Gourmet - Annual Report 2014 | FinancialReports.eu

Stock Code：2723

Annual Gourmet Master Co. Ltd. Report 2 0 1 4

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Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw Company Website http://85cafe.com

Spokesperson

Spokesperson Vice Spokesperson Name ： Chris Lee Bill Fu Title ： Vice President, Assistant Manager, Investor Relations Investor Relations Tel ： (886) 4-3503-9090 (886) 4-3503-9090 Email ： [email protected] [email protected]

Address

1-1 Head office

Gourmet Master Co. Ltd.

Address ： the Grand Pavilion Commercial Centre, Oleander Way, 802 West Bay Road, P.O. Box 32052, Grand Cayman KY1-1208, Cayman Islands, British West Indies Website ： http://www.85cafe.com Tel ： (886) 4-3503-9090

1-2 Main Operation `：`

Shanghai Gourmet Master Food & Beverage Ltd.

Comestibles Master Co., Ltd. Shanghai Gourmet Master Food & Beverage Ltd. Address ： No.35, Gongyequ 23rd Rd., Taichung City, Address ： 6F, No. 425, Yi Shan Rd., Xu Hui District, Taiwan (R.O.C.) Shanghai, China Website ： http://www.85cafe.com Website ： http://www.85cafe.com Tel ： (886) 4-3503-9090 Tel ： (86) 21-6280-6585

He-Shia Food & Beverage Ltd.

Address ： 6F, No. 425, Yi Shan Rd., Xu Hui District, Shanghai, China Website ： http://www.85cafe.com Tel ： (86) 21-6280-6585

1-3 Central Kitchen Address ： No.35, Gongyequ 23rd Rd., Taichung City, Taiwan (R.O.C.) Central Kitchen Tel ： (886) 4-3503-9090
1-4 Subsidiaries ：

85 Degrees Café International Pty. Ltd.

Address ： Unit C1, 200 Coward Street, Mascot NSW2020

Website ： http://www.85cafe.com Tel ： (61) 2-8339-1031

Perfect 85 Degrees C, Inc.

Address ： 1672 McGaw Avenue, Irvine, CA 92614 Website ： http://www.85cafe.com Tel ： (1) 949-250-1688

85 Degree Co., Ltd.

Address ： Level 6(D), Main Office Tower, Financial Park, Labuan Complex, Jalan Merdeka, P.O. Box 80887, 87018 Labuan, F.T., Malaysia Website ： http://www.85cafe.com Tel ： (886) 4-3503-9090

Prime Scope Trading Limited

Address ： Suites 2302-6 23/F Great Eagle Ctr 23 Habour Rd., Wanchai, HK Website ： http://www.85cafe.com Tel ： (86) 21-6280-6585

Lucky Bakery Limited

Address ： Portcullis Trust Net Chambers, P.O. Box 1225 Apia, SAMOA Website ： http://www.85cafe.com

Profit Sky International Ltd.

Address ： P.O. Box 975, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands Website ： http://www.85cafe.com Tel ： (886) 4-3503-9090

Golden 85 Investments, LLC

Address ： 24662 Creekview Dr. Laguna Hill, CA 92653 Website ： http://www.85cafe.com Tel ： (1) 949-553-8585

WinPin 85 Investments, LLC

Address ： 1672 McGaw Avenue, Irvine, CA 92614 Website ： http://www.85cafe.com Tel ： (1) 949-250-1688

Wincase Limited

Address ： Room 403 Fu Fai Commercial Centre,27Hillier Street, Sheung Wan, Hong Kong Website ： http://www.85cafe.com Tel ： (886) 4-3503-9090

Mei Wei Master Co., Ltd.

Address ： No. 30, Gongyequ 23rd Rd., Taichung City, Taiwan (R.O.C.) Website ： http://www.85cafe.com Tel ： (886) 4-3503-9090

Jin Wei Industrial (Shanghai) Ltd.

Address ： 6F, No. 425, Yi Shan Rd., Xu Hui District, Shanghai, China Website ： http://www.85cafe.com Tel ： (86) 21-6280-6585

Mai-Jai (Shanghai) Food Ltd.

Address ： No. 2041, Lai Yin Rd., Song Jiang District, Shanghai, China Website ： http://www.85cafe.com Tel ： (86) 21-3777-5985

Shenzheng 85 Food & Beverage Ltd.

Address ： 17F, International Trade Commercial Building, Nan Hu Rd., Shenzhen, Guangdong, China Website ： http://www.85cafe.com Tel ： (86) 755-2518-2154

He-Shia (Nanjing) Food & Beverage Ltd.

Address ： Room 608/609, No. 23, Hongwu Rd., Nanjing, Jiangsu, China Website ： http://www.85cafe.com Tel ： (86) 25-5865-3085

Zhejiang 85 Food & Beverage Ltd.

Address ： 27F, No. 7-9, Qingchun Rd., Hangzhou, Zhejiang, China Website ： http://www.85cafe.com Tel ： (86) 571-8539-3885

Fuzhou 85 Food & Beverage Ltd. Address ： 8#, No. 33, Xi Hong Rd., Fuzhou, Fujian, China Website ： http://www.85cafe.com Tel ： (86) 0591-8762-1339

Chengdu 85 Food & Beverage Ltd.

Address ： No. 239, Gang Hua Rd., Chengdu, Sichuan, China Website ： http://www.85cafe.com Tel ： (86) 028-6177-8672

Wuhan Jing Way Food & Beverage Ltd.

Address ： No. 756, Zhongshan Avenue, Wuhan, Hubei, China Website ： http://www.85cafe.com Tel ： (86) 21-6280-6585

Worldinn Limited

Address ： Room 403 Fu Fai Commercial Centre,27Hillier Street, Sheung Wan, Hong Kong Website ： http://www.85cafe.com Tel ： (886) 4-3503-9090

Mei Wei Fu Xing Ltd.

Address ： No.388, Sec. 3, Fuxing Rd., Taichung City, Taiwan (R.O.C.)

Website ： http://www.85cafe.com Tel ： (886) 4-2493-3303

Shanghai Howco Jing Way Food & Beverage Ltd.

Address ： 6F, No. 425, Yi Shan Rd., Xu Hui District, Shanghai, China Website ： http://www.85cafe.com Tel ： (86) 21-6280-6585

Sheng-Pin (Shanghai) Food Ltd. Address ： No. 2041, Lai Yin Rd., Song Jiang District, Shanghai, China Website ： http://www.85cafe.com Tel ： (86) 21-3777-5985

Sheng-Pin (Shenzheng) Food Ltd.

Address ： Guangming New District, Shenzhen, Guangdong, China Website ： http://www.85cafe.com Tel ： (86) 755-2942-7853

Sheng-Pin (Hangzhou) Food Ltd.

Address ： No. 619, Wang Mei Rd., Hangzhou, Zhejiang, China Website ： http://www.85cafe.com Tel ： (86) 571-8928-7299

Beijing 85 Food & Beverage Ltd. Address ： Room 518, No.7, Dong Da Mo Chang St., Beijing, China Website ： http://www.85cafe.com Tel ： (86) 10-6124-0399

Sheng-Pin (Beijing) Food Ltd.

Address ： No. 8, Hai Xin Rd., Da Xing District, Beijing, China Website ： http://www.85cafe.com Tel ： (86) 010-6124-0399

Sheng-Pin (Jiangsu) Food Ltd.

Address ： No. 669, Jiang Jun Da Dao, Nanjing, Jiangsu, China Website ： http://www.85cafe.com Tel ： (86) 025-8773-6674

Sheng-Pin (Wuhan) Food Ltd.

Address ： A4, Mingdian Industrial Park, Dongxihu, Wuhan, Hubei, China Website ： http://www.85cafe.com Tel ： (86) 027-8338-2885

Xiamen 85 Food & Beverage Ltd.

Address ： Unit 402, No. 2, Xiang An District, Xiamen, Fujian, China Website ： http://www.85cafe.com Tel ： (86) 024-3141-9285

Shenyang 85 Food & Beverage Ltd.

Address ： No. 83, Pu He Avenue, Shen Bei New District, Shenyang, Liaoning, China Website ： http://www.85cafe.com Tel ： (86) 024-3141-9285

Qingdao Jie Wei Food & Beverage Management Ltd.

Address ： No. 147, Liao Ning Rd., Shi Bei District, Qingdao, Shandong, China Website ： http://www.85cafe.com Tel ： (86) 21-6280-6585

Sheng-Pin (Xiamen) Food Ltd.

Address ： Unit 102/202/302, No. 2, Xiang An District, Xiamen, Fujian, China Website ： http://www.85cafe.com Tel ： (86) 0592-718-9585

Sheng-Pin (Shenyang) Food Ltd.

Address ： No. 83, Pu He Avenue, Shen Bei New District, Shenyang, Liaoning, China Website ： http://www.85cafe.com

Tel ： (86) 024-3141-9285

85 Degree (Qingdao) Food & Beverage Management Ltd.

Address ： No. 1, Wu Chang Rd., Shi Nan District, Qingdao, Shandong, China Website ： http://www.85cafe.com Tel ： (86) 21-6280-6585

Jianxi Jing Way Food & Beverage Ltd.

Address ： No. 280, Min De Rd., Nanchang, Jiangxi, China Website ： http://www.85cafe.com Tel ： (86) 21-6280-6585

Sheng-Pin (Qingdao) Food Ltd.

Address ： Proman Industrial Park, Hai'er Avenue, Jiaozhou, Qingdao, Shandong, China Website ： http://www.85cafe.com Tel ： (86) 532-8662-1185

Guangzhou 85 Degree Food & Beverage Management Ltd.

Address ： No., 236 Tianhe Rd., Guangzhou, Guangdong, China Website ： http://www.85cafe.com Tel ： (86) 21-6280-6585

Mai-Jai (Chengdu) Food Ltd.

Address ： No. 468, Yong He Rd., Chengdu, Sichuan, China Website ： http://www.85cafe.com Tel ： (86) 028-6510-9985

85 Degree (Jiangsu) Food Ltd.

Address ： Xiangyun Rd., Dingshanhu, Kunshan, Jiangsu, China Website ： http://www.85cafe.com Tel ： (86) 21-6280-6585

Jai Ding Jing Way Food & Beverage Ltd.

Address ： No. 295, Tachen Rd., Shanghai, China Website ： http://www.85cafe.com Tel ： (86) 028-6510-9985

Shares Transfer Agent
Name ： Yuanta Securities, Stock Transfer Agency Services

Website ： http://www.yuanta.com.tw

Address ： No. 210, Sec. 3, Chengde Rd., Datong Tel ： (886) 2-2586-5859 Dist., Taipei City 103, Taiwan (R.O.C.)

CPAs for the Most Recent Annual Financial Report
Name ： Hsieh Ming Zhong, Li Lee Huang Firm ： Deloitte
Address ： 12F., No. 156, Sec. 3, Minsheng E. Rd., Songshan Dist., Taipei City, Taiwan (R.O.C.)

Website ： http://www.deloitte.com.tw Tel ： (886) 2-2545-9988

4.	Directors
	Title	Name	Nationality	Experience
	Director	Wu Cheng	Taiwan	Comestibles Master Co., Ltd.
		Hsueh		Chairman
				Mei Wei Master Co., Ltd.
				Chairman
	Director	Sun Wu	Taiwan	Hot Pizza Co., Ltd. manager
		Liang		Comestibles Master manager
	Director	Zhang Ji	Taiwan	Hot Pizza Co., Ltd. manager
		Wen		Comestibles Master manager
	Director	James Hsieh	Taiwan	PCSC Chief Strategy Officer
				PCSC Senior Vice President/COO
	Independent	Wu Meng Da	Taiwan	Deloitte Audit Firm
	Director			PWC Audit Firm
				Partner at Dinkum & Co., CPAs
	Independent	Lin Jun Jian	Taiwan	Synnex Marketing Head
	Director
	Independent	Jiang Jia	Hong Kong	LionRock Capital Founder and	Director
	Director	Qiang		Sun Hung Kai Properties Senior Advisor
5.	Litigious and	Non-Litigious Agent Within Taiwan
	Name`：`	Wu Cheng Hsueh		Title`：`	Chairman
	Tel`：`	(886) 4-3503-9090		Email`：`	[email protected]

Exchanges Where The Company's Securities Are Trade Offshore, And The Method By Which To Access Information On Said Offshore Securities ： NA
Company Website ： http://www.85cafe.com

01. Letter to shareholders..............................................................................................................................001 02. Corporate Profile.......................................................................................................................................002 1. Company and Group Profile.......................................................................................................002 2. Corporate History.......................................................................................................................004 03. Corporate Governance..............................................................................................................................006 1. Organization..............................................................................................................................006 2. Information on Directors, Supervisors, and Management of the Company and Various Departments and Branches.......................................................................................................007 3. Corporate Governance...............................................................................................................018 4. External audit fees .....................................................................................................................029 5. Changing of auditors...................................................................................................................029 6. If the Company's Chairman, CEO, or managers responsible for financial and accounting affairs have held any position in the accounting firm or its affiliates during the past year, all relevant information should be disclosed................................................................................................029 7. Net Change in shareholdings and in shares pledged by directors, supervisors, management, and shareholders holding more than a 10% share in the Company.................................................030 8. Information Disclosing the Relationship between any of the Company’s Top Ten Shareholders..............................................................................................................................031 9. Company director, supervisor, and manager direct and ownership of shares in affiliated enterprises.................................................................................................................................032 04. Capital Overview.......................................................................................................................................032 1. Capitalization.............................................................................................................................033 2. Status of corporate bonds, preferred shares, GDR, employee stock option plans, mergers, acquisitions, spin-offs, and employee restricted stock plans....................................................036 3. Status of capital utilization plan.................................................................................................036 05. Operational Highlights.............................................................................................................................037 1. Business Activities......................................................................................................................037 2. Market analysis and merchandise..............................................................................................040 3. Personnel information................................................................................................................042 4. Environmental protection expenditure......................................................................................043 5. Labor relations............................................................................................................................043 6. Important Contracts...................................................................................................................044 06. Financial Information...............................................................................................................................045 1. Five-Year Financial Summary......................................................................................................045 2. Five-Year Financial Analysis........................................................................................................049 3. The most recent independent auditors’ report..........................................................................052 4. Any cash flow difficulties during the most recent year and as of April 30, 2014 at the Company and its affiliates.........................................................................................................................110

07. Review of Financial Conditions, Operating Results, and Risk Management.......................................111 1. Analysis of Financial Status.........................................................................................................111 2. Analysis of Operating Results.....................................................................................................111 3. Analysis of Cash Flow..................................................................................................................112 4. Major capital expenditures over the past fiscal year and their impact........................................................................................................................................112 5. Analysis of investments in affiliated enterprises over the past fiscal year..................................112 6. Risk assessment..........................................................................................................................114 7. Other important items...............................................................................................................116 08. Special Notes............................................................................................................................................117 1. Information about Affiliated Enterprises....................................................................................117 2. Private Placement Securities in 2013 and as of the Date of this Annual Report......................................................127 3. Status of Common Shares Acquired, Disposed of, and Held by Subsidiaries..............................127 4. Special Notes. ............................................................................................................................127 5. Any Events in 2013 and as of the Date of this Annual Report that Had Significant Impacts on Shareholders’ Right or Security Prices as Stated in Item 2 Paragraph 2 of Article 36 of Securities and Exchange Law of Taiwan.....................................................................................................128 6. Key Performance Indicator..........................................................................................................128 7. Goal and methodology of hedge accounting.............................................................................128

01. Letter to shareholders

Dear Shareholders,

Gourmet Master Co. Ltd. (The Company) reported a record high consolidated sales of NT$17,921 million for 2014, NT$2,807 million, or 18.57% higher than that in 2013. The Company also reported 2014 net profit of NT$528 million, NT$47 million lower than that in 2013, and 2014 EPS of NT$3.74. By end of December 31, 2014, The Company operated 850 stores globally, adding 83 more stores compared with end 2013.

As of end 2014, The Company retained a low debt-to-asset ratio of 31.03%, a high current (working capital) ratio of 129.56%, and strong operating cash inflow of NT$1,867 million during 2014, indicating The Company’s solid operational and financial status.

Looking back on 2014, The Company continued its aggressive expansion across all regions. Total store counts in China reached 492 by end 2014. In the US, The Company continued with its fast-growing mode and opened 5 new stores in 2014, including the second store in northern California and the first store in San Diego, the eighth largest U.S. city. As of end 2014, The Company had 14 stores in the States. In Hong Kong, The Company also expanded its market share and had 8 stores end 2014.

In addition to store expansion, The Company keeps on enhancing its organization structure, store format, product mix, and marketing strategy, evidenced by successive recognitions won by its chefs, such as the crowning of Chen Li Che in Global Pastry Chefs Challenge, and the record-breaking high marks achieved in COFFEE REVIEW, all proofs that The Company's committment to high quality product has never wavered since its founding ten years ago. Looking into 2015, The Company will focus on the innovation of new products and the ramp-up of new format stores, aiming at higher single store sales and profitability. In China, the store openings will be concentrated on the scalable markets for better brand awareness. US market becomes The Company’s new growth engine, following the robust sales performance and the planned accelerating store openings in the years to come. The Company will at the same time survey other potential markets outside of the Golden State and look forward to expanding in the world's largest consumer market.

Finally, thank you, our shareholders, for your trust and long-term supports during our journey advancing into a multinational brand. We will do our best to exceed expectations as we enter the most exciting period of our existence for the year ahead.

Warm regard,

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Wu Cheng-Hsueh, Chairman

02. Corporate Profile

1. Company and Group Profile

1-1. Date of Incorporation and Group Profile

Gourmet Master Co. Ltd. (The Company) is an investment holding company founded on September 26, 2008 under The Company act of Cayman Islands. The Company operates the leading cafe chain “ 85 。 C ” across various regions, with major product categories including coffee, cake, and bakery goods. Building on the successful positioning “Affordable Luxury”, 85 。 C chained stores rapidly expand throughout Taiwan via both self-own and franchise models, after its first store opened in Yonghe, New Taipei City back in 2004. By 2014, The Company operated 332 stores in Taiwan, 492 stores in China, 14 stores in the US, 4 stores in Australia, and 8 stores in Hong Kong. In 2006, 85 。 C started expanding outside Taiwan and opened the first store in Sidney, Australia. Before long, 85 。 C penetrated into China market and opened stores in Shanghai in 2007. In September 2008, the first 85 。 C store in the United States was launched in Irvine, southern California under the join-venture entity “Golden 85 Investments, Inc.” Recent years saw The Company's fast expansion and marshalling into Northern California and San Diego.

85 。 C group kicked off the restructuring in late 2008 to consolidate the operations in various regions into the Cayman Islands registered holding company, Gourmet Master Co, Ltd. for management efficiency and the progression to public offering in capital markets.

The Company strives to provide the finest quality products in extensive selections in order to fulfill its commitment of “Affordable Luxury”, by working with five-star hotel chefs and employing only the top-notch ingredients. After exciting 10 years, 85 。 C has brought its classic combination of “coffee, cakes, and bakery goods” into bustling urban areas and many smaller towns throughout the world. With localized attentiveness and global management, 85 。 C has recruited more than 3,500 master bakers worldwide and expanded from Taiwan to China, the United States, Australia, and Hong Kong. With a brand-new international look, 85 。 C is sharing its exquisite foods and beverage with the world.

1-2. Group Structure

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Note: Prime Scope Trading Limited and Shanghai Gourmet Master Food & Beverage Ltd. invests in 25% and 75%, respectively, of 85 Degree (Jiangsu) Food Ltd.; He-Shia Food & Beverage Ltd. and Shanghai Gourmet Master Food & Beverage Ltd. invests in 43% and 57%, respectively, of Wuhan Jing Way Food & Beverage Ltd.; Prime Scope Trading Limited and He-Shia Food & Beverage Ltd. invests in 27% and 73%, respectively, of Beijing 85 Food & Beverage Ltd. The group invests in 100% of 85 Degree (Jiangsu) Food Ltd., Wuhan Jing Way Food & Beverage Ltd., and Beijing 85 Food & Beverage Ltd.

1-3. Risk assessment: Please refer to Chapter 07.

2. Corporate History

Time Feb. 2005 Dec. Sep. 2006 Dec. May 2007 May Sep. Dec. Dec. Aug. 2008 Sep. Sep. May 2009 Dec. Dec. Mar. 2010 Nov. May 2011 Jun. Aug. Aug. Sep. Oct. Nov. Jun. 2012	Event
	Established Comestibles Master Co., Ltd. Established R&D center and central kitchen in Taichung, Taiwan. Opened in Sydney the 1st 85C store in Australia. Taiwan central kitchen certified by HACCP and ISO22000. Ranked the 11th biggest tourism & dining company in CommonWealth Magazine's annual survey. Invested in 85 Degrees Café International Pty. Ltd. in Australia. Invested in Golden 85 Investments, Inc. in the U.S. Taiwan store count reached 300. Opened in Shanghai the 1st 85C store in China. Established central kitchen in Australia. Opened in Irvine, California the 1st 85C store in the U.S. Established Gourmet Master Co. Ltd. and started group reorganization. Ranked the 6th biggest tourism & dining company in CommonWealth Magazine's annual survey. Awarded by Ministry of Economic Affairs Outstanding Brand in Service Industry. Ranked the Best Coffee Chain by Management Magazine in 2010. China store count reached 100. IPO in Taiwan Stock Exchange. Ranked the biggest tourism & dining company in CommonWealth Magazine's annual survey. China store count reached 200. Awarded by Ministry of Economic Affairs Top 100 Taiwan Brand in 2011. Opened in Hacienda Heights, California the 2nd 85C store in the U.S. Ranked the 11th Best Taiwan International Brand in Ministry of Economic Affairs INTERBRAND Awards. Provided catering service in Taiwan's 100th Anniversary for the Ministry of Foreign Affairs. Established Profit Sky International Ltd via joint venture with Café de Coral, a Hong Kong listed company. China store count reached 300.

Time
Feb. 2005

Dec.

Sep. 2006

Dec.

May 2007

May

Sep.

Dec.

Dec.

Aug. 2008

Sep.

Sep.

May 2009

Dec.

Dec.

Mar. 2010

Nov.

May 2011

Jun.

Aug.

Aug.

Sep.

Oct.

Nov.

Jun. 2012

Event

Established Comestibles Master Co., Ltd.
Established R&D center and central kitchen in Taichung,
Taiwan.
Opened in Sydney the 1st 85C store in Australia.
Taiwan central kitchen certified by HACCP and ISO22000.
Ranked the 11th biggest tourism & dining company in
CommonWealth Magazine's annual survey.
Invested in 85 Degrees Café International Pty. Ltd. in Australia.
Invested in Golden 85 Investments, Inc. in the U.S.
Taiwan store count reached 300.
Opened in Shanghai the 1st 85C store in China.
Established central kitchen in Australia.
Opened in Irvine, California the 1st 85C store in the U.S.
Established Gourmet Master Co. Ltd. and started group
reorganization.
Ranked the 6th biggest tourism & dining company in
CommonWealth Magazine's annual survey.
Awarded by Ministry of Economic Affairs Outstanding
Brand in Service Industry.
Ranked the Best Coffee Chain by Management Magazine in
2010.
China store count reached 100.
IPO in Taiwan Stock Exchange.
Ranked the biggest tourism & dining company in
CommonWealth Magazine's annual survey.
China store count reached 200.
Awarded by Ministry of Economic Affairs Top 100 Taiwan
Brand in 2011.
Opened in Hacienda Heights, California the 2nd 85C store
in the U.S.
Ranked the 11th Best Taiwan International Brand in
Ministry of Economic Affairs INTERBRAND Awards.
Provided catering service in Taiwan's 100th Anniversary for
the Ministry of Foreign Affairs.
Established Profit Sky International Ltd via joint venture
with Café de Coral, a Hong Kong listed company.
China store count reached 300.

Time Jul. Oct. Dec. May 2013 Jul. Sep. Sep. Sep. Oct. Nov. Nov. Dec. Jan. 2014 Apr. Jun. Jul. Jul. Nov. Dec. Dec. Dec.	Event
	Opened in Kowloon the 1st 85C store in Hong Kong. Invested in The Hot Pot Food and Beverage Management Co., Ltd. Opened in West Covina, California the 3rd 85C store in the U.S. Awarded Gold and Silver Medal at Hong Kong International Culinary Classic. Opened in Chino Hill, California the 4th 85C store in the U.S. China store count reached 400. Established central kitchen in Brea, California. Voted by Foursquare users as one of the 10 most popular coffee shops in the U.S. Open in Taichung, Taiwan the first 2nd Generation Store. Opened in Newark and Gardena, California the 5th and 6th 85C stores in the U.S. Awarded for the 3rd time as one of the 20 Best Taiwan International Brands in Ministry of Economic Affairs INTERBRAND Awards. Opened in Garden Grove, California the 7th 85C store in the U.S. Opened China's first 2nd Generation Store in Shanghai. Opened in Torrance and San Jose, California the 10th and 11th 85C stores in the U.S. Opened in Fullerton, California the 12th 85C store in the U.S. 85C bakery chef, Chen Li Che won Global Pastry Chefs Challenge. Rolled out Alibaba's Alipay service in all of 85C China stores. Opened in San Diego, California the 14th 85C store in the U.S. Worldwide store count reached 850. Worked with Alibaba and successfully created Double 12 shopping frenzy in China 85C in-house roast achieved record-breaking high marks in COFFEE REVIEW

Time
Jul.

Oct.

Dec.

May 2013

Jul.

Sep.

Sep.

Sep.

Oct.

Nov.

Nov.

Dec.

Jan. 2014

Apr.

Jun.

Jul.

Jul.

Nov.

Dec.

Dec.

Dec.

Event

Opened in Kowloon the 1st 85C store in Hong Kong.
Invested in The Hot Pot Food and Beverage Management
Co., Ltd.
Opened in West Covina, California the 3rd 85C store in the
U.S.
Awarded Gold and Silver Medal at Hong Kong International
Culinary Classic.
Opened in Chino Hill, California the 4th 85C store in the
U.S.
China store count reached 400.
Established central kitchen in Brea, California.
Voted by Foursquare users as one of the 10 most popular
coffee shops in the U.S.
Open in Taichung, Taiwan the first 2nd Generation Store.
Opened in Newark and Gardena, California the 5th and 6th
85C stores in the U.S.
Awarded for the 3rd time as one of the 20 Best Taiwan
International Brands in Ministry of Economic Affairs
INTERBRAND Awards.
Opened in Garden Grove, California the 7th 85C store in
the U.S.
Opened China's first 2nd Generation Store in Shanghai.
Opened in Torrance and San Jose, California the 10th and
11th 85C stores in the U.S.
Opened in Fullerton, California the 12th 85C store in the
U.S.
85C bakery chef, Chen Li Che won Global Pastry Chefs
Challenge.
Rolled out Alibaba's Alipay service in all of 85C China
stores.
Opened in San Diego, California the 14th 85C store in the
U.S.
Worldwide store count reached 850.
Worked with Alibaba and successfully created Double 12
shopping frenzy in China
85C in-house roast achieved record-breaking high marks in
COFFEE REVIEW

03. Corporate Governance

1. Organization

1-1. Organization Chart

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1-2. Responsibilities of Key Functions

Function	Description
Product Development	Product development, brand strategy building and execution, to assist operation and goal setting.
Regional Business	Decide on best business model in accordance with general product and operation strategy, to satisfy customers and achieve target.
Finance and Accounting	Treasury and bookkeeping, maintain financial stability, elevate decision-making quality via accurate data and information.
Internal Audit	Complete scheme of internal auditing and internal control, regular improvement in both regards, minimize operation risks and errors.

