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EITC Annual Report 2015

Jul 1, 2015

52161_rns_2015-07-01_bc354ed5-9ddb-4cf3-9878-e16568198342.pdf

Annual Report

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Stock Code 2607
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http://www.evergreen-eitc.com.tw Taiwan Stock Exchange Observation Post System http://mops.twse.com.tw Pirnt Date April 17, 2015

HEAD OFFICE

ADDRESS 899, Ching Kuo Road, Taoyuan, Taiwan PHONE (886)3-325-2060

WEBSITE www.evergreen-eitc.com.tw

STOCK DEPARTMENT

ADDRESS 2F, 166, Sec. 2, Minsheng East Road, Taipei, Taiwan PHONE (886)2-2500-1668 WEBSITE stock.evergreen.com.tw

SPOKESPERSON

NAME Wey, Maw-Jiunn

TITLE President PHONE (886)3-325-2060 E-Mail [email protected]

VICE-SPOKESPERSON

NAME Chen, Cheng-Pang TITLE Financial Officer PHONE (886)3-325-2060 E-Mail [email protected]

AUDIT

AUDITOR Pricewaterhouse Coopers ADDRESS 27F, 333, Keelung Road, Sec. 1, Taipei, Taiwan PHONE (886)2-2729-6666 WEBSITE www.pwc.com/tw

CONTENTS

CHAPTER 1. Letter to Shareholders------------------------------------------------------------- 1
Ⅰ. Performance of 2014-------------------------------------------------------------------------------------- 1
Ⅱ. Operation Strategy for 2015------------------------------------------------------------------------------ 2
Ⅲ. Future Development Strategy---------------------------------------------------------------------------- 4
Ⅳ. Effect from Outside Competition, Law and Market Condition-------------------------------------- 5
CHAPTER 2. General Condition of the Corporation-------------------------------- 6
. Registration Date------------------------------------------------------------------------------------------- 6
. A Chronology of Evergreen International Storage & Transport Corporation --------------------- 6
. Organization ----------------------------------------------------------------------------------------------- 7
. Directors and Supervisors--------------------------------------------------------------------------------- 8
. Compensation for Directors ----------------------------------------------------------------------------- 10
Ⅵ. Compensation for Supervisors--------------------------------------------------------------------------- 11
Ⅶ. Compensation for President and Executive Vice Presidents----------------------------------------- 12
Ⅷ. Corporate Governance ------------------------------------------------------------------------------------ 13
Ⅸ. Capital and Shares ---------------------------------------------------------------------------------------- 18
Ⅹ. Dividend Policy and Implementation Status of Dividend Policy----------------------------------- 21
. Employee Bonuses and Remuneration of The Directors and Supervisors ----------------------- 22
. Status of Stock Repurchased by EITC----------------------------------------------------------------- 22
CHAPTER 3. Business Development Outline------------------------------------------------- 23
. Business Content------------------------------------------------------------------------------------------- 23
. EITC’s People-------------------------------------------------------------------------------------------- 25
CHAPTER 4. Financial Statements-------------------------------------------------------------- 26
. The Brief Financial Statement For Recent Five Years ----------------------------------------------- 26
Ⅱ. The Financial Analysis For Recent Five Years--------------------------------------------------------- 30
Ⅲ. Supervisors’ Report --------------------------------------------------------------------------------------- 32
Ⅳ. Consolidated Financial Statements with Report of Independent Auditors------------------------- 33

CHAPTER 1. Letter to Shareholders

Ⅰ. Performance of 2014

1. Business Fulfilment of 2014

The EITC’s consolidated revenue of 2014 was NT$6,730 million, which was 100.96% of budget. The profit for the year had a year on year increase of NT$94 million, a 16.08% increase, to NT$675 million. As result, the earnings per share was NT$0.63.

Reviewing 2014, the economic environment was uncertain because of the Eurozone crisis, Chinese GDP slowdown and the slow recovery pace of the US economy. Even under such conditions along with market saturation and fierce competition, the company had been steadily, while aggressively, developing the business. As a result, the company’s annual revenue had not just achieved the pre-set target of 2014, but also performed better than the previous year. In addition, the company had been renewing vehicles and machineries; offered customers higher quality services with high efficiency; benefited from the 4th quarter’s international crude oil downward price; good internal cost control; reengineering and intergrading the company’s IT system for better information processing efficiency. All of these had made a contribution to the company’s effort to successfully reduce costs and achieve the revenue target.

Plan for developing main business scope as follows：

(1) Inland Transportation Service

Continue developing CY haulage services and passenger services, including tour coach and commuter services.

  • (2) Container Depot and Storage Service

Strengthen container freight station (CFS) services and reintroduce the machine usage fee, to improve business performance.

(3) International Marine Service

Step into container rental market, adding profit.

  1. Performance of Budget Execution

Budget of 2014’s annual consolidated revenue is NT$6,666 million. Actual achievement of the consolidated revenue was NT$6,730 million, which was 100.96% of the budget. Budget of 2014’s profit before income tax was NT$795 million. Actual achievement of the profit before income tax was NT$879 million, which was 110.57% of the budget.

  1. Financial Position and Profitability Analysis

  2. (1) Financial Position

The EITC’s annual consolidated revenue of 2014 was NT$6,730 million, a year on year

1

increase of 10.09%. Operating costs for the same period was NT$5,763 million, a year on year increase of 8.25%. Total non-operating income and expense was NT$192 million, a year on year increase of NT$34 million. Profit for the year was NT$675 million, a year on year increase of NT$94 million.

(2) Profitability Analysis

In 2014, EITC’s return on total assets was 2.50%, return on equity was 3.29%, return on sales was 10.03%, and earnings per share was NT$0.63.

  1. Research and Development

(1) Vehicle Safety

In order to increase the service quality and operation safety, the company has installed voyage data recorders on each tractor unit.

  • (2) Low Environment Impact Vehicle Fleet

In the cargo business scope, the company has been renewing its tractor units. All newly purchased vehicles are fitted with Euro 5 rated engine to increase the vehicles’ energy efficiency and reduce environment impact.

In the passenger business scope, the company also renewed its passenger vehicles with Euro 5 rated engine. Other than this, the company has also kept adjusting its bus services’ timetable according to the demand, in order to improve overall efficiency and profitability and reduce carbon dioxide emissions.

(3) Rental Service

The company invest containers for rental, to gain additional revenue.

Ⅱ. Operation Strategy for 2015

1. Operation Direction

Recently, major institutions around the globe predicted that the economic performance overall will perform better in 2015 than in 2014. As in 2014, although the US economy had a steady recovery, the Eurozone was still troubled by debt, currency and labour market issues. In addition, mainland China, under its government’s guidance, reduced its growth rate. In Japan, the internal demand is still weak. With the combination of all these factors, the economic performance was comparably slower at the turn of the year into 2015. Nevertheless, the economic activity is gaining momentum because of the quantitative easing policies by many governments. For Taiwan’s economy, under the influence of falling crude oil price and forecast of better economic conditions in 2015, many Taiwan based corporations also became positive about the current economic condition. Furthermore, the Taiwan Institute of Economic Research predicted that Taiwan’s economic growth will rise from its previous prediction on November of 2014 from 3.48% to 3.67%.

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Many forecasts indicate that the economy, both internationally and domestically, will be getting better. The company will grasp this opportunity to actively expand its business and improve the cost structure, in order to further improve the company’s performance. While pursuing business growth, the company will also fulfil its social responsibility. Detail of its operational direction is as follows

(1) Business Diversification and Steady Growth

The company has business across many different sectors. Under the diverse business, even during economic slowdown, the company still maintains a decent level of revenue and profit. To expand the business: cargo transportation business will have its fee reasonably adjusted according to its fluctuating cost, and actively obtain high value CY business; for passenger transportation business, because of the airport MRT which will be launched soon, the business of bus services will be strategically adjusted. At the same time, there will be promotions and constant seeking of business opportunities for the tour and commuter services; in terms of the warehouse business, machine usage fee has been reintroduced and will be maintained to reflect the occurrence of actual cost; in the international marine business, the company will keep expanding its Taichung Free Trade Zone business and actively obtain stevedore business from vessels in cross strait trade.

(2) Reduce Cost and Improve Business Performance

Other than actively expanding business, the company has been improving its management by carrying out IT system integration, to improve internal work processes that lead to increase of efficiency across the board. At the same time, the business is emphasising and strengthening work safety measures by renewing aged machineries. This will decrease the chance of malfunction and labour risk, thus providing a safe working environment to the workforce and better services to customers.

  • (3) Increase Awareness of Environment Protection and Social Responsibility

The company has a large fleet of vehicles. So in order to reduce their impact on the environment, the fleet is renewed with latest engine efficiency standards. At the same time, the company has improved its waste water treatment and finding ways to recycle the water, when possible. The company will keep looking for ways to reduce its environment impact to fulfil its corporate social responsibility.

2. Forecast of Business Performance

The global economy in 2015 will be under steady recovery. Compounded with global main economies’ quantitative easing policy, Taiwan’s imports and exports will likely be affected and increased. As a result, the inland transportation, container depot and warehouse will likely gain steady growth in volume. As a result of cross strait stability which leads to increased tourism business, the passenger transportation market will receive the benefit of increased demand. If the international crude oil markets continue to stay at low price level, with constant improvement of business model and expanding business along with the effort of improving

3

service quality and reducing cost, it is expected that the profit performance of the company will be better in 2015, therefore, will live up to the trust of shareholder’s expectation.

  1. Key Marketing Policy

  2. (1) Inland Transportation Business

Inland transportation business will continue the diversification of the business policy developed in recent years. In 2015, the company will keep investing in asset renewing and improvement; obtaining big retailers’ haulage business; and actively bidding for major import or export business, from government or non-government bodies, and special transportation projects. Meanwhile, vehicles will be renewed in due time to provide safe and good quality service. In terms of the passenger business, in 2015, the company will keep evaluating all bus routes and adjust them when needed to improve cost. At the same time, the company aims to increase tour and commuter business to increase passenger business’ performance.

(2) Container Depot and Warehouse Business

The company has been reintroducing the collection of machine usage fee on all export shipments since 2014. It has made a substantial recovery on warehouse business performance. So in 2015, the company will keep collecting the fee and increase the implementation ratio. Other than this, the machineries in Taoyuan and Shichih will be renewed, to reduce maintenance cost and provide safe and efficient depot services, to increase depot business performance.

(3) International Marine Business

The company has been investing in container rental market in recent years with good profit performance. The company will increase the investment in 2015 if there is an increase in market demand. In terms of the Taichung port business and the machinery equipment improvement, it will continue providing good service quality, as a way to increase business in the Taichung free trade zone and sea side operation.

(4) Petrol Station Business

The company will keep finding ways to expand customer numbers. Also it will evaluate and adjust business strategy toward streamlining manpower, joint cooperation and cross trade partnership.

Ⅲ. Future Development Strategy

Looking into 2015, although there are still many uncertainties in the global economy, however, with the influence of optimistic recovery of the US economy and low crude oil market price, the global economy is still likely to develop positively. The domestic economy of Taiwan can be

4

expected to benefit from the global economy, causing increased export value and domestic consumption activity. Marine related market will thus have better business performance.

The company will grasp the opportunities from the economic recovery, and continue improving competitiveness; increase service quality to expand business; and revitalise its asset for most effective usage. Other than diversifying business, the company can also keep finding innovative ways to reduce operation costs and expenses, and seek steady revenue growth.

Looking ahead, in addition to the company’s effort in pursuing steady growth of revenue and profit, the company also keeps strengthening its structure management, operation management and risk control ability, while fulfilling its social responsibility role, to achieve the constant goal of having sustainable business.

Ⅳ. Effect from Outside Competition, Law and Market Condition

In terms of outside competition, the container port operators have been actively seeking business. Resulting in many carriers opt for collecting loaded containers at port sides which had significantly affected inland depots’ throughput volume; also due to Taipei port’s operation and carrier’s decision in using blue way as a main route for Taiwan west coast transportation, instead of using inland trucking, have impacted inland haulage business. The company has been actively adjusting its business model to cope with the effect of outside competition.

From the legal perspective, recently, the government is studying relevant laws to ease the application for operating container depot business. This will make it easier for port operators to get into the container depot business causing fiercer competition to inland depot operators. In recent years, under the trend of globalisation, many governments are actively speeding up the progress for free trade and upgrading to international standard, in order to improve the nation’s competitiveness. In Taiwan, however, the Free Trade Agreement (FTA) has been progressing slowly, which will seriously dampen Taiwanese companies’ ability to compete internationally.

Because of the US economy’s steady recovery and reducing price in international crude oil market, it is expected that the global economy in 2015 will continue to recover. However, there are still many uncertainties, such as sovereignty risks in many regions and Eurozone economic stagnation. Nevertheless, the Taiwan export market is still on its track to become better.

Facing ever changing international economic and political conditions, the company has been keeping an eye on the market trends and reacting with adequate plans to seek out new opportunities. While chasing steady growth, the company, as always, does not forget its social and environment responsibility to grow a sustainable business.

5

CHAPTER 2. General Condition of the Corporation

Ⅰ. Registration Date

Registration Date of the Company October 5, 1973

Ⅱ. A Chronology of Evergreen International Storage & Transport Corporation

  1. Evergreen International Storage and Transport Corporation

Incorporated in 1973, Evergreen International Storage and Transport Corporation (the“Company”) was initially operated under the name of “Everglory Transport Corporation”. In July 1986, the Company was renamed as “Evergreen Transport Corportaion”. Shares of the Company have been traded on the Taiwan Stock Exchange since 1990. In September 2001, the Company was renamed again and is currently known as the “Evergreen International Storage and Transport Corporation”.

The Company merged with Evergreen Container Terminal Corporation (EGCT) and Uniglory Marine Corporation (UGMC) on March 31, 2002 and November 1, 2002, respectively, with the Company being the surviving entity. The mergers were conducted through exchange of 0.8 common share of EGCT and 1.15 common shares of UGMC for 1 common share of the Company. On March 3, 2003, the Company’s Board of Directors resolved to merge with Evervoyage Transportation Corporation (Evervoyage), a wholly-owned subsidiary of the Company, with Evervoyage being the dissolved company. The merger was conducted in accordance with Article 19 of the Business Mergers and Acquisitions Law and became effective on May 1, 2003.

The company is primarilly engaged in container trucking, operation of container distribution centers, ship chartering, operation of gasoline station and passenger transportation.

  1. Gaining Enterprise S.A.

Incorporated in Panama on December 16, 1993 and is primarily engaged in ship trading, transportation and chartering, operation and investments of container yards, leases and investment of overseas container terminals and marine transportation related business.

  1. Ever Reward Logistics Corporation

Incorporated on April 21, 2000 under the name of“Ever Reward Development Enterprise” with the principal activities in international trading, packing, forwarding agency, storage and warehousing and information administration. On August 19, 2000, the Company was renamed “ ” as Ever Reward Logistics Corporation .

  1. Shun An Enterprise Corporation

Incorporated on November 10, 2008, and is primarily engaged in management consulting and employment agency.

