$\mathcal{A}$

$\bar{\mathbf{r}}$

Consolidated Financial Statements December 31, 2014 and 2013 (With Independent Auditors' Report Thereon)

$\overline{1}$

Contents	Page
1. Cover page
2. Table of contents
3. Independent auditor's report
4. Consolidated balance sheets
5. Consolidated statements of comprehensive income
6. Consolidated statements of changes in equity
7. Consolidated statements of cash flows
8. Notes to the consolidated financial statements
(1) Company history	1
(2) Consolidated financial statements authorization date and authorization process	ı
(3) New standards and interpretations not yet adopted	1
(4) Significant accounting policies	$4 - 20$
Significant accounting judgments, estimations, assumptions, and (5) sources of estimation uncertainty	$20 - 21$
(6) Explanation of significant accounts	$22 - 50$
(7) Related-party transactions	$50 - 52$
(8) Pledged assets	52
(9) Commitments and contingencies	$52 - 53$
(10) Losses due to major disasters	53
(11) Subsequent events	53
$(12)$ Other	53
(13) Segment information	$54 - 55$

$\frac{1}{2} \sum_{i=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=1}^n \frac{1}{2} \sum_{j=$

$\sim$

要侯建業群合會計師事務府 KPMG

台北市11049信義路5段7號68樓(台北101大樓) 68F. TAIPEI 101 TOWER, No. 7, Sec. 5, Xinyi Road, Taipei, 11049, Taiwan, R.O.C.

Telephone 電話 +886 (2) 8101 6666 Fax

Independent Auditors' Report

The Board of Directors Chinese Maritime Transport Ltd.:

We have audited the accompanying consolidated balance sheets of Chinese Maritime Transport Ltd. and Subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income, changes in stockholders' equity, and cash flows for the years ended December 31, 2014 and 2013. These consolidated financial statements are the responsibility of the Company's management. $_{\rm Our}$ responsibility is to express an opinion on these consolidated financial statements based on our audits. The financial statements of long-term investments accounted for under the equity method were audited by other auditors, whose reports were furnished to us. The long-term equity investments in the consolidated financial statements accounted for using the equity method amounting to NT\$2,169,793,000, and NT\$2,718,312,000, constituted 10.14% and 12.40% of the total assets as of December 31, 2014, and 2013, respectively. The related investment loss amounted to NT\$49,727,000 and NT\$853,000, constituting $(12.53%)$ and $(0.20%)$ of the income before tax, respectively, for the years then ended.

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

In our opinion, based on our audits and the aforementioned reports of other auditors, the consolidated financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Chinese Maritime Transport Ltd. and Subsidiaries as of December 31, 2014, and 2013, and the results of their operations and their cash flows for the years then ended, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by the Financial Supervisory Commission R.O.C.

$KPMG$

March 18, 2015

The accompanying consolidated financial statements are not intended to present the financial position, results of operations, and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices to review such consolidated financial statements are those generally accepted and applied in the Republic of China.

The auditors' report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language auditors' report and consolidated financial statements, the Chinese version shall prevail.

Current financial assets at fair value through Cash and cash equivalents (note 6(a)) ssets Current assets:	December 31, 2014 4,610,003 Amount Ø	22 ż	December 31, 2013 5,246,802 Amount S	25 ҉	(note(6(h)) Liabilities and equity Notes and accounts payable Short-term borrowings Current liabilities:	December 31, 2014 1,109,600 136,194 Amount s	వి	December 31, 2013 50,000 120,790 Amount ↮	న
Current held-to-maturity financial assets profit or loss (notes $6(b)$ and $(p)$ ) (notes $6(b)$ and $(p)$ )	33,201		31,896 122,975		Long-term liabilities, current portion Other current liabilities Unearned revenue	789.976 220,728 39,274		207,005 2,692,573 77,003	ı
Notes and accounts receivable due from related Notes and accounts receivable, net (note 6(c)) parties, net (note 7) Other current assets	65912 165,923 138,712		165,608 137,763 70,354		Bonds payable (note 6(h)) Non-current liabilities: $(\text{note 6(h)})$	2,800,000 2,295,772	$\overline{10}$ $\mathbf{r}$	2,800,000 3.147.371	븨 $\frac{4}{3}$
Other current financial assets (notes 6(c) and Non-current assets:	5,272,102 258.351	र्द	32,063 5,807,461	ଅ ٠	Accrued pension liabilities (note 6(j)) Long-term borrowings (note 6(h)) Deferred tax liabilities (note $6(k)$ ) Other non-current liabilities	4,824,635 581,295 151,715 5	$\boldsymbol{\mathcal{Z}}$ $\cdot$	144,456 579,852 5,287,313 828	$\mathbf{z}$ ŗ
Non-current financial assets held for trading Investments accounted for using equity (notes 6(b) and (p))	100,000		00,000	$\ddot{\phantom{a}}$	Total liabilities	8,358,322 10,654,094	쉑 ଗ	8,812,449 11,959,820	위지
Property, plant and equipment (notes 6(e) and 8) Non-current financial assets at cost (note 6(b)) Investment property, net (note 6(f)) method (notes $6(d)$ and $8)$	2,169,793 25,000 13,702,504 39,773	$\mathbf{r}$ ड	12,500 89,808 2,718,312 104,201 3	$\overline{c}$ S	Common stock (note 6(l)) Retained earnings Capital surplus	2,564,736 53,411	$\frac{12}{1}$ ŀ	2,564,736 42,503	ᅴ "
Other non-current financial assets (note 6(g) Deferred tax assets (note 6(k)) Other non-current assets Intangible assets	14316 28,460 9,302 20.391		94,648 27,614 16,905 12,301		Unappropriated retained earnings Special reserve Legal reserve	1,583,016 579.599 8,039,626 69.774 5,877.01	38 4 27	(579, 599) 1,543,352 799,835 5,753,103 8,096,290	$\frac{5}{2}$ ₹
Total assets	3 21,381,641 16,109.539	$\frac{100}{100}$ ρŗ	22,083,750 16,276,289	닝 一血	Total liabilities and equity Other equity interest Total equity	3 21.381,641 10,727.547	톜 ရှ	\$22,083,750 10,123,930	त्र 톜

Consolidated Balance Sheets

December 31, 2014 and January 1, 2013
(expressed in thousands of New Taiwan dollars)

See accompanying notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income

For the Years ended December 31, 2014 and 2013 (expressed in thousands of New Taiwan dollars, except net income per share amounts)

		2014		2013
		Amount	%	Amount	$\%$
Operating revenue (note 7)
Freight revenue-vessel chartering	\$	1,511,071	43	1,461,145	44
Freight revenue-container hauling, net, and
logistics revenue		1,966,021	56	1,860,217	56
Freight revenue-airline agent and others		14,189	L	12,033
		3,491,281	100	3,333,395	100
Operating Cost (notes 7 and 12)
Freight cost-vessel chartering		994,517	28	981,753	29
Freight cost-container hauling and logistics cost		1,584,279	45	1,530,798	46
Freight cost-airline agent and others		8,272	$\blacksquare$	5,449	۰.
		2,587,068	73	2,518,000	$\frac{75}{2}$
Gross profit		904,213	27	815,395	25
Operating expenses (notes 7 and 12)		344,673	10	336,524	10
Net operating income		559,540	17	478,871	15
Non-operating income and expenses:
Other income (note $6(i)$ )		13,125		22,493	1
Financial costs-interest expense (note $6(0)$ )		(193, 310)	(6)	(216, 728)	(7)
Share of profit (loss) of associates accounted for
using equity method (note $6(d)$ )		(49, 727)	(1)	(853)
Interest income		52,746	2	45,624	1
Gains on disposals of investment property, plant
and equipment (notes $6(e)$ and $(f)$ )		64,703	$\mathbf{2}$	89,448	3
Miscellaneous disbursements		(3,092)		(1, 898)
Losses on disposals of investments		(25, 561)	(1)	(2,305)
Foreign exchange gains or loss (note 6(b) and (d))		(21,660)	$\Omega$	9,129
Profit before tax		396,764	12	423,781	13
Tax expense (note 6(k))		64,050	$\overline{2}$	27,133
Profit		332,714	10	396,648	12
Other comprehensive income: (note 6(m))
Other comprehensive income, before tax, exchange			16	226,530	7
differences on translation		569,696
Other comprehensive income, before tax, actuarial
gains (losses) on defined benefit plans		(6,766)		1,347
Share of other comprehensive income of associates for using equity method		81,009	2	48,655	1
Less: income tax relating to components of other
comprehensive income		(767)		388
Other comprehensive income, net		644,706	18	276,144	$\overline{\mathbf{8}}$
Comprehensive income	\$	977,420	28	672,792	20

Earnings per share: $(note 6(n))$
Basic net income per share	S		1.30		1.55
Diluted net income per share	\$		1,30		1.55

See accompanying notes to consolidated financial statements.

Consolidated Statements of changes in equity

For the Year ended December 31, 2014 and 2013
(expressed in thousands of New Taiwan dollars)

				Retained earnings	Equity attributable to owners of parent			Other equity interest
	Ordinary shares	surplus Capital	reserve Legal	reserve Special	retained earnings Unappropriated	retained earnings Total	of foreign financial on translation differences statements Exchang	available-for-sale Unrealized gains financial assets (losses)on	equity interest Total other	Total equity
Balance on January 1, 2013	\$2,564,736	42,503	1,486,071		6,467,891	7,953,962	(847,576)	(6,014)	(853, 590)	9,707,61
Appropriation and distribution of retained earnings: Legal reserve appropriated			57,281		(57, 281)
Reversal of special reserve				799,835	(799.835)
Cash dividends of ordinary share					(256, 473)	(256, 473)				(256, 473)
Profit for the year ended December 31, 2013					396,648	396,648				396,648
Other comprehensive income for the year ended December 31, 2013					의	-153	270.122	$-3.862$	273,991	276,144
Comprehensive income for the year ended December 31, 2013					398.80	393.80	270.122	$-3.869$	273,991	$-672.792$
Balance on December 31, 2013	2,564,736	42,503	1,543,352	799,835	5,753,103	8,096,290	(577, 454)	(2,145)	(579, 599)	10,123,930
Appropriation and distribution of retained carnings:
Legal reserve appropriated			39,664		(39,664)
Special reserve appropriated				(220, 236)	220,236
Cash dividends of ordinary share					[384, 71]	(387,711)				(384, 711)
Profit for the year ended December 31, 2014					332,714	332,714				332,714
Other comprehensive income for the year ended December 31, 2014 Comprehensive income for the year ended December 31, 2014					तक 328.047	$-0.667$ 328,047	654.784 654.78	$-6.41$ 15,411	549.373 649,37	644.706 977,420
Changes in equity of associates for using equity method		10.908			،	$\cdot \rceil$			$\cdot$	$\frac{300}{10}$
Balance on December 31, 2014	$3 - 24564.736$	TIFT	1,583,016	579.59	TUTRE	8,039,626	$\frac{1}{2}$	$-0.55$	-69.77	10,11,141

See accompanying notes to consolidated financial statements.