2. Information on Directors, Supervisors, and Management of the Company and Various Departments and Branches

2-1. Directors and Supervisors

2-1. Directors and Supervisors	2-1. Directors and Supervisors	2-1. Directors and Supervisors	2-1. Directors and Supervisors	2-1. Directors and Supervisors	2-1. Directors and Supervisors
																April 30,2015
Title	Nationality	Name	Date First Elected	Date Elected	Term (Years)	Shareholding when Elected		Current Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience (Education)	Other Position	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
						Shares	`％`	Shares	`％`	Shares	`％`	Shares	`％`			Title	Name	Relation
Chairman	Taiwan	Wu Cheng Hsueh	2008.09.26	2013.06.11	3	20,214,898	14.32%	20,214,898	14.32%	8,812,275	6.24%	-	-	Comestibles Master Co., Ltd. Chairman Mei Wei Master Co., Ltd. Chairman National Taiwan University of Science and Technology, Honorary Masters Degree In Business Administration	CEO	Director	Zhang Ji Wen	Brother-in-law
Director	Samoa	Henderson I Yield Growth Limited	2010.01.16	2013.06.11	3	12,477,825	8.84%	12,477,825	8.84%	-	-	-	-	-	-	-	-	-
	Taiwan	Juristic Person Representative: Sun Wu Liang	2013.09.18	2013.09.18	3	2,008,894	1.42%	1,208,894	0.86%	-	-	-	-	Hot Pizza Co., Ltd. manager Comestibles Master manager	-	-	-	-
Director	Samoa	Infinity Emerging Markets Limited	2010.01.16	2013.06.11	3	32,394,635	22.96%	32,394,635	22.96%	-	-	-	-	-	-	-	-	-
	Taiwan	Juristic Person Representative: Zhang Ji Wen	2010.01.16	2013.06.11	3	1,497,925	1.06%	632,925	0.45%	-	-	-	-	Middlesex University Master in E-Commerce University of Surrey Master in Management Hot Pizza Co., Ltd. manager Comestibles Master manager	Comestibles Master Co., Ltd. Vice President	Chairman	Wu Cheng Hsueh	Brother-in-law
Director	Taiwan	James Hsieh	2013.06.11	2013.06.11	3	100,000	0.07%	91,000	0.06%	8,000	0.01%	-	-	PCSC Chief Strategy Officer Books. Com Chairman/CEO COLD STONE/Afternoon Tea CEO PCSC Senior Vice President/COO	Consultant	-	-	-

Title	Nationality	Name	Date First Elected	Date Elected	Term (Years)	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
						Shares	`％`	Shares	`％`	Shares	`％`	Shares	`％`			Title	Name	Relation
Independent director	Taiwan	Wu Meng Da	2010.01.16	2013.06.11	3	-	-	-	-	-	-	-	-	National Taiwan University Master in Accounting Deloitte Audit Firm PWC Audit Firm Lecturer at Ming Chuan University, National Taipei College of Business Partner at Dinkum & Co., CPAs	Note	-	-	-
Independent director	Taiwan	Lin Jun Jian	2010.01.16	2013.06.11	3	-	-	-	-	-	-	-	-	National Tsing Hua University Bachelor in Industrial Engineering Synnex Marketing Head Yuxiu Education Foundation Director Synnex Culture Foundation Director	Note	-	-	-
Independent director	Hong Kong	Jiang Jia Qiang	2010.01.16	2013.06.11	3	-	-	-	-	-	-	-	-	Princeton University Bachelor, Harvard University Master LionRock Capital Founder and Director Sun Hung Kai Properties Senior Advisor	Note	-	-	-
Supervisor	Taiwan	Lian Chun Zhong	2010.01.16	2013.06.11	3	-	-	-	-	-	-	-	-	Feng Chia University Master in Business Administration HsinChu District Prosecutors Office Accounting Manager LianFeng Audit Firm CPA	Note	-	-	-
Supervisor	Taiwan	Wu Cheng He	2010.01.16	2013.06.11	3	-	-	-	-	-	-	-	-	NTNU Department of Technology Application and Human Resource Development PhD Providence University Professor New Palace International Co., Ltd. Director	Note	-	-	-

Note: Refer to Experience (Education)

April 30, 2015

Major shareholders of the institutional shareholders

Major shareholders of the institutional shareholders	Major shareholders of the institutional shareholders	Major shareholders of the institutional shareholders	April 30,2015
Name of institutional shareholders			Major shareholders of the institutional shareholders
InfinityEmergingMarkets Limited			5-Star Industrial Limited
Henderson I Yield Growth Limited			5-Star Industrial Limited
Major shareholders	of the major shareholders that are juridical persons April 30,2015 Name of juridical persons Major shareholders of the juridical persons 5-Star Industrial Limited Henderson Growth Fund
	Name of juridical persons	Major shareholders of the juridical persons
	5-Star Industrial Limited	Henderson Growth Fund

Independence and Professional Expertise of Board Members and Supervisors

	April 30,2015	April 30,2015	April 30,2015	April 30,2015	April 30,2015	April 30,2015	April 30,2015	April 30,2015	April 30,2015	April 30,2015	April 30,2015	April 30,2015	April 30,2015	April 30,2015
Criteria Name	Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience			Independence Criteria(Note)										Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director
	An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10
Wu Cheng Hsueh														0
Henderson I Yield Growth Limited`：` Sun Wu Liang														0
Infinity Emerging Markets Limited`：` ZhangJi Wen														0
James Hsieh														0
Wu Meng Da														0
Lin Jun Jian														0
Jiang Jia Qiang														0
Lian Chun Zhong														0
Wu Cheng He														0

Note: Please tick the corresponding boxes if directors or supervisors have been any of the following during the two years prior to being elected or during the term of office.

Not an employee of the Company or any of its affiliates.
Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.
Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the preceding three subparagraphs.
Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top five in holdings.
Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company.
Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof.
Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
Not been a person of any conditions defined in Article 30 of the Company Law.
Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

[10]

2-2. Information on the CEO, senior vice presidents, vice presidents, and division heads

April 30, 2015

												April 30, 2015	April 30, 2015	April 30, 2015
Title	Nationality	Name	Date Effective	Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience`（`Education`）`	Other Position	Managers who are Spouses or Within Two Degrees of Kinship
				Shares	`％`	Shares	`％`	Shares	`％`			Title	Name	Relation
CEO	Taiwan	Wu Cheng Hsueh	2015.04.01 `（`Note`）`	20,214,898	14.32%	8,812,275	6.24%	-	-`	Comestibles Master Co., Ltd. Chairman Mei Wei Master Co., Ltd. Chairman National Taiwan University of Science and Technology, Honorary Masters Degree In Business Administration	Chairman	-	-	-
Senior Vice President, Product Development	Taiwan	Zheng Ji Long	2010.01.16	1,714,382	1.21%	-	-	-	-	Agora Garden, Chef 2000 FHA Culinary Challenge, silver medal	-	-	-	-
Head of Overseas Business	Taiwan	Yin Zi Li	2010.01.16	-	-	-	-	-	-	Grand Hyatt, Chef Los Angeles RJ Patisserie, Advisor San Francisco SK,Advisor	Perfect 85 Degrees C, Inc. Director Golden 85 Investments, LLC Director	-	-	-
Vice President, Finance and Accounting	Taiwan	Michelle Hsieh	2010.01.16	21,000	0.01%	10,000	0.01%	-	-	National Taiwan University, Accounting Dept. GreTai Securities Market, staff Yuanta Securities, Assistant Manager Deloitte Audit Firm	-	-	-	-
Manager, Internal Audit	Taiwan	Zhang Ci Wen	2011.01.01	-	-	-	-	-	-	National Cheng Kung University, Accounting Dept. National Chung Hsing University, Business Administration, Master Deloitte Audit Firm FaradayTechnologyCorp.	-	-	-	-

Note: Wu Cheng Hsueh 's term began on Apr. 01, 2015; James Hsieh's term ended on Apr. 01, 2015.

2-3. Remuneration paid to Company directors, supervisors, CEO, and senior vice presidents over the past year a. Remuneration of Directors

December 31, 2014; Unit: NT$1,000 / 1,000 shares

Title	Name	Total Remuneration	Total Remuneration	Total Remuneration	Total Remuneration	Total Remuneration	Total Remuneration	Total Remuneration	Total Remuneration	Summation of A, B, C, and D as a % of After-Tax Income	Summation of A, B, C, and D as a % of After-Tax Income	Compensation to Dire	Compensation to Dire	Compensation to Dire	Compensation to Dire	ctors Also Serving as Company Employees	ctors Also Serving as Company Employees	ctors Also Serving as Company Employees	ctors Also Serving as Company Employees	ctors Also Serving as Company Employees	ctors Also Serving as Company Employees	ctors Also Serving as Company Employees	ctors Also Serving as Company Employees	Summation of A,B,C, D, E, F and G as a % of After-Tax Income	Summation of A,B,C, D, E, F and G as a % of After-Tax Income	Compensation from an invested company other than The Company’s subsidiary
		Remuneration (A)		Pension (B)		Earnings Distribution (C)		Business Expenses (D)				Salary, Bonuses, and Allowances (E)		Pension (F)		Earnings Distribution (G)				Shares Received through the Employe e Stock Option Plan (H)		New Shares Received through Employe e Restricte d Stock Awards (I)
		The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company		All consolidated companies		The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies
																Cash	Stock	Cash	Stock
Chairman	Wu Cheng Hsueh	-	-	-	-	-	-	2,160	2,160	0.41%	0.41%	6,000	14,075	-	-	-	-	-	-	-		-		1.55%	3.08%	-
Director	Henderson I Yield Growth Limited
	juristic person representative: Sun Wu Liang
Director	Infinity Emerging Markets Limited
	juristic person representative: ZhangJi Wen
Director	James Hsieh
Independent Director	Wu Meng Da
Independent Director	Lin Jun Jian
Independent Director	Jiang Jia Qiang

December 31, 2014

	December 31,2014	December 31,2014	December 31,2014	December 31,2014
Compensation Level	Name
	Total of (A+B+C+D)		Total of (A+B+C+D+E+F+G)
	The Company	All consolidated companies	The Company	All consolidated companies
None	Wu Cheng Hsueh, Sun Wu Liang, Zhang Ji Wen	Wu Cheng Hsueh, Sun Wu Liang, Zhang Ji Wen	Wu Cheng Hsueh, Sun Wu Liang, Zhang Ji Wen	-
Under NT$ 2,000,000	Hendersion I Yield Growth Limited, Infinity Emerging Markets Limted, James Hsieh, Lin Jun Jian, Wu Meng Da, Jiang Jia Qiang	Hendersion I Yield Growth Limited, Infinity Emerging Markets Limted, James Hsieh, Lin Jun Jian, Wu Meng Da, Jiang Jia Qiang	Hendersion I Yield Growth Limited, Infinity Emerging Markets Limted, Lin Jun Jian, Wu Meng Da, Jiang Jia Qiang	Hendersion I Yield Growth Limited`、`Infinity Emerging Markets Limted`、`Wu Cheng Hsueh, Sun Wu Liang, Lin Jun Jian, Wu Meng Da, Jiang Jia Qiang
NT$2,000,000 ~ NT$5,000,000	-	-	-	ZhangJi Wen
NT$5,000,000 ~ NT$10,000,000	-	-	James Hsieh	-
NT$10,000,000 ~ NT$15,000,000	-	-	-	James Hsieh
NT$15,000,000 ~ NT$30,000,000	-	-	-	-
NT$30,000,000 ~ NT$50,000,000	-	-	-	-
NT$50,000,000 ~ NT$100,000,000	-	-	-	-
Over NT$100,000,000	-	-	-	-
Total	9	9	9	9

b. Remuneration of Supervisors

		December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares
Title	Name	Total Remuneration						Summation of A, B, and C as a % of After-Tax Income		Compensation from an invested company other than The Company’s subsidiary
		Remuneration(A)		Earnings Distribution (B)		Business Expenses (C)
		The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies
Supervisor	Lian Chun Zhong	-	-	-	-	1,080	1,080	0.20%	0.20%	-
Supervisor	Wu Cheng He
Supervisor	Li Ding Zhong

Note: Li Ding Zhong's term ended on Jan. 12, 2015.

- - Supervisor u eng He Supervisor Li Ding Zhong Note: Li Ding Zhong's term ended on Jan. 12, 2015.	- - 1,080 1,080 0.20% 0.20% -	- - 1,080 1,080 0.20% 0.20% -
	December 31,2014
Compensation Level	Name
	Total of (A+B+C)
	The Company	All consolidated companies
Under NT$2,000,000	Lian Chun Zhong,Wu ChengHe,Li DingZhong	Lian Chun Zhong,Wu ChengHe,Li DingZhong
NT$2,000,000 ~ NT$5,000,000	-	-
NT$5,000,000 ~ NT$10,000,000	-	-
NT$10,000,000 ~ NT$15,000,000	-	-
NT$15,000,000 ~ NT$30,000,000	-	-
NT$30,000,000 ~ NT$50,000,000	-	-
NT$50,000,000 ~ NT$100,000,000	-	-
Over NT$100,000,000	-	-
Total	3	3

c. Remuneration of CEO and Senior Vice Presidents

								December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares	December 31,2014; Unit: NT$1,000/1,000 shares
Title	Name	Remuneration (A)		Pension (B)		Bonuses and Allowances (C)		Profit Sharing-Employee Bonus (D)				Summation of A, B, C, and D as a % of After-Tax Income		Shares Received through the Employee Stock Option Plan		New Shares Received through Employee Restricted Stock Awards		Compensation from an invested company other than The Company’s subsidiary
		The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies	The Company		All consolidated companies		The Company	All consolidated companies	The Company	All consolidated companies	The Company	All consolidated companies
								Cash	Stock	Cash	Stock
CEO	James Hsieh	6,000	14,556	-	-	-	-	-	-	-	-	1.14%	2.76`％`	-	-	-	-	-
Senior Vice President, Product Development	Zheng Ji Long
Head of Overseas Business	Yin Zi Li

December 31, 2014

	December 31,2014	December 31,2014
Compensation Level	Name
	The Company	All consolidated companies
None	Zheng Ji Long, Yin Zi Li	-
Under NT$ 2,000,000	-	Yin Zi Li
NT$2,000,000 ~ NT$5,000,000	-	Zheng Ji Long
NT$5,000,000 ~ NT$10,000,000	James Hsieh	-
NT$10,000,000 ~ NT$15,000,000	-	James Hsieh
NT$15,000,000 ~ NT$30,000,000	-	-
NT$30,000,000 ~ NT$50,000,000	-	-
NT$50,000,000 ~ NT$100,000,000	-	-
Over NT$100,000,000	-	-
Total	3	3

d. Distribution of bonuses to Company management: none.

2-4. Comparison of Remuneration for Directors, Supervisors, CEO and Senior Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents

a. The ratio of total remuneration paid by The Company and by all companies included in the consolidated financial statements for the most recent two fiscal years to directors, supervisors, CEO and senior vice presidents of the Company, to the net income.

Comparison of Remuneration for Directors, Supervisors, CEO and Senior Vice Presidents in the ost Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and ice Presidents . The ratio of total remuneration paid by The Company and by all companies included in the consolidated financial statements for the most recent two fiscal years to directors, supervisors, CEO and senior vice presidents of the Company, to the net income.	Comparison of Remuneration for Directors, Supervisors, CEO and Senior Vice Presidents in the ost Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and ice Presidents . The ratio of total remuneration paid by The Company and by all companies included in the consolidated financial statements for the most recent two fiscal years to directors, supervisors, CEO and senior vice presidents of the Company, to the net income.	Comparison of Remuneration for Directors, Supervisors, CEO and Senior Vice Presidents in the ost Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and ice Presidents . The ratio of total remuneration paid by The Company and by all companies included in the consolidated financial statements for the most recent two fiscal years to directors, supervisors, CEO and senior vice presidents of the Company, to the net income.	Comparison of Remuneration for Directors, Supervisors, CEO and Senior Vice Presidents in the ost Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and ice Presidents . The ratio of total remuneration paid by The Company and by all companies included in the consolidated financial statements for the most recent two fiscal years to directors, supervisors, CEO and senior vice presidents of the Company, to the net income.	Comparison of Remuneration for Directors, Supervisors, CEO and Senior Vice Presidents in the ost Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and ice Presidents . The ratio of total remuneration paid by The Company and by all companies included in the consolidated financial statements for the most recent two fiscal years to directors, supervisors, CEO and senior vice presidents of the Company, to the net income.	Comparison of Remuneration for Directors, Supervisors, CEO and Senior Vice Presidents in the ost Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and ice Presidents . The ratio of total remuneration paid by The Company and by all companies included in the consolidated financial statements for the most recent two fiscal years to directors, supervisors, CEO and senior vice presidents of the Company, to the net income.
December 31,2014
	2014 ratio of total remuneration paid to directors, supervisors, presidents and vice presidents to net income(%)		2013 ratio of total remuneration paid to directors, supervisors, presidents and vice presidents to net income(%)		Notes
	The Company	All consolidated companies	The Company	All consolidated companies
Directors	1.55%	3.08%	0.99%	3.71%	The standards of remuneration for directors and supervisors are clearly specified in The Company's Article of Incorporation. Director and supervisors remuneration are mainly for other positions in The Company.
Supervisors	0.20%	0.20%	0.18%	0.18%
CEO and Senior V ice Presidents	1.14%	2.76%	1.03%	2.73%

The Company went through restructuring end-2008 for Taiwan IPO, and systemized above remuneration scheme to enhance corporate governance.

b. The policies, standards, and portfolios for the payment of remuneration, the procedures for determining remuneration, and the correlation with business performance.
(1) Remuneration paid to the directors is set according to their individual performance and their contribution to The Company’s operations.
(2) Remuneration paid to the CEO and senior vice presidents is set according to their individual performance and their contribution to The Company’s operations. Said remuneration shall also conform to remuneration regulations and take into consideration typical remuneration levels paid by other companies.

3. Corporate Governance

3-1. Board of Directors

As of publication of the Annual Report, there had been a total of 6 meetings of the Board of Directors over the past fiscal year. Director and supervisor attendance is detailed below:

April 30, 2015

					April 30,2015
Title	Name	Attendance in Person	By Proxy	Attendance rate (%)	Notes
Chairman	Wu Cheng Hsueh	6	0	100`％`	Reelected on Jun. 11,2013
Director	Henderson I Yield Growth Limited (Representative: Sun Wu Liang)	5	0	83`％`	Term for this newly appointed representative began onSep. 18, 2013
Director	Infinity Emerging Markets Limited (Representative: ZhangJi Wen)	6	0	100`％`	Reelected on Jun. 11, 2013
Director	James Hsieh	6	0	100`％`	Elected on Jun. 11,2013
Independent Director	Wu Meng Da	5	0	83`％`	Reelected on Jun. 11,2013
Independent Director	Lin Jun Jian	6	0	100`％`	Reelected on Jun. 11,2013
Independent Director	Jiang Jia Qiang	5	0	83`％`	Reelected on Jun. 11,2013
Supervisor	Lian Chun Zhong	6	0	100`％`	Reelected on Jun. 11,2013
Supervisor	Wu Cheng He	6	0	100`％`	Reelected on Jun. 11,2013
Supervisor	Li Ding Zhong	4	0	80`％`	Elected on Jun. 11, 2013; Resigned on Jan. 12,2015
Other mentionable items: 1. If there are the circumstances referred to in Article 14-3 of Securities and Exchange Act and resolutions of the directors’ meetings objected to by Independent Directors or subject to qualified opinion and recorded or declared in writing, the dates of meetings, sessions, contents of motions, all independents’ opinion and the Company’s response to independent directors’ opinion should be specified: None 2.If there is Directors’ avoidance of motions in conflict of interest, the Directors’ names, contents of motions, causes for avoidance and voting should be specified: None 3. Measures taken to strengthen the functionality of the Board: The Board of Directors has established a Compensation Committee to assist the Board in carrying out its various duties on 2012/1/1. The Company has Rules And Procedures Of Board Of Directors Meetings and reports directors' attendance. The Company has elected 3 independent directors following Article 14-2 of Securities and Exchange Act and will consider setting up Audit Committee. To enhance corporate governance, the Company fully discloses information on its operation and finance.

Note: Personal attendance rate (%) is calculated based on the actual number of meetings each director or supervisor personally attended and the number of meetings held during their term.

3-2. Attendance of Supervisors for Board Meetings

Operation of Audit Committee: Not Applicable

As of publication of the Annual Report, there had been a total of 6 meetings of the Board of Directors over the past fiscal year. Supervisor attendance is detailed below:

		April 30,2015	April 30,2015	April 30,2015
Title	Name	Attendance in Person	Attendance rate (%)	Notes
Supervisor	Lian Chun Zhong	6	100`％`	Reelected on Jun. 11,2013
Supervisor	Wu Cheng He	6	100`％`	Reelected on Jun. 11,2013
Supervisor	Li Ding Zhong	4	80`％`	Elected on Jun. 11, 2013; Resigned on Jan. 12,2015
Other mentionable items: A. Composition and responsibilities of Company supervisors: 1. Communication between supervisors and the Company's employees and shareholders: Supervisors are able to communicate with employees and shareholders through a variety of reports and communication channels. 2. Communication between supervisors and internal audit managers and external auditors: The periodic reports compiled by the internal auditors keep the supervisors informed of The Company's operational and auditing status. Supervisors can also communicate with external auditors to keep tabs on the Company's financial and operational status. B. When supervisors address the Board to express their opinion on a certain issue, the Board Meeting date, session, content of the resolution, result of the Board vote, and the Company's response to supervisor's opinion shall be properly recorded. Communications between the independent directors, the Company's Chief Internal Auditor and CPAs : None.

Note: Personal attendance rate (%) is calculated based on the actual number of meetings each director or supervisor personally attended and the number of meetings held during their term.

3-3. Corporate Governance Execution Status and Deviations from “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”

Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and reasons
	Yes	No	Description
1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE Listed Companies”?	V		The Company has established the principles and disclosed them on TWSE website.	None
2. Shareholding structure & shareholders’ rights (1) Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure? (2) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares? (3) Does the company establish and execute the risk management and firewall system within its conglomerate structure? (4) Does the company establish internal rules against insiders tradingwithundisclosedinformation?	V V V V		(1) In addition to authorizing a share transfer agent to handle related affairs, the Company has also established a comprehensive spokesperson system and investor relations team to deal with shareholder issues. (2) Through the assistance of the share transfer agent, the Company remains fully aware of its major shareholders and regularly files any changes in shareholding by directors, supervisors, or the Company management. (3) Rules are made to strictly regulate the activities between the Company and its affiliates, following government regulations and the Company's internal rules. (4) The Company has established internal rules against insiders trading with undisclosed information.	None
3. Composition and Responsibilities of the Board of Directors (1) Does the Board develop and implement a diversified policy for the composition of its members? (2) Does the company voluntarily establish other functional committees in addition to the Compensation Committee and the Audit Committee? (3) Does the company establish a standard to measure the performance of the Board, and implement it annually? (4) Does the company regularly evaluate the independence of CPAs?	V V V V		(1) The Board has a diversified principle for the composition of its members. (2) The Company will voluntarily review in the future the necessity to establish other functional committees in addition to the Compensation Committee and the Audit Committee. (3) The Company measures the performance of the Board annually and uses Compensation Committee to assist the review. (4) The Company regularly evaluate the independence of CPAs.	None
4. Does the company establish a communication channel and build a designated section on its website for stakeholders, as well as handle all the issues they care for in terms of corporate social responsibilities?	V		(1) The Company has designated appropriate departments, such as Investor Relations, spokespersons, etc., to communicate with stakeholders. Furthermore, the contact information providing access to the Company’s spokesperson and relevant departments is available on the Company’s website. (2) The Company follows TWSE rules by regularly announcing financial statements, and voluntarily announces monthly sales, so that investors, banks, and creditors understands its operation. (3) The Company encourages its employees to communicate directly with human resources department. In addition, a employee direct line and mailbox has been set up to enable them to express their views on The Company's operations. (4) The Company established 0800 Customer Services direct line to centralize communication with customers. (5) The Company will disclose Corporate Social Report to respond to stakeholders in 2015.	None
5. Does the company appoint a professional shareholder service agency to deal withshareholderaffairs?	V		The Company appoints a professional shareholder service agency to deal with shareholder affairs.	None
6. Information Disclosure (1) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? (2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system,webcastinginvestor conferences)?	V V		~~20~~ (1) The Company has a corporate website to disclose both financial standings and the status of corporate governance (2) The Company has other information disclosure channels, such as appointing designated people to handle information collection and disclosure, creating a spokesman system, uploading investor conferences presentation material onto corporate website.	None

Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and reasons
	Yes	No	Description
7. Is there any other important information to facilitate a better understanding of the corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?	V		Other important information to facilitate a better understanding of corporate governance practices include: (1) Employee rights and care: The Company holds itself responsible for having a proper work environment, and take care of employee rights. (2) Investor: The Company has in place spokesperson and investor relation function to communicate with shareholders. It also joins regularly investment conferences to enhance communication with institutional investors. (3) Stakeholder interests: The Company will disclose Corporate Social Report to respond to stakeholders interests. (4) The Company encourages its directors, supervisors, CEO, senior vice presidents, finance, accounting, and internal auditing employees to take continuous training in related professional fields. (5) The factors below are taken into account in risk management: a. Outside factors: inventory source, competitors action, economic environment, and regulations b. Internal factors: human resource changes, financial activities, employee relations, IT systems Through accounting and management system and auditing, risks are identified. Each department has risk measurement process to prevent risks. Operation level risks are controlled via internal auditing and various meetings, to ensure that targets are achieved. (6) Customer policy execution: The Company puts great emphasis on customer satisfaction, aiming to add value for customers. Also has internal audit function to ensure high-quality product and service; too has professional customer service team to make real-time response to customer needs. (7)The Company purchasedinsurance policy ofUSD10million fordirectors, supervisors, andimportant employees	None
8. Has the company implemented a self-evaluation report on corporate governance or has it authorized any other professional organization to conduct such evaluation? If so, please describe the opinion from the Board, the result of self or authorized evaluation, the major deficiencies, suggestions, or improvements.		V	The Company regularly evaluates its corporate governance practices.	The Company stands to evaluate the feasiblity of implementing a self-evaluation report.