6

Ⅲ. Organization

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HUMAN RESOURCES DEPT.
G ENERAL AFFAIRS DEPT.
STOCKHOLDERS
OCCUPATIONAL SAFETY &
MEETING
HEALTH DIV.
SUPERVISORS FINANCE DEPT.
COMPUTER DEPT.
BOARD OF
DIRECTORS
COMPENSATION
PROJECT DIV.
COMMITTEE
CHAIRMAN
BUSINESS DEPT.
AUDITING DIV.
TRUCKING DEPT.
PRESIDENT BUS DEPT.
MAINTENANCE DEPT.
GAS DEPT.
TAOYUAN CONTAINER
TERMINAL
SHICHIH CONTAINER
TERMINAL
TCG PORT CONTAINER
TERMINAL
TAICHUNG OFFICE
KAOHSIUNG OFFICE
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7

Ⅳ. Directors and Supervisors

As of April 17,2015 As of April 17,2015 As of April 17,2015 As of April 17,2015
Date of Shareholding Present Shares Held by
 Shares Held by
Nationality Date of
Election		 Initial
When Elected		 Shareholdings Spouses &
Dependents
Third Parites
Title or Name
(Inaugu-		 Tenure Election,
Registry
ration)		 Appoint-
Number (%) Number (%) Number (%) Number (%)
ment
Chairman R.O.C. Evergreen Marine Corp. (Taiwan) Ltd. 2014.06.12 3 Years 1984.12.07 424,061,830 39.74 424,061,830 39.74
-		 0
0
R.O.C. Representative
Chen, Ching-Piao		 2014.06.12 3 Years 2013.11.11 0
0
0
0
0
0
0
0
Director R.O.C. Chang Yung-Fa Charity Foundation 2014.06.12 3 Years 2011.06.15 100,000 0.01
100,000		 0.01
-		 0
0
R.O.C. Representative
Ko, Lee-Ching		 2014.06.12 3 Years 1990.06.15 0
0
17,740
0
0
0
0
0
R.O.C. Representative
Hsieh, Chih-Chien		 2014.06.12 3 Years 2011.06.15 0
0
0
0
52,229
0
0
0
R.O.C. Representative
Chang, Kuo-Wei		 2015.01.01 2.5 Years 2015.01.01 0
0
0
0
0
0
0
0
Director R.O.C. Evergreen Marine Corp. (Taiwan) Ltd. 2014.06.12 3 Years 1984.12.07 424,061,830 39.74 424,061,830 39.74
-		 0
0
R.O.C. Representative
Loh, Yao-Fon		 2014.06.12 3 Years 2002.06.27 0
0
2,229,231		 0.21
211,482		 0.02
0
0
R.O.C. Representative
Tai, Jiin-Chyuan		 2014.06.12 3 Years 2014.06.12 0
0
160,374		 0.02
0
0
0
0
Independent
Director		 R.O.C. Yu, Fang-Lai 2014.06.12 3 Years 2014.06.12 0
0
0
0
0
0
0
0
R.O.C. Chang, Ching-Ho 2014.06.12 3 Years 2014.06.12 0
0
0
0
0
0
0
0
R.O.C. Szu, Wen-Chang 2014.06.12 3 Years 2014.06.12 0
0
0
0
0
0
0
0

8

As of April 17, 2015

Date of Shareholding Present Shares Held by
 Shares Held by
Nationality Date of
Election		 Initial
When Elected		 Shareholdings Spouses &
Dependents
Third Parites
Title or Name
(Inaugu-		 Tenure Election,
Registry
ration)		 Appoint-
Number (%) Number (%) Number (%) Number (%)
ment
Supervisor R.O.C. Evergreen International Corp. 2014.06.12 3 Years 1993.02.13 90,220,968 8.45 90,220,968 8.45
-		 0
0
R.O.C. Representative
Lin, Long-Hwa		 2014.06.12 3 Years 2014.06.12 0
0
0
0
0
0
0
0
R.O.C. Representative
Wu, Kuang-Hui		 2014.06.12 3 Years 2010.12.01 0
0
0
0
0
0
0
0

9

Ⅴ. Compensation for Directors

December 31, 2014 NT$(Thousand)

Remuneration for Directors Remuneration for Directors Remuneration for Directors Remuneration for Directors Compensation Earned as Employee of EITC or EITC Subsidiary Affiliates Compensation Earned as Employee of EITC or EITC Subsidiary Affiliates Compensation Earned as Employee of EITC or EITC Subsidiary Affiliates Compensation Earned as Employee of EITC or EITC Subsidiary Affiliates Compensation Earned as Employee of EITC or EITC Subsidiary Affiliates Compensation Earned as Employee of EITC or EITC Subsidiary Affiliates Compensation Earned as Employee of EITC or EITC Subsidiary Affiliates Compensation Earned as Employee of EITC or EITC Subsidiary Affiliates Compensation Earned as Employee of EITC or EITC Subsidiary Affiliates Compensation Earned as Employee of EITC or EITC Subsidiary Affiliates
Total of A, B, C and Total of A, B, C D,
D as % of 2014 Net Salar Bonus Employee Profit Employee Stock E, F and G as % of
Salary(A) Pension(B) Compensation(C) Allowance(D) Profit ,
etc(E)		 Pension(F)
Sharing(G)
Option(H)		 2014 Net Profit Other
. Compensation
Title Name Consolidated from Non-
Consolidated EITC Consolidated EITC Consolidated EITC Consolidated Consolidated EITC Consolidated EITC Consolidated EITC Subsidiaries EITC Consolidated Consolidated Subsidiary
Affiliates
EITC Subsidiaries Subsidiaries Subsidiaries Subsidiaries EITC Subsidiaries Subsidiaries
Subsidiaries		 of EITC
Subsidiaries		 EITC Subsidiaries
of EITC of EITC of EITC of EITC of EITC of EITC of EITC Cash Stock of EITC of EITC

Cash		 Stock
Chairman Evergreen Marine Corp.
(Taiwan) Ltd.
Representative:
Chen,Ching-Piao		 5,099 5,099 0 0 4,440
4,440		 252 252 1.4650 1.4650 1,243
1,243		 48 48 0 0 0 0 0 0 1.6581
1.6581		 -
Director Chang Yung-Fa Charity
Foundation
Representative:
Lin,Sun-San
Director Chang Yung-Fa Charity
Foundation
Representative:
Ko, Lee-Ching
(Note
Appointed)
Director Chang Yung-Fa Charity
Foundation
Representative:
Hsieh,Chih-Chien
Director Evergreen Marine Corp.
(Taiwan) Ltd.
Representative:
Loh,Yao-Fon
Director Evergreen Marine Corp.
(Taiwan) Ltd.
Representative:
Tai, Jiin-Chyuan
(Note
Appointed)
Director Chang Yung-Fa Charity
Foundation
Representative:
Wey, Maw-Jiunn
(Note
Discharged)
Independent
Director		 Yu, Fang-Lai
(Note
Appointed)
Independent
Director		 Chang, Ching-Ho
(Note
Appointed)
Independent
Director		 Szu, Wen-Chang
(Note
Appointed)

Note The Shareholders’ Meeting was re-elected on June 12, 2014.

10

Ⅵ. Compensation for Supervisors

December 31, 2014
NT$(Thousand)
Other Compensation from
Non-Subsidiary Affiliates
-
Remuneration for Supervisors
Total of A, B and C as
Salary(A) Compensation(B) Allowance(C) % of 2014 Net Profit Other Compensation from
Title Name
Non-Subsidiary Affiliates
Consolidated Consolidated Consolidated Consolidated
EITC Subsidiaries of EITC Subsidiaries of EITC Subsidiaries of EITC Subsidiaries of
EITC EITC EITC EITC
Supervisor Evergreen International Corp.
Representative:
Lin, Long-Hwa
(Note
Appointed)		 0 0 1,560 1,560 54 54 0.2415
0.2415		 -
Supervisor Evergreen International Corp.
Representative:
Wu, Kuang-Hui
Supervisor Evergreen International Corp.
Representative:
Ko, Lee-Ching
(Note
Discharged)

Note The Shareholders’ Meeting was re-elected on June 12, 2014.

11

Ⅶ. Compensation for President and Executive Vice Presidents

December 31, 2014 NT$(Thousand)

Total of A, B, C and D as
Salary(A) Pension(B) Bonus & Perquisite(C) Employee Profit Sharing(D)
Employee Stock Options
% of 2014 Net Profit
Other
Compensation
Consolidated
Title Name from Non-
EITC Subsidiaries of
Consolidated Consolidated Consolidated Consolidated Consolidated subsidiary
EITC
EITC Subsidiaries of EITC Subsidiaries of EITC Subsidiaries of EITC Subsidiaries of EITC Subsidiaries of Affiliates
EITC EITC EITC EITC EITC
Cash Stock Cash Stock
President Wey, Maw-Jiunn 9,480
 9,480 3,081 3,081 1,166 1,166 48 0 48 0 2.0611 2.0611 0 0 -
Executive Vice
President		 Kuo, Kou-Tung
(Note1)
Executive Vice
President		 Hwang, Jim-I
Executive Vice
President		 Chen, Cheng-Pang
(Note2)
Executive Vice
President		 Hsu, Ta-Chung
(Note3)

Note1 Effective date of the retirement on May 1, 2014.

Note2 Effective date of the new appointment on January 1, 2014.

Note3 Effective date of the new appointment on May 2, 2014.

12

Ⅷ. Corporate Governance

  1. The Composition and Operations of the Board of Directors

  2. (1) The Board of Directors and Supervisors were re-elected by the Shareholders’ Meeting on June 12, 2014.

  3. (2) The Board Meetings were convened eight (8) times in 2014. The directors’ and supervisors’ attendance status are as follows:

Title Name Attendance in
person
Attendance
by proxy		 Attendance
rate in person
(%)		 Remarks
Chairman Evergreen Marine Corp. (Taiwan) Ltd.
Representative
Chen, Ching-Piao		 8 0 100% Reappointed
Should Attendance
8
Director Chang Yung-Fa Charity Foundation
Representative
Lin, Sun-San		 5 0 100% Appointed
Should Attendance
5
Director Chang Yung-Fa Charity Foundation
Representative
Ko, Lee-Ching		 4 1 80% Appointed
Should Attendance
5
Director Chang Yung-Fa Charity Foundation
Representative
Hsieh, Chih-Chien		 7 1 87.5% Reappointed
Should Attendance
8
Director Evergreen Marine Corp. (Taiwan) Ltd.
Representative
Loh, Yao-Fon		 5 0 100% Appointed
Should Attendance
5
Director Evergreen Marine Corp. (Taiwan) Ltd.
Representative
Tai, Jiin-Chyuan		 5 0 100% Appointed
Should Attendance
5
Director Evergreen Marine Corp. (Taiwan) Ltd.
Representative
Lin, Sun-San
3		 0 100% Discharged
Should Attendance
3
Director Loh, Yao-Fon 3 0 100% Discharged
Should Attendance
3
Director Chang Yung-Fa Charity Foundation
Representative
Wey, Maw-Jiunn		 3 0 100% Discharged
Should Attendance
3

13

Title Name Attendance in
person
Attendance
by proxy		 Attendance
rate in person
(%)		 Remarks
Independent
Director		 Yu, Fang-Lai 5 0 100% Appointed
Should Attendance
5
Independent
Director		 Chang, Ching-Ho 5 0 100% Appointed
Should Attendance
5
Independent
Director		 Szu, Wen-Chang 5 0 100% Appointed
Should Attendance
5
Supervisor Evergreen International Corp.
Representative
Lin, Long-Hwa		 4 0 80% Appointed
Should Attendance
5
Supervisor Evergreen International Corp.
Representative
Wu, Kuang-Hui		 8 0 100% Reappointed
Should Attendance
8
Supervisor Evergreen International Corp.
Representative
Ko, Lee-Ching		 3 0 100% Discharged
Should Attendance
3

2. The Composition and Operations of the Supervisors

The Board Meetings were convened eight (8) times in 2014. The supervisors’ attendance status are as follows:

Title Name Attendance
in person		 Attendance rate in person
(%)		 Remarks
Supervisor Evergreen International Corp.
Representative
Lin, Long-Hwa		 4 80% Appointed
Should Attendance
5
Supervisor Evergreen International Corp.
Representative
Wu, Kuang-Hui		 8 100% Reappointed
Should Attendance
8
Supervisor Evergreen International Corp.
Representative
Ko, Lee-Ching		 3 100% Discharged
Should Attendance
3

The Supervisors understand the finance and business status of the Company by communicating with the internal auditors and the independent accountants. The internal auditors have submitted the audit reports to the supervisors periodically, and the Company’s independent accountants have presented the financial report and audit status to the supervisors periodically.

14

  1. The Composition and Operations of the Remuneration Committee

  2. (1) The Remuneration Committee was established in 2011 and consists of three (3) members.

  3. (2) The duties of the Remuneration Committee are as follows:

    • A. Establish and periodically review the performance evaluation and remuneration policy, system, standards, and structure for directors, supervisors, and managerial officers.

    • B. Periodically evaluate and establish the remuneration of directors, supervisors, and managerial officers.

  4. (3) The Meeting of the Remuneration Committee was convened three (3) times in 2014. The members’ attendance status are as follows:

Title Name Attendance
in person		 Attendance
by proxy		 Attendance rate
in person (%)		 Remarks
Convener Szu, Wen-Chang 2 0 100% Appointed
Re-elected Date
2014.06.12
Should Attendance
2
Member Yu, Fang-Lai 2 0 100% Appointed
Re-elected Date
2014.06.12
Should Attendance
2
Member Chang, Ching-Ho 2 0 100% Appointed
Re-elected Date
2014.06.12
Should Attendance
2
Convener Hsu, Shui-Teh 0 1 0% Discharged
Re-elected Date
2014.06.12
Should Attendance
1
Member Eugene Chien 1 0 100% Discharged
Re-elected Date
2014.06.12
Should Attendance
1
Member Hsieh, Chih-Chien 1 0 100% Discharged
Dismissal Date
2014.03.19
Should Attendance
1

15

4. Internal Control System Execution Status

Evergreen International Storage & Transport Corporation

Internal Control Statement

Date: Mar. 26, 2015

The Company states the following with regard to its internal control system during the period from 01 Jan. 2014 to 31 Dec. 2014, based on the findings of a self-evaluation

  1. The Company is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of its Board of Directors and management. The Company has established such a system aimed at providing reasonable assurance of the achievement of objectives in the effectiveness and efficiency of operations (including profits, performance, and safeguard of asset security), reliability of financial reporting, and compliance with applicable laws and regulations.

  2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three goals mentioned above. Furthermore, the effectiveness of an internal control system may change along with changes in environment or circumstances. The internal control system of the Company contains self-monitoring mechanisms, however, and the Company takes corrective actions as soon as a deficiency is identified.

  3. The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies promulgated by the Securities and Futures Commission, Ministry of Finance (hereinbelow, the “Regulations”). The internal control system judgment criteria adopted by the Regulations divide internal control into five elements based on the process of management control: 1. control environment 2. risk assessment 3. control activities 4. information and communications 5. monitoring. Each element further contains several items. Please refer to the Regulations for details.

  4. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.

  5. Based on the findings of the evaluation mentioned in the preceding paragraph, the Company believes that during the stated time period its internal control system (including its supervision of subsidiaries), encompassing internal controls for knowledge of the degree of achievement of operational effectiveness and efficiency objectives, reliability of financial reporting, and compliance with applicable laws and regulations, was effectively designed and operating, and reasonably assured the achievement of the above-stated objectives.

16

  1. This Statement will become a major part of the content of the Company’s Annual Report and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.

  2. This statement has been passed by the Board of Directors Meeting of the Company held on 26 Mar. 2015, where zero of the nine attending directors expressed dissenting opinions, and the remainder all affirmed the content of this Statement.

Evergreen International Storage & Transport Corporation

Chairman: Chen, Ching-Piao

President: Wey, Maw-Jiunn

17

Ⅸ. Capital and Shares

  1. History of Capitalization
As of April 17,2015 As of April 17,2015 As of April 17,2015 As of April 17,2015
Authorized Capital Issued Capital
Month
Year		 Price
Shares Amount Shares Amount
03
2002		 10 530,000,000
5,300,000,000
521,892,613
5,218,926,130
11
2002		 10 1,100,000,000
11,000,000,000
1,067,141,094
10,671,410,940
2003
04
2015
-		 1,100,000,000
11,000,000,000
1,067,141,094
10,671,410,940

2. Status of Shareholders

As of April 17,2015 As of April 17,2015
Foreign
Government Financial Other Legal Domestic
Item \ Entity Institution or Total
Agency Institution Entity Individual
Individual
Number of
Shareholders		 3
4
74
50,017
123
50,221
Shareholdings 1,260,225
14,469,154
534,739,216
467,393,618
49,278,881		 1,067,141,094
Holding (%) 0.12
1.36
50.10
43.80
4.62
100.00

18

3. Distribution of Common Shares

As of April 17, 2015

Range of Shareholdings Number of Shareholders Number of Shares Holding (%)
1-999 16,205 4,492,095 0.42
1,000-5,000 23,225 54,980,771 5.16
5,001-10,000 5,406 44,433,103 4.16
10,001-15,000 1,427 18,282,488 1.71
15,001-20,000 1,262 23,828,924 2.23
20,001-30,000 849 22,057,394 2.07
30,001-50,000 776 32,026,997 3.00
50,001-100,000 590 43,771,977 4.10
100,001-200,000 260 37,609,030 3.52
200,001-400,000 118 33,188,187 3.11
400,001-600,000 31 15,336,009 1.44
600,001-800,000 15 10,385,891 0.97
800,001-1,000,000 14 12,789,205 1.20
1,000,001 and above 43 713,959,023 66.91
Total 50,221 1,067,141,094 100.00

19

  1. Market Price, Net Worth, Earnings and Dividends per Share
Year Year 2015

2014		 2013
Item (As of April 17,2015)
Market Price
per Share		 Highest 22.90 21.70 20.00

Lowest		 16.70 18.10 17.55
Average 19.78 20.11 18.68
Net Worth
per Share		 Before Distribution 19.68 18.39 19.86
After Distribution - 18.09 -
Earnings
per Share		 Weighted Average Shares 1,067,141,094
shares		 1,067,141,094
shares		 1,067,141,094
Shares
Earnings per Share 0.63 0.54 0.18
Dividends
per Share		 Cash Dividends 0.35 0.30 -
Stock
Dividends		 Dividends from
Retained Earnings		 - - -
Dividends from
Capital Surplus		 - - -
Return on
Investment		 Price/Earnings Ratio
(Note 1)		 30.30 36.33 -
Price/Dividend Ratio
(Note 2)		 54.54 65.40 -
Cash Dividend Yield Rate
(Note 3)		 1.83% 1.53% -

Notes 1 Price/Earnings Ratio = Average Share Price at Market Close for Current Fiscal Year/Earnings per Share.

Notes 2 Price/Dividend Ratio = Average Share Price at Market Close for Current Fiscal Year/Cash Dividend per Share. Notes 3 Cash Dividend Yield Rate = Cash Dividend per Share/Average Market Closing Share Price for Current Fiscal Year.

20

Ⅹ. Dividend Policy and Implementation Status of Dividend Policy

  1. The Company’s Dividend Policy:

Any profit made by the Company for each fiscal year shall, after deduction of tax, be applied first towards making up any losses incurred by the Company in previous years, secondly 10% of the balance thereof shall be retained as the legal reserve, and set aside the special reserve in compliance with regulations, together with the accumulated unallocated profit of the previous period, shall be allocated pursuant to the proposal made by the Board of Directors and adopted by the Shareholders at their meeting, provided that the employees shall be entitled to a bonus of a minimum of 1% thereof and the remuneration of the Directors and the Supervisors shall not exceed 5% thereof to be appropriated from the allocated amount.

Stockholders’ dividends shall be distributed in cash dividends and stock dividends, with the cash dividend at least 10% of the total amount of distribution.

  1. Dividend Distribution in Current Year:

The board adopted a proposal for 2014 dividend distribution at its meeting on March 26, 2015 that cash dividends will be distributed to shareholders for NT$0.35/per share, total amount of distribution is about NT$373.50 million.