$\ddot{\phantom{0}}$

Consolidated Statements of cash flows

For the Year ended December 31, 2014 and 2013 (expressed in thousands of New Taiwan dollars)

		2014	2013
Cash flows from (used in) operating activities:
Profit before tax	\$	396,764	423,781
Adjustments:
Adjustments to reconcile profit:
Depreciation and amortization		701,176	669,799
Interest expense		193,310	216,728
Interest income		(52, 746)	(45, 624)
Share of loss (profit) of associates for using equity method		49,727	853
Gain on disposal of property, plant and equipment		(64, 703)	(89, 448)
Loss on disposal of investments		25,561	2,305
Adjustments to reconcile profit		852,325	754,613
Changes in operating assets and liabilities:
Changes in operating assets:
Changes in financial assets at fair value through profit or loss		(1, 305)	(136)
Decrease (increase) in notes and accounts receivable		(1, 264)	(51, 330)
Decrease (increase) in other current assets and prepayment		(1,055)	3,962
Decrease (increase) in other current financial assets		4,109	55,268 384
Others		1,646 2,131	8,148
Changes in operating liabilities:
Increase (decrease) in unearned revenue		(40, 388)	(138, 223)
Increase (decrease) in notes and accounts payable		15,404	14,798
Increase (decrease) in other current liabilities		5,145	(16, 516)
Others		-	(147)
		(19, 839)	(140, 088)
Total changes in operating assets and liabilities		(17,708)	(131,940)
Total adjustments		834,617	622,673
Cash flows from operations		1,231,381	1,046,454
Interest received		58,092	42,312
Dividends received		63,434	76,246
Interest paid		(223, 332)	(224,005)
Income taxes paid		(25,958)	(141,711)
Net Cash flows from (used in) operating activities		1,103,617	799,296
Cash flows from (used in) investing activities:
Proceeds from disposal of available-for-sale financial assets		1,073,741
Acquisition of available-for-sale financial assets		(1,060,547)
Acquisition of held-to-maturity financial assets		122,975	(95, 504)
Acquisition of financial assets at cost		(12,500)	(12, 500)
Proceeds from disposal of investments accounted for using equity method		502,481	38,195
Acquisition of investments accounted for using equity method		(18,600) (617, 303)	(1,389,782)
Acquisition of property, plant, equipment Proceeds from disposal of property, plant and equipment			151,505
		107,588	(43, 284)
Decrease (increase) in other non-current financial assets		(51,500) (7, 732)	(4,238)
Others Net cash flows from (used in) investing activities		38,403	(1,355,608)
Cash flows from (used in) financing activities:
Increase (decrease) in short-term loans		1,059,600	50,000
Proceeds from long-term debt			942,626
Repayments of long-term debt		(701, 449)	(688, 258)
Cash dividends paid		(384,711)	(256, 473)
Repayments of bonds		(2,000,000)	(1,000,000)
Others		(153)	(582)
Net cash flows from (used in) financing activities		(2,026,713)	(952, 687)
Effect of exchange rate changes on cash and cash equivalents		247,894	116,621
Net increase (decrease) in cash and cash equivalents		(636,799)	(1, 392, 378)
Cash and cash equivalents at beginning of period		5,246,802	6,639,180
Cash and cash equivalents at end of period	s	4,610,003 S	5,246,802

See accompanying notes to consolidated financial statements.

Notes to Consolidated Financial Statements

December 31, 2014 and 2013 (expressed in thousands of New Taiwan dollars unless otherwise specified)

(1) Company history

Chinese Maritime Transport Ltd. (the Company), previously named Associated Transport Inc., was incorporated as a company limited by shares on January 31, 1978, in the Republic of China. The Company's common shares were listed on the Taiwan Stock Exchange (TSE). The consolidated financial statements of the Company as of and for the year ended December 31, 2014 comprise the Company and its subsidiaries (together refined to as the "Group" and individually as "Group entities"). The main activities of the Company are bulk-carrier transportation through its 100%-owned overseas subsidiaries; domestic container hauling, vessel transportation, warehousing, and related business; and acting as the general sales agent for Saudi Arabian Airlines. The Company also owns investment companies to engage in the business of investment. Based on the organization of the Group and distribution of duties, the Company leads and invests in the business in the Group related to transportation. Please refer to note 4 (c) 2. for related information.

(2) Consolidated financial statements authorization date and authorization process

These consolidated financial statements were authorized for issuance by the board of directors on March 18, 2015.

(3) New standards and interpretations not yet adopted

(a) Impact of the 2013 version of the International Financial Reporting Standard ("IFRS") endorsed by the Financial Supervisory Commissions R.O.C. ("FSC") but not yet in effect.

According to Rule No.1030010325 issued on April 3, 2014 by the FSC, listed, over-the-counter, and emerging stock companies are required to adopt the 2013 version of the IFRS endorsed by the FSC (IFRS 9 Financial instruments is excluded) in preparing the 2015 financial statements. The new standards and amendments issued by the International Accounting Standards Board ("IASB") were as follows:

New standards and amendments	Effective date per IASB
· Amended IFRS 1 "Limited Exemption from Comparative IFRS 7	July 1, 2010
Disclosures for First-time Adopters"
·Amended IFRS 1 "Severe Hyperinflation and Removal of Fixed	July 1, 2011
Dates for First-time Adopters"
Amended IFRS 1 "Government Loans"	January 1, 2013
Amended IFRS 7 "Disclosure - Transfers of Financial Assets"	July 1,2011
·Amended IFRS 7 "Disclosure - Offsetting Financial Assets and	January 1, 2013
Financial Liabilities"

Notes to Consolidated Financial Statements

New standards and amendments	Effective date per IASB
·IFRS 10 Consolidated Financial Statements	January 1, 2013
	(Investment Entities
	amendments, effective 1
	January 2014.)
·IFRS 11 Joint Arrangements	January 1, 2013
·IFRS 12 Disclosure of Interests in Other Entities	January 1, 2013
·IFRS 13 Fair Value Measurement	January 1, 2013
Amended IAS 1 "Presentation of Items of Other Comprehensive Income"	July 1,2012
Amended IAS 12 "Deferred Tax: Recovery of Underlying Assets"	January 1, 2012
Amended IAS 19 "Employee Benefits"	January 1, 2013
Amended IAS 27 "Separate Financial Statements"	January 1, 2013
Amended IAS 32 "Offsetting Financial Assets and Financial	January 1, 2014
Liabilities"
·IFRIC 20 - Stripping Costs in the Production Phase of a Surface	January 1, 2013
Mine

The Group had assessed that the 2013 version of the IFRS may not have a significant impact on the consolidated financial statements.

(b) Impact of IFRS issued by the IASB but not yet endorsed by the FSC

The 2013 version of the IFRS issued by the IASB but not yet endorsed by the FSC were as follows:

New standards and amendments	Effective date per IASB
'IFRS 9 " Financial Instruments"	January 1, 2018
IFRS 10 and IAS 28 " Sale or Contribution of Assets between an Investor and its Associate or Joint Venture"	January 1, 2016
·IFRS 10, IFRS 12 and IAS 28 Investment Entities "Applying the Consolidation Exception"	January 1, 2016
Amended IFRS 11 "Accounting for acquisition of interests in joint operations"	January 1, 2016
·IFRS 14 "Regulatory Deferral Accounts"	January 1, 2016
'IFRS 15 "Revenue from contracts with customers'"	January 1, 2017
Amended IAS 16 and IAS 38 "Clarification of acceptable methods of depreciation and amortization"	January 1, 2016
Amended IAS 16 and IAS 41 "Agriculture: bearer plants"	January 1, 2016
Amended IAS 19 "Defined Benefit Plans: Employee Contributions"	July 1, 2014
Amended IAS 27 "Separate Financial Statements"	January 1, 2016
·Amended IAS 36 "Recoverable Amount Disclosures for Non-	January 1, 2014
Financial Assets"

Notes to Consolidated Financial Statements

New standards and amendments	Effective date per IASB
Amended IAS 39 "Novation of Derivatives and Continuation of	January 1, 2014
Hedge Accounting"
Amended IFRIC 21 "Levies"	January 1, 2014

As the standards and amendments above have not been endorsed by the FSC, the Group is in the process of assessing the impact on the financial position and the results of operations. Related impact will be disclosed following the completion of its assessments.

(4) Significant Accounting Policies

The significant accounting policies presented in the consolidated financial statements are summarized as follows. Except for those specifically indicated, the following accounting policies were applied consistently throughout the presented periods in the consolidated financial statements.

(a) Statement of compliance

These consolidated financial statement have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as the Regulations) and IFRSs endorsed by the FSC.

(b) Basis of preparation

Basis of measurement

Except for the following significant accounts, the consolidated annual consolidated financial statements have been prepared on the historical cost basis:

(i) Financial instruments (including derivative financial instruments) measured at fair value through profit or loss are measured at fair value;
(ii) Available-for sale financial assets are measured at fair value.
(iii) The defined benefit liabilities is recognized as plan assets, plus unrecognized past service cost and unrecognized actuarial losses, less the present value of the defined benefit obligation.
1. Functional and presentation currency

The functional currency of each Group entities is determined based on the primary economic environment in which the entities operate. The Group consolidated financial statements are presented in New Taiwan Dollar, which is the Group's functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

$\overline{\mathbf{4}}$

CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(c) Basis of consolidation

1. Principle of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and its subsidiaries. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

Changes in the Group's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Deventors of ownership (0/)

List of subsidiaries in the consolidated financial statements.

				1 Creditage of Ownership ( 70)
			December 31	December 31
Investor	Name of subsidiarv	Core business	2014	2013
The Company	Chinese Maritime Transport(S) Pte. Ltd. (CMTS)	Investment holding of ship-owning companies	0.95	0.95
$\boldsymbol{\eta}$	Chinese Maritime Transport (Hong Kong), Limited (CMTHK)	Ħ	100	100
Ħ	CMT Logistics Co., Ltd. (CMTL)	Warehouse management	100	100
$\boldsymbol{\eta}$	AGM Investment Ltd. (AGM)	Investment	100	100
$\boldsymbol{\mathit{H}}$	Hope Investment Ltd.(HIL)	Investment	100	100
$\boldsymbol{\eta}$	Mo Hsin Investment Ltd. (MHI)	Investment	100	100
Ħ	Associated Transport Inc.(ATI)	Container trucking	100	100
Ħ	CMT Travel Service Ltd.	Travel	100	100
11	United Nan Hai Petroleum INC (UNH)	Gasoline international trade	100	100
Ħ	CMT AIR LTD. (CMA)	Forwarder	100	(note 1)
CMTS	China Fortune Shipping Pte Ltd. (CFR)	Bulk-carrier transportation	100	100
n	China Enterprise Shipping PTE. Ltd.(CEP)	$\boldsymbol{\mu}$	100	100

				Percentage of ownership (%)
			December 31	December 31
Investor	Name of subsidiary	Core business	2014	2013
CMTHK	China Prosperity Shipping Ltd. (CPS)	Ħ	100	100
$\boldsymbol{\mu}$	China Peace Shipping Ltd. (CPE)	$^{\prime\prime}$	100	100
	China Progress Shipping Ltd. (CPG)	Ħ	100	100
$\boldsymbol{\mu}$	China Pioneer Shipping Ltd. (CPN)	$\boldsymbol{\eta}$	100	100
$\boldsymbol{\mu}$	China Pride Shipping Ltd. (CPD)	$^{\prime\prime}$	100	100
$\boldsymbol{r}$	CMT Chartering Ltd. (CCL)	Bulk-chartering services	100	100
$\boldsymbol{H}$	China Partners Shipping Ltd. (CPT)	Bulk-carrier transportation	(note 3)	100
$\boldsymbol{H}$	China Triumph Shipping Ltd. (CTU)	$\boldsymbol{\eta}$	100	100
$\boldsymbol{H}$	China Trade Shipping Ltd. (CTD)	$\boldsymbol{\mathit{ii}}$	100	100
$\boldsymbol{H}$	China Harmory Shipping LTD.(CHM)	$\boldsymbol{\mathcal{H}}$	100	100
$\boldsymbol{\mathcal{H}}$	China Honour shipping Ltd. (CHN)	$\boldsymbol{\mathit{ii}}$	100	100
$\boldsymbol{\mu}$	CMT Investment CO., Limited (CHI)	Investment	100	100
$\boldsymbol{\mu}$	CMT International Management Co. Limited (CIM)	Investment Management	100	(Note 2)
$\boldsymbol{H}$	CMTS	Investment holding of ship-owning companies	99.05	99.05
ATI	Chang-Shun Transport CO., LTD. (CST)	Container trucking	100	100
$\boldsymbol{n}$	Huang-Yuen Transport CO., LTD. (HYT)	Container trucking	100	100
$\boldsymbol{\mu}$	Mao-Hua Transport CO., LTD. (MHT)	Container trucking	100	100
$\boldsymbol{\eta}$	AG Prosperity Transport CO., LTD. (APT)	Container trucking	100	100

Notes to Consolidated Financial Statements

Note 1: CMT AIR was incorporated in June 2014.
Note 2: CIM was incorporated in 2014.
Note 3: Liquidation completed in first quarter of 2014.

