Flow Hedge $ (8,562) - - - - - - (17,801) (17,801) - (26,363) - - - - - 26,368 26,368 $ 5
	Shares (In Thousands) 116,137 - - - - - - - - 7,606 123,743 - - - - - - - 123,743	Legal Reserve Special Reserve Unappropriated Earnings $ 304,517 $ 8,614 $ 851,496 62,717 - (62,717) - 27,460 (27,460) - - (474,305) 62,717 27,460 (564,482) - - - - - 614,803 - - (13,384) - - 601,419 - - - 367,234 36,074 888,433 61,480 - (61,480) - (36,074) 36,074 - - (433,099) 61,480 (36,074) (458,505) - - 680,646 - - 2,669 - - 683,315 $ 428,714 $ - $ 1,113,243

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

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CHINA ECOTEK CORPORATION

STANDALONE STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments for: Depreciation expense Amortization expense Net gain on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Dividend income Loss (gain) on disposal of property, plant and equipment Share of the profit of subsidiaries and associates Gain on disposal of investments, net Recognition of provisions Others Changes in operating assets and liabilities Financial assets held for trading Notes receivable Accounts receivable Accounts receivable-related parties Amounts due from customers for construction contracts Other receivables Other receivable-related parties Inventories Other current assets Other financial assets Notes payable Accounts payable Accounts payable-related parties Amounts due to customers for construction contracts Other accounts payable Provisions Other current liabilities Accrued pension liabilities Cash generated from (used in) operations Income tax paid Net cash generated from (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of available-for-sale financial assets Proceeds from disposal of available-for-sale financial assets Acquisition of investments accounted for using equity method	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 807,805 19,167 7,641 (1,100) 122 (32,264) (15,869) 134 (448,274) (6,100) 18,694 (7,069) (20,000) 25 (286,940) 343,391 (81,323) (2,737) (1,202) (1,377) 64,119 (390,992) - 46,715 8,811 (1,020,331) 5,294 (19,372) 8,343 277 (1,004,412) (109,254) (1,113,666) (111,146) 67,552 -	2013 $ 707,817 17,362 6,381 (36) 4,973 (21,451) (15,310) (165) (336,648) (10,831) 16,094 - - (25) 67,256 49,689 413,595 (1,375) 2,367 2,846 36,745 69,964 (11,707) (75,533) 1,646 1,207,168 55,860 (22,504) (31,230) (6,632) 2,126,316 (59,388) 2,066,928 (12,394) - (325,314) (Continued)

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CHINA ECOTEK CORPORATION

STANDALONE STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

Proceeds from disposal of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Acquisition of intangible assets Increase in other financial assets Decrease in other financial assets Increase in other noncurrent assets Decrease in other noncurrent assets Interest received Dividends received from others Dividends received from subsidiaries and associates Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Increase in guarantee deposits received Decrease in other noncurrent liabilities Dividends paid Interest paid Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ - (51,588) 419 - 28,522 (7,289) - 225,845 (79) - 28,119 15,869 267,738 463,962 - (806) 20 - (433,099) (122) (434,007) (1,083,711) 2,245,532 $ 1,161,821	2013 $ 37,837 (29,531) 1,981 (66,982) - (8,738) (521,454) - - 3,256 19,555 15,310 49,697 (836,777) 806 - - (7,047) (474,305) (34) (480,580) 749,571 1,495,961 $ 2,245,532

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

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Attachment 3

CHINA ECOTEK CORPORATION

Profit Allocation Proposal

December 31, 2014

Undistributed earnings from January 1,2014 Actuarial gains(losses) from defined benefit pension plans (included in retained earnings) Subtotal of Undistributed earnings Add: After-tax earnings of 2014 (A) Deduct: Legal reserve = (A) *10% Retained Earnings Available for Distribution as of December 31, 2014 Distribution Items: Dividends for common shares Undistributed earnings	NT$ 429,926,081 2,668,991
	432,595,072 680,646,481 (68,064,648)
	NT$1,045,176,905 (556,841,484)
	NT$ 488,335,421
Compensation for the Board of Directors and Supervisors Employee Bonus Total of distribution	1,800,000 29,402,183 588,043,667

Attachment4

Comparison Table of Drafted Amendments to Articles of Incorporation of China Ecotek Corporation

Corporation	Corporation
Revised clause		Clause in force		Explanation
Article 32. In case of any earnings earned in any given fiscal year being reported from the Company’s final annual accounting, the order of distribution is as below: 1. The Company shall reverse losses of previous years. 2. Appropriate 10% for legal reserves till the accumulated amount is equal to Paid-in Capital. 3. When necessary, It may allocate or reverse partial or all of the special reserves in accordance with operation and regulations. 4. In case of any disposable earnings,the board of directors has the right to propose Proposal for Distribution. The proposal shall accepted by Shareholders’ Meeting. NT$150,000for each one of Directors and Supervisors, 5% for Employee Bonus.		Article 32. In case of any earnings earned in any given fiscal year being reported from the Company’s final annual accounting, the order of distribution is as below: 1. The Company shall reverse losses of previous years. 2. Appropriate 10% for legal reserves till the accumulated amount is equal to Paid-in Capital. 3. When necessary, It may allocate or reverse partial or all of the special reserves in accordance with operation and regulations. 4. The way of distribution of Compensation for the Board of Directors and Supervisors and Employee Bonus is as follows: NT$150,000 per person of Directors and Supervisors, 5% for Employee Bonus. Board of		Amendment is madein accordance with the actual circumstance.
			~~di~~ ~~h~~ ~~h~~ ~~i h~~

Article 42. Article 42. To revise the amendment This Articles of Incorporation are This Articles of Incorporation of cardinal number. agreed and signed on Mar. 2, are agreed and signed on Mar. 1993, firstly amended on May. 2, 1993, firstly amended on 25, 1993,(Omitted) , twelfth May. 25, 1993,(Omitted) , amended on Jun. 28, 2012 and twelfth amended on Jun. 28, 2012 thirteenth amended on June 25, 2015.