[21 ]

3-4. Composition, responsibilities, and operation of the Compensation Committee

a. Compensation Committee Members

Position	Qualifi- cation Name	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Has over 5 years of work experience and the below professional qualifications	Number of Compensation Committee Memberships held in other public companies
		Holds the position of lecturer (or higher) at public or private college or university in business, law, finance, accounting or company operations	Holds a license, obtained through national examination, for the position of judge, district attorney, lawyer, accountant, or similar	Work experience in business, law, finance, accounting or company operations	1	2	3	4	5	6	7	8
Convenor	Lin Jun Jian												-
Committee member	Wu Meng Da												-
Committee member	Huang Zhi Yao												-

Note: For the two years prior to becoming committee members and during their term, members met the following criteria indicated with a ""
(1) Not an employee of the Company or the Company's affiliates
(2) Not a director or supervisor of the Company or the Company's affiliates. This does not apply to the independent directors of the Company, its parent company, or any of the Company's subsidiaries which the Company holds directly and indirectly over 50% stake.
(3) Not an individual shareholder who holds, or whose spouse or minor children hold, or who uses nominee accounts to hold over 1% of the Company's issued shares or is one of the top 10 shareholders.
(4) This individual's spouse, relatives within two degrees of consanguinity, and lineal relatives within five degrees also meet the criteria in the above three statements.
(5) Not a director, supervisor, or employee of an institutional shareholder that directly owns over 5% of the Company's issued shares or an institutional investor that is among the top five institutional shareholders.
(6) Not a director, supervisor, or manager of any company or organization that has business or financial relations with the Company and does not own over 5% of such a company's shares.
(7) Not an owner, partner, director, supervisor, manager or spouse of any of such individual whose sole proprietorship, partnership, company, or institution provides services or consulting advise in business, law, finance and accounting to the Company or the Company's affiliates.
(8) Does not meet any of the criteria described in Article 30 of the Company Act.

b. Operations of the Compensation Committee

(1) Compensation Committee is composed of three members.
(2) The term of office for current members runs from August 13, 2013 through June 10, 2016. As of publication of the Annual Report, there had been a total of 2 meetings of the Compensation Committee over the past fiscal year. Member attendance is detailed below:

	below:
Title	Name	Meetings Attended Personally	Meetings Attended byProxy	Personal Attendance Rate	Remarks
Convenor	Lin Jun Jian	2	0	100%	Reelected on August 13,2013
Committee member	Wu Meng Da	2	0	100%	Reelected on August 13, 2013
Committee member	Huang Zhi Yao	2	0	100%	Reelected on August 13, 2013
Other issues to be noted: 1. If the Board does not adopt or amends Compensation Committee proposals, the Board meeting date, session, session, content of the resolution, result of the Board vote, and the Company´s response to the Compensation Committee's opinion shall be properly recorded: none. 2. Should a committee member oppose or reserve their opinion regarding any decision made by the Compensation Committee and their opinion has been recorded or submitted in a written statement, the committee meeting date, session, content of the resolution, opinions of all members,and the response to the opinions shall be recorded: none.

[22]

3-5. Social Responsibility

3-5. Social Responsibility
Item	Implementation Status			Deviations from “Corporate Social Responsibility Best-Practice Principles for TWSE Listed Companies” and reasons
	Yes	No	Description
1. Corporate Governance Implementation (1) Does the company declare its corporate social responsibility policy and examine the results of the implementation? (2) Does the company provide educational training on corporate social responsibility on a regular basis? (3) Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board? (4) Does the company declare a reasonable salary remuneration policy, and integrate the employee performance appraisal system with its corporate social responsibility policy, as well as establish an effective reward and disciplinary system?	V V V V		(1) The Company declare its corporate social responsibility policy and examine the results of the implementation by disclosing Corporate Social Responsibility report. (2) The Company provides educational training on a regular basis. (3) The Company promotes social responsibility via management, public relation, customer service direct line. (4) The Company makes frequent training to make employees follow social responsibility related internal rules, and make awards and punishment accordingly.	None
2. Sustainable Environment Development (1) Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment? (2) Does the company establish proper environmental management systems based on the characteristics of their industries? (3) Does the company monitor the impact of climate change on its operations and conduct greenhouse gas inspections, as well as establish company strategies for energy conservation and carbon reduction?	V V	V	1. The Company hires professional vendors to recycle its wastes. 2. The Company follows related regulations in protecting work and natural environment.	The Company will consider to evaluate the feasibility of monitoring greenhouse gas emissions.

[23 ]

Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Corporate Social Responsibility Best-Practice Principles for TWSE Listed Companies” and reasons
	Yes	No	Description
3. Preserving Public Welfare (1) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights? (2) Has the company set up an employee hotline or grievance mechanism to handle complaints with appropriate solutions? (3) Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis? (4) Does the company setup a communication channel with employees on a regular basis, as well as reasonably inform employees of any significant changes in operations that may have an impact on them? (5) Does the company provide its employees with career development and training sessions? (6) Does the company establish any consumer protection mechanisms and appealing procedures regarding research development, purchasing, producing, operating and service? (7) Does the company advertise and label its goods and services according to relevant regulations and international standards? (8) Does the company evaluate the records of suppliers’ impact on the environment and society before taking on business partnerships? (9) Do the contracts between the company and its major suppliers include termination clauses which come into force once the suppliers breach the corporate social responsibility policy and cause appreciable impact on the environment and society?	V V V V V V V V	V	(1) The Company complies with applicable laws governing labor affairs by having related system and management rules to safeguard the legitimate interests of our employees. (2) The Company established a employee direct line and mailbox enabling communication with employees and understanding their needs. (3) The Company provides employees with a safe and healthy work environment and regularly implements safety and health education programs for employees by regularly inspecting equipments, setting standard operating procedures, making sure that operators work efficiently and safely, regularly measuring the effect of following government rules, providing yearly health inspections for employees, having safety drills together with fire stations. (4) The Company sets up a communication channel with employees and reasonably informs employees of significant changes, if any, in operations that may have an impact on them. (5) The Company provides different trainings and encourages employees to become franchisees to enjoy growth with The Company. (6) The Company has established and publicized its consumer protection policy and has established an effective and transparent consumer complaint filing procedure by having a free-call 0800 (7) The Company advertises and labels its goods and services according to relevant regulations and international standards. (8) The Company works in collaboration with its suppliers to jointly upgrade CSR by maintaining good collaboration with them and promoting CSR with them. (9) The Company chooses suppliers following related guidelines and regularly evaluates whether they breach the corporate social responsibility policy and cause major impact on the environment and society and determine whether to terminate the contracts.	The Company will consider to evaluate the feasibility of adding relevant clauses in contracts.
4. Enhancing Information Disclosure (1) Does the company disclose relevant and reliable information regarding its corporate social responsibility on its website and the Market Observation Post System (MOPS)?	V		(1) The Company will disclose Corporate Social Responsibility report on its website and the Market Observation Post System.	None
5. If the Company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the Principles and their implementation: Has not established such principles.
6. Other important information to facilitate better understanding of the company’s corporate social responsibility practices： The Company from time to time has promotions connected with social responsibility, including giving cakes to children in need. Together with family day events, making NT$600,000 donations to school building for disabled kids. Making donations to Sichuan earthquake victims. On Mother's Day's eve, making donations to single-family mothers.
7. A clear statement shall be made below if the corporate social responsibility reports were verified by external certification institutions: The Company's factory in Taichung was certified by HACCP and ISO22000, and will have its Corporate Social Responsibility report verified by external auditors.

[24 ]

3-6. Ethical corporate management at the Company and related implementation

Item			Implementation Status	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE Listed Companies
	Yes	No	Description
1. Establishment of ethical corporate management policies and programs (1) Does the company declare its ethical corporate management policies and procedures in its guidelines and external documents, as well as the commitment from its board to implement the policies? (2) Does the company establish policies to prevent unethical conduct with clear statements regarding relevant procedures, guidelines of conduct, punishment for violation, rules of appeal, and the commitment to implement the policies? (3) Does the company establish appropriate precautions against high-potential unethical conducts or listed activities stated in Article 2, Paragraph 7 of the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies?	V V	V	(1) The Company hasn’t yet put in place formal ethical corporate management rules, but assigns internal audit department to monitor honest operation policy and report to Board of Directors. (2) The Company has in place work related rules as guidelines for employees to deter unlawful behavior. (3) To ensure that ethical operation is implemented, the Company has effective accounting and internal control system which are audited by internal auditors	The Company hasn’t yet put in place formal ethical corporate management rules, but assigns internal audit department to monitor honest operation policy and report to Board of Directors.
2. Fulfill operations integrity policy (1) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts? (2) Does the company establish an exclusively (or concurrently) dedicated unit supervised by the Board to be in charge of corporate integrity? (3) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it? (4) Has the company established effective systems for both accounting and internal control to facilitate ethical corporate management, and are they audited by either internal auditors or CPAs on a regular basis? (5) Does the company regularly hold internal and external educational trainings on operational integrity?	V V V V	V	(1) The Company established evaluation mechanism for vendors and contractors to specify obligations and rights of both parties, together with confidential clauses. (2) The Company has not yet had specific CSR function, and assigns different functions with corresponding tasks on CSR. (3) With respect to conflict of interests, employees can either report to managers or senior management. (4) The Company has in place internal audit plan and it is executed by responsible functions. (5) The Company makes frequent training to make employees follow ethical guidelines.	The Company will consider to evaluate the feasibility of assisgning specific CSR function.
3. Operation of the integrity channel (1) Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up? (2) Does the company establish standard operating procedures for confidential reporting on investigating accusation cases? (3)Does the company provideproper whistleblowerprotection?	V V V		(1) The Company has in work related rules whistle blowing information and punishment and assigns related personnel for follow-up. (2) The Company has procedures for employee complain which describe related process and confidentiality. (3) The Company protects interested parties in the whistle blowing process to reduce the possibilityof anyharm to related employees.	None
4. Strengthening information disclosure (1) Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?		V	(1) The Company hasn't yet disclosed its ethical corporate management policies and the results of its implementation on the company’s website or MOPS.	The Company will evaluate the necessity of strengthening.

[25 ]

If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE Listed Companies, please describe any discrepancy between the policies and their implementation: Has not established such policies.
Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies): none.
3-7. Disclosure of corporate governance principles: The Company has established the principles based on “ Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” and disclosed them on TWSE website.
3-8. Other important information to facilitate better understanding of the Company’s corporate governance practices: None

[26 ]

3-9. During the most recent year and as of the date of publication of the Annual Report, any disciplinary measures taken against the Company or its internal staff due to violations of legal requirements or taken by the Company against its own staff due to violations of the internal control system. The details of the disciplinary measures, major faults, and improvement measures should be noted: None.
3-10. Major resolutions voted on at Shareholder and Board Meetings during the most recent year and as of the date of publication of the Annual Report:
a. Major resolutions voted on by the Shareholders' Meeting (The following resolutions have been implemented)

During 2014 and this year as of the date of publication of the Annual Report, one General Shareholders' Meeting was held. The annual General Shareholders' meeting was held on June 06, 2014. The below resolutions were voted on at the meeting:

（ 1 ） To approve 2013 business report and consolidated financial statements
- Result: Approval of the financial report for 2013: including business report and financial statements.
（ 2 ） To approve 2013 profit distribution proposal
- Result: The resolution was approved and implemented.
（ 3 ） To amend the Article of Association of the Company
- Result: The above resolution was approved by the Shareholders' Meeting.
（ 4 ） To amend the Rules of Procedure for Board of Directors Meeting of the Company
- Result: The above resolution was approved by the Shareholders' Meeting.
（ 5 ） To amend the Regulations Governing the Acquisition and Disposal of Assets of the Company Result: The above resolution was approved by the Shareholders' Meeting.
（ 6 ） To amend the Guidelines for Lending of Capital of the Company
- Result: The above resolution was approved by the Shareholders' Meeting.
b. Board of Directors

2014.03.12 resolution:

（ 1 ） To approve 2013 Business Report and Consolidated Financial Statements
（ 2 ） To approve Matters regarding 2014 General Meeting
（ 3 ） To approve amendment of the Article of Association of the Company
（ 4 ） To approve amendment of the Rules of Procedure for Board of Directors Meeting of the Company
（ 5 ） To approve amendment of the Regulations Governing the Acquisition and Disposal of Assets of the Company
（ 6 ） To approve 2013 profit distribution proposal
（ 7 ） To approve matters for cash dividend distribution
（ 8 ） To approve 2013 internal control system declaration
（ 9 ） To approve authorization of representative in trademark registration and maintenance
（ 10 ） To approve lending to U.S. subsidiary Perfect 85 Degrees C, INC.
（ 11 ） To approve lending to U.S. subsidiary Winpin 85 Investments, Inc.
（ 12 ） To approve loans of China subsidiaries

[27]

（ 13 ） To approve China Subsidiary, He-Shia (Shanghai) Food and Beverage Management Limited lends money to Shenyang 85 Food & Beverage Management Limited
（ 14 ） To approve China Subsidiary, He-Shia (Nanjing) Food and Beverage Management Limited lends money to Sheng Pin (Xiamen) Food Limited
（ 15 ） To approve China Subsidiary, He-Shia (Nanjing) Food and Beverage Management Limited lends money to Shenzhen 85 Food & Beverage Management Limited
（ 16 ） To approve Banking Facility Application

2014.05.14 resolution:

（ 1 ） To approve 2014 First Quarter Financial Statements Report
（ 2 ） To approve The Amendment to the Internal Control System
（ 3 ） To approve China Subsidiary, He-Shia (Shanghai) Food and Beverage Management Limited, lends money to Zhejiang 85 Food & Beverage Ltd.
（ 4 ） To approve 2014 Directors', Supervisors' and Managers' Compensation

2014.08.06 resolution:

（ 1 ） To approve 2014 Second Quarter Financial Statements Report

2014.11.05 resolution:

（ 1 ） To approve 2014 Third Quarter Financial Statements Report
（ 2 ） 2015 Internal Audit Plan
（ 3 ） To approve banking facility application by The Company
（ 4 ） To approve changes to the banking facility
（ 5 ） To approve The Rules for Managers' Year-End Bonus

2015.01.05 resolution:

（ 1 ） To approve The Amendment to the Internal Control System
（ 2 ） To approve authorization of officer for banking facility documents execution and delivery
（ 3 ） To approve banking facility application by The Company
（ 4 ） To approve Taiwan Subsidiary, Comestibles Master Co., Ltd., lends money to Mei Wei Master Co., Ltd. and 85 Degree Co., Ltd.
（ 5 ） To approve lending money to US subsidiary, Perfect 85 Degrees C, INC.
（ 6 ） To approve Hong Kong Subsidiary, Profit Sky International Limited, lends money to Wincase Limited

2015.03.11 resolution:

（ 1 ） To approve 2014 Business Report and Consolidated Financial Statements
（ 2 ） To approve Matters regarding 2015 General Meeting
（ 3 ） To approve amendment of the Article of Association of the Company
（ 4 ） To approve 2014 profit distribution proposal
（ 5 ） To approve matters for cash dividend distribution
（ 6 ） To approve 2014 internal control system declaration
（ 7 ） To approve loans of China subsidiaries
（ 8 ） To approve lending to Hong Kong Subsidiary, Wincase Limited

[28]

3-11. Differing opinions in records or written statements from directors or supervisors regarding important resolutions made by the Board in the most recent year and through the publication of the Annual Report: None
3-12. Resignation or dismissal of Chairman, CEO, or accounting, finance, internal auditing, or R&D managers in the most recent year and through the publication of the Annual Report:

Title	Name	Begin of Term	End of Term	Reason
CEO	James Hsieh	2013.01.01	2015.04.01	Adjustment

3-13. Company procedures for processing material information: The Company has established procedures for processing material information

4. External audit fees

Unit: NT$1,000

Audit Firm	Auditor Names	Audit Fees	Non-Audit Related Fees	Non-Audit Related Fees	Non-Audit Related Fees	Non-Audit Related Fees	Non-Audit Related Fees	Audit Period	Notes
			System Design	Business Registration	Human Resources	Other	Subtotal
Deloitte	Hsieh Ming Zhong, Li Lee Huang, etc.	10,748		921			921	Fiscal Year 2014	-

5. Changing of auditors: None

If the Company's Chairman, CEO, or managers responsible for financial and accounting affairs have held any position in the accounting firm or its affiliates during the past year, all relevant information should be disclosed: None

[29]

Net Change in shareholdings and in shares pledged by directors, supervisors, management, and shareholders holding more than a 10% share in the Company

7-1. Recent changes

Unit: Shares

				Unit: Shares	Unit: Shares
		2014		As of April 30,2015
Title	Name	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Chairman	Wu ChengHsueh	-	-	-	-
CEO`（`Note 1`）`	Wu ChengHsueh	-	-	-	-
CEO`（`Note 1`）`	James Hsieh	-	-	`（`9,000`）`	-
Director	Henderson I Yield Growth Limited	-	-	-	-
	Representative: Sun Wu Liang	-	-	-	-
Director	Infinity Emerging Markets Limited	-	-	-	-
	Representative`：` Zhang Ji Wen	`（`1,086,000`）`	-	221,000	-
Director	James Hsieh	-	-	-	-
Independent director	Wu MengDa	-	-	-	-
Independent director	Lin Jun Jian	-	-	-	-
Independent director	JiangJiaQiang	-	-	-	-
Supervisor	Lian Chun Zhong	-	-	-	-
Supervisor	Wu ChengHe	-	-	-	-
Supervisor`（`Note 2`）`	Li DingZhong	-	-	-	-
Product Development Head	Zheng Ji Long	`（`1,000,000`）`	-	1,000,000	-
Head of Overseas Business	Yin Zi Li	-	-	-	-
Finance and Accounting Vice President	Michelle Hsieh	`（`65,896`）`	-	21,000	-
Internal Audit Manager	Zhang Ci Wen	-	-	-
Major shareholder	Infinity Emerging Markets Limited	-	-	-	-
Major shareholder	Wu ChengHsueh	-	-	-	-

Note 1: Wu Cheng Hsueh 's term began on Apr. 01, 2015; James Hsieh's term ended on Apr. 01, 2015. Note 2: Li Ding Zhong's term ended on Jan. 12, 2015.

7-2. Shares trading information: Not applicable

7-3. Shares pledge information: None

[30]

8. Information Disclosing the Relationship between any of the Company’s Top Ten Shareholders

	April 10,2015	April 10,2015	April 10,2015	April 10,2015	April 10,2015	April 10,2015	April 10,2015	April 10,2015	April 10,2015
Name	Shareholding		Spouse & Minor		Shareholding by Nominee Arrangement		The relationship between any of the Company’s Top Ten Share holders		NOTES
	Shares	%	Shares	%	Shares	%	Name	Relation
Infinity Emerging Markets Limited Responsible Person: Wu ChengHsueh	32,394,635	22.96%	-	-	-	-	Wu Cheng Hsueh, Henderson I Yield Growth Limited	Same Chairman
							Zhang Hua Ting	Chairman spouse
Wu Cheng Hsueh	20,214,898	14.32%	8,812,275	6.24%	-	-	Infinity Emerging Markets Limited, Henderson I Yield Growth Limited	Same Chairman
							Zhang Hua Ting	Spouse
Henderson I Yield Growth Limited Responsible Person: Wu ChengHsueh	12,477,825	8.84%	-	-	-	-	Wu Cheng Hsueh, Infinity Emerging Markets Limited	Same Chairman
							Zhang Hua Ting	Chairman spouse
CathayLife Insurance	6,257,000	4.43%	-	-	-	-	-	-
Buena Vista Opportunities Master Fund Ltd.	6,176,600	4.38%	-	-	-	-	-	-
Zhang Hua Ting	3,795,902	2.69%	25,231,271	17.88%	-	-	Wu ChengHsueh	Spouse
							Infinity Emerging Markets Limited, Henderson I Yield Growth Limited	Spouse being the responsible person of The Company
Supreme Merit Investment limited	3,396,431	2.41%	-	-	-	-	-	-
Karst Peak Asia Master Fund	2,920,950	2.07%	-	-	-	-	-	-
Saudi Arabian Monetary Agency	2,810,000	1.99%	-	-	-	-	-	-
Nan Shan Life Insurance	2,510,000	1.78%

[31 ]

9. Company director, supervisor, and manager direct and indirect ownership of shares in affiliated enterprises

affiliated enterprises
	December 31,2014 Units: Shares;%
Affiliated Enterprises	Company Investment		Direct or Indirect Ownership by Directors, Supervisors, and Managers		Total Ownership
	Shares	%	Shares	%	Shares	%
85 Degree Co.,Ltd.	12,899,078	100	-	-	12,899,078	100
Prime Scope TradingLimited	46,742,963	100	-	-	46,742,963	100
Perfect 85 Degrees C,Inc.	5,301,000	100	-	-	5,301,000	100
85 Degrees Café International Pty. Ltd.	1,785,000	51	-	-	1,785,000	51
Golden 85 Investments,LLC	Note	65	-	-	Note	65
LuckyBakeryLimited	5,500,000	100	-	-	5,500,000	100
WinPin 85 Investments,Inc.	8,800,000	100	-	-	8,800,000	100
Profit SkyInternational Ltd.	Note	100	-	-	Note	100
Wincase Limited	Note	100	-	-	Note	100
Worldinn Limited	Note	100	-	-	Note	100
Comestibles Master Co.,Ltd.	17,054,268	100	-	-	17,054,268	100
Mei Wei Master Co.,Ltd.	22,060,600	100	-	-	22,060,600	100
Mei Wei Fu XingLtd.	Note	60	-	-	Note	60
Shanghai Gourmet Master Food & Beverage Ltd.	Note	100	-	-	Note	100
He-Shia Food & Beverage Ltd.	Note	100	-	-	Note	100
Sheng-Pin(Hangzhou)Food Ltd.	Note	100	-	-	Note	100
He-Shia(Nanjing)Food & Beverage Ltd.	Note	100	-	-	Note	100
Beijing85 Food & Beverage Ltd.	Note	100	-	-	Note	100
Zhejiang85 Food & Beverage Ltd.	Note	100	-	-	Note	100
Sheng-Pin(Beijing)Food Ltd.	Note	100	-	-	Note	100
Fuzhou 85 Food & Beverage Ltd.	Note	100	-	-	Note	100
Sheng-Pin(Shanghai)Food Ltd.	Note	100	-	-	Note	100
Mai-Jai(Shanghai)Food Ltd.	Note	100	-	-	Note	100
Shanghai Howco Jing Way Food & Beverage Ltd.	Note	100	-	-	Note	100
Shenzheng85 Food & Beverage Ltd.	Note	85	-	-	Note	85
Sheng-Pin(Jiangsu)Food Ltd.	Note	100	-	-	Note	100
Chengdu 85 Food & Beverage Ltd.	Note	100	-	-	Note	100
Sheng-Pin(Shenzheng)Food Ltd.	Note	100	-	-	Note	100
Sheng-Pin(Xiamen)Food Ltd.	Note	100	-	-	Note	100
Sheng-Pin(Qingdao)Food Ltd.	Note	100	-	-	Note	100
Xiamen 85 Food & Beverage Ltd.	Note	100	-	-	Note	100
Shenyang85 Food & Beverage Ltd.	Note	100	-	-	Note	100
Sheng-Pin(Shenyang)Food Ltd.	Note	100	-	-	Note	100
85 Degree (Qingdao) Food & Beverage Management Ltd.	Note	100	-	-	Note	100
Sheng-Pin(Wuhan)Food Ltd.	Note	100	-	-	Note	100
Wuhan JingWayFood & Beverage Ltd.	Note	100	-	-	Note	100
Jianxi JingWayFood & Beverage Ltd.	Note	100	-	-	Note	100
Jin Wei Industrial(Shanghai)Ltd.	Note	100	-	-	Note	100
Guangzhou 85 Degree Food & Beverage Management Ltd.	Note	100	-	-	Note	100
Qingdao Jie Wei Food & Beverage Management Ltd.	Note	100	-	-	Note	100
85 Degree(Jiangsu)Food Ltd.	Note	100	-	-	Note	100
Mai-Jai(Chengdu)Food Ltd.	Note	100	-	-	Note	100
Jai DingJingWayFood & Beverage Ltd.	Note	100	-	-	Note	100
The Hot Pot Food and Beverage Management Co.,Ltd.	5,784,050	23	-	-	5,784,050	23

Note: Affiliated enterprises in the form limited company do not issue shares.

[32]

04. Capital Overview

1. Capitalization

1-1. Shares issued

Date	Par Value	Authorized Capital	Authorized Capital	Paid-In Capital	Paid-In Capital	Notes	Notes	Notes
		Shares	Amount	Shares	Amount	Source of Capital	Capital Expansion by Assets Other Than Cash	Ot h e r
2008.09.26	US$1/share	1	US$1(dollar)	1	US$1(dollar)	Establish	-	-
2008.12.30	US$1/share	13,000	US$13,000	12,899	US$12,899	Reissue	-	-
2009.08.20	US$1/ share	50,000	US$50,000	13,869	US$13,869	Cash capital increase	-	-
2009.10.05	US$1/ share	50,000	US$50,000	14,153	US$14,153	Cash capital increase	-	-
2009.12.31	US$1/ share	50,000	US$50,000	21,464	US$21,464	Capital increase from reserve	-	-
2010.01.18	NT$10 / share	850,000	NT$8,500,000	70,012	NT$700,123	US$ par value turned to NT$	-	-
2010.05.20	NT$10 / share	850,000	NT$8,500,000	113,750	NT$1,137,500	Capital increase from earnings	-	-
2010.11.18	NT$168 / share	850,000	NT$8,500,000	128,000	NT$1,280,000	Cash capital increase	-	Note 1
2011.09.01	NT$10 / share	850,000	NT$8,500,000	134,400	NT$1,344,000	Capital increase from earnings	-	Note 1
2012.07.18	NT$10 / share	850,000	NT$8,500,000	141,120	NT$1,411,200	Capital increase from reserve	-	Note 1

Note 1: Oct. 26, 2010 Approval Letter Chin-Kuan-Cheng-Fa-Tzu No. 0990058242 on file. Note 2: Aug. 19, 2011 Approval Letter TWSE Tai- Cheng-Son-2-Tzu No. 10000277601 on file. Note 3: Jul. 11, 2012 Approval Letter TWSE Tai- Cheng-Son-2-Tzu No. 1010014751 on file.

	Unit: 1,000 shares	Unit: 1,000 shares	Unit: 1,000 shares	Unit: 1,000 shares
Share Type	Authorized Capital			Notes
	Issued Shares	Un-issued Shares	Total Shares
Common Stock, Inscribed	141,120	708,880	850,000	Publicly Traded

[33]

1-2. Shareholder structure

April 10, 2015

						April 10,2015
Tpye Amount	Government Agencies	Financial Institutions	Other Juridical Person	Natural Persons	Foreign Institutions & Natural Persons	Total
Number of Shareholders	0	3	29	2,374	137	2,543
Shares Held	0	8,787,000	5,533,747	40,376,673	86,422,580	141,120,000
Percentage	0	6.23%	3.92%	28.60%	61.25%	100%

1-3. Shareholding Distribution Status

Par value NT$10/April 10,2015	Par value NT$10/April 10,2015	Par value NT$10/April 10,2015	Par value NT$10/April 10,2015
Class of Shareholding (Unit : Share)	Number of Shareholders	Shareholding (Shares)	Percentage
1~999	455	44,523	0.03
1,000~5,000	1,727	3,027,035	2.15
5,001~10,000	149	1,116,376	0.79
10,001~15,000	39	480,070	0.34
15,001~20,000	27	488,992	0.35
20,001~30,000	28	696,820	0.49
30,001~40,000	13	468,542	0.33
40,001~50,000	8	376,936	0.27
50,001~100,000	33	2,426,777	1.72
100,001~200,000	17	2,416,157	1.71
200,001~400,000	9	2,636,514	1.87
400,001~600,000	7	3,620,925	2.57
600,001~800,000	4	2,860,124	2.03
800,001~1,000,000	5	4,530,358	3.21
More than 1,000,001	22	115,929,851	82.14
Total	2,543	141,120,000	100.00

[34 ]

1-4. Major shareholders

Shares Shareholders	Shares	Percentage
Infinity Emerging Markets Limited	32,394,635	22.96%
Wu Cheng Hsueh	20,214,898	14.32%
Henderson I Yield Growth Limited	12,477,825	8.84%
Cathay Life Insurance	6,257,000	4.43%
Buena Vista Opportunities Master Fund Ltd.	6,176,600	4.38%
Zhang Hua Ting	3,795,902	2.69%
Supreme Merit Investment limited	3,396,431	2.41%
Karst Peak Asia Master Fund	2,920,950	2.07%
Saudi Arabian Monetary Agency	2,810,000	1.99%
Nan Shan Life Insurance	2,510,000	1.78%

1-5. Market Price, Net Worth, Earnings, and Dividends per Share

Item	Year	Year	2013	2014	As of March 31, 2015
Market Price per Share	Highest		240	271	177
	Lowest		143	160	130
	Average		190	219	152
Net Worth per Share	Before Distribution		43.96	47.65	48.63
	After Distribution		42.66	`（`Note`）`	-
Earnings per Share	Weighted Average Shares (thousand shares)		141,120	141,120	141,120
	EPS	(Undiluted)	4.07	3.74	1.34
		(Diluted)	-	`（`Note`）`	-
Dividends per Share	Cash Dividends		1.3	`（`Note`）`	-
	Stock Dividends from Retained Earnings		-	-	-
	Stock Dividends from Capital Surplus		-	-	-
	Accumulated Undistributed Dividends		-	-	-
Return on Investment	Price/Earnings Ratio		46.68	58.56	113.43
	Price/Dividend Ratio		146.15	`（`Note`）`	-
	Cash Dividend Yield Rate		0.68%	`（`Note`）`	-

Note : The earnings distributions for 2014 have not yet been approved by the Shareholders' Meeting.