$\ddot{\phantom{a}}$

Notes to Consolidated Financial Statements

(d) Foreign currencies

1. Foreign currency transaction

Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at exchange rates at the dates of the transactions. Monetary items denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between the amortized cost in the functional currency at the beginning of the year adjusted for the effective interest and payments during the year, and the amortized cost in foreign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of translation.

Foreign currency differences arising from retranslation are recognized in profit or loss, except for the available-for-sale equity instruments which are recognized in other comprehensive income.

2. Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the Group's functional currency at exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to the Group's functional currency at average rate. Foreign currency differences are recognized in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity.

When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Group disposes of only part of investment in an associate of joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planed nor likely in the foreseeable future, foreign currency gains and losses arising from such items are considered to form part of a net investment in the foreign operation and are recognized in other comprehensive income, and presented in the translation reserve in equity.

Notes to Consolidated Financial Statements

(e) Classification of current and non-current assets and liabilities

An entity shall classify an asset as current when:

1. It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
1. It holds the asset primarily for the purpose of trading;
1. It expects to realize the asset within twelve months after the reporting period; or
1. The asset is cash and cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

An entity shall classify a liability as current when:

1. It expects to settle the liability in its normal operating cycle;
1. It holds the liability primarily for the purpose of trading;
1. The liability is due to be settled within twelve months after the reporting period; or
1. It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. 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.

An entity shall classify all other liabilities as non-current.

(f) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits that are subject to an insignificant risk of changes in their fair value.

The time deposits conform with above definition are used for the purpose of meeting short-term commitments, and therefore are reclassified as cash equivalents.

(g) Financial Instruments

Financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instruments.

Notes to Consolidated Financial Statements

1. Financial assets

The Group classifies financial assets into the following categories: financial assets at fair value through profit or loss, held-to-maturities financial assets, loans and receivables, and availablefor-sale financial assets.

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

A financial asset is classified in this category if it is classified as held-for-trading or is designated as such on initial recognition. Financial assets are classified as held-fortrading if they are acquired principally for the purpose of selling in the short term. The Group designates financial assets, other than ones classified as held-for-trading, as at fair value through profit or loss at initial recognition under one of the following situations:

A. Designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
B. Performance of the financial asset is evaluated on a fair value basis
C. A hybrid instrument contains one or more embedded derivatives.

Financial assets in this category are measured at fair value at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value, and changes therein, which take into account any dividend and interest income, are recognized in profit or loss, and are included in non-operating income and expenses. A regular way purchase or sale of financial assets shall be recognized and derecognized as applicable using trade-date accounting.

Investments in equity instruments that do not have a quoted price in an active market and whose fair values cannot be reliably measured, are measured at their cost, less, impairment loss, and are included in financial assets at cost.

(ii) Available-for sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the other categories of financial assets. Available-for-sale financial assets are recognized initially at fair value, plus, any directly attributable transaction cost. Subsequent to initial recognition, they are measured at fair value, and changes therein, other than impairment losses, dividend income, and foreign currency differences on available-for-sale debt instruments, are recognized in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognized, the gain or loss accumulated in equity is reclassified to profit or loss, and is included in non-operating income and expenses. A regular way purchase

Notes to Consolidated Financial Statements

or sale of financial assets shall be recognized and derecognized, as applicable, using tradedate accounting.

Investments in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured, are measured at amortized cost, and are included in financial assets measured at cost.

Dividend income is recognized in profit or loss on the date that the Company's right to receive payment is established, which in the case of quoted securities is normally the exdividend date. Such dividend income is included in non-operating income and expenses.

(iii) Held-to-maturity financial assets

If the Group has the positive intent and ability to hold debt securities to maturity, such financial assets are classified as held-to-maturity. Held-to-maturity financial assets are recognized initially at fair value, plus, any directly attributable transaction costs. Subsequent to initial recognition, held-to-maturity financial assets are measured at amortised cost using the effective interest method, less, any impairment losses. A regular way purchase or sale of financial assets shall be recognized and derecognized, as applicable, using trade-date accounting

Interest income is included in non-operation income and expense.

(iv) Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables comprise trade receivables, other receivables, and refundable deposits. Such assets are recognized initially at fair value, plus, any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less, any impairment losses other than insignificant interest on short-term receivables. A regular way purchase or sale of financial assets shall be recognized and derecognized as applicable using trade-date accounting.

Interest income is recognized in profit or loss, and it is included in non-operating income and expenses.

(v) Impairment of financial assets

A financial asset is impaired if, and only if, there is an objective evidence of impairment 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 that can be estimated reliably.

Notes to Consolidated Financial Statements

The objective evidence that financial assets are impaired includes default or delinguency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults, or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is accounted for as objective evidence of impairment.

All individually significant receivables are assessed for specific impairment. Receivables that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics. In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of recoveries, and the amount of loss incurred, adjusted for management's judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or lesser than those suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate.

An impairment loss in respect of a financial asset measured at cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss is not reversible in subsequent periods.

An impairment loss in respect of a financial asset is deducted from the carrying amount, except for trade receivables, for which an impairment loss is reflected in an allowance account against the receivables. When it is determined a receivable is uncollectible, it is written off from the allowance account. Any subsequent recovery of receivable written off is recorded in the allowance account. Changes in the amount of the allowance account are recognized in profit or loss.

Impairment loss on available-for-sale financial assets are recognized by reclassifying the loss accumulated in the fair value reserve in equity to profit or loss.

If, in a subsequent period, the amount of the impairment loss of a financial asset measured at amortized cost decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the decrease in impairment loss is reversed through profit or loss to the extent that the carrying value of the asset does not exceed its amortized cost before impairment was recognized at the reversal date.

Impairment losses recognized on an available-for-sale equity security are not reversed through profit or loss. Any subsequent recovery in the fair value of an impaired availablefor-sale equity security is recognized in other comprehensive income and accumulated in other equity.

Notes to Consolidated Financial Statements

Impairment losses and recoveries are recognized in profit or loss. Recovery and loss on doubtful debts of account receivables is included in operating expense, others are included in non-operating income and expense.

(vi) Derecognition of financial assets

The Group derecognizes financial assets when the contractual rights of the cash inflow from the asset are terminated, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received or receivable and any cumulative gain or loss that had been recognized in other comprehensive income and presented in other equity - unrealized gains or losses from available-for-sale financial assets is recognized in profit or loss, and is included in non-operating income or expenses.

The Group separates the part that continues to be recognized and the part that is derecognized based on the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part derecognized and the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income shall be recognized in profit or loss, and shall be included in non-operating income or expenses. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is derecognized based on the relative fair values of those parts.

1. Financial liabilities and equity instruments
(i) Classification of debt or equity

Debt or equity instruments issued by the Group are classified as financial liabilities or equity in accordance with the substance of the contractual agreement.

Equity instruments refer to surplus equities of the assets after the deduction of all the debts for any contracts. Equity instruments issued are recognized as the amount of consideration received, less, the direct cost of issuing.

(ii) Other financial liabilities

Financial liabilities not classified as held-for-trading or designated as at fair value through profit or loss, which comprise loans and borrowings, and trade and other payables, are measured at fair value, plus, any directly attributable transaction cost at the time of initial recognition. Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method other than insignificant interest on short-

Notes to Consolidated Financial Statements

term loans and payables. Interest expense not capitalized as capital cost is recognized in profit or loss, and is included in non-operating income or expense.

(iii) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligation has been discharged or cancelled, or expires. The difference between the carrying amount of a financial liability removed and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss, and is included in nonoperating income or expenses.

(iv) Offsetting of financial assets and liabilities

The Group presents financial assets and liabilities on a net basis when the Group has the legally enforceable right to offset and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

(h) Non-current assets held for sale

Non-current assets or disposal groups comprising assets and liabilities that are expected to be recovered primarily through sale or distribution rather than through continuing use are reclassified as held for sale or held for distribution to owners. Immediately before classifying them as held for sale or held for distribution to owners, the assets or components of a disposal group are remeasured in accordance with the Group accounting policies. Thereafter, generally the assets or disposal group are measured at the lower of their carrying amount and fair value less costs to sell.

Any impairment loss on a disposal group will first be allocated to goodwill, and then the remaining assets and liabilities will be apportioned on a pro rata basis, except that no loss is allocated to assets not in the scope of IAS 36 - Impairments, such assets will continue to be measured in accordance with the Group accounting policies.

Impairment losses on assets initially classified as held for sale or held for distribution to owners and any subsequent gains or losses on re-measurement are recognized in profit or loss. Gains are not recognized in excess of any cumulative impairment loss.

When the assets classified as held for sale or held for distribution to owners are intangible assets or property, plant and equipment, they are no longer amortized or depreciated, and any equityaccounted investee is no longer equity accounted.

(i) Investment in associates

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.

13 CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition, less, any accumulated impairment losses.

The consolidated financial statements include the Group's share of the profit or loss and other comprehensive income of equity-accounted investees after adjustments to align the accounting policies with those of the Group from the date that significant influence commences until the date that significant influence ceases.

Unrealized profits resulting from the transactions between the Group and an associate are eliminated to the extent of the Group s interest in the associate. Unrealized losses on transactions with associates are eliminated in the same way, except to the extent that the underlying asset is impaired.

When the Group's share of losses exceeds its interest in associates, the carrying amount of the investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

(i) Investment property

Investment property is the property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, for use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition and subsequently. The depreciation is computed along with the depreciable amount. The method, the useful life and the residual amount are the same with those of property, plant and equipment. Cost includes expenditure that is directly attributable to the acquisition of the investment property.

When the use of a property changes such that it is reclassified as property, plant and equipment, the carrying amount at the date of reclassification becomes its cost for subsequent accounting.

(k) Property, plant and equipment
1. Recognition and measurement

Items of property, plant and equipment are measured at cost, less, accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset. Cost also includes foreign currency purchases of property, plant and The cost of the software is capitalized as part of the property, plant and equipment. equipment if the purchase of the software is necessary for the property, plant and equipment to be capable of operating.

Notes to Consolidated Financial Statements

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately, unless the useful life and the depreciation method of a significant part of an item of property, plant and equipment are the same as the useful life and depreciation method of another significant part of that same item.

The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized as non-operating income and expense.

Reclassification to investment property

The property is reclassified to investment property at its carrying amount when the use of the property changes from internal use to investment use.