  1. The Description of Expected Dividend Policy will be Changed Significantly:Nil

21

ⅩⅠ. Employee Bonuses and Remuneration of The Directors and Supervisors

  1. Range or percentage of employee bonuses and remuneration of the directors and supervisors:

  2. The distribution shall be allocated pursuant to the proposal made by the Board of Directors and adopted by the Shareholders at their meeting, provided that the employees shall be entitled to a bonus of a minimum of 1% thereof and the remuneration of the Directors and the Supervisors shall not exceed 5% thereof to be appropriated from the allocated amount.

  3. The estimated employee bonuses and remuneration of the directors and supervisors for 2014:

NT$(Thousand)

Item Estimated in 2014 Made by The
Board of Directors’ meeting
(As of March 26,2015)
Employee Bounses 15,000 15,000
Remuneration of The
Directors and Supervisors		 6,000 6,000

Notes:Shareholders’ meeting and the number allotted amount accrued differences , 2015 are classified as profit or loss for the year.

  1. Estimated EPS after deduction of employee bonuses and compensation to directors and supervisors: NT$0.63/per share
NT$(Thousand) NT$(Thousand)
Item Made by The
Board of Directors’
meeting
(Recognized)		 Adopted by The
Shareholders’
meeting
(Actual)		 Difference Difference
Causes and
Process
Employee Bounses 15,000 15,000 - Nil
Remuneration of The
Directors and Supervisors		 5,000 5,000 - Nil

ⅩⅡ . Status of Stock Repurchased by EITC : N/A

22

CHAPTER 3. Business Development Outline

Ⅰ. Business Content

  1. The company is engaged in the following activities:

  2. (1) Evergreen International Storage and Transport Corporation

    • (a) Gasoline Stations

    • (b) Highway Bus Transportation

    • (c) Urban Automobile Transportation

    • (d) Passenger Car Rental and Leasing

    • (e) Sightseeing Bus Transportation

    • (f) Automobile Container Transport

    • (g) Ship Transportation

    • (h) Shipping Agency Services

    • (i) Container Distributing Center Business

    • (j) Harbor Cargoes Forwarding Services

    • (k) All business items that are not prohibited or restricted by law, except those that are subject to special approval

  3. (2) Gaining Enterprise S.A.

    • (a) Ship Trading, Transportation and Chartering

    • (b) Operation and Investments of Container Yards

    • (c) Leases and Investment of Overseas Container Terminals

    • (d) Marine Transportation Related Business

  4. (3) Ever Reward Logistics Corporation

    • (a) International Trading

    • (b) Packing

    • (c) Forwarding Agency

    • (d) Storage and Warehousing

    • (e) Information Administration

  5. (4) Shun An Enterprise Corporation

    • (a) Management Consulting

    • (b) Employment Agency

23

  1. The proportion of EITC’s consolidated revenue situation:

NT$(Thousand)

The Proportion of
The Main Commodities 2014
Revenues(%)
Ship Chartering 1,814,863 26.96
Inland Transportation 1,454,296 21.61
Container Yard Service 1,302,896 19.36
Gas Station Sale 751,006 11.16
Rental Containers 436,895 6.49
Passenger Transportation 379,422 5.64
Others 591,079 8.78
Total 6,730,457 100.00
  1. Plans to Develop New products (Services):

The Company will keep monitoring market trends and adjust business strategy and policy accordingly, while taking into account of market performance and corporate social responsibility. To continue the company’s active development of new business, in addition to provide high quality and safety of existing business, the company has been committing to develop new businesses and revitalise land assets. The company has been planning its Dayuan land asset, to develop a logistics industrial park for D.C. business, which will expand the company’s business scope and further increase the company’s revenue.

24

Ⅱ . EITC’s People

2015
Items \ Year 2014 2013
(As of April 17, 2015)
No. of Employees Staff 285 296 283
Labor 773 769 760
Seafarer 319 320 323
Total 1,377 1,385 1,366
Average Age 42.60 42.20 42.80
Average Seniority 13.50 13.10 13.50
Education Profile
Distribution (%)		 Doctorate 0% 0% 0%
Master’s 0.87% 1.08% 1.02%
Bachelor’s 45.82% 43.03% 45.90%
High School 41.47% 42.96% 41.22%
Other 11.84% 12.93% 11.86%

25

CHAPTER 4. Financial Statements

Ⅰ. The Brief Financial Statement For Recent Five Years

  1. Brief Consolidated Balance Sheets IFRSs

NT$(Thousand)

Year Year
Financial Date From 2010 To 2014
2015

Item		 2014 2013 2012 2011 2010 (As of Mar. 31, 2015)
Current assets 5,204,483 5,569,837 5,286,017 N/A 5,766,250
Property, plant and equipment 23,465,908 15,197,647 15,229,803 24,681,597
Intangible assets 3,258 1,966 1,878 2,798
Other assets 3,428,868 3,268,280 2,856,598 3,483,555
Total assets 32,102,517 24,037,730 23,374,296 33,934,200
Current
liabilities		 Before
distribution		 1,176,034 565,367 640,693 2,781,225
After
distribution		 - 890,176 963,671 -
Non-current liabilities 9,750,657 3,675,882 3,330,667 9,778,673
Total
liabilities		 Before
distribution		 10,926,691 4,241,249 3,971,360 12,559,898
After
distribution		 - 4,566,058 4,294,338 -
Equity attributable to owners
of theparent		 21,000,419 19,625,769 19,259,532 21,198,120
Capital stock 10,671,411 10,671,411 10,671,411 10,671,411
Capital surplus 4,263,504 4,262,917 4,262,917 4,263,685
Retained
earnings		 Before
distribution		 4,720,339 4,304,802 4,323,356 4,916,645
After
distribution		 - 3,984,660 4,003,214 -
Other equity interest 1,345,165 386,639 1,848 1,346,379
Non-controlling interest 175,407 170,712 143,404 176,182
Total equity Before
distribution		 21,175,826 19,796,481 19,402,936 21,374,302
After
distribution		 - 19,471,672 19,079,958 -

26

2. Brief Consolidated Balance Sheets ROC GAAP

NT$(Thousand)

Year Year
Financial Date From 2010 To 2014
Financial Date From 2010 To 2014
Financial Date From 2010 To 2014
Financial Date From 2010 To 2014
Item
2014 2013 2012 2011 2010
Current assets N/A 5,287,320 4,838,466 5,018,006
Funds and investments 1,772,086 1,750,782 2,229,027
Property, plant and equipment 15,982,686 16,580,962 16,639,179
Intangible assets 329,069 137,391 145,713
Other assets 136,561 104,374 99,764
Total assets 23,507,722 23,411,975 24,131,689
Current
liabilities		 Before
distribution		 616,446 798,321 685,545
After
distribution		 936,588 1,118,463 1,432,544
Long-term liabilities 87 128 166
Other liabilities 2,909,334 2,308,784 2,108,804
Total
liabilities		 Before
distribution		 3,525,867 3,107,233 2,794,515
After
distribution		 3,846,009 3,427,375 3,541,514
Capital stock 10,671,411 10,671,411 10,671,411
Capital surplus 4,263,052 4,263,052 4,263,052
Retained
earnings		 Before
distribution		 5,692,576 5,501,321 5,434,923
After
distribution		 5,372,434 5,181,179 4,687,924
Unrealized gain or loss on
financial instruments		 345,179 336,218 1,594,036
Cumulative translation
adjustments		 (796,766) (441,974) (768,185)
Net loss not recognized as
pension cost		 (333,739) (166,213) (99)
Minority interest 140,142 140,927 142,036
Total
stockholder’s
equity		 Before
distribution		 19,981,855 20,304,742 21,337,174
After
distribution		 19,661,713 19,984,600 20,590,175

27

  1. Brief Consolidated Statements of Comprehensive Income IFRSs

NT$(Thousand)

Year

Financial Date From 2010 To 2014
2015
Item 2014 2013 2012 2011 2010 (As of Mar. 31, 2015)
Operating revenue 6,730,457 6,113,325 6,104,487 N/A 1,765,985
Gross profit 966,901 789,031 805,641 314,750
Operating profit 686,563 517,407 533,227 254,975
Non-operating income and
expenses
191,946		 158,274 119,841 (16,786)
Profit before income tax 878,509 675,681 653,068 238,189
Profit for the year from
continuingoperations		 674,798 581,298 593,666 196,944
Profit for the year 674,798 581,298 593,666 196,944
Other comprehensive
income		 1,025,968 105,809 (562,093) 1,351
Total comprehensive
income for theyear		 1,700,766 687,107 31,573 198,295
Profit, attributable to
owners of theparent		 668,344 580,653 590,802 196,306
Profit, attributable to
non-controllinginterest		 6,454 645 2,864 638
Comprehensive income
attributable to
owners of the parent		 1,694,205 686,517 28,773 197,520
Comprehensive income
attributable to
non-controlling interest		 6,561 590 2,800 775
Earnings per share
(in dollars)		 0.63 0.54 0.55 0.18

28

4. Brief Consolidated Statements of Income ROC GAAP

NT$(Thousand)

Year
Financial Date From 2010 To 2014
Financial Date From 2010 To 2014
Financial Date From 2010 To 2014
Financial Date From 2010 To 2014
Item
2014 2013 2012 2011 2010
Operating revenue N/A 6,104,487 5,997,702 5,951,006
Gross profit 759,142 772,689 766,085
Operating profit 483,661 479,776 466,800
Non-operating income and
gains		 118,776 461,909 615,239
Non-operating expenses and
losses		 1,384 2,821 7,596
Income from continuing
operations before income tax		 601,053 938,864 1,074,443
From continuing operation
net income		 514,076 813,840 1,080,462
Net income 514,076 813,840 1,080,462
Earnings per share
(in dollars)		 0.48 0.76 1.01

29

Ⅱ. The Financial Analysis For Recent Five Years

1. Consolidated Financial Analysis IFRSs

Year Financial Date From 2010 To 2014 Financial Date From 2010 To 2014 Financial Date From 2010 To 2014 Financial Date From 2010 To 2014 Financial Date From 2010 To 2014 2015
Item (As of Mar.
2014 2013 2012 2011
2010
31,2015)
Financial
Structure
(
)		 Debt Ratio 34.04
17.64
16.99
N/A




















 37.01
Ratio of Long-Term Liabilities and
Stockholders’ Equity to Property, Plant
and Equipment		 131.79
154.45
149.27		 126.22
Solvency
(
)		 Current Ratio 442.55
985.17
825.05		 207.33
Quick Ratio 435.52
970.54
812.23		 204.11
Times Interest Earned Ratio(Times) 27.90
689.07		 1,309.75 9.83
Operating
Performance		 Average Collection Turnover(Times) 13.13
13.33
12.15		 2.86
Average Collection Days for Receivables
28
27
30		 31
Average Inventory Turnover(Times) -
-
-		 -
Average Payable Turnover(Times) 17.37
17.49
19.09		 4.39
Average Days for Sale of Goods -
-
-		 -
Property, Plant and Equipment
Turnover(Times)		 0.35
0.40
0.39		 0.07
Total Assets Turnover(Times) 0.24
0.26
0.26		 0.05
Profitablilty Return on Total Assets(
)		 2.50
2.46
2.54		 0.66
Return on Equity(
)		 3.29
2.97
3.04		 0.93
Income Before Tax to Capital Stock(
)		 8.23
6.33
6.12		 2.23
Return on Sales(
)		 10.03
9.51
9.73		 11.15
Earnings Per Share (in dollars) 0.63
0.54
0.55		 0.18
Cash Flow
(
)		 Ratio of Cash Flows(
)		 136.51
206.48
184.32		 20.96
Cash Flow Adequacy Ratio(
)		 37.34
157.08
185.60		 -
Ratio of Re-Investment for Cash(
)		 3.01
2.51
2.66		 1.35
Leverage Degree of Operating Leverage 2.60
2.38
2.22		 2.51
Degree of Financial Leverage 1.05
1.00
1.00		 1.12

30

2. Consolidated Financial Analysis ROC GAAP

Year
Financial Date From 2010 To 2014
Item
2014 2013 2012 2011 2010
Financial
Structure
(
)		 Debt Ratio N/A 15.00
13.27
11.58
Ratio of Long-Term Liabilities and
Stockholders’ Equity to Property, Plant
and Equipment		 125.02
122.46
128.24
Solvency
(
)		 Current Ratio 857.71
606.08
731.97
Quick Ratio 844.18
593.28
713.59
Times Interest Earned Ratio 1,207.93 1,550.28
527.43
Operating
Performance		 Average Collection Turnover(Times) 12.15
9.80
8.19
Average Collection Days for Receivables 30
37
45
Average Inventory Turnover(Times) -
-
-
Average Payable Turnover(Times) 19.25
19.19
19.87
Average Days for Sale of Goods -
-
-
Property, Plant and Equipment
Turnover(Times)		 0.37
0.36
0.35
Total Assets Turnover(Times) 0.26
0.25
0.25
Profitablilty Return on Total Assets(
)		 2.19
3.43
4.56
Return on Stockholders’ Equity(
)		 2.55
3.91
5.20
Operating Income to Capital Stock(
)		 4.53
4.50
4.37
Income Before Tax to Capital Stock(
)		 5.63
8.80
10.07
Return on Sales(
)		 8.42
13.57
18.16
Earnings Per Share (in dollars) 0.48
0.76
1.01
Cash Flow
(
)		 Ratio of Cash Flows(
)		 205.03
207.16
187.97
Cash flow Adequacy Ratio(
)		 202.95
185.43
181.83
Ratio of Re-Investment for Cash(
)		 2.86
2.78
2.30
Leverage Degree of Operating Leverage 2.34
2.30
2.35
Degree of Financial Leverage 1.00
1.00
1.00

31

Ⅲ. Supervisors’ Report

To: 2015 Annual General Meeting

EVERGREEN INTERNATIONAL STORAGE & TRANSPORT CORPORATION (EITC)

The Board of Directors has prepared and submitted to the supervisors the Company’s 2014 Business Report, Financial Statements, and Profit Allocation Proposal of the year ended December 31, 2014. The CPA firm of PricewaterhouseCoopers, Taiwan, was retained to audit EITC’s Financial Statements and has issued an Independent Auditors’ Report relating to the Financial Statements. In accordance with Article 219 of the Company Law, the undersigned hereby certifies the Business Report, Financial Statements, and Profit Allocation Proposal of the year ended December 31, 2014 have been examined and approved by the undersigned.

Supervisor： Lin, Long-Hwa

Wu, Kuang-Hui

Date： March 27, 2015

32

. Consolidated Financial Statements with Report of Independent Auditors

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of

Evergreen International Storage and Transport Corporation

We have audited the accompanying consolidated balance sheets of Evergreen International Storage and Transport Corporation (the “Company”) and its subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements of certain consolidated subsidiaries as of and for the year ended December 31, 2013. Those financial statements and the information disclosed in Note 13 were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the reports of other independent accountants. These statements reflect total assets of NT$9,086,140 thousand, constituting 37.80% of the total consolidated assets as of December 31, 2013, and net operating revenues of NT$1,536,407 thousand, constituting 25.13% of the total consolidated operating revenues for the year then ended.

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

33

In our opinion, based on our audits and the reports of other independent accountants, the consolidated financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Evergreen International Storage and Transport Corporation and its subsidiaries as of December 31, 2014 and 2013, and their financial performance and cash flows for the years then ended in conformity with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

We have also audited the non-consolidated financial statements of Evergreen International Storage and Transport Corporation (not presented here in) as of and for the years ended December 31, 2014 and 2013, on which we have expressed an unqualified opinion with explanatory paragraph thereon.