[35]

1-6. Dividend policy and implementation

a. Dividend policy: The Company may by an Ordinary Resolution declare dividends but no dividend shall exceed the amount recommended by the directors. The Board shall set aside out of the net profits of the Company (if any) for each financial year: (i) a reserve for payment of tax for the relevant financial year; and (ii) an amount to offset all accumulated losses; and after the aforesaid sums are set aside from the profits for such relevant financial year, the Board shall, before recommending any dividend, set aside 10% of the remaining profits of the Company for the relevant financial year as a reserve. Subject to the aforesaid, the Board may distribute the retained earnings for the relevant financial year not set aside for any specific purpose if any, according to the following manner:
- (1) up to 3% as bonus to employees, including employees of a subsidiary of the Company;
- (2) up to 1% as remuneration for the directors and supervisors; and
- (3) no less than 30% of the remaining profits after tax as dividends, provided to the extent that the Company has sufficient available funds, cash dividends shall not be less than 10% of the total amount of cash dividends and stock dividends.
b. The distribution of 2014 earnings approved by the Board of Directors will be submitted to the 2015 Annual Shareholder's Meeting for approval.
1-7. Impact on the Company's operating performance and EPS of the stock dividend proposed at the Shareholders' Meeting: None
1-8. Employee bonuses and director and supervisor remuneration
a. Bonus to employees shall not exceed 3%, and remuneration for the Directors and Supervisors shall not exceed 1%, of net profits after offsetting all accumulated losses and setting aside 10% of the remaining profits as a reserve.
b. Accounting treatment of discrepancy between the estimate of employee bonuses and remuneration for directors and the supervisors and the actual amount paid out: N/A
c. Discrepancy between the estimate of employee bonuses and remuneration for directors and the supervisors and the actual amount paid out: N/A
d. The amount of any proposed distribution of employee stock bonuses, and the size of such an amount as a percentage of the sum of the after-tax net income and total employee bonuses: N/A
e.The effect upon imputed earnings per share of any proposed distribution of employee bonuses and director/supervisor compensation: N/A
f. The actual distribution of employee bonuses and director/supervisor compensation for the previous fiscal year, and, if there is any discrepancy between the actual distribution and the recognized employee bonuses and director/supervisor compensation, additionally the discrepancy, cause, and how it is treated: N/A

1-9. Share buyback: None

Status of corporate bonds, preferred shares, GDR, employee stock option plans, mergers, acquisitions, spin-offs, and employee restricted stock plans: N/A
Status of capital utilization plan
Any incomplete share issuance or private placement or any completed share issuance or private placement over the past three years from which benefits have not yet been reported: None

[36]

05. Operational Highlights

1. Business Activities

1-1. Business Scope

a. Main areas of business operations

Production and selling of coffee, tea, and bakery, 85C being the brand name of chain stores.

b. Revenue distribution

Unit: NT$ 1,000

Product Category	2013	2013	2014	2014
	Amount	%	Amount	%
Cake	5,308,791	35.12`％`	6,274,571	28.02`％`
Bread	5,423,622	35.89`％`	6,591,746	35.01`％`
Beverage	4,288,168	28.37`％`	5,020,383	36.78`％`
Others	93,753	0.62`％`	34,536	0.19`％`

c. Current products and service

Current main products include the following

Product	Item
Cake	World Champion Series, Birthday cakes, delicacy cakes, cake rolls, specialty cakes
Bread	Toast, Taiwanese/Japanese/European/Danish bread, sandwiches, donuts
Beverage	Coffee, tea, milk tea, smoothies, shakes, juice
Others	Pineapple cakes, nougats, egg rolls, gift boxes

d. New products development

(1) Major new products in development in Taiwan, China, Australia, and the U.S.

Cakes

i. Watery rhythm cakes

ii. Heart-melting puffs

iii. Limited-season cakes, e.g. strawberry, taro, etc

iv. Other traditional festive products and gift boxes, e.g. Mid-Autumn, Chinese New Year, etc.

Bread

i. Yudane series
ii. BRIC toast

iii. Toast of ice and fire

iv. Expansion in European/Danish items

Drinks

i. Tiramisu smoothie

ii. Ice creams of different flavors

iii. Shake coffee

iv. Fruit tea

(2) New store format, with more seating area, better interior, and more delicate products

(3) More non-cash payment method, such as prepaid cards and mobile payment

(4) E-commerce, to explore more online-offline business

[37]

1-2. Main Competitors in Different Region

Region	Type	Name
Taiwan	Coffee and dining chain	Starbucks
		Dante Coffee
		Barista Coffee
		Mr. Brown Coffee
		Ikari Cafe
	Convenient stores	7-11
		FamilyMart
		Hi-life
China	Coffee and dining chain	Starbucks
		Costa Coffee
		MAAN COFFEE
		UBC Coffee
		DIO Coffee
	Bakery	BreadTalk
		Paris Baguette
		Ichido
		Christine
United States	Coffee and dining chain	Starbucks
		The Coffee Bean & Tea Leaf
		Peet’s Coffee & Tea
	Bakery	Penera Bread
		Paris Baguette
		Einstein Bros Bagels

[38]

1-3. Technology and R&D

a. R&D Expense in recent years

		Unit: NT$1,000
Item	2014	2015,as of March 31
R&D Expense	35,868	10,321
Sales	17,921,236	4,775,696
Percentage	0.20%	0.22%

b. Technology or Product Successfully Developed

Primary R&D office is located in Taiwan, while China and U.S. has their own R&D teams
to do research on local tastes; some important results are as below.

`◎` Taiwan

Year	Product	Item
	Cake	Wateryrhythm,Heart-melting puffs,magic flora,choco forest
2014	Bread	Japanese crème roll, pumpkin mochi,citrus cranberry
	Beverage	Latte smoothie,mango smoothie, jade lemon,ice cream

`◎` Mainland China

Year	Product	Item
		Mahjong cake, code of true love, heart-shaped valentine,
	Cake
		macaroon hazelnut

2014	Bread	European butter,bacon egg panini, pocket bread, pork sandwich
		Shake coffee, white gourd lemon, mango milk, berry levitation
	Beverage
		latte

`◎` U.S. and Australia

Year	Product	Item
		Pumpkin roll, green tea red bean cake, choco banana mousse, pink
	Cake
		valentine

		Yudane, turandot cranberry, red wine cheese, sandwich from
2014	Bread
		down under,taro toast

		Brown sugar red bean custard milk tea, mango herbal tea, Q-plus
	Beverage
		milk tea,fruitysmoothie

1-4. Short and mid-to-long-term operating strategies

a. Short-term

Roll out new format stores, and strengthen the brand image
Optimize store and back office IT infrastructure, to enhance real-time analysis
Maintain R&D capacity, solidify standardization via knowledge management to assist future store expansion.
Optimize menu items, rev up the supply of best-selling items and lower wastage rate

b. Mid-to-long-term

Expand into other markets and become international brands
Bring in more international talents.
Utilized mobile commerce and create new business.

[39]

2. Market analysis and merchandise

2-1. Market analysis

a. Main product (service) sales areas

Unit: NT$ 1,000

			Unit: NT$1,000	Unit: NT$1,000
Area	2013		2014
	Amount	%	Amount	%
China	10,948,763	72.44%	12,933,689	72.17%
Taiwan	3,228,781	21.36%	3,028,661	16.90%
United States	768,384	5.08%	1,774,290	9.90%
Others	168,406	1.12%	184,596	1.03%
Total	15,114,334	100.00%	17,921,236	100.00%

b. Market share

Estimated market size of coffee and bakery in Taiwan and China, and market share of the Company

Unit: NT$

				Unit: NT$	Unit: NT$	Unit: NT$
	Taiwan			China
	Market Size	85C sales in 2014	85C market share	Market size	85C sales in 2014	85C market share
Coffee	20 billion	1.96 billion	9.8%	50 billion	0.94 billion	1.9%
Bakery	60 billion	1.93 billion	3.2%	500 billion	9.81 billion	2.0%

Source: The Company, Euromonitor, International Coffee Organization, Bakery Association

c. Competitive edge
Brand recognition in multiple markets and nations
Channel scale economics in sales and procurement
Multiple product categories and cross-selling
Systemized R&D, production, and selling for changing market needs
Ample resources for group companies to share
d. Positive and negative factors for future growth and strategic responses

Positive factors:

Stable coffee market growth in Taiwan; high growth potential in China thanks to urbanization
Consumer prefer on-site baking for health factor
Wide-spread smart phones bring consumer experience outside of brick-and-mortar stores

Negative factors and strategic responses:

Consumer tastes change fast
Response: better market survey and R&D capacity
Standardization of bakery production isn't easy
Response: Implementation of SOP, better training, and investment in automation
Changes in material costs
Response: Long-term contracts and hedge measures

[40]

2-2. Key purpose of major products and the production process

a. Key purpose of major products

Majorproducts	Key purpose
Beverage, cakes,bread	For sales in coffee chain stores to consumer consumption

b. Production process

Research, developmen t, tests		Pilot runs in central kitchen		Pilot runs in stores and survey		Production in central kitchen		Sales in stores

==> picture [441 x 135] intentionally omitted <==

2-3. Supply of raw materials

pply of raw materials
Raw Material	Supplier	SupplyCondition
Coffee beans	MT Corp.,MB Corp.	Good
Milk	WC Corp.,TN Corp.	Good
Crème	TD Corp.,SA Corp.	Good
Eggs	TG Corp.,OV Corp.	Good
Flour	TF Corp., DC Corp.	Good

2-4. Major clients/suppliers

a. Information on major suppliers who have accounted for at least 10% of sales/procurement in either of the past two years: None
b. Information on major clients who have accounted for at least 10% of sales/procurement in either of the past two years: None

[41]

2-5. Production over the past two years

Unit: NT$ 1,000; Single item

				Unit: NT$1,000;Single item	Unit: NT$1,000;Single item	Unit: NT$1,000;Single item
Year Output Major Products	2013 Capacity Quantity Amount			2014
		Quantity	Amount	Capacity	Quantity	Amount
Bread	201,239,343	156,728,664	1,897,686	204,961,476	160,984,078	2,086,010
Cake	266,151,734	224,761,783	2,203,555	280,648,129	218,642,281	2,623,973
Coffee	1,091,040	839,279	136,088	1,292,520	829,100	117,290
Total	468,482,117	382,329,726	4,237,329	486,902,125	380,455,459	4,827,273

Analysis: Bread production increased because of growing business in China and the U.S., while cake production absolute quantity did not, because product adjustment led to changes in units. Coffee production in 2013 is higher than in 2014 because production was ramped up end 2013 to supply for strong Chinese New Year holidays early 2014.

2-6. Shipments and sales over the last two years

Unit: NT$ 1,000; Single item

					Unit: NT$1,000;Single item	Unit: NT$1,000;Single item	Unit: NT$1,000;Single item	Unit: NT$1,000;Single item
Year Shipments & Sales Major Products	2013				2014
	Local		Export		Local		Export
	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
Bread	115,322,322	4,976,363	2,805,433	332,428	108,761,888	5,642,953	5,325,750	631,618
Cake	162,465,891	4,965,414	9,289,574	458,208	175,416,631	5,624,850	17,776,723	966,896
Coffee	100,847,066	4,142,014	1,723,550	146,154	111,271,830	4,660,011	4,083,464	360,372
Others	268,205	93,753	-	-	86,190	34,536	-	-
Total	378,903,484	14,177,544	13,818,557	936,790	395,536,539	15,962,350	27,185,937	1,958,886

Note: export refers to sales to regions outside of China and Taiwan.

Analysis: Business and operating regions have expanded, so have shipments and sales.

3. Personnel information

Unit: Headcount; %

				Unit: Headcount;%
	Year	2013	2014	As of April 30, 2015
No. of Employees	Management	258	261	261
	Production Line Workers	2,144	2,203	2,196
	General Staff	1,683	1,718	1,711
	Store Employees	8,030	9,240	9,213
	Part-Time	8,997	9,145	8,328
	Total	21,112	22,567	21,709
	Average Age	23.25	24.04	24.56
Average Years of Service		1.68	1.22	1.18
Education Level (as a % of the total)	PhD	0.01`％`	0.01`％`	0.01`％`
	Master	0.11`％`	0.24%	0.24%
	Bachelors	33.74`％`	38.15%	37.96%
	High School or Below	66.14`％`	60.64%	59.47%

[42]

4. Environmental protection expenditure

4-1. Due to breaches of Related Law, total punishment amount: None
4-2. Future Response and probable expenditure: None

5. Labor relations

5-1. Employee benefit plans, continuing education, training, retirement systems, and the status of their implementation, and the status of labor-management agreements and measures for preserving employees' rights and interests

a. Employee benefits

The Company and its affiliates jointly review, revise, and integrate their HR systems to build a robust talent pool and career planning systems for the group. The result is an environment that facilitates a fair and reasonable development of in-house talents.

The Company established the Employee Benefit Committee. The Committee regularly hosts a variety of activities, organizes health check-ups for employees, and provides other benefits such as subsidies for on-the-job training, a flexible benefit program, club subsidies, discount purchasing, wedding and funeral allowances, dormitories, group insurance, employee travel allowances, and other benefits provided by Employee Benefits Committee to meet the needs of employees.

The Company provides an incentive program to encourage its employees to become franchisees so that they can grow and develop with the Company.

b. Training and development

and development	and development	and development
Internal Training by Operation Department			Internal Training by Logistics Department			External Training
Training Sessions	Number of Trainees	Hours of Training	Training Sessions	Number of Trainees	Hours of Training	Number of Trainees	Hours of Training
27	703	56	33	774	112	133	50

c. Retirement plan

Retirement policy is set according to the Labor Pension Act of the Republic of China. With the Company’s sound financial system, it ensures employees a solid pension contribution and payments, which encourages employees to set long-term career plans and raises their commitment. Other regions follow local laws in retirement scheme design.

d. Labor-management negotiations

Aside from a service line manned by HR, the Company has established procedures to facilitate communications among employees regarding a range of issues at work and at home, to exchange ideas, and provide feedback to the Company.

5-2. Losses due to labor disputes

The Company provides employees with a comprehensive benefit system, quality working environment, and open communications channels. Therefore, no major labor disputes have occurred and no significant losses have been reported.

[43]

5-3. Work environment and safety

a. The Company provides its employees with a safe and harmonious workplace that encourages positive interactions between male and female employees. To best ensure employee rights and interests, the Company has defined a set of related policies.
b. Established the health and safety procedures to review and implement health and safety affairs
c. Regularly holds an occupational safety promotion event to remind employees of the importance of work safety and encourage them to stay aware of any safety hazards.

6. Important Contracts

Agreement	Counterparty	Period	Major Contents	Restrictions
Equity investment	The Company Company B	Apr. 15, 2007	To expand in the U.S., the Company entered joint venture with Company B to establish Golden 85 Investments,Inc.	Confidentiality
Trademark authorization	Comestibles Master Co., Ltd. Golden 85 Investments,Inc.	Apr. 15, 2007	Comestibles Master Co., Ltd. authorized Golden 85 Investments, Inc. to use trademark.	Confidentiality
Equity investment	The Company Company A	Jun. 01, 2007	To expand in Australia, the Company entered joint venture with Company A to establish 85 Degrees Café International Pty. Ltd.	Confidentiality
Trademark authorization	Comestibles Master Co., Ltd. 85 Degrees Café International Pty. Ltd.	Jun. 01, 2007	Comestibles Master Co., Ltd. authorized 85 Degrees Café International Pty. Ltd. to use trademark.	Confidentiality
Technical service and trademark use permission	The Company Comestibles Master Co., Ltd. Company C Lucky Bakery Limited	Jul. 06, 2011	Taiwan subsidiary authorized Profit Sky International Ltd. to use trademark. The Company and Comestibles Master Co., Ltd. agreed to provide technical assistance.	Confidentiality
Construction	85 Degree (Jiangsu) Food Ltd. CompanyD	Dec. 20, 2013	Kitchen Construction	None

[44]

06. Financial Information

1. Five-Year Financial Summary

1-1. Condensed Balance Sheet and Income Statement

a. Condensed Balance Sheet-IFRS

Unit: NT$ 1,000

							Unit: NT$ 1,000
Year Item		Five-Year Financial Summary					As of March 31, 2015 (Note 1)
		2010	2011	2012	2013	2014
Current assets		-	-	4,308,009	3,995,179	3,766,882	4,116,808
Property, plant and equipment		-	-	3,397,262	3,899,390	4,922,226	5,049,770
Intangible assets		-	-	24,855	74,355	75,936	80,037
Other assets		-	-	832,880	859,515	1,057,711	1,214,613
Total assets		-	-	8,563,006	8,828,439	9,822,755	10,461,228
Current liabilities	Before distribution	-	-	2,258,163	2,437,804	2,907,532	2,789,111
	After distribution	-	-	2,963,763	2,621,260	2,907,532	2,789,111
Non current	liabilities	-	-	71,225	116,481	140,148	758,016
Total liabilities	Before distribution	-	-	2,329,388	2,554,285	3,047,680	3,547,127
	After distribution	-	-	3,034,988	2,737,741	3,047,680	3,547,127
Equity attributable to owners of The Company		-	-	6,108,932	6,202,970	6,723,893	6,862,601
Capital		-	-	1,411,200	1,411,200	1,411,200	1,411,200
Capital reser	ve	-	-	2,681,126	2,681,126	2,681,126	2,681,126
Retained earnings	Before distribution	-	-	2,023,975	1,892,407	2,235,083	2,424,374
	After distribution	-	-	1,318,375	1,708,951	2,235,083	2,424,374
Other equity		-	-	`（`7,369`）`	218,237	396,484	345,901
Treasury stock		-	-	-	-	-	-
Non-controlling interest		-	-	124,686	71,184	51,182	51,500
Total equity	Before distribution	-	-	6,233,618	6,274,154	6,775,075	6,914,101
	After distribution	-	-	5,528,018	6,090,698	6,775,075	6,914,101

Note 1: Financial information regarding the first quarter of 2015 follows IFRS and has been verified by independent auditors.

Note 2: 2014 earnings distribution is pending Annual General Shareholders Meeting resolution, thus amount after distribution is the same as before distribution.

[45]

b. Condensed Balance Sheet-ROC GAAP

Unit: NT$ 1,000

		Unit: NT$ 1,000	Unit: NT$ 1,000	Unit: NT$ 1,000	Unit: NT$ 1,000	Unit: NT$ 1,000
Year Item		Five-Year Financial Summary
		2010	2011	2012	2013	2014
Current Assets		4,583,310	4,963,955	4,370,457	N/A	N/A
Funds & Investments		23,484	-	96,198
Fixed Assets		1,193,158	2,134,768	2,887,264
Intangible Assets		20,700	24,278	24,855
Other Assets		507,318	863,848	1,205,390
Total Assets		6,327,970	7,986,849	8,584,164
Current Liabilities	Before Distribution	1,312,554	2,015,657	2,290,123
	After Distribution	1,760,554	2,553,257	2,995,723
Long-Term Liabilities		1,038	737	18
Other Liabilities		48,281	53,568	51,959
Total Liabilities	Before Distribution	1,361,873	2,069,962	2,342,100
	After Distribution	1,809,873	2,607,562	3,047,700
Capital		1,280,000	1,344,000	1,411,200
Capital Reserve		2,742,374	2,850,226	2,696,451
Retained Earnings	Before Distribution	998,334	1,652,809	2,047,826
	After Distribution	486,334	1,115,209	1,342,226
Unrealized Gains (Loss) from Financial Products		-	-	-
Accumulated Translation Adjustments		`（`137,810`）`	`（`39,858`）`	`（`38,099`）`
Net Loss Not Recognized as Pension Cost		-	-	-
Shareholders' Equity	Before Distribution	4,966,097	5,916,887	6,242,064
	After Distribution	4,518,097	5,379,287	5,536,464

Note: Financial information regarding 2010 to 2012 has been verified by independent auditors.

[46]

c. Condensed Income Statement-IFRS

Unit: NT$ 1,000

						Unit: NT$1,000
Year Item	Five-Year Financial Summary					As of March 31, 2015 (Note)
	2010	2011	2012	2013	2014
Revenue	-	-	13,551,149	15,114,334	17,921,236	4,775,696
Gross Profit	-	-	7,485,471	8,395,238	10,084,821	2,730,578
Operating Profit	-	-	1,305,815	941,444	847,814	313,997
Non-Operating Income (Expenses)	-	-	121,372	（17,705）	65,087	(49,795)
Net Income Before Tax	-	-	1,427,187	923,739	912,901	264,202
Net Income from Continuing Operations	-	-	1,008,680	604,348	543,786	192,135
Income (or Loss) from Discontinued Operations	-	-	-	-	-	-
Net Income (Loss)	-	-	1,008,680	604,348	543,786	192,135
Other Comprehensive Income(Loss) (After-Tax)	-	-	`（`130,079`）`	221,146	177,980	(53,109)
Total Comprehensive Income (Losses)	-	-	878,601	825,494	721,766	139,026
Net Income Attributable to the Parent	-	-	980,142	574,032	527,509	189,291
Net Income Attributable to Non-Controlling Interests	-	-	28,538	30,316	16,277	2,844
Total Comprehensive Income Attributable to the Parent	-	-	844,880	799,638	705,756	138,708
Total Comprehensive Income Attributable to Non-Controlling Interests	-	-	33,721	25,856	16,010	318
Earnings per Share (NT$)	-	-	6.95	4.07	3.74	1.34

Note: Financial information regarding the first quarter of 2015 follows IFRS and has been verified by independent auditors.

d. Condensed Income Statement-ROC GAAP

	Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000
Year Item	Five-Year Financial Summary
	2010	2011	2012	2013	2014
Revenue	8,347,168	11,456,414	13,479,263	N/A	N/A
Gross Profit	4,410,774	6,133,009	7,445,702
OperatingProfit	1,090,953	1,403,894	1,301,196
Non-OperatingIncome	95,014	155,142	187,904
Non-OperatingExpenses	30,117	33,505	67,268
Pre-tax Income from Continuing Operations	1,155,850	1,525,531	1,421,832
After-tax Income from Continuing Operations	836,861	1,137,866	1,005,702
Profit/Loss from Discontinued Operations	-	-	-
ExtraordinaryGains/Losses	-	-	-
Accumulated Adjustments due to Changes of Accounting Principles	-	-	-
Net Income	836,861	1,137,866	1,005,702
Earningsper Share(NT$)	6.83	7.94	6.93

Note: Financial information regarding 2010 to 2012 has been verified by independent auditors.