Subsequent cost

Subsequent expenditure is capitalized only when it is probable that the future economic benefits associated with the expenditure will flow to the Company. The carrying amount of those parts that are replaced is derecognized. Ongoing repairs and maintenance are expensed as incurred.

Depreciation

The depreciable amount of an asset is determined after deducting its residual amount, and it shall be allocated on a systematic basis over its useful life. Items of property, plant and equipment with the same useful life may be grouped in determining the depreciation charge. The remainder of the items may be depreciated separately. The depreciation charge for each period shall be recognized in profit or loss.

The depreciable amount of a leased asset is allocated to each accounting period during the period of expected use on a systematic basis consistent with the depreciation policy the lessee adopts for depreciable assets that are owned. If there is reasonably certainty that the lessee will obtain ownership by the end of the lease term, the period of expected use is the useful life of the asset; otherwise, the asset is depreciated over the shorter of the lease term and its useful life.

Land has an unlimited useful life and therefore is not depreciated.

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

Notes to Consolidated Financial Statements

(i) Buildings: $17 \sim 55$ years

(ii) Building improvements: $3 \sim 15$ years.

(iii) Container transportation equipment: $4 \sim 7$ years

$(iv)$ Shipping transportation equipment: $2 \sim 20$ years

(v) Container terminal facility: 4~60 years

(vi) Furniture, fixtures and other equipments: $3 \sim 12$ years

Depreciation methods, useful lives, and residual values are reviewed at each reporting date. If expectations differ from the previous estimates, the change is accounted for as a change in an accounting estimate.

(l) Lease

The Group as lessor

Lease income from an operating lease is recognized in income on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized as an expense over the lease term on the same basis as the lease income. Incentives granted to the lessee to enter into the operating lease are spread over the lease term on a straight-line basis so that the lease income received is reduced accordingly.

The Group as lessee

Operating leases are not recognized in the Group's balance sheet.

Payments made under operating lease (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense on a straight-line basis, over the term of the lease.

(m) Intangible assets

Other intangible assets

Other intangible assets that are acquired by the Group are measured at cost less accumulated amortization and any accumulated impairment losses.

Notes to Consolidated Financial Statements

2. Subsequent Expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.

3. Amortization

The amortizable amount is the cost of an asset, or other amount substituted for cost, less its residual value.

The intangible asset that the Group possesses is software. Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The estimated useful lives of computer software is 3 years.

The residual value, amortization period, and amortization method for an intangible asset with a finite useful life shall be reviewed at least annually at each fiscal year-end. Any change shall be accounted for as changes in accounting estimates.

(n) Impairment - non-derivative financial assets

Non-derivative financial assets except for inventories, deferred tax assets, assets arising from employee benefits and non-current assets held for sale are assessed at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the Group shall estimate the recoverable amount of the asset. If it is not possible to determine the recoverable amount (fair value less cost to sell and value in use) for the individual asset, then the Group will have to determine the recoverable amount for the asset's cashgenerating unit.

The recoverable amount for an individual asset or a cash-generating unit is the higher of its fair value, less, costs to sell and its value in use. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss. An impairment loss shall be recognized immediately in profit or loss.

The Group assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. An impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its recoverable amount. That increase is a reversal of an impairment loss.

17 CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(o) Provisions

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

(p) Revenue

1. Freight revenue is recognized after providing transportation service. The rental income of vessels is recognized in accordance with the rental contract. Warehouse storage charges and terminal handling fees are recognized after service is provided. Operating cost is recognized as incurred.
1. Rental income from investment property is recognized in income on a straight-line basis over the lease term. Incentives granted to the lessee to enter into an operating lease are considered as part of rental income which is spread over the lease term on a straight-line basis so that the rental income received are recognized periodically.
(q) Employee benefits
1. Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs, the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the Group's obligations and that are denominated in the same currency in which the benefits are expected to be paid.

Notes to Consolidated Financial Statements

The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognized asset is limited to the total of any unrecognized past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realizable during the life of the plan, or on settlement of the plan liabilities.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognized in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognized immediately in profit or loss.

All actuarial gains and losses at January 1, 2012, the date of transition to IFRS endorsed by the FSC, were recognized in retained earnings. The Group recognizes all actuarial gains and losses arising subsequently from defined benefit plans in other comprehensive income and expenses related to defined benefit plans in personnel expenses in profit or loss.

The Group recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change in the fair value of plan assets, change in the present value of the defined benefit obligation and any related actuarial gains or losses and past service cost that had not previously been recognized.

Termination benefits

Termination benefits are recognized as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period, then they are discounted to their present value.

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

Notes to Consolidated Financial Statements

A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(r) Income taxes

Income tax expenses include both current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

Current taxes include tax payables and tax deduction receivables on taxable gains (losses) for the year calculated using the statutory tax rate on the reporting date or the actual legislative tax rate, as well as tax adjustments related to prior years.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes shall not be recognized for the following exceptions:

1. Assets and liabilities that are initially recognized but are not related to the business combination and have no effect on net income or taxable gains (losses) during the transaction.
1. Temporary differences arising from equity investments in subsidiaries or joint ventures where there is a high probability that such temporary differences will not reverse.
1. Initial recognition of goodwill.

Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled based on tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities may be offset against each other if the following criteria are met:

1. The entity has the legal right to settle tax assets and liabilities on a net basis; and
1. the taxing of deferred tax assets and liabilities fulfill one of the below scenarios:
i) levied by the same taxing authority; or
ii) levied by different taxing authorities, but where each such authority intends to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation, or where the timing of asset realization and debt liquidation is matched.

Notes to Consolidated Financial Statements

A deferred tax asset should be recognized for the carry-forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. Such unused tax losses, unused tax credits, and deductible temporary differences shall also be re-evaluated every year on the financial reporting date, and they shall be adjusted based on the probability that future taxable profit that will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized.

The 10% surtax on unappropriated earnings is recorded as current tax expense in the following year after the resolution to appropriate retain earnings is approved in the stockholder's meeting.

(s) Earnings per share

The Group discloses the basic and diluted earnings per share attributable to ordinary equity holders of the Company. The calculation of basic earnings per share is based on the profit attributable to the ordinary shareholders of the Company divided by the weighted average number of ordinary The calculation of diluted earnings per share is based on the profit shares outstanding. attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. Dilutive potential ordinary shares comprise employee stock options and employee bonuses not yet resolved by the shareholders.

(t) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may incur revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Each operating segment consists of standalone financial information.

(5) Major sources of significant accounting assumptions, judgments, and estimation uncertainty

The preparation of the parent company only financial reports in conformity with the Guidehines Governing the preparation of Financial Reports by Securities Issuers requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Management continued to monitor the accounting assumptions, estimates and judgments. Management recognized the changes in the accounting estimates during the period and the impact of the changes in the accounting estimates in the next period.

Notes to Consolidated Financial Statements

There are no critical judgments, assumptions and estimation uncertainty in applying accounting policies that have significant effect on amounts recognized in the consolidated financial statements.

(6) Explanation of significant accounts

(a) Cash and cash Equivalents

	2014	December 31, December 31, 2012
Petty cash, checking accounts and demand
deposits	\$1,250,933	1,257,716
Time deposits	3,263,606	3,954,189
Cash equipment-commercial paper and reverse
repurchase agreement	95,464	34,897
	S 4.610.003	5,246,802

Please refer to note 6(p) for the exchange rate risk, the interest rate risk and, the fair value sensitivity analysis of the financial assets and liabilities of the Group.

(b) Financial assets

Information is as follow:

	2014	December 31, December 31, 2013
Fair value through profit or loss-current
Held-for-trading	\$ 1,292	1,400
Financial assets at fair value through profit
or loss	31,909	30,496
	33,201	31,896
Current held-to-maturity financial assets		122,975
Non-current financial assets held for
trading	100,000	100,000
Non-current financial assets at cost	25,000	12,500

The Group purchased 104,000 thousand shares of China Airlines Ltd amounting to \$1,060,547 and recorded as Current available-for-sale financial assets.

(Continued)

$\sim$

Notes to Consolidated Financial Statements

Because the strategy of investment is changed the Group disposed of all of available-for-sale financial asset for $\overline{\$1,073,741}$ , and the related gain was $\$13,194$ .

Please refer to notes 6(p) for the exposure to credit risk, currency risk and interest rate risk of the financial instruments of the Group.

The Group did not provide any aforementioned financial assets as collateral for its loans as of December 31, 2014 and 2013.

2. Debt investment and fixed rate deposit:

The carrying amounts of debt and fixed rate deposit as of 31 December 2014, 31 December 2013, were \$131,909 and \$253,471, respectively. Other related information are as follows:

	2014		2013
	Interest rates	Maturity dates	Interest rates	Maturity dates
Current financial assets at fair value through profit or loss Current held-to-maturity financial	3.75%	2015	3.75%	2015
asset			2.20%	2014
Non current financial assets held- for-trading	3%	2019	3%	2019

3. Sensitive analysis – equity investment price risk

If the equity price changes, and if it is on the same basis for both years and assumes that all other variables remain the same, the impact on other comprehensive income will be as follows:

	2014		2013
Equity price at reporting date	After-tax other		After-tax other comprehensive Before-tax comprehensive Before-tax
Increase 5% Decrease 5%		l.660 1.660)	$\overline{\phantom{a}}$	1.595 1.595)

Notes to Consolidated Financial Statements

	2014	December 31, December 31, 2013
Notes receivable	\$ 8,036	6,724
Accounts receivable	159,714	160,683
Other receivables	20,444	14,963
	188,194	182,370
Less: allowance for uncollectible accounts	(1, 827)	(1,799)
	186,367	180.571
Notes and account receivable, net	\$ 165,923	165,608
Other receivables – current	20,444	14,963
	86,367	180,571

As of December 31, 2014 and 2013 the Group did not provide any aforementioned notes and accounts receivable and other receivables as collaterals for its loans. Please refer to note 6(p) for the change in the allowance for doubtful accounts of the Group.

(d) Investments accounted for using equity method

(i) A summary of the Group's financial information for equity-accounted investees at the reporting date is as follows:

	December 31, December 31,
	2014	2013
Associates	$$2,169,793$ $2,718,312$

(ii) In 2014 and 2013, the Group's share of the net income of associates was as follows:

	2014	2013
Associates	(49.727) C. ۰υ	(853)

The losses on investment in associate recognized in 2014 and 2013 including the amortization of investment premium are \$106,904 and \$118,360, respectively. As of December 31, 2014 and 2013, the balance of unamortized investment premium amounted to \$199,874 and \$359,905, respectively.

24 CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(iii) Summary financial information for investments in associate were as follows (before being adjusted to the Groups proportionate share):

	2014	December 31, December 31, 2013
Total assets	\$12,736,400	.326.612
Total liabilities	933.006	1,005,530
	2014	2013
Income	2.089.652	2.122.068
Net income for the period	283.726	17.865

The Group disposed of 21,436 and 1,529 thousand shares of its investments accounted for using equity method for \$507,121 and 38,195, respectively in 2014 and 2013. The related loss amounted to \$38,755 and 2,305, respectively and recorded as non-operating income and expense. The receivable amounting to \$4,640 was recorded as other current financial asset.

(iv) As of December 31, 2014 and 2013, the fair value of the shares of listed company based on the closing price was as follows:

2014.12.31			2013.12.31
	Fair Carrying value value		Carrying value	Fair value
			1,606,717 \$ 2,524,107	2,697,217

(v) Pledges

As of December 31, 2014 and 2013, the Group provided investment accounted for using equity method as collateral for its loans. Please refer to note (8).