PricewaterhouseCoopers, Taiwan March 26, 2015 Taipei, Taiwan Republic of China

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

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

34

EVERGREEN INTERNATIONAL STORAGE AND TRANSPORT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
6(2)
6(4)
6(4) and 7
6(2)
6(3)
6(5)
6(6) and 7
6(7)
6(21)
8		 December 31, 2014
AMOUNT
%
$
3,106,834
10
1,401,835
4
14,759
-
202,690
1
380,183
1
15,605
-
40,605
-
40,975
-
997
-
5,204,483
16
1,232,256
4
5,357
-
1,097,400
3
23,465,908
73
726,435
2
3,258
-
204,197
1
163,223
1
26,898,034
84
$
32,102,517
100		 December 31, 2013 December 31, 2013
AMOUNT
$
3,106,834
1,401,835
14,759
202,690
380,183
15,605
40,605
40,975
997
5,204,483
1,232,256
5,357
1,097,400
23,465,908
726,435
3,258
204,197
163,223
26,898,034
$
32,102,517		 AMOUNT
$
3,888,596
1,142,750
15,506
197,079
214,766
28,427
43,195
38,683
835
5,569,837
1,074,262
5,357
1,082,988
15,197,647
729,650
1,966
217,766
158,257
18,467,893
$
24,037,730		 %
Current assets
Cash and cash equivalents
Available-for-sale financial assets - current
Notes receivable, net
Accounts receivable, net
Accounts receivable, net - related parties
Other receivables
Inventories
Prepayments
Other current assets
Total Current Assets
Non-current assets
Available-for-sale financial assets -
non-current
Financial assets carried at cost -
non-current
Investments accounted for using equity
method
Property, plant and equipment
Investment property, net
Intangible assets
Deferred income tax assets
Other non-current assets
Total Non-current Assets
TOTAL ASSETS		 16
5
-
1
1
-
-
-
-
23
4
-
5
63
3
-
1
1
77
100

(Continued)

35

EVERGREEN INTERNATIONAL STORAGE AND TRANSPORT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity Notes
7
6(21)
6(8)
6(8)
6(21)
6(9)(10)
6(11)
6(12)
6(13)
6(14)
9
11		 December 31, 2014
AMOUNT
%
$
191
-
306,380
1
27,202
-
205,100
1
103,502
-
463,040
2
70,619
-
1,176,034
4
6,119,731
19
1,973,008
6
1,657,918
5
9,750,657
30
10,926,691
34
10,671,411
33
4,263,504
13
1,800,628
6
-
-
2,919,711
9
1,345,165
4
21,000,419
65
175,407
1
21,175,826
66
$
32,102,517
100		 December 31, 2013 December 31, 2013
AMOUNT
$
191
306,380
27,202
205,100
103,502
463,040
70,619
1,176,034
6,119,731
1,973,008
1,657,918
9,750,657
10,926,691
10,671,411
4,263,504
1,800,628
-
2,919,711
1,345,165
21,000,419
175,407
21,175,826
$
32,102,517		 AMOUNT
$
2,410
301,730
25,871
189,967
13,441
-
31,948
565,367
-
1,893,908
1,781,974
3,675,882
4,241,249
10,671,411
4,262,917
1,742,563
785,326
1,776,913
386,639
19,625,769
170,712
19,796,481
$
24,037,730		 %
Current liabilities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Current income tax liabilities
Long-term liabilities, current portion
Other current liabilities, others
Total Current Liabilities
Non-current liabilities
Long-term borrowings
Deferred income tax liabilities
Other non-current liabilities
Total Non-current Liabilities
TOTAL LIABILITIES
Equity attributable to owners of the parent
Capital stock
Common stock
Capital surplus
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated retained earning
Other equity interest
Other equity interest
Equity attributable to owners of the
parent
Non-controlling interest
Total equity
Significant contingent liabilities and
unrecognized contract commitments
Significant events after the balance sheet
date
TOTAL LIABILITIES AND EQUITY		 -
2
-
1
-
-
-
3
-
8
7
15
18
44
18
7
3
7
2
81
1
82
100

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 26, 2015.

36

EVERGREEN INTERNATIONAL STORAGE AND TRANSPORT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Items Forthe yearendedDecember31
2014
2013
Notes
AMOUNT
%
AMOUNT
%
6(15) and 7
$
6,730,457
100
$
6,113,325
100
6(19) and 7
(
5,763,556 ) (
86) (
5,324,294) (
87)
966,901
14
789,031
13
6(19) and 7
(
280,338 ) (
4) (
271,624) (
5)
686,563
10
517,407
8
6(16)
134,544
2
137,692
2
6(17)
49,221
1
15,680
1
6(18)
(
32,656 ) (
1) (
982)
-
6(5)
40,837
1
5,884
-
191,946
3
158,274
3
878,509
13
675,681
11
6(21)
(
203,711 ) (
3) (
94,383) (
2)
$
674,798
10
$
581,298
9
6(14)
$
539,969
8
$
222,429
4
430,423
6
182,518
3
81,164
1 (
335,910) (
6)

6(21)
(
25,588 )
-
36,772
1
$
1,025,968
15
$
105,809
2
$
1,700,766
25
$
687,107
11
$
668,344
10
$
580,653
9
6,454
-
645
-
$
674,798
10
$
581,298
9
$
1,694,205
25
$
686,517
11
6,561
-
590
-
$
1,700,766
25
$
687,107
11
6(22)
$
0.63
$
0.54
$
0.63
$
0.54
Operating revenue
Operating costs
Gross profit
Operating expenses
Operating profit
Non-operating income and expenses
Other income
Other gains and losses
Finance costs
Share of profit of associates and joint
ventures accounted for using equity
method
Total non-operating income and
expenses
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Financial statements translation
differences of foreign operations
Unrealized gain on valuation of
available-for-sale financial assets
Actuarial gain (loss) on defined
benefit plan
Income tax relating to the components
of other comprehensive income
Total other comprehensive income for
the year
Total comprehensive income for the
year
Profit, attributable to:
Owners of the parent
Non-controlling interest
Comprehensive income attributable
to:
Owners of the parent
Non-controlling interest
Basic earnings per share
Basic earnings per share (in dollars)
Diluted earnings per share (in
dollars)

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 26, 2015.

37

EVERGREEN INTERNATIONAL STORAGE AND TRANSPORT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

Year 2013
Balance at January 1, 2013
Appropriation of 2012 earnings
Legal reserve
Special reserve
Cash dividends
Changes in equity of associates and joint ventures
accounted for using equity method
Profit for the year
Other comprehensive income (loss) for the year
Changes in non-controlling interests
Balance at December 31, 2013
Year 2014
Balance at January 1, 2014
Appropriation of 2013 earnings
Legal reserve
Special reserve
Cash dividends
Changes in equity of associates and joint ventures
accounted for using equity method
Profit for the year
Other comprehensive income for the year
Changes in non-controlling interests
Balance at December 31, 2014		 Notes Equityattributable to owners of theparent Equityattributable to owners of theparent Equityattributable to owners of theparent Equityattributable to owners of theparent Equityattributable to owners of theparent Non-controlling
interest		 Total equity
Common stock Capital surplus Retained Earnings Other equityinterest Total
Legal reserve Special reserve Unappropriated
retained earnings		 Financial
statements
translation
differences of
foreign
operations		 Unrealized gain on
available-for-sale
financial assets
6(14)
6(14)


$ 10,671,411
-
-
-
-
-
-
-
$ 10,671,411
$ 10,671,411
-
-
-
-
-
-
-
$ 10,671,411		 $ 4,262,917
-
-
-
-
-
-
-
$ 4,262,917
$ 4,262,917
-
-
-
587
-
-
-
$ 4,263,504		 $ 1,691,423
51,140
-
-
-
-
-
-
$ 1,742,563
$ 1,742,563
58,065
-
-
-
-
-
-
$ 1,800,628		 $
271,969
-
513,357
-
-
-
-
-
$
785,326
$
785,326
-
(
785,326 )
-
-
-
-
-
$
-		 $
2,359,964
(
51,140 )
(
513,357 )
(
320,142 )
(
138 )
580,653
(
278,927 )
-
$
1,776,913
$
1,776,913
(
58,065 )
785,326
(
320,142 )
-
668,344
67,335
-
$
2,919,711		 ($
343,331 )
-
-
-
-
-
222,605
-
($
120,726 )
($
120,726 )
-
-
-
-
-
539,893
-
$
419,167		 $
345,179
-
-
-
-
-
162,186
-
$
507,365
$
507,365
-
-
-
-
-
418,633
-
$
925,998		 $ 19,259,532
-
-
(
320,142 )
(
138 )
580,653
105,864
-
$ 19,625,769
$ 19,625,769
-
-
(
320,142 )
587
668,344
1,025,861
-
$ 21,000,419		 $
143,404
-
-
(
2,836 )
(
72 )
645
(
55 )
29,626
$
170,712
$
170,712
-
-
(
4,667 )
-
6,454
107
2,801
$
175,407		 $ 19,402,936
-
-
(
322,978 )
(
210 )
581,298
105,809
29,626
$ 19,796,481
$ 19,796,481
-
-
(
324,809 )
587
674,798
1,025,968
2,801
$ 21,175,826

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 26, 2015.

38

EVERGREEN INTERNATIONAL STORAGE AND TRANSPORT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated profit before tax for the year
Adjustments to reconcile profit before tax to net cash
provided by operating activities
Income and expenses having no effect on cash flows
Depreciation

Amortization

Bad debt expense

Interest expense

Interest income

Dividend income

Share of profit of associates and joint ventures
accounted for using equity method

Gain on disposal of property, plant and equipment

Gain on disposal of investments

Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Notes receivable, net
Account receivable, net
Accounts receivable, net - related parties
Other receivables
Inventories
Prepayments
Other current assets
Net changes in liabilities relating to operating activities
Notes payable
Notes payable - related parties
Accounts payable
Accounts payable - related parties
Other payables
Other current liabilities, others
Other non-current liabilities
Cash provided by generated from operations
Interest received
Interest paid
Income tax paid
Net cash provided by operating activities		 Forthe years endedDecember31
Notes
2014
2013
$
878,509 $
675,681
6(19)
1,098,392
711,891
6(19)
1,782
1,840
6(4)
7
1,414
6(18)
32,438
766
6(16)
(
36,413 ) (
29,529 )
6(16)
(
88,342 ) (
89,850 )
6(5)
(
40,837 ) (
5,884 )
6(17)
(
13,450 ) (
7,968 )
6(17)
(
1,017 ) (
1,470 )

747
6,709
(
5,618 )
15,662
(
165,417 )
38,800
2,493 (
8,071 )
2,590 (
2,809 )
(
2,292 )
2,809
(
162 ) (
596 )

(
2,219 )
1,582
- (
250 )
4,650
88,629
1,331 (
38,608 )
(
20,888 ) (
84,145 )
38,671 (
12,140 )
(
45,395 ) (
45,647 )
1,639,560
1,218,816
37,775
27,355
(
25,186 ) (
766 )
(
46,689 ) (
78,053 )
1,605,460
1,167,352

(Continued)

39

EVERGREEN INTERNATIONAL STORAGE AND TRANSPORT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of available-for-sale financial assets
Proceeds from disposal of available-for-sale financial assets
Proceeds from liquidation of financial assets carried at cost
Acquisition of investments accounted for using equity
method

Acquisition of property, plant and equipment (including
prepayments for equipment and prepayments for land)

Proceeds from disposal of property, plant and equipment
Decrease in refundable deposits
Acquisition of intangible assets
Decrease in other non-current assets-other financial assets
Dividends received
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings
Increase in guarantee deposits received
Decrease in guarantee deposits received
Dividends paid
Net change in non-controlling interest
Net cash provided by (used in) financing activities
Effect of exchange rate changes
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 Forthe years endedDecember31
Notes
2014
2013
($
460,000 ) ($
715,000 )

481,017
596,033
6(3)
-
436
6(5)
- (
193,638 )
6(23)
(
8,766,677 ) (
530,938 )
13,684
8,353
240
1,295
(
3,074 ) (
1,928 )

200
-
127,640
100,233
(
8,606,970 ) (
735,154 )
6,306,261
-
2,465
-
- (
1,011 )
(
324,809 ) (
322,978 )
2,801
29,626

5,986,718 (
294,363 )
233,030
65,877
(
781,762 )
203,712
3,888,596
3,684,884
$
3,106,834 $
3,888,596

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 26, 2015.

40

EVERGREEN INTERNATIONAL STORAGE AND TRANSPORT CORPORATION

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT AS OTHERWISE INDICATED)

1. HISTORY AND ORGANIZATION

  • (1) Incorporated in 1973, Evergreen International Storage and Transport Corporation (the “Company”) was initially operated under the name of “Everglory Transport Corporation”. In July 1986, the Company was renamed as “Evergreen Transport Corporation”. Shares of the Company have been traded on the Taiwan Stock Exchange since 1990. In September 2001, the Company was renamed again and is currently known as “Evergreen International Storage and Transport Corporation”. The Company is principally engaged in container trucking, operation of container distribution centers, ship chartering, operation of gasoline station and passenger transportation.

The Company merged with Evergreen Container Terminal Corporation and Uniglory Marine Corporation on March 31, 2002 and November 1, 2002, respectively. On May 1, 2003, the Company merged with Evervoyage Transportation Corporation, a subsidiary of the Company, which was conducted in accordance with the Business Mergers and Acquisitions Law.

  • (2) Gaining Enterprise S.A. (GESA) was incorporated in Panama on December 16, 1993 and is primarily engaged in ship trading, transportation and chartering, operation and investments of container yards, leases and investments of overseas container terminals and marine transportation related business.

  • (3) Ever Reward Logistics Corporation (ERL) was initially incorporated on April 21, 2000 under the name of “Ever Reward Development Enterprise” with the principal activities in international trading, packing, forwarding agency, storage and warehousing and information administration. On August 19, 2000, the Company was renamed as “Ever Reward Logistics Corporation”.

  • (4) Shun An Enterprise Corporation (SAEC) was initially incorporated on November 10, 2008, and is primarily engaged in management consulting and employment agency.

  • (5) The Company and its subsidiaries are collectively referred herein as the “Group”.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized by the Board of Directors on March 26, 2015.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

  • (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRSs”) as endorsed by the Financial Supervisory Commission (“FSC”)

  • None.

41

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

According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued on April 3, 2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9, ‘Financial instruments’) as endorsed by the FSC and the "Regulations Governing the Preparation of Financial Reports by Securities Issuers " effective January 1, 2015 (collectively referred herein as the “2013 version of IFRSs”) in preparing the consolidated financial statements. The related new standards, interpretations and amendments are listed below:

42

New Standards,Interpretations and Amendments Effective Date Issued by
International Accounting
Standards Board
Limited exemption from comparative IFRS 7
disclosures for first-time adopters (amendments to IFRS 1)
Severe hyperinflation and removal of fixed dates
for first-time adopters (amendments to IFRS 1)
Government loans (amendments to IFRS 1)
Disclosures-Transfers of financial assets
(amendments to IFRS 7)
Disclosures-Offsetting financial assets and financial
liabilities (amendments to IFRS 7)
IFRS 10, ‘Consolidated financial statements’
IFRS 11,‘Joint arrangements’
IFRS 12,‘Disclosure of interests in other entities’
IFRS 13, ‘Fair value measurement’
Presentation of items of other comprehensive income
(amendments to IAS 1)
Deferred tax: recovery of underlying assets
(amendments to IAS 12)
IAS 19 (revised), ‘Employee benefits’
IAS 27,‘Separate financial statements’
(as amended in 2011)
IAS 28,‘Investments in associates and joint ventures’
(as amended in 2011)
Offsetting financial assets and financial liabilities
(amendments to IAS 32)
IFRIC 20, ‘Stripping costs in the production phase
of a surface mine’
Improvements to IFRSs 2010
Improvements to IFRSs 2009-2011		 July 1, 2010
July 1, 2011
January 1, 2013
July 1, 2011
January 1, 2013
January 1, 2013
(Investment entities: January 1, 2014)
January 1, 2013
January 1, 2013
January 1, 2013
July 1, 2012
January 1, 2012
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
January 1, 2011
January 1, 2013

Based on the Group’s assessment, the adoption of the 2013 version of IFRSs has no significant impact on the consolidated financial statements of the Group, except for the following:

43

A. IAS 19 (revised), ‘Employee benefits’

The revised standard eliminates corridor approach and requires actuarial gains and losses to be recognized immediately in other comprehensive income. Past service costs will be recognized immediately in the period incurred. Net interest expense or income, calculated by applying the discount rate to the net defined benefit asset or liability, replace the finance charge and expected return on plan assets. The return of plan assets, excluding net interest expense, is recognized in other comprehensive income. An entity is required to recognize termination benefits at the earlier of when the entity can no longer withdraw an offer of those benefits and when it recognizes any related restructuring costs. Additional disclosures are required to present how defined benefit plans may affect the amount, timing and uncertainty of the entity’s future cash flows.

B. IAS 1, ‘Presentation of financial statements’

The amendment requires entities to separate items presented in OCI classified by nature into two groups on the basis of whether they are potentially reclassifiable to profit or loss subsequently when specific conditions are met. If the items are presented before tax then the tax related to each of the two groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown separately. Accordingly, the Group will adjust its presentation of the statement of comprehensive income.

  • C. IFRS 12, ‘Disclosure of interests in other entities’

The standard integrates the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. Also, the Group will disclose additional information about its interests in consolidated entities and unconsolidated entities accordingly.

D. IFRS 13, ‘Fair value measurement’

The standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard sets out a framework for measuring fair value using the assumptions that market participants would use when pricing the asset or liability; for non-financial assets, fair value is determined based on the highest and best use of the asset. Also, the standard requires disclosures about fair value measurements. Based on the Group’s assessment, the adoption of the standard has no significant impact on its consolidated financial statements, and the Group will disclose additional information about fair value measurements accordingly.

44

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

New standards, interpretations and amendments issued by IASB but not yet included in the 2013 version of IFRSs as endorsed by the FSC:

New Standards,Interpretations andAmendments Effective Date Issued by
International Accounting
StandardsBoard
IFRS 9, ‘Financial instruments'
Sale or contribution of assets between an investor and its associate or
joint venture (amendments to IFRS 10 and IAS 28)
Investment entities: applying the consolidation exception (amendments
to IFRS 10, IFRS 12 and IAS 28)
Accounting for acquisition of interests in joint operations
(amendments to IFRS 11)
IFRS 14, 'Regulatory deferral accounts'
IFRS 15, ‘Revenue from contracts with customers'
Disclosure initiative (amendments to IAS 1)
Clarification of acceptable methods of depreciation and amortisation
(amendments to IAS 16 and IAS 38)
Agriculture: bearer plants (amendments to IAS 16 and IAS 41)
Defined benefit plans: employee contributions
(amendments to IAS 19R)
Equity method in separate financial statements (amendments to IAS 27)
Recoverable amount disclosures for non-financial assets
(amendments to IAS 36)
Novation of derivatives and continuation of hedge accounting
(amendments to IAS 39)
IFRIC 21, ‘Levies’
Improvements to IFRSs 2010-2012
Improvements to IFRSs 2011-2013
Improvements to IFRSs 2012-2014		 January 1, 2018
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2017
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
January 1, 2014
July 1, 2014
July 1, 2014
January 1, 2016

The Group is assessing the potential impact of the new standards, interpretations and amendments above. The impact on the consolidated financial statements will be disclosed when the assessment is complete.

45

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

These consolidated financial statements are prepared by the Group in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers”.