[47]

e. Names and opinions of external auditors over the past five years

Year	Auditors	Audit Firm	Audit Opinion
2010	Chen Hui Ming, Lai Guo Wang	Deloitte	Unqualified opinion
2011	Hsieh Ming Zhong, Chen Hui Ming	Deloitte	Unqualified opinion
2012	Hsieh Ming Zhong, Chen Hui Ming	Deloitte	Unqualified opinion
2013	Hsieh Ming Zhong, Li Lee Huang	Deloitte	Unqualified opinion
2014	Hsieh Ming Zhong, Li Lee Huang	Deloitte	Unqualified opinion

[48]

2. Five-Year Financial Analysis

2-1. Financial analysis-IFRS

Item	Year	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	As of Mar. 31, 2015 (Note 2)
		2010	2011	2012	2013	2014
Financial Structure `（％）`	Debt to Assets Ratio	-	-	27.20%	28.93%	31.03%	33.91%
	Long-Term Capital to Fixed Assets, Machinery and equipment Ratio	-	-	183.49%	160.90%	139.96%	149.39%
Liquidity (`％`)	Current Ratio	-	-	190.77%	163.88%	129.56%	135.06%
	Quick Ratio	-	-	159.04%	128.93%	98.77%	107.36%
	Interest Coverage	-	-	1,740,571.95%	684,351.11%	-	14,688.74%
Operating Performance	Accounts Receivable Turnover (times)	-	-	63.96	64.60	73.56	80.41
	Average Collection Days	-	-	5.71	5.65	4.96	4.54
	Inventory Turnover (times)	-	-	15.75	15.77	15.73	15.90
	Accounts Payable Turnover (times)	-	-	8.08	8.62	8.67	7.97
	Average Inventory Turnover Days	-	-	23.18	23.14	23.20	22.96
	Fixed Assets, Machinery and equipment Turnover (times)	-	-	3.99	3.88	3.64	3.78
	Total Assets Turnover (times)	-	-	1.58	1.71	1.82	1.83
Profitability	ROA`（％）`	-	-	12.18%	6.95%	5.83%	7.63%
	ROE`（％）`	-	-	16.61%	9.66%	8.33%	11.23%
	Pre-tax Profit Ratio to Paid-in Capital`（％）`	-	-	101.13%	65.46%	64.69%	74.89%
	Net Margin `（％）`	-	-	7.44%	4.00%	3.03%	4.02%
	EPS`（`NT$`）`	-	-	6.95	4.07	3.74	1.34
Cash Flow	Cash Flow Ratio `（％）`	-	-	67.35%	61.12%	64.22%	18.45%
	Cash Flow Adequacy`（％）`	-	-	115.40%	106.65%	98.29%	92.27%
	Cash Flow Reinvestment Ratio`（％）`	-	-	12.98%	9.49%	17.85%	5.16%

[49]

Leverage	Operating Leverage	-	-	1.41	1.81	2.09	1.87
	Financial Leverage	-	-	1.00	1.00	1.00	1.01
Please explain the reasons for extraordinary changes in financial ratios over the past two years: N/A

Note 1: The Company just began using International Financial Reporting Standards (IFRS), so we have also included a table below showing financial information for the past years calculated using Taiwan Financial Accounting Standards. Note 2: Financial information regarding the first quarter of 2015 follows IFRS and has been verified by independent auditors. Note 3: The above ratios are calculated using the below formulas (based on IFRS): • Financial Structure (1) Debt to Assets Ratio = total liabilities / total assets (2) Long-term Capital to Fixed Assets, Machinery and Equipment Ratio = (total equity + non-current liabilities) / net Fixed Assets, Machinery and Equipment • Liquidity (1) Current Ratio = current assets / current liabilities (2) Quick Ratio = (current assets – inventory – prepaid expenses) / current liabilities (3) Interest Coverage = earnings before interest and taxes / interest expenses

• Operating Performance

(1) Average Accounts Receivable Turnover (including accounts receivable and notes receivable arising from business activities) = net sales / average accounts receivable (including accounts receivable and notes receivable arising from business activities)

(2) Average Collection Days = 365 / average accounts receivable turnover

(3) Inventory Turnover = cost of goods sold / average inventory

(4) Average Accounts Payable Turnover (including accounts payable and notes payable arising from business activities) = cost of goods sold / average accounts payable ((including accounts payable and notes payable arising from business activities)

(5) Average Inventory Turnover Days = 365 / inventory turnover ratio

(6) Fixed Assets, Machinery and Equipment Turnover = net sales / net Fixed Assets, Machinery and Equipment

(7) Total Asset Turnover = net sales / average total assets

• Profitability

(1) Return on Assets = [net income after tax + interest expense × (1 – effective tax rate)] / average total assets

(2) Return on Equity = net income after tax / average shareholders' equity

(3) Net Margin = net income after tax / net sales

(4) Earnings per Share = (profit or loss attributable to the parent – preferred stock dividends) / weighted average number of shares outstanding

• Cash Flow

(1) Cash Flow Ratio = net cash flows from operating activities / current liabilities (2) Cash Flow Adequacy Ratio = five year sum of net cash flows from operating activities / five year (sum of capital expenditures+ increase in inventory + cash dividends)

(3) Cash Flow Reinvestment Ratio = (net cash flows from operating activities – cash dividends) / (gross PP&E / long-term investments + other non-current assets + working capital)

• Leverage

(1)Operating Leverage = (net sales – variable costs and expenses) / operating profit

(2) Financial Leverage = operating profit / (operating profit – interest expenses)

[50]

2-2. Financial analysis-ROC GAAP

（ Note 1 ） Financial information for the most recent five years

Item （ Note 2 ）

Year`（`Note 1`）` Item`（`Note 2`）`	Year`（`Note 1`）` Item`（`Note 2`）`	Year`（`Note 1`）` Item`（`Note 2`）`	Financial information for the most recent five years	Financial information for the most recent five years	Financial information for the most recent five years	Financial information for the most recent five years	Financial information for the most recent five years
			2010	2011	2012	2013	2014
Financial Structure `（％）`	Debt to Assets Ratio		21.52%	25.92`％`	27.28%	N/A	N/A
	Long-Term Capital to Fixed Assets, Machinery and equipment Ratio		416.30%	277.20`％`	216.19%
Liquidity (`％`)	Current Ratio		349.19%	246.27`％`	190.84%
	Quick Ratio		321.97%	219.74`％`	159.62%
	Interest Coverage		207,986.69%	1,733,657.95 `％`	1,713,150.60%
Operating Performance	Accounts Receivable Turnover (times)		55.31	65.19	59.16
	Average Collection Days		7	5.59	6.17
	Inventory Turnover (times)		18.07	17.56	15.66
	Accounts Payable Turnover (times)		7.54	8.47	8.04
	Average Inventory Turnover Days		20	20.78	23.31
	Fixed Assets, Machinery and equipment Turnover (times)		7.00	5.37	4.67
	Total Assets Turnover (times)		1.32	1.43	1.57
Profitability	ROA`（％）`		17.58%	15.90`％`	12.14%
	ROE`（％）`		24.00%	20.91`％`	16.54%
	Ratio to Paid-in Capital `（％）`	Operating Income	85.23%	104.46`％`	92.20%
		Pre-tax Profit	90.30%	113.51`％`	100.75%
	Net Margin`（％）`		10.03%	9.93`％`	7.46%
	EPS`（`NT$`）`		7.18	8.34	6.93
Cash Flow	Cash Flow Ratio`（％）`		90.80%	97.69`％`	68.62%
	Cash Flow Adequacy`（％）`		144.90%	134.42`％`	120.67%
	Cash Flow Reinvestment Ratio`（％）`		19.59%	23.33`％`	14.48%
Leverage	Operating Leverage		1.24	1.27	1.43
	Financial Leverage		1	1	1
Please explain the reasons for extraordinary			changes in financial ratios over the past two years: N/A

Note 1: Financial information has been verified by independent auditors. Note 2: The above ratios are calculated using the below formulas (based on IFRS): • Financial Structure

(1) Debt to Assets Ratio = total liabilities / total assets

(2) Long-term Capital to Fixed Assets, Machinery and Equipment Ratio = (total equity + non-current liabilities) / net Fixed Assets, Machinery and Equipment

• Liquidity

(1) Current Ratio = current assets / current liabilities

(2) Quick Ratio = (current assets – inventory – prepaid expenses) / current liabilities

(3) Interest Coverage = earnings before interest and taxes / interest expenses

• Operating Performance

(3) Inventory Turnover = cost of goods sold / average inventory

(5) Average Inventory Turnover Days = 365 / inventory turnover ratio

(6) Fixed Assets, Machinery and Equipment Turnover = net sales / net Fixed Assets, Machinery and Equipment

(7) Total Asset Turnover = net sales / average total assets

Profitability

(1) Return on Assets = [net income after tax + interest expense × (1 – effective tax rate)] / average total assets

(2) Return on Equity = net income after tax / average shareholders' equity

(3) Net Margin = net income after tax / net sales

(4) Earnings per Share = (profit or loss attributable to the parent – preferred stock dividends) / weighted average number of shares outstanding

Cash Flow

(1) Cash Flow Ratio = net cash flows from operating activities / current liabilities

(2) Cash Flow Adequacy Ratio = five year sum of net cash flows from operating activities / five year (sum of capital expenditures+ increase in inventory + cash dividends)

(3) Cash Flow Reinvestment Ratio = (net cash flows from operating activities – cash dividends) / (gross PP&E / long-term investments + other non-current assets + working capital)

Leverage

(1)Operating Leverage = (net sales – variable costs and expenses) / operating profit

(2) Financial Leverage = operating profit / (operating profit – interest expenses

[51]

3.The most recent independent auditors’ report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders Gourmet Master Co. Ltd.

We have audited the accompanying consolidated balance sheets of Gourmet Master Co. Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”) as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income, changes in equity, and 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 conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2014 and 2013, and their consolidated financial performance and their consolidated cash flows for the years then ended, in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed by the Financial Supervisory Commission of the Republic of China.

March 11, 2015

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

52 -

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Debt investments with no active market - current (Notes 7 and 28) Notes receivable Trade receivables (Note 8) Other receivables Current tax assets Inventories (Note 9) Prepayments (Note 12) Other current assets (Note 12) Total current assets NONCURRENT ASSETS Investments accounted for using equity method (Note 10) Property, plant and equipment (Notes 11 and 28) Intangible assets Deferred tax assets (Notes 5 and 18) Prepaid equipment (Note 12) Refundable deposits (Note 12) Other noncurrent assets (Note 12) Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Notes payable Trade payables (Note 13) Other payables (Note 14) Current tax liabilities Receipts in advance (Note 14) Current portion of long-term borrowings Other current liabilities (Note 14) Total current liabilities NONCURRENT LIABILITIES Long-term borrowings Decommission, restoration and rehabilitation provisions (Note 14) Deferred tax liabilities (Note 18) Guarantee deposits received (Note 14) Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 15) Share capital Capital surplus Additional paid-in capital Retained earnings Reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		2014 Amount % $ 2,480,103 25 56,070 1 218 - 238,551 2 76,950 1 7,291 - 533,994 5 361,089 4 12,616 - 3,766,882 38 58,710 1 4,922,226 50 75,936 1 81,596 1 297,939 3 545,718 5 73,748 1 6,055,873 62 $ 9,822,755 100 $ - - 994,015 10 1,171,192 12 83,823 1 641,974 7 934 - 15,594 - 2,907,532 30 14,846 - 56,726 - 653 - 67,923 1 140,148 1 3,047,680 31 1,411,200 14 2,681,126 27 424,109 4 38,098 1 1,772,876 18 2,235,083 23 396,484 4 6,723,893 68 51,182 1 6,775,075 69 $ 9,822,755 100		2013
				Amount % $ 2,503,716 28 285,695 3 1,041 - 236,397 3 60,453 1 43,139 - 455,331 5 396,800 5 12,607 - 3,995,179 45 188,759 2 3,899,390 44 74,355 1 63,346 1 175,661 2 418,421 5 13,328 - 4,833,260 55 $ 8,828,439 100 $ 296 - 812,497 9 934,551 11 98,554 1 568,626 7 - - 23,280 - 2,437,804 28 - - 29,233 - - - 87,248 1 116,481 1 2,554,285 29 1,411,200 16 2,681,126 30 366,706 4 38,098 - 1,487,603 17 1,892,407 21 218,237 3 6,202,970 70 71,184 1 6,274,154 71 $ 8,828,439 100

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

53 -

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 16 and 32) OPERATING COSTS GROSS PROFIT OPERATING EXPENSES Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING INCOME NONOPERATING INCOME AND EXPENSES Gain from bargain purchase acquisition of subsidiaries Other income (Note 17) Share of loss of associates and joint ventures Other gains and losses (Note 17) Total nonoperating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 18) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME Exchange differences on translating foreign operations TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests		2014 Amount % $ 17,921,236 100 (7,836,415) (44) 10,084,821 56 (8,265,903) (46) (935,236) (5) (35,868) - (9,237,007) (51) 847,814 5 8,310 - 169,001 1 (21,622) - (90,602) (1) 65,087 - 912,901 5 (369,115) (2) 543,786 3 177,980 1 $ 721,766 4 $ 527,509 3 16,277 - $ 543,786 3		2013
				Amount % $ 15,114,334 100 (6,719,096) (45) 8,395,238 55 (6,637,887) (44) (798,346) (5) (17,561) - (7,453,794) (49) 941,444 6 - - 157,970 1 (16,496) - (159,179) (1) (17,705) - 923,739 6 (319,391) (2) 604,348 4 221,146 1 $ 825,494 5 $ 574,032 4 30,316 - $ 604,348 4 (Continued)

54 -

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (Note 19) Basic		2014 Amount % $ 705,756 4 16,010 - $ 721,766 4 $ 3.74		2013
				Amount % $ 799,638 5 25,856 - $ 825,494 5 $ 4.07
		$		$

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

(Concluded)

55 -

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2013 Appropriation of 2012 earnings Reserve Special reserve Cash dividends distributed by the Company Cash dividends distributed by subsidiaries Net profit for the year ended December 31, 2013 Other comprehensive income (loss) for the year ended December 31, 2013, net of income tax Total comprehensive income for the year ended December 31, 2013 Effect of deconsolidation of subsidiary BALANCE AT DECEMBER 31, 2013 Appropriation of 2013 earnings Reserve Cash dividends distributed by the Company Cash dividends distributed by subsidiaries Change in capital surplus from investments in associates accounted for by using equity method Net profit for the year ended December 31, 2014 Other comprehensive income (loss) for the year ended December 31, 2014, net of income tax Total comprehensive income for the year ended December 31, 2014 BALANCE AT DECEMBER 31, 2014		Equity Attributable to the Owners of the Company	Equity Attributable to the Owners of the Company		Non-controlling Total Interests $ 6,108,932 $ 124,686 - - - - (705,600) - - (47,084) 574,032 30,316 225,606 (4,460) 799,638 25,856 - (32,274) 6,202,970 71,184 - - (183,456) - - (36,012) (1,377) - 527,509 16,277 178,247 (267) 705,756 16,010 $ 6,723,893 $ 51,182	Total Equity $ 6,233,618 - - (705,600) (47,084) 604,348 221,146 825,494 (32,274) 6,274,154 - (183,456) (36,012) (1,377) 543,786 177,980 721,766 $ 6,775,075
	Share Capital Capital Surplus $ 1,411,200 $ 2,681,126 - - - - - - - - - - - - - - - - 1,411,200 2,681,126 - - - - - - - - - - - - - - $ 1,411,200 $ 2,681,126		Retained Earnings Unappropriated Reserve Special Reserve Earnings $ 268,972 $ - $ 1,755,003 97,734 - (97,734) - 38,098 (38,098) - - (705,600) - - - - - 574,032 - - - - - 574,032 - - - 366,706 38,098 1,487,603 57,403 - (57,403) - - (183,456) - - - - - (1,377) - - 527,509 - - - - - 527,509 $ 424,109 $ 38,098 $ 1,772,876	Other Equity Exchange Differences on Translating Foreign Operations $ (7,369) - - - - - 225,606 225,606 - 218,237 - - - - - 178,247 178,247 $ 396,484

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

56 -

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Impairment loss recognized on trade receivables Net gain on fair value change of financial assets at fair value through profit or loss Interest expense Interest income Share of loss of associates and joint ventures Loss on disposal of property, plant and equipment Loss on disposal of intangible assets Impairment loss of non-financial assets Gain on deconsolidation of subsidiary Gain from bargain purchase acquisition of subsidiaries Changes in operating assets and liabilities Decrease in financial assets held for trading Decrease in notes receivable Increase in trade receivables Increase in other receivables Increase in inventories Decrease (increase) in prepayments (Increase) decrease in other current assets Increase in other operating assets Decrease in notes payable Increase in trade payables Increase in other payables Increase in provisions Increase in receipts in advance (Decrease) increase in other current liabilities Decrease in other operating liabilities Cash generated from operations Interest paid Income taxes paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of debt investments with no active market Acquisition of investment accounted for by equity method Net cash outflow on acquisition of subsidiaries Net cash outflow on deconsolidation of subsidiary Proceeds from capital reduction of investment accounted for by equity method	2014 $ 912,901 898,613 21,685 10,335 - - (35,732) 21,622 60,274 149 1,688 - (8,310) - 823 (12,852) (15,172) (72,522) 41,067 (9) (60,180) (296) 174,742 179,968 19,511 73,348 (7,810) - 2,203,843 - (336,681) 1,867,162 229,625 (841) (21,859) - 53,239	2013 $ 923,739 743,713 16,857 - (5,183) 135 (22,845) 16,496 79,424 426 - (5,874) - 14,267 1,360 (8,444) (7,515) (76,211) (75,641) 97 (6,959) (908) 68,503 124,279 9,986 53,413 7,002 (426) 1,849,691 (135) (359,625) 1,489,931 453,969 - - (47,726) - (Continued)

57 -

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars)

Payment for property, plant and equipment Proceeds from property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Acquisition of intangible assets Proceeds from intangible assets Increase in prepaid equipment Decrease in prepaid equipment Interest received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings Repayments of long-term borrowings Increase in guarantee deposits received Decrease in guarantee deposits received Dividends paid to owners of the Company Dividends paid to non-controlling interests Net cash used in financing activities EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2014 $ (1,864,835) 114,219 (144,284) 48,559 (21,520) 94 (116,450) - 34,407 (1,689,646) 15,780 - 47,653 (68,670) (183,456) (36,012) (224,705) 23,576 (23,613) 2,503,716 $ 2,480,103	2013 $ (1,296,542) 20,007 (106,398) 83,903 (63,661) 89 - 128,746 18,772 (808,841) - (588) 41,486 (8,251) (705,600) (47,084) (720,037) 1,120 (37,827) 2,541,543 $ 2,503,716

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

(Concluded)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

Gourmet Master Co. Ltd. (the “Company”) was incorporated in the Cayman Islands in September 2008.

The Company and its subsidiaries (collectively, the “Group”) mainly engages in the production and wholesale of bakery products, retail of beverages, wholesale of bakery machinery, and the business of multiple shops and alliance shops.

The Company’s shares have been listed on the Taiwan Stock Exchange (“TSE”) since November 22, 2010.

The functional currency of the Company is Renminbi. For greater comparability and consistency of financial reporting, the consolidated financial statements are presented in New Taiwan dollars since the Company’s stocks are listed on the Taiwan Stock Exchange.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the board of directors on March 11, 2015.

3. APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND INTERPRETATIONS

a. The amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the 2013 version of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) endorsed by the FSC not yet effective

Rule No. 1030029342 and Rule No. 1030010325 issued by the FSC on April 3, 2014, stipulated that the Group should apply the 2013 version of IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) endorsed by the FSC and the related amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers starting January 1, 2015.

New, Amended and Revised Standards and Interpretations (the “New IFRSs”) Improvements to IFRSs (2009) - amendment to IAS 39 Amendment to IAS 39 “Embedded Derivatives” Improvements to IFRSs (2010) Annual Improvements to IFRSs 2009-2011 Cycle	Effective Date Announced by IASB (Note)
	January 1, 2009 and January 1, 2010, as appropriate Effective for annual periods ended on or after June 30, 2009 July 1, 2010 and January 1, 2011, as appropriate January 1, 2013 (Continued)

59 -

New, Amended and Revised
Standards and Interpretations (the“New IFRSs”)
Amendment to IFRS 1 “Limited Exemption from Comparative IFRS 7
Disclosures for First-time Adopters”

Amendment to IFRS 1 “Severe Hyperinflation and Removal of Fixed
Dates for First-time Adopters”

Amendment to IFRS 1 “Government Loans”

Amendment to IFRS 7 “Disclosure - Offsetting Financial Assets and
Financial Liabilities”

Amendment to IFRS 7 “Disclosure - Transfer of Financial Assets”

IFRS 10 “Consolidated Financial Statements”

IFRS 11 “Joint Arrangements”

IFRS 12 “Disclosure of Interests in Other Entities”

Amendments to IFRS 10, IFRS 11 and IFRS 12 “Consolidated
Financial Statements, Joint Arrangements and Disclosure of
Interests in Other Entities: Transition Guidance”

Amendments to IFRS 10 and IFRS 12 and IAS 27 “Investment
Entities”

IFRS 13 “Fair Value Measurement”

Amendment to IAS 1 “Presentation of Other Comprehensive Income”
Amendment to IAS 12 “Deferred Tax: Recovery of Underlying
Assets”

IAS 19 (Revised 2011) “Employee Benefits”

IAS 28 (Revised 2011) “Investments in Associates and Joint
Ventures”

Amendment to IAS 32 “Offsetting Financial Assets and Financial
Liabilities”

IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine”

Effective Date
Announced by IASB (Note)

July 1, 2010
July 1, 2011
January 1, 2013
January 1, 2013
July 1, 2011
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
July 1, 2012
January 1, 2012
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
(Concluded)

Note: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after the respective effective dates.

Except for the following, whenever applied, the initial application of the above 2013 IFRSs version and the related amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers would not have any material impact on the Group’s accounting policies:

1) IFRS 12 “Disclosure of Interests in Other Entities”

IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive than in the current standards.

2) IFRS 13 “Fair Value Measurement”

IFRS 13 establishes a single source of guidance for fair value measurements. It defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The disclosure requirements in IFRS 13 are more extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only will be extended by IFRS 13 to cover all assets and liabilities within its scope.

The fair value measurements under IFRS 13 will be applied prospectively from January 1, 2015.

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Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance, and will disclose the relevant impact when the assessment is completed.

c. New IFRSs in issue but not yet endorsed by the FSC

The Group has not applied the following New IFRSs issued by the IASB but not yet endorsed by the FSC. As of the date the consolidated financial statements were authorized for issue, the FSC has not announced their effective dates.

New IFRSs
Annual Improvements to IFRSs 2010-2012 Cycle

Annual Improvements to IFRSs 2011-2013 Cycle

Annual Improvements to IFRSs 2012-2014 Cycle

IFRS 9 “Financial Instruments”

Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of
IFRS 9 and Transition Disclosures”

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”

Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities:
Applying the Consolidation Exception”

Amendment to IFRS 11 “Accounting for Acquisitions of Interests in
Joint Operations”

IFRS 14 “Regulatory Deferral Accounts”

IFRS 15 “Revenue from Contracts with Customers”

Amendment to IAS 1 “Disclosure Initiative”

Amendments to IAS 16 and IAS 38 “Clarification of Acceptable
Methods of Depreciation and Amortization”

Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants”

Amendment to IAS 19 “Defined Benefit Plans: Employee
Contributions”

Amendment to IAS 27 “Equity Method in Separate Financial
Statements”

Amendment to IAS 36 “Impairment of Assets: Recoverable Amount
Disclosures for Non-financial Assets”

Amendment to IAS 39 “Novation of Derivatives and Continuation of
Hedge Accounting”

IFRIC 21 “Levies”

Effective Date
Announced by IASB (Note 1)

July 1, 2014 (Note 2)
July 1, 2014
January 1, 2016 (Note 4)
January 1, 2018
January 1, 2018
January 1, 2016 (Note 3)
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

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are effective for annual periods beginning on or after July 1, 2014.
Note 3: Prospectively applicable to transactions occurring in annual periods beginning on or after January 1, 2016.
Note 4: The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016.
61 -

The initial application of the above New IFRSs, whenever applied, would not have any material impact on the Group’s accounting policies, except for the following:

1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are subsequently measured at amortized cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated below.

For the Group’s debt instruments that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, their classification and measurement are as follows:

a) For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss, if any. Interest revenue is recognized in profit or loss by using the effective interest method;
b) For debt instruments, if they are held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using the effective interest method, and other gain or loss shall be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When the debt instruments are derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

Except for above, all other financial assets are measured at fair value through profit or loss. However, the Group may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.

The impairment of financial assets

IFRS 9 requires that impairment loss on financial assets is recognized by using the “Expected Credit Losses Model”. The credit loss allowance is required for financial assets measured at amortized cost, financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising from IFRS 15 “Revenue from Contracts with Customers”, certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial recognition and is not low. However, a loss allowance for full lifetime expected credit losses is required for trade receivables that do not constitute a financing transaction.

For purchased or originated credit-impaired financial assets, the Group takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss.

62 -
2) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”

In issuing IFRS 13 “Fair Value Measurement”, the IASB made consequential amendment to the disclosure requirements in IAS 36 “Impairment of Assets”, introducing a requirement to disclose in every reporting period the recoverable amount of an asset or each cash-generating unit. The amendment clarifies that such disclosure of recoverable amounts is required only when an impairment loss has been recognized or reversed during the period. Furthermore, the Group is required to disclose the discount rate used in measurements of the recoverable amount based on fair value less costs of disposal measured using a present value technique.

3) Annual Improvements to IFRSs: 2010-2012 Cycle

Several standards including IFRS 2 “Share-based Payment”, IFRS 3 “Business Combinations” and IFRS 8 “Operating Segments” were amended in this annual improvement.

The amended IFRS 8 requires an entity to disclose the judgments made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have “similar economic characteristics”. The amendment also clarifies that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if the segments’ assets are regularly provided to the chief operating decision-maker.

IFRS 13 was amended to clarify that the issuance of IFRS 13 did not remove the ability to measure short-term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of not discounting is immaterial.

4) Annual Improvements to IFRSs: 2011-2013 Cycle

Several standards, including IFRS 3, IFRS 13 and IAS 40 “Investment Property”, were amended in this annual improvement.

The scope in IFRS 13 of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis was amended to clarify that it includes all contracts that are within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32.

5) Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization”

The entity should use appropriate depreciation and amortization method to reflect the pattern in which the future economic benefits of the property, plant and equipment and intangible asset are expected to be consumed by the entity.

The amended IAS 16 “Property, Plant and Equipment” requires that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate. The amended standard does not provide any exception from this requirement.

The amended IAS 38 “Intangible Assets” requires that there is a rebuttable presumption that an amortization method that is based on revenue that is generated by an activity that includes the use of an intangible asset is not appropriate. This presumption can be overcome only in the following limited circumstances:

a) In which the intangible asset is expressed as a measure of revenue (for example, the contract that specifies the entity’s use of the intangible asset will expire upon achievement of a revenue threshold); or
63 -
b) When it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated.

An entity should apply the aforementioned amendments prospectively for annual periods beginning on or after the effective date.

6) Annual Improvements to IFRSs: 2012-2014 Cycle

Several standards, including IFRS 5 “Non-current assets held for sale and discontinued operations”, IFRS 7, IAS 19 and IAS 34, were amended in this annual improvement.

7) Amendment to IAS 1 “Disclosure Initiative”

The amendment clarifies that the consolidated financial statements should be prepared for the purpose of disclosing material information. To improve the understandability of its consolidated financial statements, the Group should disaggregate the disclosure of material items into their different natures or functions, and disaggregate material information from immaterial information.

The amendment further clarifies that the Group should consider the understandability and comparability of its consolidated financial statements to determine a systematic order in presenting its footnotes.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

Statement of Compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed by the FSC.

Basis of Preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

Classification of Current and Non-current Assets and Liabilities

Current assets include:

a. Assets held primarily for the purpose of trading;
b. Assets expected to be realized within twelve months after the reporting period; and
c. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current liabilities include:

a. Liabilities held primarily for the purpose of trading;
64 -
b. Liabilities due to be settled within twelve months after the reporting period; and
c. Liabilities of which the Group does not have an unconditional right to defer settlement for at least twelve months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

Basis of Consolidation

a. Principles for preparing consolidated financial statements

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e. its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

Attribution of total comprehensive income to non controlling interests

Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in existing subsidiaries

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. 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 and attributed to the owners of the Company.

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and any investment retained in the former subsidiary at its fair value at the date when control is lost and (ii) the assets (including any goodwill) and liabilities and any non-controlling interests of the former subsidiary at their carrying amounts at the date when control is lost. The Group accounts for all amounts recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for the cost on initial recognition of an investment in an associate.