Notes to Consolidated Financial Statements

(e) Property, plant equipment

The cost depreciation, and impairment of the property, plant and equipment of the Group for the year ended December 31, 2014 and 2013 were as follows:

	Land	Buildings and construction	Transportation Equipment	Other equipment	On construction	Total
Cost or deemed cost:
Balance at January 1, 2014	\$1,758,525	103,757	13,862,141	468,799	278,378	16,471,600
Additions		1,467	165,358	27,782	422,696	617,303
Disposals		(183)	(63, 333)	(24, 704)	$\overline{\phantom{0}}$	(88, 220)
Reclassifications		34,410	539	8,499		43,448
Effect of movements in
exchange rates		1.511	816,492		37.718	855,721
Balance on December 31, 2014	\$1,758.525	140.962	14,781.197	480.376	738.792	17.899.852
Balance on January 1, 2013	\$1,758,525	105,906	11,590,037	455,127	926,282	14,835,877
Additions		1,381	88,368	64,718	1,235,315	1,389,782
Disposals		(3,530)	(18, 359)	(59, 979)		(81, 868)
Reclassifications			1,905,002	8,933	(1,905,002)	8.933
Effect of movements in
exchange rates			297,093		21,783	318,876
Balance on December 31, 2013	\$1,758,525	103.757	13,862,141	468,799	278,378	16,471,600
Depreciation and impairments loss:
Balance on January 1, 2014	\$	61,838	3.093,786	211,775		3,367,399
Depreciation for the year		6,140	654,555	35,019		695,714
Disposals		(41)	(42, 951)	(21, 636)		(64, 628)
Reclassifications		2,668				2,668
Effect of movements in
exchange rates		117	196.078			196.195
Balance on December 31, 2014		70.722	3.901.468	225,158		4,197,348
Balance on January 1, 2013	\$	58,648	2,431,238	229,874		2,719,760
Depreciation for the year		6,512	619,891	36,992		663,395
Disposals		(3, 322)	(16, 482)	(55,091)		(74, 895)
Effect of movements in			59,139			59,139
exchange rates Balance on December 31, 2013	\$	61.838	3,093,786	211.775		3.367.399
Carrying amounts:
Balance on December 31, 2014	\$1,758,525	70,240	10.879.729	255,218	738.792	, 13,702,504
Balance on December 31, 2013	\$1.758,525	41.919	10.768,355	257.024	278,378	13,104,201

(i) The pledge information is summarized in note 8

(ii) The Group took over a bulk-carrier construction contract from the third parties on January 10, 2014, July 11, 2013 and August 30, 2013. The Group commenced construction of the new bulk-carrier and the costs incurred up to the reporting date totaled \$738,792.

$\mathcal{A}^{\mathcal{A}}$

CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(iii) The Group sales and retires the property, plant and equipment to the third party for \$63,899 and \$24,686, respectively .The cost of aforementioned property, plant and equipment amounted to \$23,592 and \$6,973, respectively, and the related gain of disposal amounted to 40,307 and 17,713, respectively. The registration procedures of the property transfer have been completed and related receivable have been collected.
(iv) The Group tested the transportation equipment for impairment and recognized an impairment loss of US \$31,555,000 (NTD\$998,716 and \$940,497) as of December 31,2014 and 2013, respectively.
(v) The capitalized interests amounting to \$1,360 on 2013, were resulted from bank loans to prepay the shipbuilder for bulk-carrier construction.
(f) Investments property

		Land	Building	Total

Cost:
Balance on January 1, 2014	\$	19,094	81,045	100,139
Disposals			(22, 204)	(22, 204)
Reclassifications			(34,062)	(34,062)
Effect of movements in exchange rates			2,286	2,286
Balance on December 31, 2014	\$		27,065	46,159
Balance on January 1, 2013	$\overline{\mathbf{r}}$	19,094	141,041	160,135
Additions			679	679
Disposals			(64, 049)	(64, 049)
Effect of movements in exchange rates			3,374	3,374
Balance on December 31, 2013	\$	19.094	81,045	100.139
Depreciation and impairment losses:
Balance on January 1, 2014	\$		10,331	10,331
Depreciation for the year			1,530	1,530
Disposals			(3,111)	(3,111)
Reclassifications			(2,668)	(2,668)
Effect of movements for exchange rates			304	304
Balance on December 31, 2014	\$		6,386	6,386
Balance on January 1, 2013	\$		16,449	16,449
Depreciation for the year			2,481	2,481
Disposals			(8,965)	(8,965)
Effect of movements for exchange rates			366	366
Balance on December 31, 2013	S		10,331	10,331
Carrying amount:
Balance on December 31, 2014	\$	19,094	20,679	39.773
Balance on December 31, 2013	S	19,094	70.714	89.808

Notes to Consolidated Financial Statements

	Land	Building	Total

Fair value:
Balance on December 31, 2014			141.250 - \$
Balance on December 31, 2013			171.328

Investment property comprises a number of commercial properties that are leased to third parties. Each of the lease contract contains an initial non-cancellable period. Subsequent renewals are negotiated with the lessee. No contingent rents are charged. See note 6(i) for further information.

On 2014 and 2013, the Group sold a part of investments property to the third party for \$43,489 (US\$1,435,000) and \$126,819 (US\$4,272,000), respectively. The cost of the aforementioned
investments property amounted to \$19,093 (US\$630,000) and \$55,084 (US\$1,855,000), respectively, and the related gain of disposal amounted to \$24,396 and \$71,735, respectively. The registration procedures of the property transfer have been completed and the receivable have been collected.

As of December 31, 2014 and 2013, the Investment property of the Group were not pledged as collateral or restricted.

⁽g) Other financial assets

		2014	December 31, December 31, 2013
Time deposits (over three months)	\$	12,150	17,100
Other receivables		20.444	14,963
Guarantee deposits		5.389	5,673
Pledged assets-time deposits		240,759	188,975
		278,742	226.711
Other financial assets-current	S	258,351	32,063
Other financial assets-non-current		20.391	194,648
		278.742	226.711

Notes to Consolidated Financial Statements

(h) Loans

The Group's detail of loans was as follows:

Short-term loans and commercial paper payable

	2014	December 31, December 31, 2013
Secured Ioans	380,000	50,000
Commercial paper payable	730,000
Less: discount on commercial paper payable	(400)
	1.109.600	50.000
Unused credit lines	2,865,000	.949.840
Range of interest rate during the year	$0.82\% - 2\%$	$0.82\% - 2\%$

The Group's loans and commercial paper payable amounted to \$1,110,000 and \$50,000 on 2014 and 2013, with an interest of 1.12% $\sim$ 1.4% and 1.11% $\sim$ 2%, and the due months were in January 2014, January 2013 and February 2013. The Group settled the credit loan amounting to 50,000 in 2014.

Long-term loans

Bank	Currency	Due Year		December 31, 2014	December 31, 2013
COMMERZ BANK (formerly Deutsche	USD	2016	S	246,364	290,003
Schiffs Bank) Mega International Commercial Bank (formerly International Commercial Bank	n	2015		159,470	210,243
of China) COMMERZ BANK (formerly Deutsche Schiffs Bank)	n	2019		683,640	754,067
Mega International Commercial Bank	n	2022		996,975	1,072,980
Bank Sinopec	u	2022		1,208,625	1,236,530
Mega International Commercial Bank Bank Sinopec	n	2022 2023		1,068,188 1.251,349	1,140,040 1,276,023
Less: current portion			S	5,614,611 (789, 976) 4,824,635	5,979,886 (692, 573) 5,287,313
Range of interest rates during the year				0.93%~2%	$0.87\% - 1.75\%$

The Group took the loan for the bulk-carrier cost amounting USD 31,750,000 in 2013. The interest rates were $1.20\%$ ~ 1.41%.

Notes to Consolidated Financial Statements

3. Bonds Payable

The Company issued secured bonds at face value. The interest is calculated and paid annually from the date of issuance. The bonds payable on December 31, 2014 and 2013, were as follows:

	Guarantee bank	Interest rate	Due	December 31, 2014	December 31, 2013
The second secured bonds payable	Mega International Commercial Bank	2.21%	November 2014	S	1,000,000
$\boldsymbol{\eta}$	Cathay United Bank	2.21%	November 2014		500,000
$\boldsymbol{\eta}$	Shanghai Commercial Bank	2.21%	November 2014		500,000
The third secured bonds payable	Shanghai Commercial Bank	1.40%	June 2017	1,000,000	1,000,000
$^{\prime\prime}$	Cathay United Bank	1.40%	June 2017	500,000	500,000
$^{\prime\prime}$	Chinatrust Commercial Bank	1.40%	June 2017	500,000	500,000
$\boldsymbol{\eta}$	Bank SinoPac	1.40%	June 2017	500,000	500,000
$\boldsymbol{\eta}$	Industrial Bank of Taiwan	1.40%	June 2017	300,000	300,000
				2,800,000	4,800,000
Less: corporate bonds payable-current
portion					(2,000,000)
				2.800.000	2,800,000 S

Refer to note $6(p)$ for the information of exposure to liquidity risk.

The Group provided assets as collaterals for credit line of short-term and long-term borrowing, please refer to note 8.

(i) Operating lease

1. The Group as leasee
(i) Lease rentals that the Group signed the operating lease contracts for warehouse, office, and parking are payable as follows:

Notes to Consolidated Financial Statements

	2014	December 31, December 31, 2013
Less than one year	\$ 55,387	58,187
Between one and five years	160,523	126,952
Above five years	66,859	45,012
	282.769	230.151

As of 2014 and 2013, the operating rental expenses were 55,637 and 58,925, respectively.

2. The Group as lessor

The Company intends to lease out investment property under operating lease. Please see note 6(f). The future minimum lease payments under non-cancellable lease are as follows:

	2014	December 31, December 31, 2013
Less than one year	4.390	5,118
Between on and five years	10,193
	14.583	5.118

The rental income earned by lease investment property amounted 6,336 and 10,324 in 2014 and 2013, respectively.

(j) Employee benefits

1. Defined benefit plans

The present value of the defined benefit obligations and the fair value of the plan assets $(i)$ of the Company and CMTL were as follows:

$\bar{z}$

	2014	December 31, December 31, 2013
Present value of defined benefit obligations	212,617	201,664
Fair value of plan assets	(60, 902)	(57,208)
Recognized liabilities for defined benefit obligations

Notes to Consolidated Financial Statements

The Company and CMTL makes defined benefit plan contributions to the pension fund account at Bank of Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive an annual payment based on years of service and average salary for the six months prior to retirement.

(ii) Composition of plan assets

$\ddot{\tau}$

The Company and CMTL allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Labor Pension Fund Supervisory Committee. With regard to the utilization of the funds, minimum earnings in the annual distributions on the final consolidated financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with interest rates offered by local banks.

The Company and CMTL'S Bank of Taiwan labor pension reserve account balance amounted to \$62,349 at the end of the reporting period. For information on the utilization of the labor pension fund assets including the asset allocation and yield of the fund, please refer to the website of the Labor Pension Fund Supervisory Committee.