(2) Basis of preparation

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

  • (a)Available-for-sale financial assets measured at fair value.

  • (b)Defined benefit liabilities recognized based on the net amount of pension fund assets plus unrecognized past period’s service cost and unrecognized actuarial losses, and less unrecognized actuarial gains and present value of defined benefit obligation.

  • B. The preparation of financial statements in compliance with International Financial Reporting Standards, International Accountings Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

  • A. Basis for preparation of consolidated financial statements:

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

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

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

46

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

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

  • B. Subsidiaries included in the consolidated financial statements:

Name of
investor
Name of
subsidiary
The
Company
ERL
The
Company
SAEC
The
Company
GESA
GESA
Hazel
Investment
(Netherlands)
N.V.(HINV)
HINV
Hazel Estate
B.V.		 Main business activities
International trading,
packing, forwarding
agency, storage and
warehousing and
information
administration
Management consulting
and employment agency
Ship trading,
transportation and
chartering, operation
and investments of
container yards, leases
and investments of
overseas container
terminals and marine
transportation related
business
Investments
Investments		 0Ownership(%)0
December 31, 2014
December 31, 2013
60.00
60.00
80.00
80.00
100.00
100.00
70.00
70.00
100.00
100.00

December 31, 2014
60.00
80.00
100.00
70.00
100.00

47

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

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

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

(4) Foreign currency translations

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

  • A. Foreign currency transactions and balances

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

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

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

  • (d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

B. Translation of foreign operations

  • (a) The operating results and financial position of all subsidiaries and associates entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

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

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

iii.All resulting exchange differences are recognized in other comprehensive income.

48

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

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

(5) Classification of current and non-current items

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

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

  • (b) Assets held mainly for trading purposes;

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

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

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

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

  • (b) Liabilities arising mainly from trading activities;

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

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

(6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

49

(7) Available-for-sale financial assets

  • A. Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.

  • B. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting; beneficiary securities are recognized and derecognized using settlement date accounting.

  • C. Available-for-sale financial assets are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are presented in ‘financial assets carried at cost’.

(8) Notes, accounts and other receivables

Notes and accounts receivable are claims resulting from the sale of goods or services. Receivables arising from transactions other than the sale of goods or services are classified as other receivables. Notes, accounts and other receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as effect of discounting is immaterial.

(9) Impairment of financial assets

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

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

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

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

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

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

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

50

  • (f) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;

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

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

  • C. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:

  • (a) Financial assets measured at amortized cost

The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(b) Financial assets carried at cost

The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at current market return rate of similar financial asset, and is recognized in profit or loss. Impairment loss recognized for this category shall not be reversed subsequently. Impairment loss is recognized by adjusting the carrying amount of the asset through the use of an accumulated impairment account.

(c) Available-for-sale financial assets

The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortization) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognized, then such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss.

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Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an accumulated impairment account.

(10) Derecognition of financial assets

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

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

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

  • C. The contractual rights to receive cash flows from the financial asset have been transferred; however, the Group has not retained control of the financial asset.

(11) Inventories

The perpetual inventory system is adopted for inventory recognition. Inventories are stated at cost. The cost is determined using the moving weighted average method. At the end of period, inventories are evaluated at the lower of cost or net realizable value, and the individual item approach is used in the comparison of cost and net realizable value. The calculation of net realizable value is based on the estimated selling price in the normal course of business, net of estimated costs of completion and estimated selling expenses.

(12) Investments accounted for using equity method / associates

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

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

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

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

52

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

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

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

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

(13) Property, plant and equipment

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

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

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

53

  • D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:
Asset
Land improvements
Buildings
Machinery
Loading/unloading
equipment
Transportation equipment
Ships and equipment
Office equipment
Leased assets
Leasehold improvements
Other equipment		 Useful Life
3 - 25 years
15 - 55 years
3 - 15 years
5 - 15 years
4 -
8 years
23 - 29 years
3 -
6 years
5 years
2 -
9 years
2 - 50 years

The significant components of buildings include hydroelectric facilities and buildings, which are depreciated over 15 to 55 years.

(14) Investment property

  • A. An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 3~55 years.

  • B. The significant components of investment property include land and buildings. Buildings are depreciated over its useful life of 55 years.

(15) Intangible assets

Computer software is amortized on a straight-line basis over its estimated useful life of 3 years.

(16) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment

54

loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.

(17) Borrowings

  • A. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

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

(18) Notes and accounts payable

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

(19) Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability specified in the contract is discharged or cancelled or expires.

(20) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

(21) Employee benefits

A. Short-term employee benefits

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

B. Pensions

  • (a) Defined contribution plans

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

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(b) Defined benefit plans

  • i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized past service costs. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.

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

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

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

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

(22) Income tax

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

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

56

  • C. Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

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

  • E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

(23) Share capital

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

(24) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Company’s shareholders. Cash dividends are recorded as liabilities.

(25) Revenue recognition

A. Sales of goods

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

57

B. Sales of services

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

C. Leases service

The Group follows the guidance of IAS 17 “Leases” to recognize revenue from the leasing of ships and containers. Leases are required to be classified as either finance lease or operating lease according to the extent of transition of risks and rewards of ownership. Revenue is recognized through the period of leases.

(26) Operating segments

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

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; the information is addressed below:

(1) Critical judgements in applying the Group’s accounting policies

A. Financial assets—impairment of equity investments

The Group follows the guidance of IAS 39 to determine whether a financial asset—equity investment is impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

If the decline of the fair value of an individual equity investment below cost was considered significant or prolonged, the Group would suffer additional loss in its 2013 financial statements, being the transfer of the accumulated fair value adjustments recognized in other comprehensive income on the impaired available-for-sale financial assets to profit or loss or being the recognition of the impairment loss on the impaired financial assets carried at cost in profit or loss.

58

B. Financial assets carried at cost

The equity based financial instruments for unlisted stocks held by the Group that are not traded in an active market are classified as financial asset carried at cost due to lack of information to determine the fair value.

(2) Critical accounting estimates and assumptions

  • A. Impairment assessment of investments accounted for using equity method

The Group assesses the impairment of an investment accounted for using equity method as soon as there is any indication that it might have been impaired and its carrying amount cannot be recovered.

As of December 31, 2014, the Group’s investments accounted for using equity method amounted to $1,097,400.

  • B. Realisability of deferred income tax assets

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

As of December 31, 2014, the Group recognized deferred income tax assets amounting to $204,197.

  • C. Calculation of accrued pension obligations

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

As of December 31, 2014, the carrying amount of accrued pension obligations was $1,638,549.

  • D. Financial assets—fair value measurement of unlisted stocks without active market

The fair value of unlisted stocks held by the Group that are not traded in an active market is determined considering fair value assessment of other companies of the same type, market conditions and other economic indicators existing on balance sheet date. Any changes in these judgements and estimates will impact the fair value measurement of these unlisted stocks. Please refer to Note 12(3) for the financial instruments fair value information.

As of December 31, 2014, the carrying amount of unlisted stocks was $446,754.

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6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand and petty cash
Checking accounts and demand deposits
Time deposits		 December31,2014
2,489
$ 689,160
2,415,185
3,106,834
$		 December31,2013
2,458
$ 67,775
3,818,363
3,888,596
$

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

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

(2) Available-for-sale financial assets

December31,2014 December31,2013
Current items:
Listed stocks $ 723,276
 $ 723,276
Beneficiary certificates 200,000 220,000
Subtotal 923,276 943,276
Adjustments 478,559 199,474
Total $ 1,401,835 $ 1,142,750
Non-current items:
Listed stocks $ 513,610
 $ 513,610
Unlisted stocks 267,447 265,559
Subtotal 781,057 779,169
Adjustments 485,308 329,202
Accumulated impairment ( 34,109)
 ( 34,109)
Total $ 1,232,256 $ 1,074,262

The Group recognized $418,633 and $162,186 in other comprehensive income for fair value change for the years ended December 31, 2014 and 2013, respectively.

(3) Financial assets carried at cost

Non-current items:
Universal Venture Fund Inc.
Fu-ji Management Service Co., Ltd.		 December31,2014
5,357
$ -
5,357
$		 December31,2013
5,357
$ -
5,357
$

60

  • A. Based on the Group’s intention, its investment should be classified as available-for-sale financial assets. However, as they are not traded in active market, and no sufficient industry information of companies similar to the investee companies can be obtained, the fair value of the investment cannot be measured reliably. The Group classified those stocks as ‘financial assets carried at cost’.

  • B. A resolution was passed during the interim shareholders’ meeting of Fu-Ji Management Service Company to distribute its residual assets on March 29, 2013. The Group received liquidation proceeds amounting to $436, which was recognized as investment income in 2013.

  • C. As of December 31, 2014 and 2013, no financial assets carried at cost held by the Group were pledged to others.

(4) Accounts receivable

Accounts receivable
December31,2014 December31,2013
Accounts receivable $ 203,318
 $ 197,707
Accounts receivable - related parties 380,183 214,766
Less: allowance for bad debts ( 628)
 ( 628)
$ 582,873 $ 411,845
  • A. The ageing analysis of accounts receivable that were past due but not impaired is as follows:
The ageing analysis of accounts receivable that were past due but not impaired is as follows:
Up to 3 months
Over 3 months		 December31,2014
43,134
$ 5,470
48,604
$		 December31,2013
38,271
$ 9,266
47,537
$

The above ageing analysis was based on past due date.

  • B. Movement analysis of financial assets that were impaired is as follows:

  • (a)There was no impairment on accounts receivable as of December 31, 2014 and 2013.

  • (b)Movement of the Group’s provision for impairment of accounts receivable are as follows:

At January 1
Provision for impairment
Writeoffs during the period
(
At December 31		 2014
Individualprovision
-
$ 7
7)

-
$

61

2013
Individualprovision Group provision Total
At January 1
$		 - $ 628 $ 628
Provision for impairment
 1,414 - 1,414
Writeoffs during the period
(		 1,414)
 - ( 1,414)
At December 31
$		 -
 $ 628 $ 628
C. The maximum exposure to credit risk at December 31, 2014 and 2013 was the carrying amou
of each class of accounts receivable.
D. The Group holds $22,119 of collateral as security for accounts receivable.
Investments accounted for using equity method
December31,2014 December31,2013
United Stevedoring Corp. $ 30,230
 $ 29,852
Qingdao Evergreen Container Storage
and Transportation Corp. 137,565 128,446
Taipei Port Container Terminal Corp. 929,605 924,690
$ 1,097,400 $ 1,082,988
  • C. The maximum exposure to credit risk at December 31, 2014 and 2013 was the carrying amount of each class of accounts receivable.

(5) Investments accounted for using equity method

A. The financial information of the Group’s principal associates is summarized below:

United Stevedoring
Corp.
Qingdao Evergreen
Container Storage
and Transportation
Corp.
Taipei Port Container
Terminal Corp.		 December Liabilities
35,164
$ 188,579
8,310,436
8,534,179
$ 31,2014		 Revenue
Profit
72,729
$ 8,070
$ 969,915
170,310
1,383,879
24,947
2,426,523
$ 203,327
$ For the year ended
December 31,2014		 % interest
held
50.00%
20.00%
19.49%
Assets
95,624
$ 879,691
13,082,368
14,057,683
$		 Revenue
72,729
$ 969,915
1,383,879
2,426,523
$

62

United Stevedoring
Corp.
Qingdao Evergreen
Container Storage
and Transportation
Corp.
Taipei Port Container
Terminal Corp.		 December Liabilities
29,730
$ 163,722
8,576,415
8,769,867
$ 31,2013		 Profit/
Revenue
(Loss)
71,995
$ 7,985
$ 873,142
142,084
1,186,358
131,256)
(
2,131,495
$ 18,813
$ For the year ended
December 31,2013		 % interest
held
50.00%
20.00%
19.49%
Assets
89,435
$ 806,232
13,323,400
14,219,067
$

  • B. Taipei Port Container Terminal Corporation (Taipei Port) raised additional cash through issuance of 100,000,000 shares of common stock at subscription price of $10 (in NT dollars) per share and set the effective date on May 28, 2013. The Group participated directly in the issuance of new shares by Taipei Port with the additional cash of NT$193,638. The Group’s percentage of ownership in Taipei Port decreased from 19.52% to 19.49%.

  • C. Taipei Port is accounted for using equity method despite the percentage of combined holding in Taipei Port is less than 20%. The reason is the issuing entity had to reserve issue rights for its employees, and the Group could not exercise rights with original percentage of ownership, which caused the percentage of ownership to decrease from 20% to 19.49%. After the assessment of the decrease in the percentage of ownership, the Group still has significant influence over Taipei Port.

63

(6) Property, plant and equipment

At January 1, 2014
Cost
Accumulated depreciation
2014
Opening net book amount
Additions
Disposals
Reclassifications
Depreciation charge
Effect of exchange rate
changes
Closing net book amount
At December 31, 2014
Cost
Accumulated depreciation		 Land Land
improvements		 Buildings Machinery Loading/
unloading
equipment		 Transportation
equipment		 Ships and
equipment		 Office
equipment		 Leased
assets		 Leasehold
improvements		 Other
equipment		 Construction
inprogress		 Total
8,113,913
$ -

8,113,913
$ 8,113,913
$ 20,009
-
-
-

-
8,133,922
$ 8,133,922
$ -

8,133,922
$		 10,892
$ 2,966)
(

7,926
$ 7,926
$ 1,758
-
-
1,596)
(

-
8,088
$ 11,692
$ 3,604)
(

8,088
$		 947,629
$ 792,917)
(

154,712
$ 154,712
$ 86
-
-
19,254)
(

-
135,544
$ 947,715
$ 812,171)
(

135,544
$		 18,944
$ 18,227)
(

717
$ 717
$ 146
-
-
211)
(

-
652
$ 18,652
$ 18,000)
(

652
$		 1,423,739
$ 1,318,676)
(

105,063
$ 105,063
$ 1,400
-

15,981
18,944)
(

-
103,500
$ 1,440,661
$ 1,337,161)
(

103,500
$		 1,455,416
$ 915,321)
(

540,095
$ 540,095
$ 8,451,727
3,737)
(
213,031
405,599)
(

244,225
9,039,742
$ 10,272,566
$ 1,232,824)
(

9,039,742
$		 13,888,567
$ 7,708,629)
(

6,179,938
$ 6,179,938
$ 71,367
-
-
628,300)
(

331,969
5,954,974
$ 14,729,139
$ 8,774,165)
(

5,954,974
$		 17,746
$ 16,448)
(

1,298
$ 1,298
$ 531
-
-
290)
(

-
1,539
$ 17,687
$ 16,148)
(

1,539
$		 206
$ 106)
(

100
$ 100
$ -
-
-
34)
(

-
66
$ 206
$ 140)
(

66
$		 51,231
$ 8,534)
(

42,697
$ 42,697
$ -
-

-
5,790)
(

-
36,907
$ 51,231
$ 14,324)
(

36,907
$		 440,161
$ 388,973)
(
51,188
$ 51,188
$ 7,661
2)
(
7,286
15,159)
(
-
50,974
$ 447,102
$ 396,128)
(
50,974
$		 -
$ -

-
$ -
$ -
-

-
-

-
-
$ -
$ -

-
$		 26,368,444
$ 11,170,797)
(
15,197,647
$
15,197,647
$ 8,554,685
3,739)
(
236,298
1,095,177)
(
576,194
23,465,908
$
36,070,573
$ 12,604,665)
(
23,465,908
$

1.The Group has provided a negative pledge to the loan granting banks for the credits used to purchase the above transportation equipment.

2.As the land with the book value of $20,009 in Jhuwei area in Dayuan District, Taoyuan City is farming and pasturable land, the ownership is registered as a natural person. The Group has set the pledge of land ownership to itself in order to protect its rights.