65 -

b. Subsidiary included in consolidated financial statements

Investor
Investee
Main Businesses
Gourmet Master Co. Ltd.
85 Degree Co., Ltd.
Investment
Prime Scope Trading Limited
Investment
Perfect 85 Degrees C, Inc.
Manufacturing of baking fund
and sale
85 Degrees Café International Pty
Ltd.
Grocery and drink retailing
Lucky Bakery Limited
Investment
WinPin 85 Investments, Inc.
Grocery and drink retailing
Perfect 85 Degrees C, Inc.
Golden 85 Investments, LLC
Grocery and drink retailing
85 Degree Co., Ltd.
Comestibles Master Co., Ltd.
Grocery and drink retailing
Comestibles Master Co., Ltd. Mei Wei Master Co., Ltd.
Grocery and drink retailing
Mei Wei Master Co., Ltd.
Mei Wei Fu Xing Ltd.
Grocery and drink retailing
Lucky Bakery Limited
Profit Sky International Limited
Investment
Profit Sky International
WinCase Limited
Grocery and drink retailing
Limited
Worldinn Limited
Manufacturing of baking fund
and sale
Prime Scope Trading Limited Shanghai Gourmet Master Food &
Beverage Ltd.
Grocery and drink retailing
He-Shia Food & Beverage Ltd.
Grocery and drink retailing
Sheng-Pin (Hangzhou) Food Ltd.
Manufacturing of baking food
and sale
He-Shia (Nanjing) Food &
Beverage Ltd.
Grocery and drink retailing
Beijing 85 Food & Beverage Ltd.
Grocery and drink retailing
Zhejiang 85 Food & Beverage Ltd. Grocery and drink retailing
Sheng-Pin (Beijing) Food Ltd.
Manufacturing of baking food
and sale
Fuzhou 85 Food & Beverage Ltd. Grocery and drink retailing
Sheng-Pin (Jiangsu) Food Ltd.
Manufacturing of baking food
and sale
Sheng-Pin (Xiamen) Food Ltd.
Manufacturing of baking food
and sale
Sheng-Pin (Qingdao) Food Ltd.
Manufacturing of baking food
and sale
Xiamen 85 Food & Beverage Ltd. Grocery and drink retailing
Shenyang 85 Food & Beverage
Ltd.
Grocery and drink retailing
Sheng-Pin (Shenyang) Food Ltd.
Manufacturing of baking food
and sale
85 Degree (Qingdao) Food &
Beverage Management Ltd.
Grocery and drink retailing
85 Degree (Jiangsu) Food Ltd.
Manufacturing of baking food
and sale
Shanghai Gourmet Master
Food & Beverage Ltd.
Sheng-Pin (Shanghai) Food Ltd.
Manufacturing of baking food
and sale
Mai-Jai (Shanghai) Food Ltd.
Manufacturing of baking food
and sale
Shanghai Howco Jing Way Food
& Beverage Ltd.
Grocery and drink retailing
Shenzheng 85 Food & Beverage
Ltd.
Grocery and drink retailing
Chengdu 85 Food & Beverage Ltd. Grocery and drink retailing
Sheng-Pin (Wuhan) Food Ltd.
Manufacturing of baking food
and sale
Wuhan Jing Way Food &
Beverage Ltd.
Grocery and drink retailing
Jianxi Jing Way Food & Beverage
Ltd.
Grocery and drink retailing
Jin Wei Industrial (Shanghai) Ltd. Grocery sale

% of Ownership
December 31
2014
2013
Note
100
100
-
100
100
-
100
100
-
51
51
-
100
100
-
100
100
-
65
65
-
100
100
-
100
100
1)
60
60
-
100
-
2)
100
-
2)
100
-
2)
100
100
-
100
100
-
100
100
-
100
100
-
100
100
-
100
100
-
100
100
-
100
100
-
100
100
-
100
100
-
100
100
-
100
100
-
100
100
-
100
100
-
100
100
-
25
68
-
100
100
-
100
100
-
100
100
-
85
85
-
100
100
-
100
100
-
57
100
-
100
100
-
100
100
-
(Continued)

66 -

Investor
Investee
Main Businesses
Guangzhou 85 Degree Food &
Beverage Management Ltd.
Grocery and drink retailing
85 Degree (Jiangsu) Food Ltd.
Manufacturing of baking food
and sale
Mai-Jai (Chengdu) Food Ltd.
Manufacturing of baking food
and sale
Jai Ding Jing Way Food &
Beverage Ltd.
Grocery and drink retailing
He-Shia Food Beverage Ltd.
Wuhan Jing Way Food &
Beverage Ltd.
Grocery and drink retailing
Shenzheng 85 Food &
Beverage Ltd.
Sheng-Pin (Shenzheng) Food Ltd. Manufacturing of baking food
and sale
85 Degree (Qingdao) Food &
Beverage Management Ltd.
Qingdao Jie Wei Food & Beverage
Management Ltd.
Grocery and drink retailing

% ofOwnership
December 31
2014
2013
Note
100
100
-
32
-
-
100
-
-
100
-
-
43
-
100
100
-
100
100
-

(Concluded)

1) In order to improve the efficiency of the management and operation of the factories and stores since, May 2014, Comestibles Master Co., Ltd. transferred the management and operation of most stores to Mei Wei Master Co., Ltd.
2) In November 2014, the Group acquired 50% interest in Profit Sky International Limited. As a result, the Group can control Profit Sky International Limited and its subsidiaries. Hence, Profit Sky International Limited and its subsidiaries were included in the consolidated financial statements from the date of acquisition. Please refer to Note 21.

Business Combinations

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as incurred.

If, after re-assessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree, the excess are recognized immediately in profit or loss as a bargain purchase gain.

Foreign Currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including of the subsidiaries, associates, joint ventures or branches operations in other countries or currencies used different with the Company) are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognized in other comprehensive income attributed to the owners of the Company and non-controlling interests as appropriate.

67 -

On the disposal of a foreign operation (i.e. a disposal of the Company’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over a jointly controlled entity that includes a foreign operation, or a disposal involving loss of significant influence over an associate that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

Inventories

Inventories consist of raw materials, supplies, finished goods and work-in-process and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at weighted-average cost on the balance sheet date.

Investment in Associates and Jointly Controlled Entities

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Joint venture arrangements that involve the establishment of a separate entity in which venturers have joint control over the economic activity of the entity are referred to as jointly controlled entities.

The results and assets and liabilities of associates and jointly controlled entities are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, an investment in an associate and jointly controlled entity is initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate and jointly controlled entity. The Group also recognizes the changes in the Group’s share of equity of associates and jointly controlled entity.

When the Group subscribes for additional new shares of the associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus. If the Group’s ownership interest is reduced due to the additional subscription of the new shares of associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for by the equity method is insufficient, the shortage is debited to retained earnings.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

When a group entity transacts with its associate (and jointly controlled entity), profits and losses resulting from the transactions with the associate are recognized in the Group’ consolidated financial statements only to the extent of interests in the associate (and the jointly controlled entity) that are not related to the Group.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and subsequent accumulated impairment loss.

68 -

Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such properties are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.

Depreciation is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

Impairment of Tangible and Intangible Assets Other Than Goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the smallest group of cash-generating units on a reasonable and consistent allocation basis.

Recoverable amount is the higher of fair value less costs to sell and value in use. The recoverable amount was estimated by pre-tax discounting future cash flows. The discounting rate reflects the current market for the value of money and not adjusted the certain risk of assessment to future cash flows.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount.

When an impairment loss subsequently is reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

Financial Instruments

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

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

a. Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

1) Measurement category

Financial assets are classified into the following specified categories: Financial assets at fair value through profit or loss and loans and receivables.

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Financial assets at fair value through profit or loss

Financial assets are classified as at fair value through profit or loss when the financial asset is held for trading.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividend or interest earned on the financial asset.

Loans and receivables

Loans and receivables (including trade receivables, cash and cash equivalent and debt investments with no active market) are measured at amortized cost using the effective interest method, less any impairment, except for short-term receivables when the effect of discounting is immaterial.

Cash equivalent includes time deposits with original maturities within three months from the date of acquisition, highly liquid, readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

2) Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For financial assets carried at amortized cost, such as trade receivables, assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 30 to 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables, and other situation.

For financial assets carried at amortized cost, the amount of the impairment loss recognized is 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.

For financial assets measured at amortized cost, 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 was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

For all other financial assets, objective evidence of impairment could include significant financial difficulty of the issuer or counterparty, breach of contract, such as a default or delinquency in interest or principal payments, it becoming probable that the borrower will enter bankruptcy or financial re-organization, or the disappearance of an active market for that financial asset because of financial difficulties.

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The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss except for uncollectible trade receivables that are written off against the allowance account.

3) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss.

b. Financial liabilities
1) Subsequent measurement

All the financial liabilities are measured at amortized cost using the effective interest method.

2) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Sales returns are recognized at the time of sale provided the seller can reliably estimate future returns and recognizes a liability for returns based on previous experience and other relevant factors.

a. Sale of goods

Revenue from the sale of goods is recognized when all the following conditions are satisfied:

1) The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
2) The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
3) The amount of revenue can be measured reliably;
4) It is probable that the economic benefits associated with the transaction will flow to the Group; and
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5) The costs incurred or to be incurred in respect of the transaction can be measured reliably.
b. Interest income

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

c. Royalties

Royalty revenue is recognized on an accrual basis in accordance with the substance of the relevant agreement provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Royalties determined on a time basis are recognized on a straight-line basis over the period of the agreement. Royalty arrangements that are based on production, sales and other measures are recognized by reference to the underlying arrangement.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term. Contingent rents arising under operating leases are recognized as an expense in the period in which they are incurred.

Government Grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable.

Retirement Benefit Costs

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

a. Current tax

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

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b. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carry forward to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

c. Current and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

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Income Taxes

As of December 31, 2014 and 2013, the carrying amount of the deferred tax assets in relation to unused tax losses was $19,707 thousand and $8,169 thousand, respectively. As of December 31, 2014 and 2013, no deferred tax asset has been recognized on the tax loss of $966,682 thousand and $655,920 thousand, respectively, due to the unpredictability of future profit streams. The realizability of the deferred tax asset mainly depends on whether sufficient future profits or taxable temporary differences will be available. In cases where the actual future profits generated are less than expected, a material reversal of deferred tax assets may arise, which would be recognized in profit or loss for the period in which such a reversal takes place.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalent Time deposits with original maturities less than three months		December 31	December 31
		2014 $ 115,765 1,116,362 1,247,976 $ 2,480,103	2013 $ 135,854 2,322,438 45,424 $ 2,503,716

The market rate intervals of cash in bank at the end of the reporting period were as follows:

Bank deposits Time deposits	December 31
	2014 2013 0.01%-0.50% 0.01%-0.45% 0.87%-3.20% 0.94%-4.00%

7. DEBT INVESTMENTS WITH NO ACTIVE MARKET

Current Time deposits with original maturity more than 3 months Restricted bank deposit		December 31	December 31
		2014 $ 5,150 50,920 $ 56,070	2013 $ 98,773 186,922 $ 285,695

a. The market interest rates of the time deposits with original maturity more than 3 months were 0.88%-1.345% and 1.09%-3.25% per annum respectively as of December 31, 2014 and 2013.
b. Refer to Note 28 for information relating to bond investments with no active market pledged as security.
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8. TRADE RECEIVABLES

Trade receivables Less: Allowance for doubtful accounts		December 31	December 31
		2014 $ 249,249 (10,698) $ 238,551	2013 $ 236,397 - $ 236,397

The average credit period on sales of goods was between 30 days and 60 days. In determining the recoverability of a trade receivable, the Group considered any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period. The Group recognized an allowance for impairment loss of 100% against all receivables over 60 days because historical experience had been that receivables that are past due beyond 60 days were not recoverable.

For the trade receivables balances that were past due at the end of the reporting period, the Group did not recognize an allowance for impairment loss, because there was not a significant change in credit quality and the amounts were still considered recoverable. The Group did not hold any collateral or other credit enhancements for these balances.

The aging of receivables that were past due but not impaired was as follow:

Less than 90 days 90 days to 180 days 181 days to 361 days Over 361 days		December 31
		2014 2013 $ 8,378 $ 7,020 3,936 17,650 31,351 32,548 18,245 10,771 $ 61,910 $ 67,989

The above aging schedule was based on the invoice date.

On the above receivables that were past due but not impaired, the receivables of outlets in shopping malls are collected by the mall first, which means the procedures and timing for the billing of the Company are longer. The experience shows that the receivables are collectable, so there was no impairment loss recognized.

The movements of the allowance for doubtful trade receivables were as follows:

Individually Assessed for Impairment Collectively Assessed for Impairment Balance at January 1, 2014 $ - $ - Add: Impairment losses recognized on receivables 10,335 - Foreign exchange translation gains and losses 363 - Balance at December 31, 2014 $ 10,698 $ -	Total $ - 10,335 363 $ 10,698

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9. INVENTORIES

Finished goods Work in process Raw materials and supplies Merchandise		December 31	December 31
		2014 $ 29,500 2,999 409,322 92,173 $ 533,994	2013 $ 35,695 2,778 323,832 93,026 $ 455,331

As of December 31, 2014 and 2013, the allowance for inventory devaluation was $4,371 thousand and $2,701 thousand, respectively.

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2014 and 2013 was $7,836,415 thousand and $6,719,096 thousand, respectively.

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2014 and 2013 included inventory write-down of $1,688 thousand and zero respectively.

The obsolescence of inventories recognized as cost of goods sold for the years ended December 31, 2014 and 2013 was $241,700 thousand and $210,566 thousand, respectively.

10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investment in associates Investment in jointly controlled entities a. Investment in associates Unlisted company The Hot Pot Food and Beverage Management Co., Ltd.		December 31	December 31
		2014 2013 $ 58,710 $ 110,233 - 78,526 $ 58,710 $ 188,759 December 31
		2014 $ 58,710	2013 $ 110,233

As the end of the reporting period, the proportion of ownership and voting rights in associates held by the Group were as follows:

Name of Associate The Hot Pot Food and Beverage Management Co., Ltd.	December 31
	2014 2013 23% 42%

The Group has no power to govern the financial and operating policies of The Hot Pot Food and Beverage Management Co., Ltd. starting August 2013. This is because the Group lost power to cast the majority of votes at meetings of the board of directors. As a result, The Hot Pot Food and Beverage Management Co., Ltd. is no longer consolidated but accounted for using the equity method. Please refer to Note 22.

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The summarized financial information in respect of the Group’s associates is set out below:

Total asset Total liabilities Revenue Profit for the year Other comprehensive income Group’s share of profit of associates for the year		December 31	December 31
	2014 $ 317,804 $ 58,940 For the Year Ended		2013 $ 297,602 $ 36,509 December 31
		2014 $ 280,244 $ 3,864 $ - $ 2,252	2013 $ 128,453 $ 514 $ 26 $ 3,516

The investments accounted for by the equity method and the share of profit or loss and other comprehensive income of those investments for the year ended December 31, 2014 was based on the associates’ financial statements audited by the auditors for the same years.

b. Investment in jointly controlled entities:

Unlisted company Profit Sky International Limited		December	31
		2014 $ -	2013 $ 78,526

As the end of the reporting period, the proportion of ownership and voting rights in jointly controlled entities held by the Group were as follows:

Name of Jointly Controlled Entities Profit Sky International Limited	December 31
	2014 2013 - 50%

In November 2014, the Group acquired 50% interest in Profit Sky International Limited. As a result, the Group can control Profit Sky International Limited and its subsidiaries. Hence, Profit Sky International Limited and its subsidiaries were included in the consolidated financial statements from the date of acquisition. Please refer to Note 21.

The summarized financial information in respect of the Group’s interests in the jointly controlled entities which are accounted for using the equity method is set out below:

	December 31,	December 31,
		2013
Current assets	$	4,447
Non-current assets	$	76,371
Current liabilities	$	2,653

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	For the Year	For the Year
	Ended
	December	31,
	2013
Income recognized in profit or loss	$ (20,012)
Other comprehensive income	$	-

The investments accounted for by the equity method and the share of profit or loss and other comprehensive income of those investments for the year ended December 31, 2013 was based on the jointly controlled entities’ unaudited financial statements.

11. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2013 Additions Disposal Reclassified Effect of deconsolidation of subsidiary Effect of foreign currency exchange differences Balance at December 31, 2013 Accumulated depreciation and impairment Balance at January 1, 2013 Depreciation charge for the period Disposal Reclassified Effect of deconsolidation of subsidiary Effect of foreign currency exchange differences Balance at December 31, 2013 Carrying amounts at December 31, 2013 Cost Balance at January 1, 2014 Additions Disposal Reclassified Acquisitions through business combinations Effect of foreign currency exchange differences Balance at December 31, 2014 Accumulated depreciation and impairment Balance at January 1, 2014 Depreciation charge for the period Disposal Reclassified	Land $ 417,259 - - - - 2,952 $ 420,211 $ - - - - - - $ - $ 420,211 $ 420,211 - - 102,714 - 3,713 $ 526,638 $ - - - -	Buildings Machinery and Equipment Leasehold Improvements Transportation Equipment $ 414,094 $ 1,729,320 $ 1,391,242 $ 47,953 133,798 296,780 448,965 10,674 (1,118 ) (44,709 ) (152,016 ) (7,882 ) 90,952 (19,267 ) 187,198 1,321 - (3,256 ) (21,584 ) - 22,320 79,198 67,968 1,345 $ 660,046 $ 2,038,066 $ 1,921,773 $ 53,411 $ 32,865 $ 494,457 $ 496,749 $ 20,829 30,459 298,376 298,783 8,995 (1,118 ) (42,195 ) (67,908 ) (2,127 ) - (9,146 ) 3,111 (1,282 ) - (379 ) (1,277 ) - 880 23,454 25,378 606 $ 63,086 $ 764,567 $ 754,836 $ 27,021 $ 596,960 $ 1,273,499 $ 1,166,937 $ 26,390 $ 660,046 $ 2,038,066 $ 1,921,773 $ 53,411 83,136 482,286 551,636 9,683 (1,178 ) (197,460 ) (214,444 ) (12,062 ) 5,261 40,362 140,236 - - 24,147 38,711 - 19,605 66,085 73,709 1,126 $ 766,870 $ 2,453,486 $ 2,511,621 $ 52,158 $ 63,086 $ 764,567 $ 754,836 $ 27,021 36,909 357,510 363,979 10,161 (1,178 ) (138,831 ) (134,518 ) (8,782 ) - 24,180 - -	Office Equipment $ 354,068 76,135 (18,208 ) 22,909 (979 ) 18,501 $ 452,426 $ 147,544 82,704 (12,391 ) 8,537 (111 ) 8,013 $ 234,296 $ 218,130 $ 452,426 139,933 (37,868 ) (38,128 ) - 17,176 $ 533,539 $ 234,296 105,625 (32,545 ) (24,186 )	Other Equipment $ 172,067 26,242 (19,520 ) (15,138 ) (11,436 ) 1,100 $ 153,315 $ 100,593 24,396 (18,283 ) (1,220 ) (1,651 ) 312 $ 104,147 $ 49,168 $ 153,315 89,531 (80,707 ) 96 62,473 1,384 $ 226,092 $ 104,147 24,429 (53,372 ) 6	Construction in Progress Total $ 164,296 $ 4,690,299 293,643 1,286,237 - (243,453 ) (267,975 ) - (44,420 ) (81,675 ) 2,551 195,935 $ 148,095 $ 5,847,343 $ - $ 1,293,037 - 743,713 - (144,022 ) - - - (3,418 ) - 58,643 $ - $ 1,947,953 $ 148,095 $ 3,899,390 $ 148,095 $ 5,847,343 531,635 1,887,840 - (543,719 ) (250,541 ) - 401 125,732 13,108 195,906 $ 442,698 $ 7,513,102 $ - $ 1,947,953 - 898,613 - (369,226 ) - - (Continued)

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Acquisitions through business combinations Effect of foreign currency exchange differences Balance at December 31, 2014 Carrying amounts at January 1, 2014 Carrying amounts at December 31, 2014	Land $ - - $ - $ 420,211 $ 526,638	Buildings Machinery and Equipment Leasehold Improvements Transportation Equipment $ - $ 4,437 $ 13,660 $ - 2,075 28,867 33,122 675 $ 100,892 $ 1,040,730 $ 1,031,079 $ 29,075 $ 596,960 $ 1,273,499 $ 1,166,937 $ 26,390 $ 665,978 $ 1,412,756 $ 1,480,542 $ 23,083	Office Equipment $ - 10,041 $ 293,231 $ 218,130 $ 240,308	Other Equipment $ 19,882 777 $ 95,869 $ 49,168 $ 130,223	Construction in Progress Total $ - $ 37,979 - 75,557 $ - $ 2,590,876 $ 148,095 $ 3,899,390 $ 442,698 $ 4,922,226 (Concluded)

The above items of property, plant and equipment were depreciated on a straight-line basis over the estimated useful life of the asset:

Building Main buildings 20-39 years Power system engineering 11 years Furnishing 3-20 years Machinery and equipment 1-20 years Leasehold improvements 1-41 years Transportation equipment 1-15 years Office equipment 1-11 years Other equipment 1-11 years

Refer to Note 28 for the carrying amount of property, plant and equipment pledged by the Group to secure borrowings granted to the Group.

12. OTHER ASSETS

Current Prepaid rent Prepayments Offset against business tax payable Other prepayments Others Noncurrent Prepaid equipment Refundable deposits Long-term prepayments for lease Others		December 31	December 31
		2014 $ 205,603 69,333 47,329 38,824 12,616 $ 373,705 $ 297,939 545,718 63,616 10,132 $ 917,405	2013 $ 226,480 76,304 55,162 38,854 12,607 $ 409,407 $ 175,661 418,421 9,497 3,831 $ 607,410

a. Prepaid rent is due to store lease arrangement.
b. Prepaid equipment is due to purchasing new equipment for factory.
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c. Refundable deposits are for rental of store and factories.
d. Long-term prepayments for lease are land use right in China.

13. TRADE PAYABLES

The average credit period on purchases of certain goods was 45 days. The Group has financial risk management policies to ensure in place that all payables are paid within the pre-agreed credit terms.

14. OTHER LIABILITIES

Current Other payables Payable for purchase of equipment Accrued payroll and bonus Utilities Insurance Rent Others (shipping expense and repairing expense, etc.) Other liabilities Receipts in advance Others Noncurrent Decommission restoration and rehabilitation provision Guarantee deposits received		December 31	December 31
		2014 $ 151,142 460,869 91,127 58,194 38,308 371,552 $ 1,171,192 $ 641,974 15,594 $ 657,568 $ 56,726 67,923 $ 124,649	2013 $ 122,087 352,924 86,421 43,406 22,529 307,184 $ 934,551 $ 568,626 23,280 $ 591,906 $ 29,233 87,248 $ 116,481

Receipts in advance are mainly issued gift vouchers not yet redeemed.

15. SHAREHOLDERS’ EQUITY

Share Capital

Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2014 850,000 $ 8,500,000 141,120 $ 1,411,200	2013 850,000 $ 8,500,000 141,120 $ 1,411,200

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Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

Capital Surplus

The capital surplus arising from shares issued in excess of par (including share premium from issuance of common shares may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to capital (limited to a certain percentage of the Company’s capital surplus and once a year).

The capital surplus from long-term investments, employee share options and share warrants may not be used for any purpose.

Retained Earnings and Dividend Policy

The Company’s Articles of Incorporation provide that reserve should be set aside at 10% of annual net income less any accumulated losses. In addition, a special reserve should be appropriated as needed. The remainder of the income should be appropriated in the following order:

a. 3% or less as bonus to employees (including subsidiaries’ employees);
b. 1% or less as remuneration to directors and supervisors; and
c. The earnings appropriated should not be less than 30% of the after-tax earnings. And the cash dividends should not be less than 10% of the sum of cash dividends and stock dividends.

For the years ended December 31, 2014 and 2013, there were no accrual for bonus to employees and the remuneration to directors and supervisors. Material differences between such estimated amounts and the amounts proposed by the board of directors on or before the consolidated financial statements are authorized for issue are adjusted in the year the bonus and remuneration were recognized. If there is a change in the proposed amounts after the consolidated financial statements are authorized for issue, the differences are recorded as a change in accounting estimate. If a share bonus is resolved to be distributed to employees, the number of shares is determined by dividing the amount of the share bonus by the fair value of the shares. The fair value of the shares refer to the closing price (after considering the effect of cash and stock dividends) of the shares on the day immediately preceding the shareholders’ meeting.

Under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, the Company should appropriate or reverse to a special reserve. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and thereafter distributed.

The appropriations of earnings for 2013 and 2012 were approved in the shareholders’ meeting held on June 6, 2014 and June 11, 2013, respectively. The appropriations and dividends per share were as follows:

Reserve Special reserve Cash dividends	Appropriation of Earnings 2013 2012 $ 57,403 $ 97,734 - 38,098 183,456 705,600	Dividends Per Share (Dollars)
		2013 2012 $ - $ - - - 1.3 5

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There was no bonus to employees and the remuneration to directors and supervisors for 2013 and 2012 was approved in the shareholders’ meeting held on June 6, 2014 and June 11, 2013, respectively.

The appropriations of earnings for 2014 had been proposed by the Company’s board of directors on March 11, 2015. The appropriations and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Reserve	$	52,751	$ -
Cash dividends		169,344	1.2

The appropriations of earnings, the bonus to employees, and the remuneration to directors and supervisors for 2014 are subject to the resolution of the shareholders’ meeting to be held on June 6, 2015.

There was no difference between the amounts of bonuses to employees and the remuneration to directors and supervisors approved in shareholders’ meetings in 2014 and 2013 and the amounts recognized in the financial statements for the years ended December 31, 2013 and 2012.

Information on the bonus to employees, directors and supervisors proposed by the Company’s board of directors is available on the Market Observation Post System website of the Taiwan Stock Exchange.

Provision of Special Reserve

The Company had a decrease in retained earnings that resulted from all IFRSs adjustments; therefore, no special reserve was appropriated.

16. REVENUE

Revenue from sales of goods	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 17,921,236	2013 $ 15,114,334

17. NET PROFIT

a. Other income

Interest income Income from government grants Others	For the Year Ended	For the Year Ended	December 31
		2014 $ 35,732 75,809 57,460 $ 169,001	2013 $ 22,845 87,169 47,956 $ 157,970

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b. Other gains and losses

For the Year Ended	For the Year Ended	For the Year Ended	December 31
2014 $ 12,369 (60,274) - (42,697) $ (90,602) For the Year Ended			2013 $ (5,507) (79,424) 5,874 (80,122) $ (159,179) December 31
2014 $ 898,613 21,685 $ 920,298 $ 157,251 741,362 $ 898,613 $ 2,051 19,634 $ 21,685 For the Year Ended			2013 $ 743,713 16,857 $ 760,570 $ 134,221 609,492 $ 743,713 $ 3,379 13,478 $ 16,857 December 31
	2014 $ 39,468 4,711,572 $ 4,751,040 $ 623,204 4,127,836 $ 4,751,040	2013 $ 36,652 3,779,354 $ 3,816,006 $ 527,192 3,288,814 $ 3,816,006

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18. INCOME TAX

a. Income tax recognized in profit or loss

The major components of tax expense were as follows:

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior periods Deferred tax In respect of the current year Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2014 $ 366,035 - 5,335 371,370 (2,255) $ 369,115	2013 $ 299,853 32,379 4,215 336,447 (17,056) $ 319,391

A reconciliation of accounting income and income tax expenses used is as follow:

Profit before income tax Income tax expense calculated at the statutory rate Nondeductible expense in determining taxable income Tax exempt income Income tax on unappropriated earnings Oversea earnings repatriate tax withholdings Unrecognized deductible temporary differences Unrecognized loss carryforwards Adjustment for prior year’s tax Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2014 $ 912,901 $ 237,522 4,381 (7,901) - 55,621 6,195 67,962 5,335 $ 369,115	2013 $ 923,739 $ 243,130 (29,544) (8,863) 32,379 7,939 (2,127) 72,262 4,215 $ 319,391

The applicable tax rate used by the subsidiaries in ROC is 17%, in China is 25%, and in Hong Kong is 16.5%. Tax rates used by other group entities operating in other jurisdictions are based on the tax laws in those jurisdictions.

As the status of 2015 appropriations of earnings is uncertain, the potential income tax consequences of 2014, unappropriated earnings are not reliably determinable.