(iii) Movements in present value of the defined benefit obligations

The movements in present value of defined benefit obligations for the Company and CMTL were as follows:

			2013

Defined benefit obligation at 1 January	201.664	S	202,467
Benefits paid by the plan	(4,739)		(8,114)
Current service costs and interest	8.589		8,801
Actuarial losses (gains)	7.103		(1, 490)
Defined benefit obligation at 31 December	212.617		201,664

(iv) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Company and CMTL were as follows:

Notes to Consolidated Financial Statements

	2014		2013
Fair value of plan assets at 1 January Contributions made Benefits paid from the plan assets Expected return on plan assets Actuarial (losses) gains Fair value of plan assets at 31 December	S	57,208 7.082 (4, 739) 1,014 337	56,745 7,035 (7, 290) 861 (143) 57.208

(v) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company and CMTL were as follows:

		2014		2013
Service cost		4,842		5,535
Interest cost		3,747		3,266
Expected rate of return on plan assets		(1,014)		(861)
	S	7.575		7.940
Operating cost	\$	4.310	S	4,453
Operating expense		3,265		3,487
		7,575		7.940
Actual return on plan assets		1,351		742

(vi) Actuarial gains and losses recognized in other comprehensive income

The Company and CMTL's actuarial gains and losses recognized in other comprehensive income, before tax for the years ended December 31, 2013 and 2012, were as follows:

	2014	December 31, December 31, 2013
Cumulative amount at 1 January Recognized during the period	7.905 6.766	9.252 1.347
Cumulative amount at 31 December		7905

Notes to Consolidated Financial Statements

(vii) Actuarial assumptions

The following are the Company and CMTL's principal actuarial assumptions:

	2014	2013

Discount rate at 31 December	1.75%~2.00%	1.75%
Expected return rate on plan assets	$1.75\% \sim 2.00\%$	1.75%
Future salary increase rate	$1.00\%~3.50\%$ 1.00%~3.50%

The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based exclusively on historical returns, without adjustments.

The expected allocation payment made by the Company and CMTL to the defined benefit plans for the one year period after the reporting date is \$7,402.

(vii) Experience adjustments on historical information

		December 31, 2014	December 31, 2013	December 31, 2012	January 1,2012
Present value of defined benefit plans Fair value of plan assets Net liabilities of defined benefit obligations \$ 151,715		\$212,617 (60, 902)	201,664 (57,208) 144,456	202,467 (56, 745) $-145,722$	198,296 (59, 105) 139,191
Experience adjustments arising on the present value of defined benefit plans	S.	7.103	(1,490)	8.932
Experience adjustments arising on the fair value of the plan assets		(337)	143	320

(viii) When computing the present value of the defined benefit obligations, the Company and CMTL uses judgments and estimations to determine the actuarial assumptions, including employee turnover rates and future salary changes, as of the financial statement date. Any changes in the actuarial assumptions may significantly impact the amount of the defined benefit obligations.

As of 31 December 2014, the Company and CMTL's accrued pension liabilities were \$151,715. If the discount rate and the salary increase rate had been increased or decreased by 0.25%, the Company's accrued pension liabilities were as follows:

Actuarial assumption	Increase 0.25%	Decrease 0.25%
Discount Rate	\$ (3,703)	3,837
Salary increase rate	3.718	(3,899)

Notes to Consolidated Financial Statements

2. Defined contribution plans

The Company and CMTL allocates 6% of each employee's monthly wages to the labor pension personal account at Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under this defined contribution plan, the Company and CMTL allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligations.

The Company and CMTL recognized pension costs under the defined contribution method amounting to \$3,934 and \$3,780 for the years ended December 31, 2014 and 2013, respectively. Payment was made to the Bureau of Labor Insurance.

The pension expenses recognized by the other subsidiaries included in consolidated financial statements for the years ended December 31, 2014, and 2013, were \$3,792 and \$3,490, respectively.

(k) Income taxes

$\sim$

Income tax expenses

The amount of income tax for 2014 and 2013 was as follows:

		2014	2013
Current tax expense
Recognized during the period	S	43,799	25,186
10% surtax on unappropriated earnings		18,784
Adjustment for prior periods		103	961
		62,686	26,147
Deferred tax expense
Recognition and reversal of temporary
differences		1,364	986
Income tax expense	S	64.050	27.133

The amount of income tax recognized in other comprehensive income for 2014 and 2013 was as follows:

	2014	2013
Foreign currency translation differences of foreign operations	383	159
Defined benefit plan actuarial (losses) gains	1.150)	າາດ 200

Notes to Consolidated Financial Statements

Reconciliation of income tax and profit before tax for 2014 and 2013 was as follows:

		2014	2013

Profit excluding income tax	S	396,764	423,781
Income tax using the Company's domestic tax rate		67,450	72,043
Effect of tax rates in foreign jurisdiction		(66, 477)	(71, 654)
Dividend revenue-overseas		30,457	24,888
Tax exemption for investment income under the equity
method		8.453	145
10% surtax on unappropriated earnings		18,784
Other		5,383	1,711
	S	64.050	27.133

2. Deferred tax assets and liabilities

(i) Unrecognized deferred tax liabilities

The company entity is able to control the timing of the reversal of the temporary differences associated with investments in subsidiaries as at December 31 2014 and 2013. Also, management considered it probable that the temporary differences will not be reversed in the foreseeable future. Hence, such temporary differences were not recognized under deferred tax liabilities. Details were as follows:

	2014	December 31, December 31, 2013
Aggregate amount of temporary differences related to investments in
subsidiaries	$$ \frac{9,022,700}{9}$	8,243,288
Unrecognized deferred tax liabilities	\$1,533,859	1.401.359

(ii) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2014 and 2013 were as follows:

Notes to Consolidated Financial Statements

Deferred tax liabilities: 579,852 438,368 2,649 138,835 Balance on January 1, 2014 S	Total


1,442 Recognized in profit or loss	1.442
Recognized in other
comprehensive income
4.092 581.295 138.835 438,368 Balance on December 31, 2014 \$
578,876 438,368 1.673 138,835 S Balance on January 1, 2013
976 Recognized in profit or loss	976
2.649 579,852 38.835 438.368 Balance on December 31, 2013 \$

		Investment income overseas	Land increment	Others	Total

S				5,353	27,614
	85			$\left( 7\right)$	78
					768
Balance on December 31, 2014 \$	23,496			4,964	28.460
S	22,476			5,536	28,012
	14			(24)	(10)
Balance on December 31, 2013 \$	(229) 22.261			(159) 5.353	(388) 27.614
		22,261 1,150	Defined benefit the equity method	recognized under revaluation	(382)

3. Examination and approval

The income tax returns of the Company and its ROC Subsidiaries have been examined by the tax authorities for the years through 2012.

Notes to Consolidated Financial Statements

Information related to the unappropriated earnings and tax deduction ratio was summarized below:

	December 31, December 31, 2014	2013
Unappropriated earnings of 1998 and after Balance of imputation credit account	\$.5,877,611 $$ -614,428$	.5,753,103 618.982
	2013 (Estimated)	2012 (Actual)
Creditable ratio for earnings distribution to ROC residents	S	1.02%

The above stated information was prepared in accordance with the information letter No.10204562810 announced by the Ministry of Finance of R.O.C. on October 17, 2013.

(I) Capital and other equities
1. Ordinary shares

As of December 31, 2014, and 2013, the authorized common stocks amounted to \$3,600,000 with a par value of 10 New Taiwan dollars per share. All the ordinary shares were common stocks, and of which \$256,474 thousand shares were issued. All issued shares were paid upon issuance.

Capital surplus

In accordance with the ROC Company Act amended in 2013, realized capital reserves can only be reclassified as share capital or distributed as cash dividends after offsetting losses. The aforementioned capital reserves include share premiums and donation gains. In accordance with the Securities Offering and Issuance Guidelines, the amount of capital reserves to be reclassified under share capital shall not exceed 10 percent of the actual share capital amount.

The balances of capital surplus were as follows:

	June 30, 2014	December 31, 2013
Gain or loss on disposal of subsidiary Changes in equity of associates for using	42,503	42,503
equity method	10,908
	53.411

Notes to Consolidated Financial Statements

3. Retained Earning

According to the Company's articles, 10% of annual net income (less, payment of corporate income tax and losses of prior years, if any) shall be appropriated as legal reserve, and when there is a reduction in stockholders' equity at the end of the year, the Company should appropriate the same amount as special reserve from retained earnings. The remaining balance, if any, should be distributed as follows:

$-0.5\% \sim 2\%$ as employees' bonuses.
Remuneration to directors and supervisors not exceeding 2%.
The remainder and the accumulated unappropriated earnings of prior years are distributable as dividends to stockholders. The distribution rate is based on the proposal of the Company's board of directors and should be approved in the stockholders' meeting.

Dividends are paid in cash or stock from retained earnings, and the amount of cash dividends should not be less than 10% of total dividends. However, if the cash dividend per share is less than \$0.1 (New Taiwan dollar), a stock dividend will be paid instead.

(i) Legal reserve

Following the amendment of the ROC Company Act announced on January 4, 2012, the Company must retain 10% of its after tax annual earnings as legal reserve until such retention equals the amount of total capital. Upon a resolution of the shareholders' meeting, when the Company has no accumulated deficits on the books, the legal reserve can be converted to share capital or distributed as cash dividends, and only the portion of legal reserve that exceeds 25% of issued share capital may be distributed.

(ii) Special reserve

FBy choosing to apply the exemptions granted under IFRS 1 First-time Adoption of International Financial Reporting Standards during the Company's first-time adoption of the International Financial Reporting Standards approved by the Financial Supervisory Commission (IFRSs), unrealized revaluation gains recognized under shareholders' equity. The increase in retained earnings occurring before the adoption date, due to the first- $\overline{1}$ time adoption of IFRSs in accordance with Ruling No. 1010012865 issued by the Financial Supervisory Commission on 6 April 2012, shall be reclassified as a special earnings reserve during earnings distribution. The carrying amount of special earnings reserve amounted to \$359,487 on December 31, 2014.

Notes to Consolidated Financial Statements

In accordance with the guidelines of the above Ruling, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as a special earnings reserve during earnings distribution. The amount to be reclassified should be equal to the difference between the total net current-period reduction of other shareholders' equity resulting from the first-time adoption of IFRSs and the carrying amount of special earnings reserve as stated above. Similarly, a portion of undistributed prior period earnings shall be reclassified as a special earnings reserve (which does not qualify for earnings distribution) to account for cumulative changes to other shareholders' equity pertaining to prior periods due to the first-time adoption of IFRSs. Amounts of subsequent reversals pertaining to the net reduction of other shareholders' equity shall qualify for additional distributions.

(iii) Earnings distribution

According to the ROC Company Act and the Company's articles of incorporation, the Company estimates the amount of employee bonuses and directors' and supervisors' remuneration for 2014 and 2013. The employee bonuses and directors' and supervisors' remuneration were recognized on a percentage of net income after deducting the legal reserve for the years ended December 31, 2014 and 2013. The Company recognized employee bonuses and directors' and supervisors' remuneration of \$10,392 and \$11,544 for the years ended December 31, 2014 and 2013. The equivalent number of shares distributed for stock dividends is determined based on the closing price of the day before the shareholders' meeting and considering the ex-rights and ex-dividend effects.

Differences between the amounts approved in the shareholders' meeting and those recognized in the consolidated financial statements, if any, are accounted for as changes in accounting estimates and recognized as profit or loss in the following year.