64

At January 1, 2013
Cost
Accumulated depreciation
2013
Opening net book amount
Additions
Disposals
Reclassifications
Depreciation charge
Effect of exchange rate
changes
Closing net book amount
At December 31, 2013
Cost
Accumulated depreciation		 Land Land
improvements		 Buildings Machinery Loading/
unloading
equipment
 Transportation
equipment		 Ships and
equipment		 Office
equipment		 Leased
assets		 Leasehold
improvements		 Other
equipment		 Construction
inprogress		 Total
7,984,753
$ -

7,984,753
$ 7,984,753
$ 129,160
-
-
-

-
8,113,913
$ 8,113,913
$ -

8,113,913
$		 10,726
$ 3,085)
(

7,641
$ 7,641
$ 1,852
-
-
1,567)
(

-
7,926
$ 10,892
$ 2,966)
(

7,926
$		 945,880
$ 773,593)
(

172,287
$ 172,287
$ 2,050
-
-
19,625)
(

-
154,712
$ 947,629
$ 792,917)
(

154,712
$		 18,730
$ 18,140)
(

590
$ 590
$ 290
-
-
163)
(

-
717
$ 18,944
$ 18,227)
(

717
$		 1,387,307
$ 1,303,390)
(

83,917
$ 83,917
$ 16,912
-

21,716
17,482)
(

-
105,063
$ 1,423,739
$ 1,318,676)
(

105,063
$		 1,311,258
$ 908,600)
(

402,658
$ 402,658
$ 1,264
379)
(
214,846
78,294)
(

-
540,095
$ 1,455,416
$ 915,321)
(

540,095
$		 13,478,730
$ 6,965,764)
(

6,512,966
$ 6,512,966
$ 81,529
-
12,206
574,893)
(

148,130
6,179,938
$ 13,888,567
$ 7,708,629)
(

6,179,938
$		 18,024
$ 16,416)
(

1,608
$ 1,608
$ -
-
-
310)
(

-
1,298
$ 17,746
$ 16,448)
(

1,298
$		 206
$ 71)
(

135
$ 135
$ -
-
-
35)
(

-
100
$ 206
$ 106)
(

100
$		 35,142
$ 4,039)
(

31,103
$ 31,103
$ -
-

16,089
4,495)
(

-
42,697
$ 51,231
$ 8,534)
(

42,697
$		 412,334
$ 380,189)
(
32,145
$ 32,145
$ 7,533
7)
(
23,308
11,791)
(
-
51,188
$ 440,161
$ 388,973)
(
51,188
$		 -
$ -

-
$ -
$ -
-

-
-

-
-
$ -
$ -

-
$		 25,603,090
$ 10,373,287)
(
15,229,803
$ 15,229,803
$ 240,590
386)
(
288,165
708,655)
(
148,130
15,197,647
$ 26,368,444
$ 11,170,797)
(
15,197,647
$

65

(7) Investment property

A. Changes in investment property:

At January 1, 2014
Cost

Accumulated depreciation
2014
Opening net book amount

Depreciation charge
Closing net book amount
At December 31, 2014
Cost

Accumulated depreciation
At January 1, 2013
Cost

Accumulated depreciation
2013
Opening net book amount

Depreciation charge
Closing net book amount
At December 31, 2013
Cost

Accumulated depreciation		 Land
Buildings
Total
$ 639,583
168,768
$ 808,351
$ -
78,701)
(
78,701)
(
639,583
$ 90,067
$ 729,650
$ $ 639,583
90,067
$ 729,650
$ -
3,215)
(
3,215)
(
639,583
$ 86,852
$ 726,435
$ $ 639,583
168,768
$ 808,351
$ -
81,916)
(
81,916)
(
639,583
$ 86,852
$ 726,435
$ Land
Buildings
Total
$ 639,583
168,768
$ 808,351
$ -
75,465)
(
75,465)
(
639,583
$ 93,303
$ 732,886
$ $ 639,583
93,303
$ 732,886
$ -
3,236)
(
3,236)
(
639,583
$ 90,067
$ 729,650
$ $ 639,583
168,768
$ 808,351
$ -
78,701)
(
78,701)
(
639,583
$ 90,067
$ 729,650
$

66

  • B. Rental income from the lease of the investment property and direct operating expenses arising from the investment property are shown below:
Rental income from the lease of the
investment property
Direct operating expenses arising from
the investment property that generated
rental income in the period		 For the year ended
December31,2014
35,707
$ 6,576
$		 For the year ended
December31,2013
39,075
$
7,413
$
  • C. The fair value of the investment property held by the Group as at December 31, 2014 and 2013 was $1,530,739 and $1,490,000, respectively, which was revalued by the Group. Valuations were made using the income approach with key assumptions as follows:
Long-term borrowings
December31,2014
Gross margin
84.212%0
Discount rate
2.125%0
December31,2014
Unsecured borrowings
6,614,850
$ Less: arrangement fees
32,079)
(
6,582,771
Less: current portion
463,040)
(
6,119,731
$ Interest rate range
1.53%~1.95%		 December31,2013
81.030%0
2.125%0
December31,2013
-
$ -
-
-
-
$
-

- (8) Long term borrowings

(9) Other non-current liabilities

Accrued pension obligations
Guarantee deposits received
Others		 December31,2014
1,638,549
$ 19,369
-
1,657,918
$		 December31,2013
1,765,028
$ 16,904
42
1,781,974
$

67

(10) Pension

  • A.(a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. The Company and its domestic subsidiaries contribute monthly to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

The foreign subsidiaries paid the pension directly to the retired employees when they have their own defined benefit pension plan.

  • (b) The amounts recognized in the balance sheet are determined as follows:
December31,2014 December31,2013
Present value of defined benefit
obligations $ 2,613,352
 $ 2,724,581
Fair value of plan assets ( 974,803)
 ( 959,553)
Net liability in the balance sheet $ 1,638,549 $ 1,765,028
  • (c) Changes in present value of defined benefit obligations are as follows:
2014 2013
Present value of defined benefit
obligations
At January 1 $ 2,724,581
 $ 2,397,960
Current service cost 54,771 54,222
Interest cost 47,350 35,805
Actuarial (gains) losses ( 75,743)
 331,791
Benefits paid ( 140,296)
 ( 96,924)
Past service cost 2,689 1,727
At December 31 $ 2,613,352 $ 2,724,581
  • (d) Changes in fair value of plan assets are as follows:
2014 2013
Fair value of plan assets
At January 1 $ 959,553
 $ 923,386
Expected return on plan assets 16,808 16,159
Actuarial gains (losses) 5,421 ( 4,119)
Employee contributions 133,317 121,051
Benefits paid ( 140,296)
 ( 96,924)
At December 31 $ 974,803 $ 959,553

68

  • (e) Amounts of costs and expenses recognized in comprehensive income statements are as follows:
follows:
For the year ended For the year ended
December31,2014 December31,2013
Current service cost $ 54,771
 $ 54,222
Interest cost 47,350 35,805
Expected return on plan assets ( 16,808)
 ( 16,159)
Past service cost 2,689 1,727
Current pension costs $ 88,002 $ 75,595

Details of costs and expenses recognized in comprehensive income statements are as follows:

follows:
Operating costs
Operating expenses		 For the year ended
December31,2014
82,593
$ 5,409
88,002
$		 For the year ended
December31,2013
67,899
$ 7,696
75,595
$
  • (f) Amounts of actuarial gains (losses) recognized under other comprehensive income are as follows:
follows:
For the year ended For the year ended
December31,2014 December31,2013
Recognition for current period $ 81,164 ($ 335,910)
Accumulated amount ($ 529,034) ($ 610,198)
  • (g) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and its domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. The constitution of fair value of plan assets as of December 31, 2014 and 2013 is given in the Annual Labor Retirement Fund Utilisation Report published by the government. Expected return on plan assets was a projection of overall return for the obligations period, which was estimated based on historical returns and by reference to the status of Labor Retirement Fund utilisation by the Labor Pension Fund Supervisory Committee and taking into account the effect that the Fund’s minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks.

69

Actual return on plan assets for the years ended December 31, 2014 and 2013 were $22,229 and $12,040, respectively.

  • (h) The principal actuarial assumptions used were as follows:
Discount rate
Future salary increase rate
Rate of expected return on plan
assets		 2014
1.75%~2.25%
2.00%~2.50%
1.75%~2.25%		 2013
1.75%~2.00%
1.30%~2.00%
1.75%~2.00%

The assumption of future death rate depends on Taiwan Standard Ordinary Experience Mortality Table (2004-2008) for 2014 and 2013.

  • (i) Historical information of experience adjustments was as follows:
For the year ended
For the year ended
December31,2014
December31,2013
Present value of defined
benefit obligations
2,613,352
$ 2,724,581
$ Fair value of plan assets
974,803)
(
959,553)
(
1,638,549
$ 1,765,028
$ Experience adjustments
on plan liabilities
418,685
$ 391,716)
($ Experience adjustments
on plan assets
5,421
$ 4,119)
($		 For the year ended
December31,2012
2,397,960
$ 923,386)
(
1,474,574
$ 380
$ 8,317)
($

  • (j) Expected contributions to the defined benefit pension plans of the Group within one year from December 31, 2014 amounts to $135,949.

  • B. Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contributes monthly an amount based on not less then 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

  • C. The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2014 and 2013 were $112,885 and $97,863, respectively.

(11) Capital stock

  • A. As of December 31, 2014, the Company’s authorized capital was $11,000,000, consisting of 1,100,000 thousand shares of ordinary stock, and the paid-in capital was $10,671,411 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

70

  • B. The Company has the same weighted average number of ordinary shares outstanding at the beginning and end of year in 2014 and 2013.

(12) Capital surplus

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

(13) Retained earnings

At January 1
Profit for the period
Appropriation, release and distribution
of earnings
Actuarial gains (losses) on post
employment benefit obligations net
of tax
Recognized the deduction to retained
earning attributed to investee company
non-subscribed proportionately
At December 31		 2014
2013
1,776,913
$ 2,359,964
$ 668,344
580,653
407,119
884,639)
(
67,335
278,927)
(
-
138)
(
2,919,711
$ 1,776,913
$

  • A. According to the Company’s Articles of Incorporation, any profit made by the Company for each fiscal year shall, after deduction of tax, be applied first towards making up any losses incurred by the Company in previous years, then 10% of the balance thereof shall be retained as the legal reserve, and set aside the special reserve in compliance with regulations, together with the accumulated unallocated profit of the previous period, shall be allocated pursuant to the proposal made by the Board of Directors and adopted by the shareholders at their meeting, provided that the employees shall be entitled to a bonus of a minimum of 1% thereof and the remuneration to the directors and the supervisors shall not exceed 5% thereof to be appropriated from the allocated amount.

  • B. The Company’s dividend policy is summarized below:

Stockholders’ dividends shall be distributed in cash dividends and stock dividends,with the cash dividend at least 10% of the total amount of distribution.

71

C. Legal reserve

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

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

  • (b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently.

  • E. The Company estimates $15,000 for bonus to employees both in 2014 and 2013, $6,000 and $5,000 for remuneration to the directors and supervisors in 2014 and 2013, respectively, which is estimated on the basis of the Company’s Articles of Incorporation and consideration of legal reserve with post-tax profit.

The amount of bonus to employees and remuneration to the directors and supervisors for 2013 had been resolved at the shareholders’ meeting, which is the same as the amount recognized in the 2013 financial statements. Please refer to the Market Observation Post System for the information related to the resolution resolved by the Board of Director’s meeting and carried at the shareholders’ meeting regarding to bonus to employees and remuneration to directors and supervisors.

  • F. The Company declared earnings distribution for 2013 and 2012 at the annual stockholders’ meeting on June 12, 2014 and June 19, 2013, respectively. The information is summarized below:
below:
Amount
Legal reserve
58,065
$ Special reserve
785,326)
(
Cash dividends
320,142
407,119)
($		 Dividends per share
(indollars)
0.3
$ 2013		 2012
Amount
51,140
$ 513,357
320,142
884,639
$		 Dividends per share
(indollars)
0.3
$

Please refer to the Market Observation Post System for the information related to the resolution carried at the shareholders’ meeting regarding to bonus to employees and remuneration to directors and supervisors.

72

  • G. The Company declared the earnings distribution for 2014 at the Board of Directors’ meeting on March 26, 2015. The information is summarized below:
Legal reserve
Cash dividends		 2014 2014
Amount
67,332
$ 373,499
440,831
$		 Dividends per share
(indollars)
0.35
$

The information about the earnings distribution in 2014 presented above has not been resolved at the stockholders’ meeting up until March 26, 2015.

(14) Other equity items

Other equity items
2014
Available-for-sale Currency
investments translation Total
At January 1 $ 507,365
 ($ 120,726)
 $ 386,639
Available-for-sale investments:
-Revaluation – gross 431,440 - 431,440
-Revaluation – tax ( 11,790)
 - ( 11,790)
-Revaluation – transfer ( 1,017)
 - ( 1,017)
Currency translation:
-Group - 539,893 539,893
At December 31 $ 925,998 $ 419,167 $ 1,345,165
2013
Available-for-sale Currency
investments translation Total
At January 1 $ 345,179
 ($ 343,331)
 $ 1,848
Available-for-sale investments:
-Revaluation – gross 183,552 - 183,552
-Revaluation – tax ( 20,332)
 - ( 20,332)
-Revaluation – transfer ( 1,034)
 - ( 1,034)
Currency translation:
-Group - 222,605 222,605
At December 31 $ 507,365 ($ 120,726) $ 386,639

73

(15) Operating revenue

Operating revenue
For the year ended For the year ended
December31,2014 December31,2013
Sales revenue $ 797,872
 $ 978,569
Service revenue 3,611,038 3,336,153
Lease revenue 2,322,074 1,799,719
6,730,984 6,114,441
Less: Sales returns and allowances ( 527)
 ( 1,116)
$ 6,730,457 $ 6,113,325
Other income
For the year ended For the year ended
December31,2014 December31,2013
Rental revenue $ 1,423
 $ 1,423
Dividend income 88,342 89,850
Interest income:
Bank deposits 36,413 29,529
Imputed rate of interest for deposits 15 -
Other income 8,351 16,890
$ 134,544 $ 137,692
Other gains and losses
For the year ended For the year ended
December31,2014 December31,2013
Net currency exchange gains (losses) $ 32,099
 ($ 195)
Gains on disposal of property, plant and
equipment 13,450 7,968
Gains on disposal of investments 1,017 1,470
Other gains 2,655 6,437
$ 49,221 $ 15,680
Finance costs
For the year ended For the year ended
December31,2014 December31,2013
Interest expense:
Bank borrowings $ 32,434
 $ 759
Imputed rate of interest for deposits 218 216
Other 4 7
$ 32,656 $ 982

(16) Other income

(17) Other gains and losses

(18) Finance costs

74

(19) Expenses by nature

Expenses by nature
Cost of sales and related fees
Employee benefit expense
Depreciation
Amortisation
Transportation expense
Vessels operation expense
Other expenses
Operating costs and operating expenses		 For the year ended
December31,2014
2,216,968
$ 1,539,942
1,098,392
1,782
614,047
445,529
127,234
6,043,894
$		 For the year ended
December31,2013
2,341,618
$ 1,451,337
711,891
1,840
544,089
414,979
130,164
5,595,918
$

(20) Employee benefit expense

Employee benefit expense
Wages and salaries
Labor and health insurance fees
Pension cost
Other personnel expenses		 For the year ended
December31,2014
1,237,554
$ 78,789
112,885
110,714
1,539,942
$		 For the year ended
December31,2013
1,173,379
$ 74,173
97,863
105,922
1,451,337
$

(21) Income tax

A.Income tax expense

(a) Components of income tax expense:

Components of income tax expense:
Current tax:
Current tax on profits for the period
Tax on undistributed earnings
Total current tax
Deferred tax:
Origination and reversal of
temporary differences
Income tax expense		 For the year ended
December31,2014
71,175
$ 65,575
136,750
66,961
203,711
$		 For the year ended
December31,2013
47,120
$ 540
47,660
46,723
94,383
$

75

  • (b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:
follows:
For the year ended For the year ended
December31,2014 December31,2013
Fair value gains/losses on available-
for-sale financial assets ($ 11,789)
 ($ 20,332)
Actuarial gains/losses on defined
benefit plan ( 13,799) 57,104
($ 25,588) $ 36,772
  • (c) The income tax charged/ (credited) to equity during the period is as follows:
For the year ended
December31,2014
Capital surplus - changes in equity of
associates and joint ventures
accounted for using eqquity method
120)
($ Recognized the deduction to retained
earnings attributed to foreign
investee company non-subscribed
proportionately
-
120)
($		 For the year ended
December31,2013
-
$ 28
28
$
  • B.Reconciliation between income tax expense and accounting profit:
For the year ended For the year ended
December31,2014 December31,2013
Tax calculated based on profit before
tax and statutory tax rate $ 151,396
 $ 117,329
Expenses disallowed by tax regulation 951 85
Tax exempted income by tax regulation ( 14,211)
 ( 5,571)
Additional 10% tax on undistributed
earnings 65,575 540
Effect from investment tax credit - ( 18,000)
Income tax expense $ 203,711 $ 94,383

76

  • C. Amounts of deferred tax assets or liabilities as a result of temporary difference, loss carry forward and investment tax credit are as follows:
For theyear For theyear For theyear ended December ended December ended December 31,2014 31,2014
Recognized
Recognized in other
in profit comprehensive Recognized
January1 or loss income in equity December31
Temporary differences:
-Deferred tax assets:
Unrealized sales discounts
and allowances $ 850
 $ -
 $ -
 $ -
 $ 850
Unrealized compensation
loss 1,461 ( 1,080)
 - - 381
Provision for bad debts 1 - - - 1
Unrealized foreign
exchange loss 3 12 - - 15
Unpaid pensions 211,253 ( 7,674)
 ( 5,057)
 - 198,522
Unpaid annual leave 4,198 230 - - 4,428
Subtotal 217,766 ( 8,512) ( 5,057) - 204,197
Deferred tax liabilities:
Unrealized foreign
exchange gain ( 28)
 ( 85)
 - - ( 113)
Unpaid pensions ( 12)
 ( 24)
 - - ( 36)
Investments income
(overseas) ( 775,488)
 ( 54,562)
 ( 9,032)
 ( 120)
 ( 839,202)
Difference between
depreciation for financial
reporting and tax
purposes ( 47,647)
 ( 3,778)
 - - ( 51,425)
Unrealized gain or loss on
available-for-sale
financial assets (overseas) ( 7,542)
 - ( 11,499)
 - ( 19,041)
Reserve for land
revaluation increment tax ( 1,063,191) - - - ( 1,063,191)
Subtotal ( 1,893,908) ( 58,449) ( 20,531) ( 120) ( 1,973,008)
Total ($ 1,676,142) ($ 66,961) ($ 25,588) ($ 120) ($ 1,768,811)

77

For thr year ended December 31, 2013

Recognized Recognized
Recognized in other
in profit comprehensive Recognized
January1 or loss income in equity December31
Temporary differences:
-Deferred tax assets:
Unrealized sales discounts
and allowances $ 850
 $ -
 $ -
 $ -
 $ 850
Unrealized compensation
loss 450 1,011 - - 1,461
Provision for bad debts 1 - - - 1
Unrealized foreign
exchange loss 8 ( 5)
 - - 3
Unpaid pensions 166,442 ( 6,726)
 51,537 - 211,253
Unpaid annual leave 4,122 76 - - 4,198
Subtotal 171,873 ( 5,644) 51,537 - 217,766
Deferred tax liabilities:
Unrealized foreign
exchange gain ( 3)
 ( 25)
 - - ( 28)
Unpaid pensions ( 3)
 ( 9)
 - - ( 12)
Investments income
(overseas) ( 731,024)
 ( 37,269)
 ( 7,223)
 28 ( 775,488)
Difference between
depreciation for financial
reporting and tax
purposes ( 43,870)
 ( 3,777)
 - - ( 47,647)
Unrealized gain or loss on
available-for-sale
financial assets (overseas) - - ( 7,542)
 - ( 7,542)
Reserve for land
revaluation increment tax ( 1,063,191) - - - ( 1,063,191)
Subtotal ( 1,838,091) ( 41,080) ( 14,765) 28 ( 1,893,908)
Total ($ 1,666,218) ($ 46,724) $ 36,772 $ 28 1,676,142)
($

78

  • D. At December 31, 2014, the Company’s income tax returns through 2012 have been assessed and approved by the Tax Authority.