84 -

b. Deferred tax assets

The movements of deferred tax assets were as follows:

For the year ended December 31, 2014

Deferred Tax Assets Opening Balance Recognized in Profit or Loss Effect of Consoli- dation of Subsidiary Exchange Differences Temporary differences Unrealized foreign exchange losses $ 719 $ (718) $ - $ (1) Salary and wages payable 42,737 1,588 - 1,553 Write-down of inventories 281 140 - - Others 11,440 3,634 - 516 55,177 4,644 - 2,068 Tax losses 8,169 (1,737) 12,757 518 $ 63,346 $ 2,907 $ 12,757 $ 2,586 Deferred Tax Liabilities Opening Balance Recognized in Profit or Loss Effect of Consoli- dation of Subsidiary Exchange Differences Temporary differences Unrealized foreign exchange gains $ - $ 652 $ - $ 1 For the year ended December 31, 2013 Deferred Tax Assets Opening Balance Recognized in Profit or Loss Effect of Deconsoli- dation of Subsidiary Exchange Differences Temporary differences Unrealized foreign exchange losses $ 840 $ (121) $ - $ - Salary and wages payable 32,512 8,235 - 1,990 Write-down of inventories 630 (349) - - Others 6 11,219 (35) 250 33,988 18,984 (35) 2,240 Tax losses 12,523 (1,928) (2,948) 522 $ 46,511 $ 17,056 $ (2,983) $ 2,762	Closing Balance $ - 45,878 421 15,590
	61,889 19,707
	$ 81,596
	Closing Balance $ 653
	Closing Balance $ 719 42,737 281 11,440
Deferred Tax Assets Temporary differences Unrealized foreign exchange losses Salary and wages payable Write-down of inventories Others Tax losses
	55,177 8,169
	$ 63,346

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c. Items for which no deferred tax assets have been recognized

Loss carryforwards Expired 2015 Expired 2016 Expired 2017 Expired 2018 Expired 2019 Expired 2020 Expired 2022 Expired 2023 Expired 2024	December 31	December 31
	2014 Applicable Tax Rate 25% Applicable Tax Rate 17% $ 7,142 $ - 53,188 - 171,812 117 357,027 21,674 295,209 9,369 - 2,012 - 1,352 - 113 - 77,667 $ 884,378 $ 112,304	2013
		Applicable Tax Rate 25% Applicable Tax Rate 17% $ 6,906 $ - 66,063 - 246,526 117 301,788 21,674 - 9,369 - 2,012 - 1,352 - 113 - - $ 621,283 $ 34,637

d. Information about unused loss carry-forward and tax-exemption

Loss carryforwards as of December 31, 2014 comprised of:

Unused Amount	Total Expiry Year $ 7,142 2015 53,188 2016 171,929 2017 441,000 2018 307,961 2019 42,031 2020 1,352 2022 113 2023 77,667 2024 $ 1,102,383
Applicable Tax Rate 25% Applicable Tax Rate 17% Applicable Tax Rate 16.5% $ 7,142 $ - $ - 53,188 - - 171,812 117 - 382,426 21,674 36,900 296,472 9,369 2,120 - 2,012 40,019 - 1,352 - - 113 - - 77,667 - $ 911,040 $ 112,304 $ 79,039

As of December 31, 2014, profits attributable to the following expansion projects were exempted from income tax for a five-year period:

Expansion of Construction Project Tax-exemption Period Construction and expansion of 2009 by Comestibles Master Co., Ltd. 2013 to 2016

e. Except for the Company which is tax-free, the income tax returns through 2012 of Comestibles Master Co., Ltd., Mei Wei Master Co., Ltd. and Mei Wei Fu Xing had been examined and cleared by the Republic of China (Taiwan)’s tax authorities. All other companies prepare their tax returns according to local law.
86 -

19. EARNINGS PER SHARE

Basic earnings per share From continuing operations	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 3.74	2013 $ 4.07

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

Net Profit for the Year

For the Year Ended 2014 Earnings used in computation of basic earnings per share $ 527,509 Weighted Average Number of Ordinary Shares Outstanding (In Thousand Shares)	For the Year Ended	December 31
		2013 $ 574,032

Weighted average number of ordinary shares used in the computation of basic and diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 141,120	2013 141,120

20. GOVERNMENT GRANTS

The amounts of project subsidies and incentives received for the years ended December 31, 2014 and 2013 were $75,809 thousand and $87,169 thousand, respectively. The government grants were recognized in non-operating income and expenses - other income in the consolidated statements of comprehensive income.

21. BUSINESS COMBINATIONS

a. Subsidiaries acquired

			Proportion of
			Voting Equity
			Interests	Consideration
	Principal Activity	Date of Acquisition	Acquired (%)	Transferred
Profit Sky International	Grocery and drink	November 30, 2014	50%	$46,296
Limited and its	retailing
subsidiaries

Profit Sky International Limited was acquired in order to control the operation in the Hong Kong market.

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b. Assets acquired and liabilities assumed at the date of acquisition

	Profit Sky	Profit Sky
	International
	Limited and its
	Subsidiaries
Current assets
Cash and cash equivalents	$	24,437
Inventories		7,811
Prepayments		5,356
Non-current assets
Plant and equipment		87,753
Deferred income tax assets		12,757
Other non-current assets		22,402
Current liabilities
Trade and other payables		(40,444)
Other current liabilities		(124)
Non-current liabilities
Decommission, restoration and rehabilitation provisions		(7,982)
	$	111,966

c. Net cash outflow on acquisition of subsidiaries

	For the Year
	Ended
	December 31,
	2014
Consideration paid in cash	$ 46,296
Less: Cash and cash equivalent balances acquired	(24,437)
	$ 21,859

d. Impact of acquisitions on the results of the Group

The results of the acquirees since the acquisition date included in the consolidated statements of comprehensive income were as follows:

	For the Year
	Ended
	December 31,
	2014
Revenue
Profit Sky International Limited and its subsidiaries	$ 20,126
Profit
Profit Sky International Limited and its subsidiaries	$ (4,152)

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22. DECONSOLIDATION OF SUBSIDIARY

Starting August 2013, The Hot Pot Food and Beverage Management Co., Ltd. increased its share capital and the Group did not participate in the share issuance. The Group lost is power to govern the financial and operating policies of The Hot Pot Food and Beverage Management Co., Ltd. and its subsidiary The Hot Pot Food and Beverage Management Limited due to the loss of power to cast the majority of votes at meetings of the board of directors; accordingly, the Company derecognized related assets, liabilities and noncontrolling interests of The Hot Pot Food and Beverage Management Co., Ltd.

a. Consideration received

The Company did not receive any consideration in the deconsolidation of The Hot Pot Food and Beverage Management Co., Ltd.

b. Analysis of assets and liabilities over which the Company lost control

	December 31,	December 31,
		2013
Current assets
Cash and cash equivalents	$	47,726
Inventories		10,109
Others		10,748
Noncurrent assets
Property, plant and equipment		78,257
Others		8,598
Current liabilities
Other payables		(19,868)
Others		(2,290)
Net assets deconsolidated	$	133,280
Gain on deconsolidation of subsidiary
	For the Year
		Ended
	December 31,
		2013
Fair value of interest retained	$	106,775
Less: Carrying amount of interest retained
Net assets deconsolidated		133,280
Noncontrolling interests		(32,274)
		101,006
Add: Reclassified other equity to profit or loss		105
Gain on deconsolidation of subsidiary	$	5,874

c. Gain on deconsolidation of subsidiary

Gain on deconsolidation of subsidiary was included in other gains and losses for the year ended December 31, 2013.

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d. Net cash outflow arising from deconsolidation of the subsidiary

	For the Year
	Ended
	December 31,
	2013
The balance of cash and cash equivalents deconsolidated	$ 47,726

23. NON-CASH TRANSACTIONS

For the years ended December 31, 2014 and 2013, the Group entered into the following non-cash investing activities which were not reflected in the consolidated statement of cash flows:

a. The Group acquired property, plant and equipment with an aggregate fair value of $1,887,840 thousand, of which amount $23,005 thousand was recognized as other payables. Net cash used in acquiring property, plant and equipment was $1,864,835 thousand in the year ended December 31, 2014. (Please refer to Note 11)
b. The Group acquired property, plant and equipment with an aggregate fair value of $1,286,237 thousand, and paid related other payables in the amount of $10,305 thousand. Net cash used in acquiring property, plant and equipment was $1,296,542 thousand in the year ended December 31, 2013. (Please refer to Note 11)

24. OPERATING LEASE ARRANGEMENTS

Operating leases relate to leases of store and plant with lease terms between 1 and 10 years. All operating lease contracts over 5 years contain clauses for 1 to 5 years market rental reviews. The Group does not have a bargain purchase option to acquire the leased property and plant at the expiration of the lease periods.

The future minimum lease payments of non-cancellable operating lease commitments were as follows:

Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years		December 31	December 31
		2014 $ 1,845,335 4,463,857 998,484 $ 7,307,676	2013 $ 1,528,167 3,274,402 458,097 $ 5,260,666

25. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents) and equity attributable to owners of the Company (comprising issued capital, reserves, retained earnings and other equity).

The Group is not subject to any externally imposed capital requirements.

90 -

Key management personnel of the Group review the capital structure on a quarterly basis. As part of this review, the key management personnel consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Group may adjust the amount of dividends paid to shareholders, the number of new shares issued and the amount of existing debt redeemed.

26. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments

Fair value of financial instruments not carried at fair value

The management considers the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements as approximate amounts of their fair values.

b. Categories of financial instruments

Financial assets Loans and receivables (Note 1) Financial liabilities Amortized cost (Note 2)	December 31
	2014 2013 $ 2,851,892 $ 3,087,302 2,180,987 1,747,344

Note 1: The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt investments with no active market, notes receivable, trade receivable and other receivables.
Note 2: The balances included financial liabilities measured at amortized cost, which notes payable, trade and other payables, and long-term borrowings.
c. Financial risk management objectives and policies

The Group’s major financial instruments included equity, trade receivables and trade payables. The Group’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

1) Market risk

Foreign currency risk

The Group’s primary financial risk is foreign exchange risk. There is no change in the financial instrument’s market risk and exposure of management and measurement since prior period.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the reporting period are set out in Note 30.

91 -

Sensitivity analysis

The Group was mainly exposed to the U.S. dollars.

The following table details the Group’s sensitivity to a 1% increase and decrease in Renminbi (the functional currency) against the relevant foreign currencies. The sensitivity analysis included only outstanding foreign currency denominated monetary items and foreign currency forward contracts designated as cash flow hedges, and adjusts their translation at the end of the reporting period for a 1% change in foreign currency rates. A positive number below indicates an increase in pre-tax profit associated with Renminbi weaken 1% against the relevant currency. For a 1% strengthening of Renminbi against the relevant currency, there would be an equal and opposite impact on pre-tax profit and the balances below would be negative.

Profit or loss	U.S. Dollars Impact
	For the Year Ended December 31
	2014 2013 $ 3,317 $ 4,631 (i)

i. This was mainly attributable to the exposure outstanding on U.S. dollars receivables and cash in bank, which were not hedged at the end of the reporting period.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.

At the end of the reporting period, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties is arising from the carrying amount of the respective recognized financial assets as stated in the balance sheet.

Most of the Group’s counterparties are franchisees traded for a long-term, and the Group monitors trade receivables from franchisees continuously. So impairment loss recognized on trade receivables was not significant. Trade receivables consisted of a large number of customers and spread across diverse industries between geographical areas. Therefore the Group assessed that the concentration of credit risk was limited.

The concentration of credit risk with counterparties was never more than 10 percent of non-monetary assets.

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. Because most counterparties of excess liquidity are banks monitored by regulators in the People’s Republic of China and Republic of China, the credit risk is limited.

3) Liquidity risk

The working capital of the Group is enough to afford the contract so there is no risk of liquidity.

92 -

27. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Besides as disclosed elsewhere in other notes, details of transactions between the Group and other related parties are disclosed below:

a. Sales of goods

Line Items Related Party Categories Sales Joint ventures Associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 17,827 44 $ 17,871	2013 $ 11,184 - $ 11,184

There is no significant difference between sales to related parties and sales to other customers.

b. Purchases of goods

Related Party Categories Related party	For the Year Ended	For the Year Ended	December 31
		2014 $ 98,133	2013 $ 121,639

The purchases price is 65% of the sale price, and paid 30 days date of purchases.

c. Receivables from related parties (excluding loans to related parties)

Line Items Related Party Categories Trade receivables Joint ventures Associates Other receivables Joint ventures Associates		December	31
		2014 $ - 37 $ 37 $ - 745 $ 745	2013 $ 1,039 - $ 1,039 $ 559 - $ 559

The outstanding trade receivables from related parties are unsecured. For the years ended December 31, 2014 and 2013, no impairment loss was recognized for trade receivables from related parties.

d. Other transactions with related parties

The Group performed technical services for joint ventures. For the years ended December 31, 2014 and 2013, other income amounted to $6,809 thousand and $3,833 thousand, respectively.

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e. Compensation of key management personnel

Short-term benefits	For the Year Ended	For the Year Ended	December 31
		2014 $ 23,716	2013 $ 32,574

The remuneration of directors and key executives was determined by the remuneration committee having regard to the performance of individuals and market trends.

28. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The assets pledged or mortgaged as collaterals for bank borrowings and other contracts were as follows:

Property, plant and equipment Land Buildings Bond investments with no active market - current Restiricted bank deposits		December 31	December 31
		2014 $ 293,761 69,835 50,920 $ 414,516	2013 $ 202,305 13,760 186,922 $ 402,987

29. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of December 31, 2014 and 2013 were as follows:

Significant Commitments

a. As of December 31, 2014 and 2013, unused letters of credit for purchases of raw materials and machinery and equipment amounted to approximately US$4,000 thousand and US$2,000 thousand, respectively.
b. Unrecognized commitments are as follows:

Acquisition of property, plant and equipment		December 31	December 31
		2014 $ 671,290	2013 $ 101,963

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30. EXCHANGE RATE OF FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The significant financial assets and liabilities denominated in foreign currencies were as follows:

Financial assets Monetary items USD Financial assets Monetary items USD	December 31, 2014
	Foreign Currencies Exchange Rate Carrying Amount $ 10,645 6.119 (USD:RMB) $ 331,671 December 31, 2013
	Foreign Currencies Exchange Rate Carrying Amount $ 15,442 6.0969 (USD:RMB) $ 463,126

31. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:
1) Financings provided to others. (Table 1)
2) Endorsements/guarantees provided. (Table 2)
3) Marketable securities held (excluding investment in subsidiaries, associates and joint controlled entities). (None)
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital. (None)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital. (Table 3)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital. (None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 4)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 5)
9) Trading in derivative instruments. (None)
10) Intercompany relationships and significant intercompany transactions. (Table 6)
11) Information on investees. (Table 7)
95 -
b. Information on investments in Mainland China
1) Information on any investee company in Mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the Mainland China area. (Table 8)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: (None)
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.
- c) The amount of property transactions and the amount of the resultant gains or losses.
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.
- e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds.
- f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services.

32. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. The Group’s principal geographical areas are China, Taiwan and the United Stated (USA).

a. Revenue from major products and services

The following is an analysis of the Group’s revenue from continuing operations categorized by major products and services:

Beverages Cake Bread Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2014 $ 5,020,383 6,274,571 6,591,746 34,536 $ 17,921,236	2013 $ 4,288,168 5,308,791 5,423,622 93,753 $ 15,114,334

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b. Geographical information

The Group’s revenue from continuing operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below:

Revenue from External Customers For the Year Ended December 31 2014 2013 $ 12,933,689 $ 10,948,763 3,028,661 3,228,781 1,774,290 768,384 184,596 168,406 $ 17,921,236 $ 15,114,334	Non-current Assets	Non-current Assets

	December 31
2014 $ 12,933,689 3,028,661 1,774,290 184,596 $ 17,921,236	2014 $ 3,966,417 947,913 776,411 224,826 $ 5,915,567	2013 $ 3,158,033 749,075 631,829 42,218 $ 4,581,155

Non-current assets exclude financial instruments and deferred tax assets.

c. Significant customer information

The Group has no client that its revenue is over 10% of the income statement at years ended December 31, 2014 and 2013.

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TABLE 1

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2014 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period	Ending Balance	Actual Borrowing Amount	Interest Rate	Nature of Financing	Business Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower	Aggregate Financing Limits	Note
													Item	Value
1	Shanghai Gourmet Master Food & Beverage Ltd.	Sheng-Pin (Shanghai) Food Ltd. Sheng-Pin (Shenzheng) Food Ltd. Sheng-Pin (Wuhan) Food Ltd. Wuhan Jing Way Food & Beverage Ltd.	Other receivable - related parties Other receivable - related parties Other receivable - related parties Other receivable - related parties	Yes Yes Yes Yes	$ 101,840 (RMB 20,000) 76,380 (RMB 15,000) 61,104 (RMB 12,000) 101,840 (RMB 20,000)	$ 76,380 (RMB 15,000) - 50,920 (RMB 10,000) -	$ 76,380 (RMB 15,000) - 50,920 (RMB 10,000) -	3.75 3.75 3.75 3.75	For short-term financing For short-term financing For short-term financing For short-term financing	$ - - - -	Working capital loan Working capital loan Working capital loan Working capital loan	$ - - - -	- - - -	$ - - - -	$ 672,389 672,389 672,389 672,389	$ 1,344,779 1,344,779 1,344,779 1,344,779	Note Note Note Note
2	He-Shia Food & Beverage Ltd.	Sheng-Pin (Beijing) Food Ltd. Beijing 85 Food & Beverage Ltd. Zhejiang 85 Food & Beverage Ltd. Shenyang 85 Food & Beverage Ltd.	Other receivable - related parties Other receivable - related parties Other receivable - related parties Other receivable - related parties	Yes Yes Yes Yes	76,380 (RMB 15,000) 203,680 (RMB 40,000) 101,840 (RMB 20,000) 76,380 (RMB 15,000)	76,380 (RMB 15,000) 127,300 (RMB 25,000) 101,840 (RMB 20,000) 76,380 (RMB 15,000)	76,380 (RMB 15,000) 127,300 (RMB 25,000) - 76,380 (RMB 15,000)	3.75 3.75 3.75 3.75	For short-term financing For short-term financing For short-term financing For short-term financing	- - - -	Working capital loan Working capital loan Working capital loan Working capital loan	- - - -	- - - -	- - - -	672,389 672,389 672,389 672,389	1,344,779 1,344,779 1,344,779 1,344,779	Note Note Note Note
3	He-Shia (Nanjing) Food & Beverage Ltd.	Sheng-Pin (Xiamen) Food Ltd. Shenzheng 85 Food & Beverage Ltd.	Other receivable - related parties Other receivable - related parties	Yes Yes	101,840 (RMB 20,000) 101,840 (RMB 20,000)	101,840 (RMB 20,000) 101,840 (RMB 20,000)	50,920 (RMB 10,000) 50,920 (RMB 10,000)	3.75 3.75	For short-term financing For short-term financing	- -	Working capital loan Working capital loan	- -	- -	- -	672,389 672,389	1,344,779 1,344,779	Note Note
4	Comestibles Master Co., Ltd.	Perfect 85 Degrees C, Inc. WinPin 85 Investments Inc. Perfect 85 Degrees C, Inc. Perfect 85 Degrees C, Inc. WinPin 85 Investments Inc.	Other receivable - related parties Other receivable - related parties Other receivable - related parties Other receivable - related parties Other receivable - related parties	Yes Yes Yes Yes Yes	56,084 (US$ 1,800) 56,084 (US$ 1,800) 171,368 (US$ 5,500) 56,084 (US$ 1,800) 56,084 (US$ 1,800)	56,084 (US$ 1,800) 56,084 (US$ 1,800) 171,368 (US$ 5,500) - -	56,084 (US$ 1,800) 56,084 (US$ 1,800) 171,368 (US$ 5,500) - -	3.75 3.75 3.75 3.75 3.75	For short-term financing For short-term financing For short-term financing For short-term financing For short-term financing	- - - - -	Working capital loan Working capital loan Working capital loan Working capital loan Working capital loan	- - - - -	- - - - -	- - - - -	672,389 672,389 672,389 672,389 672,389	1,344,779 1,344,779 1,344,779 1,344,779 1,344,779	Note Note Note Note Note
5	WinPin 85 Investments, Inc.	Perfect 85 Degrees C, Inc.	Other receivable - related parties	Yes	68,547 (US$ 2,200)	68,547 (US$ 2,200)	-	3.75	For short-term financing	-	Working capital loan	-	-	-	672,389	1,344,779	Note

Note: According to Gourmet Master Co. Ltd. financing provided procedure the limit of amount is calculated as follow:

a. The total amount for lending for funding for a short-term period shall not exceed forty percent (40%) of the net worth of Gourmet Master Co. Ltd., which was reviewed by CPA. While subsidiaries whose voting shares are 100% owned directly or indirectly, by Gourmet Master Co. Ltd. are not subject to the above restrictions.

$6,723,893 × 40% = $2,689,557 (in thousands).

b. The total amount for lending to a company for a short-term period shall not exceed twenty percent (20%) of the net worth of Gourmet Master Co., Ltd., and the amount shall not exceed the amount of transaction.
$6,723,893 × 20% = $1,344,779 (in thousands).

(Continued)

98 -
c. The total amount for lending to a company for funding for a short-term period shall not exceed $6,723,893 (in thousands) x 20% = $1,344,779 (in thousands) of the net worth of Gourmet Master Co. Ltd. The total amount for lending to a company for funding for a short-term period shall not exceed $6,723,893 (in thousands) x 10% = $672,389 (in thousands) of the net worth of Gourmet Master Co. Ltd.
d. Transaction above is already written off in consolidated financial statements.

(Concluded)

99 -

TABLE 2

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2014 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note 1)	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note 3)	Maximum Amount Endorsed/Guar anteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity In Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit (Note 3)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship (Note 2)
1	He-Shia Food & Beverage Ltd.	Shanghai Gourmet Master Food & Beverage Ltd.	c	$ 1,344,779	$ 254,600 (RMB 50,000)	$ 254,600 (RMB 50,000)	$ 203,680 (RMB 40,000)	$ -	3.79	$ 3,361,947	No	No	Yes
2	Comestibles Master Co., Ltd.	Gourmet Master Co. Ltd.	d	1,344,779	124,632 (US$ 4,000)	124,632 (US$ 4,000)	15,579 (US$ 500)	148,583	1.85	3,361,947	No	Yes	No

Note 1: Number should be noted in number column.

a. Number 0 represents issuer.
b. Start from number 1 represents the order of the investee.

Note 2: Relationship information of endorser and endorsee should be noted.

a. Trading partner.
b. Majority owned subsidiary.
c. The Company and subsidiary owns over fifty percent (50%) ownership of the investee company.
d. A subsidiary jointly owned over fifty percent (50%) by the Company and the Company's directly-owned subsidiary.
e. Guaranteed by the Company according to the construction contract.
f. An investee company. The guarantees were provided based on the Company's proportionate share in the investee company.

Note 3: The limit of amount is calculated as follows:

a. The total amount of guarantee shall not exceed fifty percent (50%) of net worth Gourmet Master Co. Ltd. $6,723,893 × 50% = $3,361,947 (in thousands).

b. The total amount of the guarantee provided by Gourmet Master Co. Ltd. to any individual entity shall not exceed twenty percent (20%) of net worth of Gourmet Master Co. Ltd. $6,723,893 × 20% = $1,344,779 (in thousands).

100 -

TABLE 3

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2014

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer	Property	Event Date	Transaction Amount	Payment Status	Counterparty	Relationship	Information on Previous Title Transfer If Counterparty	Information on Previous Title Transfer If Counterparty	Information on Previous Title Transfer If Counterparty	is a Related Party	Pricing Reference	Purpose of Acquisition	Other Terms
							Property Owner	Relationship	Transaction Date	Amount
85 Degree (Jiangsu) Food Ltd.	Building and equipment	November 30, 2014	$ 516,147 (RMB 101,364)	By the contract	Jiansu Jiangdu Construction Group Co., Ltd. etc.	-	N/A	N/A	N/A	N/A	Bidding, price comparison and negotiated by the contracts	Manufacturing purpose	-

101 -

TABLE 4

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2014

(In Thousands of New Taiwan Dollars)

Buyer	Related Party	Relationship		Transaction Detail	Transaction Detail		Abnormal Transaction	Abnormal Transaction	Notes/Accounts Payable or Receivable	Notes/Accounts Payable or Receivable	Notes/Accounts Payable or Receivable	Note
			Purchases/S ales	Amount	% to Total	Payment Term	Unit Price	Payment Term	Account	Ending Balance	% to Total
Comestibles Master Co., Ltd. Sheng-Pin (Shanghai) Food Ltd. Sheng-Pin (Jiangsu) Food Ltd. Sheng-Pin (Hangzhou) Food Ltd. Sheng-Pin (Beijing) Food Ltd. Sheng-Pin (Xiamen) Food Ltd. Sheng-Pin (Shenzheng) Food Ltd. Mai-Jai (Chengdu) Food Ltd. Perfect 85 Degrees C, Inc.	Mei Wei Master Co., Ltd. Shanghai Gourmet Master Food & Beverage Ltd. He-Shia Food & Beverage Ltd. Jin Wei Industrial (Shanghai) Ltd. He-Shia Food & Beverage Ltd. He-Shia (Nanjing) Food & Beverage Ltd. Shanghai Gourmet Master Food & Beverage Ltd. He-Shia Food & Beverage Ltd. He-Shia (Nanjing) Food & Beverage Ltd. Zhejiang 85 Food & Beverage Ltd. Beijing 85 Food & Beverage Ltd. Fuzhou 85 Food & Beverage Ltd. Xiamen 85 Food & Beverage Ltd. Shengzheng 85 Food & Beverage Ltd. Chengdu 85 Food & Beverage Ltd. WinPin 85 Investments, Inc. Golden 85 Investment, LLC.	Affiliated company Parent company Affiliated company Affiliated company Affiliated company Affiliated company Affiliated company Affiliated company Affiliated company Affiliated company Affiliated company Affiliated company Affiliated company Parent company Affiliated company Affiliated company Parent company	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales	$ 303,491 741,555 209,667 100,503 132,859 761,608 299,914 263,223 113,234 170,254 353,544 295,564 131,668 236,378 153,640 566,477 176,744	11 62 17 8 13 75 31 27 12 17 88 53 24 77 70 76 24	25 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 30 days 30 days	Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy Based on the Group’s transfer pricing policy	- - - - - - - - - - - - - - - - -	Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables	$ 89,200 87,852 24,090 26,097 10,734 97,797 33,134 18,418 19,385 28,831 44,061 39,117 33,118 50,171 23,627 43,683 15,293	39 58 16 17 8 69 24 13 14 21 70 36 30 74 66 54 19	Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note

Note: Transaction above is already written off in consolidated financial statements.

102 -

TABLE 5

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2014

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Ending Balance (Note 1)	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
Comestibles Master Co., Ltd. Shanghai Gourmet Master Food & Beverage Ltd. He-Shia Food & Beverage Ltd. He-Shia (Nanjing) Food & Beverage Ltd.	Perfect 85 Degrees C, Inc. Sheng-Pin (Shenzheng) Food Ltd. Shanghai Gourmet Master Food & Beverage Ltd. Beijing 85 Food & Beverage Ltd. Chengdu 85 Food & Beverage Ltd. Zhejiang 85 Food & Beverage Ltd. Shanghai Gourmet Master Food & Beverage Ltd.	Affiliated company Parent company Affiliated company Affiliated company Affiliated company Affiliated company Affiliated company	$ 227,452 105,236 406,097 291,262 103,459 129,907 121,419	(Note) (Note) (Note) (Note) (Note) (Note) (Note)	$ - - - - - -	- - - - - -	$ - - - - - -	$ - - - - - -

Note: The ending balance is primarily consisted of other receivables, which is not applicable for the calculation of turnover ratio.