Based on the resolutions of the annual stockholders' meetings held on June 16, 2014 and June 24, 2013, the appropriations of cash dividends were \$1.5 (New Taiwan dollars) and 1 (New Taiwan dollars) per share, amounting to \$384,711 and 256,473, respectively. Furthermore, the earning distribution to employees directors and supervisors for the fiscal vears 2013 and 2012 were as follows:

	2013	2012
Employee bonuses – cash Directors' and supervisors' remuneration	5.772 5.772	1.504 .504
	11.544	3.008

Notes to Consolidated Financial Statements

There was no difference between the actual distribution and the estimation in the 2013 and 2012 consolidated financial statements. The related information about the distribution of employee bonuses, dividends, and directors' and supervisors' remuneration appropriated from the distributable retained earnings of 2014 approved in the shareholders' meeting can be accessed from the Market Observation Post System after the holding of the meeting. Differences between the amount approved in the shareholders' meeting and those recognized in the consolidated financial statements, if any, are accounted for as changes in accounting estimates and are recognized in profit or loss in 2015.

(m) Other Equity (After tax)

		Exchange differences on translation of foreign financial Statements	Unrealized gains (losses) on available for- sale financial assets	Total
January 1 2014	S	(577, 454)	(2,145)	(579, 599)
The subsidiary		569,313		569,313
Associates		85,471	(5, 411)	80,060
December 31 2014	S	77.330	(7.556)	69.774
January 1 2013	S	(847, 576)	(6,014)	(853, 590)
The subsidiary		226,371		226,371
Associates		43,751	3,869	47,620
December 31 2013	S	(577,454)	(2.145)	(579,599)

(n) Earnings per share

Basic earnings per share

The calculation of basic earnings per share at December 31, 2014 and 2013 were based on the profit attributable to ordinary shareholders of the Company and the weighted-average number of ordinary shares outstanding, calculated as follows:

Profit attributable to ordinary shareholders of the Company $(i)$

	2014	2013
Profit attributable to ordinary shareholders
of the Company	332.714	396.648

Notes to Consolidated Financial Statements

(ii) Weighted-average number of ordinary shares

			2014	2013
	Issued ordinary shares at January 1 (Equal to December 31)	S	256.474	256.474
(iii)	Basic earnings per share (TWD)
			2014	2013
	Basic earnings per share	S	I.30

Diluted earnings per share

The calculation of diluted earnings per share at December 31, 2014 and 2013 were based on profit attributable to ordinary shareholders of the Company and the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, calculated as follows:

(i) Profit attributable to ordinary shareholders of the Company (diluted)

	2014	2013
Profit attributable to ordinary shareholder of the Company (basic and diluted)	332.714	396.648

(ii) Weighted-average number of ordinary shares (diluted)

		2014		2013
Weighted-average number of ordinary shares (basic)	S	256,474	S	256,474
Effect of employee stock bonuses		235		142
Weighted-average number of ordinary shares (diluted) at December 31	S	256.709	S	256.616
		2014		2013
Diluted earnings per share (TWD)
Diluted earnings per share	S	.30

42

CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The average market value of the Company's shares for purpose of calculating the dilutive effect of shares options was based on quoted market price for the period during which the options were outstanding.

(o) Financial cost-Interest expense

The financial cost interest expense in the years ended December 31, 2014 and 2013 were as follows:

		2014	2013
Secured bank loan	\$	79.616	72,659
Bonds payable		113,694	145,429
		193,310	218,088
Less: Bank loan-capitalized interest		۰	1,360
	S	193.310	216.728

(p) Financial Instruments

1. Categories of financial instruments

	December 31, 2014	December 31, 2013
Financial assets
Current financial assets at fair value through profit or
loss	\$ 33,201	\$ 31,896
Non-current financial assets at cost	25,000	12,500
Non-current financial assets held for trading	100,000	100,000
Held-to-maturity financial assets		122.975
	58,20	267.371
Loans and receivables:
Cash and cash equivalents	4,610,003	5,246,802
Time deposits over three months	12,150	17,100
Notes and accounts receivables and other receivables
	325,079	318,334
Refundable deposits	5,389	5,673
Pledged assets-time deposits	240,759	188,975
	5,193,380	5,776,884
Total	5,351,581	6.044.255

Notes to Consolidated Financial Statements

	December 31, 2014	December 31, 2013
Financial liabilities
Short-term borrowings	1.109,600 S	S 50,000
Notes and account payable	136.194	120,790
Bonds payable	2,800,000	4,800,000
Accrued expense and other payable	117,737	123,755
Long-term borrowings	5,614,611	5,979,886
Total	9,778,142	\$11,074,431

2. Credit risk

(i) Exposure to credit risk

The carrying amount of financial assets represents the maximum amount exposed to credit risk. As of December 31, 2014 and 2013, the maximum amount exposed to credit risk amounted to \$5,351,581 and \$6,044,255, respectively.

The aggregation of sales to the Group's major customers exceeding 10% of the Group's total sales accounted for 60% and 64% of the total net sales for the year ended December 31, 2014 and 2013, respectively. In order to reduce credit risk, the Group assesses the financial status of the customers and the possibility of collection of receivables in order to estimate an adequate allowance for doubtful accounts on a regular basis. The customers have had a good credit and profit record. The Group has never suffered any significant credit loss.

(ii) Impairment loss

The aging analysis of accounts receivable and other receivables were as follows:

		2014	December 31, December 31, 2013
$0-90$ days 90-180 days	\$	325,067	314,953 3,381
	г.	325.079	318,334

Notes to Consolidated Financial Statements

Group recognized impairment loss in a collectively assessed method. The changes of allowance for notes and accounts receivable and other receivables were as follow:

		2014
Balance on January 1		1.799	1.792
Bad debt expense		ົດ
Balance on December 31	АD

The Group believes that the unimpaired amounts that are past due are still collectible, base on historic payment behavior and extensive analysis of customer credit risk, including the underlying customers' credit ratings, when available.

Allowances for uncollectible accounts are used to record loss on doubtful accounts. When it is determined a receivable is uncollectible, it is written off from the allowance account. As of December 31, 2014 and 2013, there were no recoveries of impairment on account receivable.

Liquidity Risk

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

		Carrying Amount	Contractual cash flows	Within a year	$1 \sim 2$ years	Over 2 years
December 31, 2014
Non-derivative financial
liabilities:
Short-term borrowings	S	1,109,600	(1,110,000)	(1,110,000)		۰
Secured bank loan		5,614,611	(5,614,611)	(789, 976)	(753, 694)	(4,070,941)
Notes and accounts
payable		136,194	(136, 194)	(136, 194)	$\overline{\phantom{0}}$	$\overline{\phantom{0}}$
Bonds payable		2,800,000	(2,800,000)			(2,800,000)
Accrued expenses and
other payables		117,737	(117,737)	(117, 737)
		9.778.142	(9,778,542)	(2,153,907)	(753, 694)	(6,870,941)

Notes to Consolidated Financial Statements

		Carrying Amount	Contractual cash flows	Within a year	$1 - 2$ years	Over 2 years
December 31, 2013
Non-derivative financial
liabilities:
Short-term borrowings	S	50,000	(50,000)	(50,000)
Secured bank loan		5,979,886	(5,979,886)	(692, 573)	(743, 931)	(4, 543, 382)
Bonds payable		4,800,000	(4,800,000)	(2,000,000)		(2,800,000)
Notes and accounts
payable		120,790	(120, 790)	(120,790)
Accrued expenses and
other payables		123,755	(123,755)	(123, 755)
		11,074,431	71,074,431)	(2.987.118)	(743.931)	(7,343,382)

The Group is not expecting that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amount.

Exchange rate risk

The Group do not have significant exposure to foreign currency risk.

Interest Rate analysis

The details of financial assets and liabilities exposed to interest rate risk were as follows:

	Carrying amount
	December 31, December 31, 2012 2013
Fixed rate instruments:
Financial assets	4,160,264 3,516,515 S
Financial liabilities	(4,800,000) (2,800,000)
	(639,736) 716,515 S
Variable rate instruments:
Financial assets	1,250,933 1,257,716 S
Financial liabilities	(5,979,886) (6, 724, 211)
	(5.473.278) (4,722,170)

Please refer to the note for liquidity risk of the Group's financial assets and liabilities.

$\ddot{\phantom{a}}$

$\mathcal{L}^{\text{max}}{\text{max}}$ and $\mathcal{L}^{\text{max}}{\text{max}}$

Notes to Consolidated Financial Statements

The following sensitivity analysis is based on the risk exposure to interest rate on the derivative and non-derivative financial instruments on the reporting date. Regarding the liabilities with variable interest rates, the analysis is on the basis of the assumption that the amount of liabilities outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.25% when reporting to management internally, which also represents management of the Group's assessment on the reasonably possible interval of interest rate change.

If the interest rate had increased or decreased by 0.25%, the net profit before tax would have decrease or increased by \$13,683 and \$11,805 for the years ended December 31, 2014 and 2013, respectively, which would be mainly resulted from the bank savings with variable interest rates.

1. Fair value
(i) Fair value and carrying amount

Except as detailed in the following table, the management of the Group believes that the carrying amounts of the financial assets and liabilities in the financial statement measured at amortized cost to be a reasonable approximation of fair value.

	December 31, 2014			December 31, 2013
	Carrying	amount	Fair rate	Carrying amount	Fair rate
Held-to-maturity financial assets - foreign fixed deposit		مە	-	122.975	122,876

(ii) Fair value hierarchy

The table below analyzes financial instruments carried at fair value by the levels in the fair value hierarchy. 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 (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs).

Notes to Consolidated Financial Statements

	Level 1	Level 2	Level 3	Total
December 31, 2013 Financial assets at fair value through profit or loss Current financial assets held for
trading Non-current financial assets held	\$ 1,292			1,292
for trading Designated as upon initial			100,000	100,000
recognition	.292		31,909 131,909	31,909 133,201
Financial liabilities Bonds payable December 31, 2013	s	.800.000		2.800.000
Financial assets at fair value through profit or loss
Current financial assets held for trading Non-current financial assets held	S 1,400			1,400
for trading Designated as upon initial			100,000	100,000
recognition	.400		30,496	30,496
Financial liabilities Bonds payable	S		130,496	131.896 .800.000

(iii) Valuation techniques and assumptions used in fair value determination

The Group uses the following methods in determining the fair value of its financial assets and liabilities:

A. The fair value of listed shares and bonds is based on the financial assets traded in active markets. The fair value is determined based on the quoted market prices.
B. The bonds and other financial assets without an active market are estimated by using the financial instruments as reference.

(q) Financial risk management

Briefings

The Group is exposed to the following risks arising from financial instruments:

$\ddot{\phantom{0}}$

Notes to Consolidated Financial Statements

(i) Credit risk
(ii) Liquidity risk
(iii) Market risk

In this note expressed the information on risk exposure and objectives, policies and process of risk measurement and management. For detailed information, please refer to the related notes of each risk.

Structure of risk management

The Group's finance department provides business services for the overall internal department. It sets the objectives, policies and processes for managing the risk and the methods used to measure the risk arising from both the domestic and international financial market operations.

The Group minimizes the risk exposure through financial instruments. The Board of Directors regulated the use of financial instruments in accordance with the Group's policy about risks arising from financial instruments, such as interest rate risk, credit risk, the use of non-derivative financial instruments, and the investments of excess liquidity. The internal auditors of the Group continue with the review of the amount of the risk exposure in accordance with the Group's policy and the risk management policies and procedures. The Group has no transactions in financial instruments (including derivative financial instruments) for the purpose of speculation.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers and investment securities.

(i) Accounting receivable and other receivables

The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Group's customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk.

The Group has established a credit policy. Credit limits are established for each customer. Customers that fail to meet the Group's benchmark creditworthiness may transact with the Group only on a prepayment basis.