  • E. Unappropriated retained earnings:

Unappropriated retained earnings:
Earnings generated in and before 1997
Earnings generated in and after 1998		 December31,2014
1,216,233
$ 1,703,478
2,919,711
$		 December31,2013
1,216,233
$ 560,680
1,776,913
$
  • F. As of December 31, 2014 and 2013, the balance of the imputation tax credit account was $296,664 and $138,066, respectively. The creditable tax rate was 27.34% for 2013 and is estimated to be 17.42% for 2014.

(22) Earnings per share

Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all
dilutive potential ordinary
shares
Employees’ bonus
Profit attributable to
ordinary shareholders of the
parent plus assumed
conversion of all dilutive
potential ordinary shares		 Forthe yearendedDecember31, yearendedDecember31, Earnings per
share (indollars)
2014
Amount aftertax
668,344
$ 668,344
$ -
668,344
$		 Weighted average
number of ordinary
shares outstanding
(shareinthousands)
1,067,141
1,067,141
1,192
1,068,333		 0.63
$ 0.63
$

79

Non-cash transaction
Investing activities with partial cash payments:
Weighted average
number of ordinary
Amount after tax
shares outstanding
(share in thousands)
Earnings per
share(in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
580,653
$ 1,067,141
0.54
$ Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
580,653
$ 1,067,141
Assumed conversion of all
dilutive potential ordinary
shares
Employees’ bonus
-
1,094
Profit attributable to
ordinary shareholders of the
parent plus assumed
conversion of all dilutive
potential ordinary shares
580,653
$ 1,068,235
0.54
$ For theyear ended December31,2013
For the year ended
For the year ended
December31,2014
December31,2013
Purchase of fixed assets
8,798,102
$ 530,938
$ Add : opening balance of payable on
equipment
-
-
Less : ending balance of payable on
equipment
31,425)
(
-
Cash paid during the period
8,766,677
$ 530,938
$		 For the year ended December31, year ended December31, Earnings per
share(in dollars)
2013
Weighted average
number of ordinary
shares outstanding
(share in thousands)

(23) Non-cash transaction

80

7. RELATED PARTY TRANSACTIONS

(1) Significant related party transactions and balances

A.Operating revenue

The entities which have significant
influence to the Group
Associates
Other related parties		 For the year ended
December31,2014
2,062,485
$ 190,439
2,319,391
4,572,315
$		 For the year ended
December31,2013
1,932,182
$ 160,973
1,822,447
3,915,602
$

The terms on the above transactions with the related parties are not materially different from those with non-related parties.

B. Purchases of goods :

The entities which have significant
influence to the Group
Associates
Other related parties		 For the year ended
December31,2014
123,229
$ 4,060
86,713
214,002
$		 For the year ended
December31,2013
122,603
$ 3,720
88,297
214,620
$

The terms on the above transactions with the related parties are not materially different from those with non-related parties.

C.Receivables from related parties :

Accounts receivable :
The entities which have significant
influence to the Group
Associates
Other related parties		 December31,2014
23,750
$ 16,285
340,148
380,183
$		 December31,2013
21,050
$ 15,058
178,658
214,766
$

81

D.Payables to related parties :

December 31, 2014 December 31, 2013

December31,2014 December31,2013
Accounts payable :
The entities which have significant
influence to the Group
Associates
Other related parties		 26,688
$ 96
418
27,202
$		 24,994
$ 90
787
25,871
$

E.Property transactions:

Acquisition of property, plant and
equipment (including prepayments for
equipment) :
The entities which have significant
influence to the Group
Other related parties		 For the year ended
December31,2014
4,302
$ 133,209
137,511
$		 For the year ended
December31,2013
19,969
$ 15,130
35,099
$

F. Significant contracts

  • (a) The Group charters the ships to the entities which have significant influence to the Group. The Group recognized lease revenue of $1,814,863 and $1,729,441 in 2014 and 2013, respectively. Revenue is collected monthly.

  • (b) The Group started to lease its containers to other related parties since 2014. The revenue for leasing container was $436,895 in 2014.

  • (c) The entities which have significant influence to the Group administer the vessels business as agency for the Group. The Group recognized vessels operation expense of $109,759 and $109,469 in 2014 and 2013, respectively.

  • G. Due to contributions to society for charity activities, the Group donated $30,494 and $35,494 to Chang Yung-Fa Foundation and Chang Yung-Fa Charity Foundation in 2014 and 2013, respectively.

(2) Key management compensation

Short-term employee benefits
Post-employment benefits		 For the year ended
December31,2014
24,062
$ 3,431
27,493
$		 For the year ended
December31,2013
18,524
$ 3,479
22,003
$

82

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Pledged assets
Other non-current assets -
pledged time deposits		 December31,2014
December31,2013
123,500
$ 123,700
$ Bookvalue		 Purpose
December31,2014
123,500
$
To purchase supplies
and materials and
execute contracts etc.
  1. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

(1) Contingencies

None.

(2) Commitments

Guarantee notes written by the Group:

Guarantee notes for purchases of supplies
and materials		 December31,2014
6,000
$		 December31,2013
9,000
$

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

  • (1) The Company declared the earnings distribution for 2014 at the Board of Directors’ meeting on March 26, 2015. The details of earnings distribution is referred to in Note 6(13).

  • (2) For purchasing new containers, the Company’s subsidiary Gaining Enterprise S.A. plans to apply for 7-year middle-term loan of each USD30,000 thousand granted by Bank of Taiwan and Land Bank of Taiwan. The Company’s Board of Directors at their meeting had approved to be association guarantor for the syndicated loan in March 26, 2015.

12. OTHERS

(1) Capital management

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

83

(2) Financial instruments

A. Fair value information of financial instruments

The carrying amounts of the Group’s financial instruments not measured at fair value (including cash and cash equivalents, notes receivable, accounts receivable, other receivables, refundable deposits, other financial assets, notes payable, accounts payable, other payables and guarantee deposits) are approximate to their fair values. The interest rate of long-term borrowings is approximate to the market interest rate, thus, the carrying amount can be considered reasonable as the basis for fair value estimation. The fair value information of financial instruments measured at fair value is provided in Note 12(3).

  • B. Financial risk management policies

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

  • (b) Risk management is carried out by the Group under policies approved by the Board of Directors.

  • C. Significant financial risks and degrees of financial risks

  • (a) Market risk

Foreign exchange risk

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

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

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

84

(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
Non-monetary items
KRW:NTD
Financial liabilities
Monetary items
JPY:NTD
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
Non-monetary items
KRW:NTD
Financial liabilities
Monetary items
JPY:NTD		 Foreign
currency
amount
Book value
(In Thousands)
Exchangerate
(NTD)
418
$ 31.6500
13,225
$ 11,360
0.2646
3,006
5,204,819
0.0292
151,981
11,756
0.2646
3,111
December31,2014
Foreign
currency
amount
Book value
(In Thousands)
Exchangerate
(NTD)
395
$ 29.8050
11,785
$ 1,348
0.2839
383
2,969,645
0.0284
84,338
3,213
0.2839
912
December31,2013		 Foreign
currency
amount
Book value
(In Thousands)
Exchangerate
(NTD)
418
$ 31.6500
13,225
$ 11,360
0.2646
3,006
5,204,819
0.0292
151,981
11,756
0.2646
3,111
December31,2014
Foreign
currency
amount
Book value
(In Thousands)
Exchangerate
(NTD)
395
$ 29.8050
11,785
$ 1,348
0.2839
383
2,969,645
0.0284
84,338
3,213
0.2839
912
December31,2013		 Foreign
currency
amount
Book value
(In Thousands)
Exchangerate
(NTD)
418
$ 31.6500
13,225
$ 11,360
0.2646
3,006
5,204,819
0.0292
151,981
11,756
0.2646
3,111
December31,2014
Foreign
currency
amount
Book value
(In Thousands)
Exchangerate
(NTD)
395
$ 29.8050
11,785
$ 1,348
0.2839
383
2,969,645
0.0284
84,338
3,213
0.2839
912
December31,2013
Foreign
currency
amount
(In Thousands)

395
$ 1,348
2,969,645
3,213		 Exchangerate
29.8050
0.2839
0.0284
0.2839
11,785
$ 383
84,338
912

85

iv.Analysis of foreign currency market risk arising from significant foreign exchange variation:

(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
Financial liabilities
Monetary items
JPY:NTD		 Effect on other
Degree of
Effect on
comprehensive
variation
profit or loss
income
1%
132
$ -
$ 1%
30
-
1%
31
-
Forthe yearendedDecember31,2014
Sensitivity analysis		 Effect on other
Degree of
Effect on
comprehensive
variation
profit or loss
income
1%
132
$ -
$ 1%
30
-
1%
31
-
Forthe yearendedDecember31,2014
Sensitivity analysis		 Effect on other
Degree of
Effect on
comprehensive
variation
profit or loss
income
1%
132
$ -
$ 1%
30
-
1%
31
-
Forthe yearendedDecember31,2014
Sensitivity analysis
Degree of
variation		 Effect on
profit or loss
1%
1%
1%		 132
$ 30
31		 -
$ -
-

For the year ended December 31, 2013

(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD
JPY:NTD
Financial liabilities
Monetary items
JPY:NTD		 Effect on other
Effect on
comprehensive
profit or loss
income
118
$ -
$ 4
-
9
-
Sensitivityanalysis		 Effect on other
Effect on
comprehensive
profit or loss
income
118
$ -
$ 4
-
9
-
Sensitivityanalysis
Degree of
variation		 Effect on
profit or loss
1%
1%
1%		 118
$ 4
9		 -
$ -
-

Price risk

  • i. The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet as available-for-sale financial assets.

  • ii. The Group’s investments in equity securities comprise beneficiary certificate, domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 10% with all other variables held constant, comprehensive income for the years ended December 31, 2014 and 2013 would have increased/decreased by $263,409 and $221,701, respectively.

86

Interest rate risk

  • i. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group’s borrowings are at variable rates. During the year ended December 31, 2014, the Group’s borrowings at variable rates were denominated in the USD.

  • ii. At December 31, 2014, if interest rates on USD-denominated borrowings had been 1% higher/lower with all other variables held constant, post-tax profit for the year ended December 31, 2014 would have been $16,632 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.

(b)Credit risk

  • i. The Group’s transactions are conducted only with counterparties with good credit conditions. The Group’s strategy also requires that before completing transactions, the Group should perform credit confirmation procedures, consider the nature of transactions in requesting the counterparties to provide the pledged notes or guarantees, and regularly assess the collectability of notes and accounts receivable. Therefore, the Group expects no significant bad debts.

The credit risk of other financial assets (including cash and cash equivalents) mainly results from the risk of failing to meet the contract requirements by the counterparty. The maximum credit risk is equal to the book value.

  • ii. The banks and financial institutions that the Group has bank deposits and other financial instrument contracts have solid reputation and low non-performance risk. Hence, the Group has no significant credit risk.

  • iii. The ageing analysis of financial assets that were past due but not impaired is shown in Note 6(4).

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

(c)Liquidity risk

  • i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by the Group’s treasury department. The Group’s treasury department monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.

  • ii. The Group invested in interest bearing deposits, time deposits and securities with residual capital. Those instruments have appropriate maturity dates and sufficient liquidity to provide sufficient capital movement. The Group has no significant liquidity risk because the Group’s holding capital at the balance sheet date is higher than accrued liability for the coming year.

87

  • iii.The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. As of December 31, 2014 and 2013, notes payable, accounts payable and other payables would expire within 1 year. As of December 31, 2014, long-term borrowings are analysed based on the remaining period. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities :

December 31, 2014
Long-term borrowings
(including current portion)		 Less than
1year
$ 563,040		 Between
1 and 2years
$ 1,019,764		 Between
2 and5 years
$ 2,969,043		 Over5 years
$ 2,492,663		 Total
$ 7,044,510
  • iv. The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(3) Fair value estimation

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

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

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

Level 3: Inputs for the asset or liability that are not based on observable market data.

The following table presents the Group’s financial assets and liabilities that are measured at fair value at December 31, 2014 and 2013:

December 31, 2014
Financial assets:
Available-for-sale financial
assets
Equity securities
Beneficiary certificates		 Level 1
1,986,503
$ 200,834
2,187,337
$		 Level 2
-
$ -
-
$		 Level3
446,754
$ -
446,754
$		 Total
2,433,257
$ 200,834
2,634,091
$

88

December 31, 2013
Financial assets:
Available-for-sale financial
assets
Equity securities
Beneficiary certificates		 Level 1
1,625,230
$ 220,081
1,845,311
$		 Level 2
-
$ -
-
$		 Level3
371,701
$ -
371,701
$		 Total
1,996,931
$ 220,081
2,217,012
$

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

  • C. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

  • D. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

  • E. Specific valuation techniques used to value financial instruments include:

  • (a) Quoted market prices or dealer quotes for similar instruments.

  • (b) The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves.

  • (c) The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value.

  • (d) Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

89

  • F. The following table presents the changes in level 3 instruments as at December 31, 2014 and 2013
At January 1
Gains and losses recognized in other
comprehensive income
Effect of exchange rate changes
At December 31		 Equity Securities Equity Securities
2014
371,701
$ 68,396
6,657
446,754
$		 2013
230,667
$ 139,273
1,761
371,701
$

90

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A.Loans to others: None.

B. Provision of endorsements and guarantees to others:

Number
(Note 1)		 Endorser /
guarantor		 Party being endorsed /
guaranteed		 Party being endorsed /
guaranteed		 Ceiling on
endorsements/
guarantees
provided for a
single party
(Note 3)		 Maximum
outstanding
endorsement/
guarantee
amount during
the year ended
Dec. 31, 2014		 Outstanding
endorsement/
guarantee
amount at
Dec. 31,
2014		 Actual
amount
drawn down		 Amount of
endorsements
/guarantees
secured with
collateral		 Ratio of
accumulated
endorsement/
guarantee
amount to net
asset
value of the
endorser /
guarantor
company
(%)		 Ceiling on total
amount of
endorsements /
gurantees
provided
(Note 3)		 Provision of
endorsements /
guarantees by
parent
company to
subsidiary		 Provision of
endorsements /
guarantees by
subsidiary to
parent
company		 Provision of
endorsements /
guarantees to
the party in
Mainland
China		 Footnote
Company
name		 Relationship
with the
endorser/
guarantor
(Note 2)
0 Evergreen
International
Storage and
Transport
Corporation		 Gaining
Enterprise
S.A.		 2 31,500,629
$		 7,311,150
$		 7,311,150
$		 6,614,850
$		 - 34.81 31,500,629
$		 Y N N Note 4
  • Note 1 The numbers filled in for the endorsements/guarantees provided by the Group or subsidiaries are as follows

==> picture [21 x 9] intentionally omitted <==

  • (1) The Company is ‘0’.

  • (2) The subsidiaries are numbered in order starting from ‘1’.

  • Note 2 Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six cate gories: (1)Having business relationship.

  • (2)The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.

  • (3)The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.

  • (4)The endorsed/guaranteed parent company directly or indirectly owns more than 50% voting shares of the endorser/guarantor subsidiary.

  • (5)Mutual guarantee of the trade as required by the construction contract.

  • (6)Due to joint venture, each shareholder provides endorsements/gua rantees to the endorsed/guaranteed company in proportion to its ownership.

  • Note 3 Under the Company’s “Procedures for Provision of Endorsements and Guarantees” No.13, the Company’s total guarantees and endorsements to others should not exceed 150% of the Company’s net asset value, and total guarantees and endorsements provided for a single party should not exceed 30% of the Comp any’s net asset value. The Company’s endorsements and guarantees provided toward its subsidiaries are not restricted by the above, but should not exceed 150% of the Company’s net asset value. The calculation is shown below:

  • The net assets based on latest financial report 21,000,419 thousand dollars × 150% 31,500,629 thousand dollars The net assets based on latest financial report 21,000,419 thousand dollars × 30% 6,300,126 thousand dollars

  • Note 4 ： When preparing consolidated financial statement, the transalations have already been written off.