49 CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Group set the allowance for bad debt account to reflect the estimated losses for trade, other receivables, and investment. The allowance for bad debt account consists of specific losses relating to individually significant exposure and the unrecognized losses arising from similar assets groups. The allowance for bad debt account is based on historical collection record of similar financial assets.

(ii) Investment

The credit risk exposure in the bank deposits, fixed income investments and other financial instruments are measured and monitored by the Group's management. Since the Group's transaction counterparties and contractually obligated counterparties are banks, financial institutes and corporate organizations with good credits, there are no compliance issues, and therefore no significant credit risk.

(iii) Guarantees

The Group is only permissible to provide financial guarantees to subsidiaries.

Liquidity risk

The Group manages sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Group's management supervises the banking facilities and ensures in compliance with the terms of the loan agreements.

The loans and borrowings from the bank form an important source of liquidity for the Group. Please refer to note 6(h) for unused short-term bank facilities as of December 31, 2014 and 2013.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

(i) Currency risk

The Group is exposed to currency risk on revenue and borrowings that are denominated in a currency other than the respective functional currencies of the Group's entities, primarily the New Taiwan Dollars (TWD). The Group uses natural hedging strategy in exposing the current and future currency risk that arises from cash flows of foreign currency asset and liability. Foreign currency gains (losses) from assets and liabilities are subsequently offset by foreign currency losses (gains) to hedge the foreign currency risk.

Notes to Consolidated Financial Statements

(ii) Interest rate risk

The Group borrows funds on interest rate, which has risk exposure to cash flow. The bonds payable are fixed-interest-rate debts. Changes in market interest rates lower the effect on future cash flow.

(iii) Other market price risk

The Group is exposed to equity price risk due to the investments in non-listing equity securities, corporate banks, listing equity securities that measure the fair value of the publicly quoted price, and quoted open-ended fund at fair value.

(r) Capital management

The Group maintains the capital based on the current operating characteristics of the industry, future development, and changes in external environment, to assure there is financial resource and operating plan to support working capital, capital expenditures, and debt redemption and dividend payment and so on. The management decides the optimized capital by using appropriate debt-toasset ratio. To maintain a strong capital base, the Group enhances the return on equity by optimizing debt-to-assets ratio. As of December 31, 2013, and December 31 and January 1, 2012, the Company's debt-to-assets ratio at the end of the reporting date was as follows:

	2014	December 31, December 31, 2013
Total liabilities	10,654.094	11,959,820
Total assets	21,381,641	22,083,750
Debt-to-asset ratio	50%	54%

There were no changes in the Group's approach to capital management during the years.

Related-Party Transactions $(7)$

(a) Parent company and ultimate controlling company

CMT investment is the ultimate controlling party of the Company and owns 58.54 percent of all shares outstanding of the Company. The Company has issued the Consolidated financial statements available for public use.

Notes to Consolidated Financial Statements

(b) Key management personnel compensation

Key management personnel compensation comprised

	2014	2013
Short-term employee benefits	44.451	42,217
Post-employment benefits	888
	45.339	$-5.052$

(c) Significant related party transactions

1. Freight revenue

The amounts of significant sales transactions and account receivable between the Group and its related parties were as follows:

	Revenue		Account Receivable-related-parties
	2014	2013	December31, 2014	December 31, 2013
Other relates parties The entities with significant	970,380	931.699	132,508	133,376
influence over the Group	493	660	54	138
	70.873	932.359	132.562	133.514

The collection periods of inland trucking transactions are within 30 to 45 days after consignment, which are similar to those of the ordinary customers. If the contracts have similar terms and conditions, the selling prices for related parties and ordinary customers shall not have any significant different.

2. Logistic and agent revenue

The amount of significant sales transactions and account receivable between the Group and its related parties were as follows:

		Revenue		Account Receivable-related-parties
		2014	2013	December31, 2014	December31. 2013
The entities with significant influence over the Group		72.156	74.934	6.150	4.249

The Group's selling price for related parties is cost, plus, fixed percentage when the related parties receive cash from customers; the related parties pay the Group immediately.

Notes to Consolidated Financial Statements

3. Operating expense

	Operating expense
		2014	2013
Entities with significant influence over the Group		9.140	8.329

The Group entered into rental agreements with its related parties from November 2008 to December 2016. The prices are similar to those of the market prices, and they are being paid monthly.

$(8)$ Pledged Assets:

The carrying values of pledged assets are as follow:

Assets	Subject		2014	December 31, December 31, 2013
equity method $-$ stock	Long-term investment with Commercial paper payable – and long-term loans and credit lines	S	485,267
Property and equipment - land and buildings Transportation and other	Short-term and long-term loans and credit loan secured Short-term and long-term loans and		899,336	899,336
equipment (including prepayment equipment) Other financial assets-	lines Long-term loans		10,502,387	10,425,677
current (time deposit)			220,368
Non-current other financial assets (Guarantee deposits and pledged	Guarantee for letters of credit and others
assets-time deposits)			20,391	194,648
			27.749	1,519,661

Commitments and contingencies $(9)$

(a) The Group had issued guarantee promissory notes amounting to \$2,884,000 and \$4,946,100 as of December 31, 2014 and 2013, respectively, as guarantee for bonds payable.
(b) As of December 31, 2014, the Group still had several long-term leases of its ships with customers in effect. The ending periods of the contracts are from May 2015 to July 2020.

53 CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(c) In order to expand the business scale, the subsidiaries took over a bulk-carrier construction contract from the third parties. The related information was as follows:

Purchaser	Date of contract	Total price	Date of delivery	Price paid
CEP	July 11, 2013	1.481.220	June 2016	148,122
		(US\$46,800,000)	(note)	(US\$4,680,000)
CHM	August 30, 2013	1,474,890	September 2015	443,181
		(US\$46,600,000)	(note)	(US\$4,660,000)
CHN	January 10, 2014	1,474,890	October 2016	147,489
		(US\$46,600,000)	(note)	(US\$4,660,000)

Note: These are the estimated dates of delivery.

(10) Losses due to major disasters: none

(11) Subsequent events: none

$(12)$ Other

(a) The followings are the summary statement of current period employee benefits, depreciation and amortization expenses by function:

		2014		2013
By function By item	Cost of sales	Operating Total expenses		Cost of Operating sales expenses		Total
Employee benefits
Salary	336,227	181,132	517,359	316,543	167,595	484,138
Labor and health insurance	7,692	13,379	21,071	7,756	12,002	19,758
Pension	5,874	9,427	15,301	6,041	9,169	15,210
Others	17,910	4,142	22,052	16,277	6,004	22,281
Depreciation (Note)	686,859	9,926	696,785	653,315	12,102	665,417
Amortization		3,932	3,932		3,923	3,923

Note: excluding the deduction of rental income of \$459 for the year ended December 31, 2014 and 2013, respectively.

Notes to Consolidated Financial Statements

(13) Segment information

The Group's reportable segments consist of the Land Transportation Segment, the Logistics Segment and the Sea Transportation Segment. The land transportation segment and the logistics segment engage in the container transportation business, warehousing business, and freight agent business. And the sea transportation segment engages in the bulk carrier business. The Group's reportable segments are the strategic business units that provide different kinds of transportation services. Each strategic business unit requires different services and marketing strategies, thus, should be managed separately.

The amounts of the Company's reportable segments are the same as those in the report used by the chief operating decision maker. The accounting policies for the operating segments are the same as those in Note 2, which describe significant accounting policies. The Company's operating segments' income before tax was the foundation for the chief operating decision maker to evaluate performance. There was no transfer of revenue between segments.

			2014
	Inland trucking and terminal & logistics department	Shipping department	Others	Adjustments and eliminations	Total
Revenue from outside customers	1,966,021 S	1,511,071	14,189		3,491,281
Revenue from segments
Total revenues	1,966,021 S	1,511.071	14,189		3,491,281
Segment income before tax Total assets of segment	S 141,229	422.745	(4.434)		\$ 21,381,641
			2013
	Inland trucking and terminal & logistics department	Shipping department	Others	Adjustments and eliminations	Total
Revenue from outside customers	1,860,217 S	1,461,145	12,033		3,333,395
Revenue from segments
Total revenues Segment income before	.860,217 S	1,461,145	12,033		3,333,395
tax Total assets of segment	S 106,634	375.225	(2.988)		478.871 22,083,750

Notes to Consolidated Financial Statements

(a) Entity-wide information

The Consolidated Company's industrial information is the same as the one in reportable segments.

The geographic information of the Consolidated Company's sales that was presented by customer location, and the non-current assets that were presented by location were as follows:

a. Revenue from external customers:

Country	2014	2013
Taiwan	\$ 1,980,863	1,872,983
Switzerland	593,626	405,199
Marshall islands	612,853	510,557
Others	303,939	544.656
	3,491,281 S.	3,333,395
b. Non-current Assets:
Country	2014	2013
Taiwan	\$ 2,486,052	2,464,193
Hong Kong	9,213,701	8,704,429
Others	2,066,142	2,054,593
	13,765,895 S.	13,223,215

(b) Major customers

Sales to individual customers constituting over 10% of the total revenue in the consolidated statements of income of 2014 and 2013 are summarized as follows:

	Nature of services	2014			2013
			Amount	$\%$	Amount	%
Customer:
A Company	Container
	transportation	S	900,169	26	866,603	26
F Company	Vessel transportation		612,853	17	510,557	15
S Company	Vessel transportation		593,626	17	405,199	12
R Company	Vessel transportation		303,939	-9	379,828	11
			2.410.587	69	2.162.187	$\underline{64}$

AI assistant

CMT — Annual Report 2014

52166_rns_2014-11-13_0a6f31e4-cd97-49f9-9661-fb56b625ce0a.pdf

Table of contents

要侯建業群合會計師事務府 KPMG

Independent Auditors' Report

Consolidated Statements of Comprehensive Income

For the Years ended December 31, 2014 and 2013 (expressed in thousands of New Taiwan dollars, except net income per share amounts)

Consolidated Statements of cash flows

For the Year ended December 31, 2014 and 2013 (expressed in thousands of New Taiwan dollars)

Notes to Consolidated Financial Statements

December 31, 2014 and 2013 (expressed in thousands of New Taiwan dollars unless otherwise specified)

(1) Company history

(2) Consolidated financial statements authorization date and authorization process

(3) New standards and interpretations not yet adopted

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

(4) Significant Accounting Policies

(b) Basis of preparation

$\overline{\mathbf{4}}$

CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(c) Basis of consolidation

1. Principle of preparation of the consolidated financial statements

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

(d) Foreign currencies

1. Foreign currency transaction

2. Foreign operations

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

1. Financial assets

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

(vi) Derecognition of financial assets

Notes to Consolidated Financial Statements

13

CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(i) Investment property

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

2. Subsequent Expenditure

3. Amortization

17

CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(o) Provisions

(p) Revenue

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

(r) Income taxes

Notes to Consolidated Financial Statements

(5) Major sources of significant accounting assumptions, judgments, and estimation uncertainty

Notes to Consolidated Financial Statements

(6) Explanation of significant accounts

(b) Financial assets

Notes to Consolidated Financial Statements

2. Debt investment and fixed rate deposit:

3. Sensitive analysis – equity investment price risk

Notes to Consolidated Financial Statements

24

CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

(e) Property, plant equipment

CHINESE MARITIME TRANSPORT LTD. AND SUBSIDIARIES AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

(h) Loans

Notes to Consolidated Financial Statements

3. Bonds Payable

(i) Operating lease

Notes to Consolidated Financial Statements

2. The Group as lessor

(j) Employee benefits

1. Defined benefit plans

CMT Annual Report 2014