91

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

==> picture [17 x 9] intentionally omitted <==

Securities held by Type and name of marketable securities Relationship with the
securities issuer		 General ledger account As of Dec. 31,2014 As of Dec. 31,2014 As of Dec. 31,2014 As of Dec. 31,2014 Footnote
Number of shares
or units		 Book value Ownership (%) Fair value
or net asset value
Evergreen
International
Storage and
Transport
Corporation		 Beneficiarycertificate
Mega Diamond Money Market Fund None Available-for-sale financial
assets - current		 11,425,440.83 $ 140,605 - 140,605
$
Yuanta Wan Tai Money Market Fund None Available-for-sale financial
assets - current		 2,697,658.50 40,165 - 40,165
Yuanta De-Li Money Market Fund None Available-for-sale financial
assets - current		 1,252,630.50 20,064 - 20,064
Equitysecurities
Evergreen Marine Corp. Major institutional
stockholder of the
Company		 Available-for-sale financial
assets - current		 15,995,288 358,294 0.46 358,294
EVA Airways Corp. Investee of the Company's
major
institutional stockholder		 Available-for-sale financial
assets - current		 38,045,443 842,707 1.17 842,707
Central Reinsurance Corp. Investee of the Company's
major
institutional stockholder		 Available-for-sale financial
assets - non-current		 48,788,966 785,502 8.68 785,502
Evergreen International Engineering Corp. Investee of the Company's
major
institutional stockholder		 Available-for-sale financial
assets - non-current		 715,713 21,415 11.93 21,415
Ever Accord Construction Corp. Investee of the Company's
major
institutional stockholder		 Available-for-sale financial
assets - non-current		 8,130,882 53,740 15.27 53,740
UNI Airways Corp. Investee of the Company's
major
institutional stockholder		 Available-for-sale financial
assets - non-current		 13,161,594 78,589 4.17 78,589
Taiwan Terminal Services Co., Ltd. Subsidiary of the
Company's major
institutional stockholder		 Available-for-sale financial
assets - non-current		 1,200,000 25,957 12.00 25,957
Dongbu Pusan Container Terminal Co., Ltd. None Available-for-sale financial
assets - non-current		 300,000 151,981 15.00 151,981
Universal Venture Fund Inc. None Financial assets carried at cost -
non-current		 534,308 5,357 2.98 5,357
Gaining Enterprise
S.A.		 Green Peninsula Agencies Sdn. Bhd. None Available-for-sale financial
assets - non-current		 950,000 113,254 19.00 113,254
Greenpen Properties Sdn. Bhd. None Available-for-sale financial
assets - non-current		 190,000 1,818 19.00 1,818

Note Financial assets carried at cost - non-current consisted of stocks with no quoted market price and value cannot be measured reliably, and wherein the Company also does not possess significant influence. In accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers”, these financial assets are carried at cost.

92

D. Aggregate purchases or sales of the same securities reaching NT$300 million or 20% of the Company's paid-in capital or more

==> picture [13 x 7] intentionally omitted <==

Investor Type and
name of
marketable
securities
(Note 1)		 General
ledger
account		 Counterparty
(Note 2)		 Relationship
with the
investor
(Note 2)		 Balance as at
Jan. 1, 2014
(Note 4)		 Balance as at
Jan. 1, 2014
(Note 4)		 Addition (Note 3) Addition (Note 3) Disposal (Note 3) Disposal (Note 3) Disposal (Note 3) Disposal (Note 3) Balance as at Dec. 31,2014
(Note 4)		 Balance as at Dec. 31,2014
(Note 4)
Number
of shares or
units		 Amount Number
of shares or
units		 Amount Number
of shares or
units		 Selling
price		 Book
value		 Gain (loss)
on disposal		 Number of
shares or units		 Amount
Evergreen
International
Storage and
Transport
Corporation		 Beneficiary
certificate
Mega
Diamond
Money
Market
Fund		 Available-
for-sale
financial
assets-
current		 17,987,246.86 220,000
$		 23,648,112.81 290,000
$		 30,209,918.84 370,973
$		 370,000
$		 973
$		 11,425,440.83 140,000
$
  • Note 1 Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

Note 2 Fill in the columns the counterparty and relationship if securities are accounted for using equity method; otherwise leave the columns blank.

Note 3 Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individua lly reach NT$300 million or 20% of paid-in capital or more.

Note 4 Valuation adjustments at year-end are not included.

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

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

93

G.Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of the Company’s paid-in capital or more:

Purchaser /
seller		 Counterparty Relationship with the Counterparty Transaction Transaction Transaction Transaction Differences in transaction
terms compared to third
party transactions		 Differences in transaction
terms compared to third
party transactions		 Notes/accounts receivable
(payable)		 Notes/accounts receivable
(payable)		 Footnote
Purchases/
Sales		 Amount Percentage
of total
purchases /
sales (%)		 Credit term Unit price Credit term Balance Percentage of
total
notes/accounts
receivable
(payable)(%)
Evergreen
International
Storage and
Transport
Corporation		 Evergreen International
Corp.		 Major institutional stockholder of
the Company		 Operating
revenues		 1,558,120
$		 23.15 30~60 Days -
$		 - Accounts
Receivable
$ 135,903		 22.74
Evergreen Marine Corp. Major institutional stockholder of
the Company		 Operating
revenues		 446,306 6.63 30~60 Days - - Accounts
Receivable
23,750		 3.97
United Stevedoring
Corp.		 Investee of the Company’s
subsidiary accounted for under the
equitymethod		 Operating
revenues		 186,664 2.77 30~60 Days - - Accounts
Receivable
15,757		 2.64
EVA Airways Corp. Investee of the Company’s major
institutional stockholder		 Operating
revenues		 141,780 2.11 30~60 Days - - Accounts
Receivable
12,488		 2.09
Gaining
Enterprise
S.A.		 Evergreen Marine Corp. Major institutional stockholder of
the Company		 Operating
revenues		 1,616,179 24.01 30 Days - - - -
Evergreen International
S.A.		 The main stockholder of the major
institutional stockholder of the
Company		 Operating
revenues		 436,895 6.49 60 Days - - Accounts
Receivable
161,370		 27.00

94

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

Creditor Counterparty Relationship with the
Company		 Balance as at Dec.
31, 2014		 Turnover rate
(times)		 Overdue receivables Overdue receivables Amount collected
subsequent to the
balance sheet date		 Allowance for
doubtful
accounts
Amount Action taken
Evergreen International
Storage and Transport
Corporation		 Evergreen International Corp. Major institutional
stockholder of the Company		 $ 135,903 11.67 -
$		 - 135,903
$		 -
$
Gaining Enterprise S.A. Evergreen International S.A. The main stockholder of the
major institutional
stockholder of the Company		 161,370 7.22 - - 161,370 -

I. Derivative financial instruments undertaken during the year ended December 31, 2014 None.

  • J. Significant inter-company transactions during the year ended December 31, 2014:

The Group has no significant inter-company transaction.

95

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

Investor Investee Location Main business activities Initial investment amount Initial investment amount Shares held as of Dec. 31,2014 Shares held as of Dec. 31,2014 Shares held as of Dec. 31,2014 Net income
(loss) of the
investee for the
year ended Dec.
31, 2014		 Investment income
(loss) recognized
by the Company
for the year ended
Dec. 31, 2014		 Footnote
Balance as at
Dec. 31, 2014		 Balance as at
Dec. 31, 2013		 Number. of
shares		 Ownership
(%)		 Book value
Evergreen
International
Storage and
Transport
Corporation		 Gaining
Enterprise S.A.		 Republic of
Panama		 1.Ship trading, transportation
and chartering
2.Operation and investments
of container yards
3.Leases and investments of
overseas container terminals
4.Marine transportation
related business		 4,977,435
$		 4,977,435
$		 1,570,000 100.00 9,849,662
$		 320,954
$		 320,954
$		 Subsidiary of
the Company
(Note 2)
〞 Shun An
Enterprise
Corp.		 Taiwan Management consulting and
employment agency		 20,000 20,000 2,000,000 80.00 24,666 4,245 3,396 Subsidiary of
the Company
(Note 2)
〞 Ever Reward
Logistics Corp.		 Taiwan International trading,
packing, forwarding agency,
storage and warehousing,
information administration		 14,271 14,271 1,480,230 60.00 40,951 14,273 8,564 Subsidiary of
the Company
(Note 2)
〞 Taipei Port
Container
Terminal Corp.		 Taiwan Container distribution and
cargo stevedoring		 507,619 507,619 50,761,905 9.76 465,832 24,947 2,435 Investee of the
Company
accounted for
using equity
method
Gaining
Enterprise
S.A.		 Hazel Investment
(Netherlands)
N.V.		 Curacao Investment Business 371,018 364,371 4,200 70.00 331,195 348)
(		 243)
(		 Indirect
subsidiary of
the Company
(Note 1)
(Note 2)
Hazel
Investment
(Netherlands)
N.V.		 Hazel Estate B.V. Netherlands Investment Business 523,793 517,463 40 100.00 470,822 441 441 Indirect
subsidiary of
the Company
(Note 1)
(Note 2)

96

Investor Investee Location Main business activities Initial investment amount Initial investment amount Shares held as of Dec. 31,2014 Shares held as of Dec. 31,2014 Shares held as of Dec. 31,2014 Net income
(loss) of the
investee for the
year ended Dec.
31, 2014		 Investment income
(loss) recognized
by the Company
for the year ended
Dec. 31, 2014		 Footnote
Balance as at
Dec. 31, 2014		 Balance as at
Dec. 31, 2013		 Number. of
shares		 Ownership
(%)		 Book value
Hazel Estate
B.V.		 Taipei Port
Container
Terminal Corp.		 Taiwan Container distribution and
cargo stevedoring		 506,019
$		 506,019
$		 50,601,940 9.73 463,773
$		 24,947
$		 2,461
$		 Investee of
the
Company’s
indirect
subsidiary
accounted for
using equity
method
Shun An
Enterprise
Corporation		 United
Stevedoring Corp.		 Taiwan Cargo and labor service
stevedoring		 25,000 25,000 2,500,000 50.00 30,230 8,070 4,035 Investee of
the
Company’s
subsidiary
accounted for
using equity
method

Note 1 Initial investments amount was denominated in foreign currency, and converted to NTD based on spot rate on balance sheet date.

  • Note 2 ： The investments are the principle part of preparing consolidated financial st atements. The investments have been eliminated when preparing consolidate financial statements.

97

(3)Information on investments in Mainland China

A.Basic Information

Investee in Mainland
China		 Main business activities Paid-in
Capital		 Investment
method
(Note 1)		 Accumulated
amount of
remittance
from Taiwan
to Mainland
China as of
Jan. 1, 2014		 Amount remitted from
Taiwan to Mainland
China/ Amount remitted
back to Taiwan for the
year ended Dec. 31, 2014		 Amount remitted from
Taiwan to Mainland
China/ Amount remitted
back to Taiwan for the
year ended Dec. 31, 2014		 Accumulated
amount of
remittance
from Taiwan
to Mainland
China as of
Dec. 31, 2014		 Net income
(loss) of the
investee for
the year
ended Dec.
31, 2014		 Ownership
held by the
Company
(direct or
indirect)
(%)		 Investment
income (loss)
recognized by
the Company
for the year
ended Dec. 31,
2014 (Note 2)		 Book value
of
investments
in Mainland
China as of
Dec. 31,
2014		 Accumulated
amount of
investment
income
remitted back
to Taiwan as
of Dec. 31,
2014		 Footnote
Remitted to
Mainland
China		 Remitted
back to
Taiwan
Qingdao Evergreen
Container Storage &
Transportation
Co.,Ltd.		 1. Main businesses:
Inland container
transportation,
container storage,
loading, discharging,
repair and cleaning, and
other related activities.
2. Impact on operations
of the Company:
Increase investment
income.		 390,162
$		 2 60,912
$		 -
$		 -
$		 60,912
$		 170,310
$		 20.00 31,906
$		 137,565
$		 -
$		 Investment
Income(loss)
Note 2 (2) B
Name of the company Accumulated amount of
remittance from Taiwan
to Mainland China as of
Dec. 31, 2014		 Investment
amount
approved by the
Investment
Commission of
the Ministry of
Economic
Affairs
(MOEA)		 Ceiling on investments in Mainland
China imposed by the Investment
Commission of MOEA
Qingdao Evergreen
Container Storage &
Transportation
Co.,Ltd.		 60,912
$		 110,775
$		 12,600,251
$

98

Note 1: Investment methods are classified into the following three categories:

  • (1) Directly invest in a company in Mainland China.

  • (2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China. Gaining Enterprise S.A.

  • (3) Others.

Note 2: In the ‘Investment income (loss) recognized by the Company for the year ended December 31, 2014’ column:

  • (1) It should be indicated if the investee was still in the incorporation arrangements and had not yet any profit during this period.

  • (2) Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:

  • A. The financial statements that are audited and attested by international accounting firm which has cooperative relationship with accounting firm in R.O.C.

B. The financial statements that are audited and attested by R.O.C. parent company’s CPA.

  • C. Others.

  • B. Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas.：None.

14. SEGMENT INFORMATION

(1) General information

The Group has included several operating segments with similar economic characteristics and meeting the requirements as reportable segments and have included other operating segments that do not meet

the quantitative thresholds as other segments. Products for sale and types of services of every reportable segment are summarized as follows:

  • (a) Inland transportation is the business of carrying cargo and passengers.

  • (b) Container terminals are the business of container and cargo loading.

  • (c) International marine transportation is the business of container terminals and leased ships and containers.

  • (d) Gasoline station are the business of different kinds of petroleum products sold.

  • (e) Other businesses are those not classified from (a) to (d).

(2) Measurement of segment information

  • (a) Segment profit (loss), the basis of assessing performance, is measured at operating profit (loss).

  • (b) Segment assets are measured at the basis of identifiable assets, including property, plant and equipment, investment property, intangible assets, prepayments for equipment and prepayments for lands.

  • (c) Management measurement of the performance of segments do not include information on liabilities. Therefore, the information on the segments’ liabilities are not disclosed.

99

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

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

Revenue from outside the
Company
Revenue from
Interdepartmental transactions
Operating profit
Identifiable assets
Depreciation and amortization
Revenue from outside the
Company
Revenue from
Interdepartmental transactions
Operating profit
Identifiable assets
Depreciation and amortization		 For theyear ended December 31,2014 For theyear ended December 31,2014
Inland Transportation Container
Terminals		 International Marine
Transportation		 Gasoline Station Others Adjustments and
Write- off		 Total
1,917,477
$ 792
1,918,269
$ 117,289
$ 1,685,897
$ 99,617
$		 535,945
$ 182
536,127
$ 56,692
$ 7,226,999
$ 28,620
$		 3,446,111
$ 751,006
$ 1,643
-
3,447,754
$ 751,006
$ 477,783
$ 2,506
$ 14,593,211
$ 86,576
$ 965,824
$ 1,980
$ For theyear ended December 31,2013		 79,918
$ -
79,918
$ 32,258
$ 640,170
$ 4,133
$		 -
$ 2,617)
(
2,617)
($		 6,730,457
$ -
6,730,457
$ 686,563
$ 24,232,853
$ 1,100,174
$

35
$ -
$ -
$
Inland Transportation Container
Terminals		 International Marine
Transportation		 Gasoline Station Others Adjustments and
Write- off		 Total
1,787,206
$ 642
1,787,848
$ 112,189
$ 1,589,135
$ 84,451
$		 504,691
$ 111
504,802
$ 47,293
$ 7,277,124
$ 28,615
$		 2,810,837
$ 1,642
2,812,479
$ 322,081
$ 6,420,618
$ 594,636
$		 919,317
$ -
919,317
$ 4,264
$ 106,182
$ 1,808
$		 91,274
$ -
91,274
$ 31,474
$ 566,337
$ 4,221
$		 -
$ 2,395)
(
2,395)
($		 6,113,325
$ -
6,113,325
$ 517,407
$ 15,959,396
$ 713,731
$

106
$ -
$ -
$

100

(4) Reconciliation for segment income (loss)

A reconciliation of reportable segment profit or loss to the profit before tax and discontinued operations for the years ended December 31, 2014 and 2013 is provided as follows:

Reportable segments operating profit
and loss
Other segments operating profit and
loss
Total segments
Total non-operating income and
expenses
Profit before tax		 For the year ended
December31,2014		 For the year ended
December31,2013
654,270
$ 32,293
686,563
191,946
878,509
$		 485,827
$ 31,580
517,407
158,274
675,681
$

The amounts provided to the chief operating decision-maker with respect to total assets are measured in a manner consistent with that of the financial statements.

(5) Information on products and services

Please refer to Note 6 (15) for the related information.

(6) Geographical information

Geographical information for the years ended December 31, 2014 and 2013 is as follows:

Taiwan
America
Others		 December 31,2014
For the year ended		 December 31,2014
For the year ended		 December 31,2014
For the year ended		 December 31,2013
For the year ended		 December 31,2013
For the year ended		 December 31,2013
For the year ended
Revenue
6,272,272
$ 436,895
21,290
6,730,457
$		 Non-current assets Revenue
6,095,375
$ -
17,950
6,113,325
$		 Non-current assets
10,530,799
$ 13,828,025
-
24,358,824
$		 10,493,218
$ 5,594,302
-
16,087,520
$

The non-current assets do not include financial instruments and deferred income tax assets.

101

(7) Major customer information

Major customer information of the Group for the years ended December 31, 2014 and 2013 is as follows:

Evergreen
Marine
Corp.
Evergreen
International
Corp.		 For theyear ended December 31,2014 For theyear ended December 31,2014 For theyear ended December 31,2013 For theyear ended December 31,2013
Revenue
2,062,485
$ 1,558,120		 Segment Revenue
1,932,182
$ 1,502,647		 Segment
International marine
transportation, inland
transportation,
gasoline station,
container terminals
and others
Inland transportation,
international marine
transportation,
container terminals
and gasoline station		 International marine
transportation, inland
transportation,
gasoline station,
container terminals
and others
Inland transportation,
international marine
transportation,
container terminals
and gasoline station

102

==> picture [277 x 55] intentionally omitted <==

103

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