103 -

TABLE 6

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2014 (In Thousands of New Taiwan Dollars)

No. (Note 1)	Investee Company	Counterparty	Relationship (Note 2)		Intercompany Transactions	Intercompany Transactions
				Financial Statement Account	Amount	Payment Terms	% to Total Sales or Assets
1	Comestibles Master Co., Ltd.	Perfect 85 Degrees C, Inc. WinPin 85 Investments Inc. 85 Degrees Co., Ltd.	c c c	Other receivables Other receivables Other receivables	$ 227,452 56,084 46,399	Financings provided, annual interest rate 3.75% Financings provided, annual interest rate 3.75% -	2 1 -
2	Mei Wei Master Co., Ltd.	Comestibles Master Co., Ltd. Comestibles Master Co., Ltd.	c c	Purchases Trade payables	303,491 89,200	25 days 25 days	2 1
3	Shanghai Gourmet Master Food & Beverage Ltd.	Sheng-Pin (Shanghai) Food Ltd. Sheng-Pin (Shanghai) Food Ltd. Sheng-Pin (Shanghai) Food Ltd. Sheng-Pin (Shenzheng) Food Ltd. Sheng-Pin (Wuhan) Food Ltd. Sheng-Pin (Hangzhou) Food Ltd. Sheng-Pin (Hangzhou) Food Ltd. Mai-Jia (Chengdu) Food Ltd. Sheng-Pin (Shenyang) Food Ltd. Sheng-Pin (Xiamen) Food Ltd.	c c c c c c c c c c	Other receivables Purchases Trade payables Other receivables Other receivables Purchases Trade payables Other receivables Other receivables Purchases	76,380 741,555 87,852 105,236 50,920 299,914 33,134 65,834 63,635 49,235	Financings provided, annual interest rate 3.75% 60 days 60 days - Financings provided, annual interest rate 3.75% 60 days 60 days - - 60 days	1 4 1 1 1 2 - 1 1 -
4	He-Shia Food & Beverage Ltd.	Shanghai Gourmet Master Food & Beverage Ltd. Sheng-Pin (Beijing) Food Ltd. Sheng-Pin (Hangzhou) Food Ltd. Sheng-Pin (Xiamen) Food Ltd. Sheng-Pin (Shanghai) Food Ltd. Beijing 85 Food & Beverage Ltd. Beijing 85 Food & Beverage Ltd. Sheng-Pin (Jiangsu) Food Ltd. Shenyang 85 Food & Beverage Ltd. Shenyang 85 Food & Beverage Ltd.	c c c c c c c c c c	Other receivables Other receivables Purchases Other receivables Purchases Other receivables Other receivables Purchases Other receivables Other receivables	406,097 76,380 263,223 41,189 209,667 127,300 163,962 132,859 76,380 70,229	- Financings provided, annual interest rate 3.75% 60 days - 60 days Financings provided, annual interest rate 3.75% - 60 days Financings provided, annual interest rate 3.75% -	4 1 1 - 1 1 2 1 1 1
							(Continued)

104 -

No. (Note 1)	Investee Company	Counterparty	Relationship (Note 2)		Intercompany Transactions	Intercompany Transactions
				Financial Statement Account	Amount	Payment Terms	% to Total Sales or Assets
		Shenzheng 85 Food & Beverage Ltd. Chengdu 85 Food & Beverage Ltd. Zhejiang 85 Food & Beverage Ltd.	c c c	Other receivables Other receivables Other receivables	58,151 103,459 129,907	- - -	1 1 1
5	Beijing 85 Food & Beverage Ltd.	Sheng-Pin (Beijing) Food Ltd. Sheng-Pin (Beijing) Food Ltd.	c c	Purchases Trade payables	353,544 44,061	60 days 60 days	2 -
6	He-Shia (Nanjing) Food & Beverage Ltd.	Sheng-Pin (Jiangsu) Food Ltd. Sheng-Pin (Jiangsu) Food Ltd. Shanghai Gourmet Master Food & Beverage Ltd. Shenzheng 85 Food & Beverage Ltd. Sheng-Pin (Xiamen) Food Ltd. Sheng-Pin (Hangzhou) Food Ltd.	c c c c c c	Purchases Trade payables Other receivables Other receivables Other receivables Purchases	761,608 97,797 121,419 50,920 50,920 113,234	60 days 60 days - Financings provided, annual interest rate 3.75% Financings provided, annual interest rate 3.75% 60 days	4 1 1 1 1 1
7	Wuhan Jing Way Food & Beverage Ltd.	Sheng-Pin (Wuhan) Food Ltd. Sheng-Pin (Wuhan) Food Ltd.	c c	Purchases Prepayment for purchases	87,757 32,665	60 days 60 days	- -
8	Zhejiang 85 Food & Beverage Ltd.	Sheng-Pin (Hangzhou) Food Ltd.	c	Purchases	170,254	60 days	1
9	Fuzhou 85 Food & Beverage Ltd.	Sheng-Pin (Xiamen) Food Ltd. Sheng-Pin (Xiamen) Food Ltd. Guangzhou 85 Degree Food & Beverage Management Ltd.	c c c	Purchases Trade payables Other receivables	295,564 39,117 43,027	60 days 60 days -	2 - -
10	Xiamen 85 Food & Beverage Ltd.	Sheng-Pin (Xiamen) Food Ltd. Sheng-Pin (Xiamen) Food Ltd.	c c	Purchases Trade payables	131,668 33,118	60 days 60 days	1 -
11	Shenzheng 85 Food & Beverage Ltd.	Sheng-Pin (Shenzheng) Food Ltd. Sheng-Pin (Shenzheng) Food Ltd.	c c	Purchases Trade payables	236,378 50,171	60 days 60 days	1 1
12	Chengdu 85 Food & Beverage Ltd.	Mai-Jia (Chengdu) Food Ltd.	c	Purchases	153,640	60 days	1
13	Jin Wei Industrial (Shanghai) Ltd.	Sheng-Pin (Shanghai) Food Ltd. Sheng-Pin (Hangzhou) Food Ltd. Sheng-Pin (Hangzhou) Food Ltd.	c c c	Purchases Purchases Trade payables	100,503 54,442 30,914	60 days 60 days 60 days	1 - -
14	WinPin 85 Investments, Inc.	Perfect 85 Degrees C, Inc. Perfect 85 Degrees C, Inc. Perfect 85 Degrees C, Inc.	c c c	Purchases Trade payables Administrative expenses - other expenses	566,477 43,683 69,725	30 days 30 days -	3 - -
15	Golden 85 Investments, LLC	Perfect 85 Degrees C, Inc.	c	Purchases	176,744	30 days	1
							(Continued)

105 -

(Concluded)

Note 1: Intercompany relationships and significant intercompany transactions information should be noted in number column.

a. Number 0 represents parent company.
b. Number 1 to 15 represents subsidiaries.
Note 2: a. Represents the transactions from parent company to subsidiary.
b. Represents the transactions from subsidiary to parent company.
c. Represents the transactions between subsidiaries.

Note 3: The asset accounts and liability accounts amounts are calculated as percentage of consolidated total assets. The income accounts amounts are calculated as percentage of consolidated total gross sales.

106 -

TABLE 7

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

INFORMATION OF INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2014 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As	of December 31, 2014	of December 31, 2014	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2014	December 31, 2013	Shares	%	Carrying Amount
Gourmet Master Co. Ltd. Perfect 85 Degrees C, Inc. Lucky Bakery Limited Profit Sky International Limited 85 Degree Co., Ltd. Comestibles Master Co., Ltd. Mei Wei Master Co., Ltd.	85 Degree Co., Ltd. Prime Scope Trading Limited Perfect 85 Degrees C, Inc. 85 Degrees Café International Pty. Ltd. Lucky Bakery Limited WinPin 85 Investments, Inc. Golden 85 Investments, LLC Profit Sky International Limited Wincase Limited Worldinn Limited Comestibles Master Co., Ltd. Mei Wei Master Co., Ltd. The Hot Pot Food and Beverage Management Co., Ltd. Mei Wei Fu Xing Ltd.	Malaysia Hong Kong USA Australia Samoa USA USA Hong Kong Hong Kong Hong Kong Taichung City, Taiwan (R.O.C.) Taichung City, Taiwan (R.O.C.) Taichung City, Taiwan (R.O.C.) Taichung City, Taiwan (R.O.C.)	Investment Investment Manufacturing of baking food and sale Grocery and drink retailing Investment Grocery and drink retailing Grocery and drink retailing Investment Grocery and drink retailing Manufacturing of baking food and sale Grocery and drink retailing Grocery and drink retailing Food and beverage; Grocery and drink retailing Grocery and drink retailing	$ 553,447 1,456,415 (US$ 46,743) 235,323 (US$ 7,553) 46,240 (AUD 1,785) 171,369 (US$ 5,500) 274,190 (US$ 8,800) 61,425 (US$ 1,971) 169,728 (HK$ 41,600) 114,240 (HK$ 28,000) 122,400 (HK$ 30,000) 553,447 220,606 57,841 1,800	$ 553,447 1,456,415 (US$ 46,743) 204,165 (US$ 6,553) 46,240 (AUD 1,785) 171,369 (US$ 5,500) 274,190 (US$ 8,800) 61,425 (US$ 1,971) 122,400 (HK$ 30,000) 114,240 (HK$ 28,000) 122,400 (HK$ 30,000) 553,447 20,606 114,000 1,800	12,899,078 46,742,963 5,301,000 1,785,000 5,500,000 8,800,000 - - - - 17,054,268 22,060,600 5,784,050 -	100 100 100 51 100 100 65 100 100 100 100 100 23 60	$ 1,364,173 4,596,902 305,899 32,778 114,891 320,326 36,667 110,181 53,309 53,154 1,407,152 126,062 58,710 2,136	$ 132,920 381,948 19,814 (9,610) (20,072) 51,766 45,946 (54,837) (28,736) (26,011) 180,992 (81,194) 3,864 (122)	$ 132,920 381,948 19,814 (4,901) (20,072) 51,766 29,865 (28,129) (28,736) (26,011) 180,992 (81,194) 2,252 (73)	Note 1 Note 1 Notes 1 and 2 Notes 1 and 2 Note 1 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2

Note 1: The exchange rate was US$1=NT$31.158; RMB1=NT$5.092; AUD1=NT$25.905; HK$1=NT$4.08 as of December 31, 2014.

Note 2: The carrying amount was based on the net assets of investee, which was not audited as of December 31, 2014.

Note 3: For information of investment in Mainland China, please refer to Table 8.

107 -

TABLE 8

GOURMET MASTER CO. LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2014

(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital (RMB in Thousands) (Note)	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2014	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2014	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss)	Carrying Amount as of December 31, 2014	Accumulated Repatriation of Investment Income as of December 31, 2014	Note
					Outward	Inward
Prime Scope Trading Limited Shanghai Gourmet Master Food & Beverage Ltd. He-Shia Food & Beverage Ltd. Sheng-Pin (Hangzhou) Food Ltd. He-Shia (Nanjing) Food & Beverage Ltd. Beijing 85 Food & Beverage Ltd. Zhejiang 85 Food & Beverage Ltd. Sheng-Pin (Beijing) Food Ltd. Fuzhou 85 Food & Beverage Ltd. Sheng-Pin (Jiangsu) Food Ltd. Sheng-Pin (Xiamen) Food Ltd. Sheng-Pin (Qingdao) Food Ltd. Xiamen 85 Food & Beverage Ltd. Shenyang 85 Food & Beverage Ltd. Sheng-Pin (Shenyang) Food Ltd. 85 Degree (Qingdao) Food & Beverage Management Ltd. 85 Degree (Jiangsu) Food Ltd. Shanghai Gourmet Master Food & Beverage Ltd. Sheng-Pin (Shanghai) Food Ltd. Mai-Jai (Shanghai) Food Ltd. Shanghai Howco Jing Way Food & Beverage Ltd. Shenzheng 85 Food & Beverage Ltd. Chengdu 85 Food & Beverage Ltd.	Grocery and drink retailing Grocery and drink retailing Manufacturing of baking food and sale Grocery and drink retailing Grocery and drink retailing Grocery and drink retailing Manufacturing of baking food and sale Grocery and drink retailing Manufacturing of baking food and sale Manufacturing of baking food and sale Manufacturing of baking food and sale Grocery and drink retailing Grocery and drink retailing Manufacturing of baking food and sale Grocery and drink retailing Manufacturing of baking food and sale Manufacturing of baking food and sale Manufacturing of baking food and sale Grocery and drink retailing Grocery and drink retailing Grocery and drink retailing	$ 310,364 (US$ 9,961) 76,473 (US$ 2,454) 62,316 (US$ 2,000) 62,316 (US$ 2,000) 62,316 (US$ 2,000) 62,316 (US$ 2,000) 124,632 (US$ 4,000) 15,579 (US$ 500) 140,211 (US$ 4,500) 62,316 (US$ 2,000) 77,895 (US$ 2,500) 31,158 (US$ 1,000) 31,158 (US$ 1,000) 124,632 (US$ 4,000) 62,316 (US$ 2,000) 155,790 (US$ 5,000) 91,656 (RMB 18,000) 36,153 (RMB 7,100) 76,380 (RMB 15,000) 57,839 (RMB 11,359) 33,556 (RMB 6,590)	Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment	$ - - - - - - - - - - - - - - - - - - - - -	$ - - - - - - - - - - - - - - - - - - - - -	$ - - - - - - - - - - - - - - - - - - - - -	$ - - - - - - - - - - - - - - - - - - - - -	$ (17,402) 167,974 39,202 140,262 (56,400) (11,020) (22,378) 94,330 36,905 20,422 (17,430) 60,668 (40,051) (16,741) 9,364 15,638 26,066 15,678 444 33,006 (38,996)	100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 25 100 100 100 85 100	$ (17,402) 167,974 37,921 140,262 (56,400) (11,020) (23,245) 94,330 34,894 19,790 (17,430) 60,668 (40,051) (16,741) 9,364 4,513 24,396 15,048 444 28,055 (38,996)	$ 1,391,226 1,747,776 171,627 597,319 (104,921) (19,470) 39,412 174,834 155,901 27,035 28,090 96,722 (46,691) 78,743 90,042 163,734 123,390 63,930 98,454 (8,376) (14,986)	$ - - - - - - - - - - - - - - - - - - - - -	Note 1 Note 1 Note 1 Note 1 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Note 1 Note 1 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Note 1 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2

(Continued)

108 -

Investee Company	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital (RMB in Thousands) (Note)	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2014	Accumulated Outflow of Investment from Taiwan as of January 1, 2014	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2014	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss)	Carrying Amount as of December 31, 2014	Accumulated Repatriation of Investment Income as of December 31, 2014	Note
							Outward	Inward
Sheng-Pin (Wuhan) Food Ltd. Wuhan Jing Way Food & Beverage Ltd. Jianxi Jing Way Food & Beverage Ltd. Jin Wei Industrial (Shanghai) Ltd. Guangzhou 85 Degree Food & Beverage Management Ltd. Mai-Jia (Chengdu) Food Ltd. 85 Degree (Jiangsu) Food Ltd. Jia Ding Jing Way Food & Beverage Ltd. Shenzheng 85 Food & Beverage Ltd. Sheng-Pin (Shenzheng) Food Ltd. 85 Degree (Qingdao) Food & Beverage Management Ltd. Qingdao Jie Wei Food & Beverage Management Ltd. He-Shia Food & Beverage Ltd. Wuhan Jing Way Food & Beverage Ltd.	Manufacturing of baking food and sale Grocery and drink retailing Grocery and drink retailing Grocery sale Grocery and drink retailing Manufacturing of baking food and sale Manufacturing of baking food and sale Grocery and drink retailing Manufacturing of baking food and sale Grocery and drink retailing Grocery and drink retailing		$ 30,552 (RMB 6,000) 132,392 (RMB 26,000) 30,552 (RMB 6,000) 10,184 (RMB 2,000) 30,552 (RMB 6,000) 126,027 (RMB 24,750) 472,079 (RMB 92,710) 5,092 (RMB 1,000) 33,098 (RMB 6,500) 7,638 (RMB 1,500) 101,840 (RMB 20,000)	Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment Direct investment	$	- - - - - - - - - - -	$ - - - - - - - - - - -	$ - - - - - - - - - - -	$ - - - - - - - - - - -	$ (25,493) (30,075) (7,053) 12,146 (22,436) (16,550) 15,638 3,048 (782) 859 (30,075)	100 57 100 100 100 100 75 100 100 100 43	$ (25,493) (16,999) (7,053) 12,146 (22,436) (16,550) 11,125 3,048 (1,722) 859 (13,076)	$ (44,085) 72,546 14,662 44,146 1,587 93,483 486,202 7,901 (25,586) 8,549 55,804	$ - - - - - - - - - - -	Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Note 1 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2 Notes 1 and 2

Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2014		Investment Amounts Authorized by Investment Commission, MOEA				Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
NA		NA				NA

Note 1: The exchange rate was US$1=NT$31.158, RMB1=NT$5.092 as of December 31, 2014.

Note 2: The carrying amount was based on the net assets of investee, which was not audited as of December 31, 2014.

(Concluded)

109 -
Any cash flow difficulties during the most recent year and as of April 30, 2015 at the Company and its affiliates: None

110

07. Review of Financial Conditions, Operating Results, and Risk Management

1. Analysis of Financial Status

1. Analysis of Financial Status	1. Analysis of Financial Status	1. Analysis of Financial Status
			Unit: NT$1,000
Year Item	2013	2014	Difference
			Amount	%
Current assets	3,995,179	3,766,882	-228,297	-5.71
Long-term investments	188,759	58,710	-130,049	-68.90
Property, plant, and equipment	3,899,390	4,922,226	1,022,836	26.23
Intangible assets	74,355	75,936	1,581	2.13
Other assets	670,756	999,001	328,245	48.94
Total assets	8,828,439	9,822,755	994,316	11.26
Current liabilities	2,437,804	2,907,532	469,728	19.27
Long-term liabilities	116,481	140,148	23,667	20.32
Total liabilities	2,554,285	3,047,680	493,395	19.32
Capital	1,411,200	1,411,200	-	-
Capital reserves	2,681,126	2,681,126	-	-
Retained earnings	1,892,407	2,235,083	342,676	18.11
Other equities	218,237	396,484	178,247	81.68
Non-controlling interests	71,184	51,182	-20,002	-28.10
Total shareholders' equity	6,274,154	6,775,075	500,921	7.98
Explanation for extraordinary variance: N/A

2. Analysis of Operating Results

Unit: NT$ 1,000

			Unit: NT$1,000	Unit: NT$1,000
Year Item	2013	2014	Difference
			Amount	%
Operatingrevenue	15,114,334	17,921,236	2,806,902	18.57
Operatingcosts	6,719,096	7,836,415	1,117,319	16.63
Gross operating profit	8,395,238	10,084,821	1,689,583	20.13
Operatingexpenses	7,453,794	9,237,007	1,783,213	23.92
Operating profits	941,444	847,814	-93,630	-9.95
Non-operating income and expense	-17,705	65,087	82,792	467.62
Income before income tax	923,739	912,901	-10,838	-1.17
Less: income tax	319,391	369,115	49,724	15.57
Net income	604,348	543,786	-60,562	-10.02
Explanation for extraordinaryvariance: N/A

111

3. Analysis of Cash Flow

3-1. Cash Flow Analysis for the Most Recent Year

Unit: NT$ 1,000; %

				Unit: NT$1,000;%
Year Item	2013	2014	Difference	%
Operating activities	1,489,931	1,867,162	377,231	25.32
Investing activities	-808,841	-1,689,646	-880,805	-108.90
Financing activities	-720,037	-224,705	495,332	68.79
Variance analysis: 1. Operating activities: Cash flow from operating activities increased because of continuing business expansion. 2. Investing activities: Cash flow out of investing activities increased because of continuing store expansion and purchasing of equipment. 3. Financing activities: Cash flow out of financing activities decreased because 2014 cash dividend is smaller than 2013 cash dividend.

3-2. Remedy for Cash Deficit and Liquidity Analysis:

The Company still has capital expenditure plans in the coming year and expects growing sales to produce net operating cash inflow ample enough to cover investing and financing cash outflow.

Cash Flow Analysis for the Coming Year

Unit: NT$ 1,000

				Unit: NT$1,000	Unit: NT$1,000
Estimated Cash and Cash Equivalents, Beginning of Year (1)	Estimated Net Cash Flow from Operating Activities (2)	Estimated Cash Outflow (Inflow) (3)	Cash Surplus (Deficit) (1)+(2)-(3)	Remedies for Cash Shortage
				Investment Plans	Financing Plans
2,480,103	1,749,774	304,760	3,925,117	None	None

4. Major capital expenditures over the past fiscal year and their impact

The Company's expenditure on property, plant, and equipment totaled NT$1,296,542 thousand and NT$1,864,835 thousand for 2013 and 2014, respectively, because the Company continued expansion in stores and production capacity, and the expenditure was mainly covered by operating cash inflow, and no adverse impact on financial and operation stability was produced.

Turnover	2013	2014	2015 as of March 31
Fixed Assets Turnover(times)	3.88	3.64	3.78
Total Assets Turnover(times)	1.71	1.82	1.83

5. Analysis of investments in affiliated enterprises over the past fiscal year

5-1. Affiliated enterprise investment policy

Re-investment policy of the Company is focused on basic food-related business and does not involve other industries. Related internal control system is followed by relevant functions, which are resolved and approved by Board of Directors or Shareholders' Meeting.

112

5-2. Reasons for profits or losses at affiliated enterprises

Unit: NT$ 1,000

		Unit: NT$1,000
Affiliated enterprises	Investment profit / loss in the most recent year	Main reasons for profit / loss
Prime Scope Trading Limited	381,948	Investment profit and loss from Shanghai Gourmet Master Food & Beverage Ltd. and He-Shia Food & Beverage Ltd.
85 Degree Co., Ltd.	132,920	Investment profit and loss from Comestibles Master Co., Ltd.
85 Degrees Café International Pty. Ltd	-4,901	Operation hasn't reached economies of scale.
Perfect 85 Degrees C, Inc.	19,814	Operation and profit performance are improving.
Golden 85 Investments,LLC	29,865	Operation and profit performance are improving.
WinPin 85 Investments, Inc.	51,766	Operation and profit performance are improving.
Comestibles Master Co., Ltd	180,992	In stable operation and profit-making.
Mei Wei Master Co., Ltd.	-81,194	Operation hasn't reached economies of scale.
The Hot Pot Food and Beverage Management Co., Ltd.	2,252	Operation and profit performance are improving.
Mei Wei Fu Xing Co., Ltd	-73	Operation hasn't reached economies of scale.
Shanghai Gourmet Master Food & Beverage Ltd.	-17,402	Investment hasn't reached economies of scale.
He-Shia Food & Beverage Ltd.	167,974	Operation and profit performance are improving.
Sheng-Pin (Shanghai) Food Ltd.	24,396	Operation and profit performance are improving.
Mai-Jai (Shanghai) Food Ltd.	15,048	Operation is growing.
Shanghai Howco Jing Way Food & Beverage Ltd.	444	Operation and profit performance are improving.
Sheng-Pin (Hangzhou) Food Ltd.	37,921	Operation is growing.
He-Shia (Nanjing) Food & Beverage Ltd.	140,262	Operation is growing.
Beijing 85 Food & Beverage Ltd.	-56,400	Operation hasn't reached economies of scale.
Zhejiang 85 Food & Beverage Ltd.	-11,020	Operation hasn't reached economies of scale.
Shenzheng 85 Food & Beverage Ltd.	28,055	Operation and profit performance are improving.
Sheng-Pin (Shenzheng) Food Ltd.	-1,722	Operation hasn't reached economies of scale.
Sheng-Pin (Beijing) Food Ltd.	-23,245	Operation hasn't reached economies of scale.
Fuzhou 85 Food & Beverage Ltd.	94,330	Operation is growing.
Sheng-Pin (Jiangsu) Food Ltd.	34,894	Operation is growing.
Chengdu 85 Food & Beverage Ltd.	-38,996	Operation hasn't reached economies of scale.
Lucky Bakery Limited	-20,072	Operation hasn't reached economies of scale.
Profit Sky International Ltd.	-28,129	Operation hasn't reached economies of scale.
Wincase Limited	-28,736	Operation hasn't reached economies of scale.
Worldinn Limited	-26,011	Operation hasn't reached economies of scale.
Sheng-Pin (Xiamen) Food Ltd.	19,790	Operation and profit performance are improving.
Sheng-Pin (Qingdao) Food Ltd.	-17,430	Operation hasn't reached economies of scale.
Xiamen 85 Food & Beverage Ltd.	60,668	In stable operation and profit-making.
Shenyang 85 Food & Beverage Ltd.	-40,051	Operation hasn't reached economies of scale.
Sheng-Pin (Shenyang) Food Ltd.	-16,741	Operation hasn't reached economies of scale.
85 Degree (Qingdao) Food & Beverage Management Ltd.	9,364	Operation and profit performance are improving.
Sheng-Pin (Wuhan) Food Ltd.	-25,493	Operation hasn't reached economies of scale.
Wuhan Jing Way Food & Beverage Ltd.	-30,075	Operation hasn't reached economies of scale.
Jianxi Jing Way Food & Beverage Ltd.	-7,053	Operation hasn't reached economies of scale.
Jin Wei Industrial (Shanghai) Ltd.	12,146	In stable operation and profit-making.
Guangzhou 85 Degree Food & Beverage Management Ltd.	-22,436	Operation hasn't reached economies of scale.
Qingdao Jie Wei Food & Beverage Management Ltd.	859	Operation and profit performance are improving.
Jia Ding Jing Way Food & Beverage Ltd.(still in process of preparation)	3,048	Operation and profit performance are improving.
85 Degree (Jiangsu) Food Ltd.	15,638	In stable operation and profit-making.
Mai-Jai (Chengdu) Food Ltd.	-16,550	Established in 2013 and investment costs haven't been recovered.

5-3. Investment Plans for the Coming Year

Based on actual operation needs, subsidiaries will make detailed plans and proposed to the Company for evaluation and approval.

113

6. Risk assessment

6-1. Risk management policies and structure

The Company endeavors to maintain a comprehensive risk management system that works to manage risks for the entire organization including subsidiaries. The Board of Directors, managers at all levels, and employees work together to promote proper implementation of risk management. In addition to observing relevant regulations, the Company identifies, analyzes, measures, monitors, responds to, reports, and mitigates all potential risks that could arise from operating activities based on the characteristics and impact of such risks. While working to achieve the Company's strategic goals, we can also effectively maintain and control potential risk. The Company's primary risk management structure and the various business units responsible for risk management and its implementation are as below:

a. Strategic and operational risks: Each business unit and subsidiary is responsible for the planning and risk assessment of any new investments or operational decisions. The Company's Office of the CEO regularly conducts related indicator analysis and tracks performance at the Company and affiliated enterprises monthly exchange meetings to ensure each business entity's operating strategy is in line with its operational goals and strategic vision.
b. Financial, liquidity, and credit risks: To respond to changes in related regulations, policies, and the market, the Company's Finance and Accounting function defines a range of strategies, procedures, and indicators to perform regularly-scheduled analysis and evaluation of changes in risk status and respond appropriately in order to mitigate potential risks for the entire company.
c. Market risks: Each business unit analyses and assesses major government policies, laws, and technological advances and formulates appropriate response measures to reduce potential future risks.
d. Through risk assessment and regulatory reviews, the Internal Audit function draws up an annual audit plan and self-inspection procedures and methods, which, when implemented, help to control aforementioned risks. The results of these inspections shall be reported periodically to the Board of Directors.
6-2. Impact on company profits and responses to fluctuations in interest rates, foreign exchange rates, and inflation
a. Interest rate fluctuation: The interest expense of 2013 and 2014 was NT$135 thousand and NT$4 thousand, and amounted to 0.014% and 0%, respectively, of operating profits, which are relatively minor.
b. Exchange rate fluctuation: Response measures for possible future exchange rate risks include:
- （ 1 ） Finance function closely watches changes in foreign exchange rates and decides on proper positions for operations needs.
- （ 2 ） Following related internal rules, derivative positions can be built to offset risks.
- （ 3 ） Establish specific account for foreign currency to reduce impact from exchange rate changes.
c. Inflation/deflation: Changes in raw material prices are being watched closely, and proper procurement quantity is pre-determined to reduce price impacts.
6-3. Policies regarding engagement in highly risky or highly leveraged investments, loans to others, endorsements, or derivatives trading; reasons for profits or losses from such activities; and proposed response measures
a. Policies regarding engagement in highly risky or highly leveraged investments; reasons for profits or losses from such activities; and proposed response measures:

The Company focuses on the main business and does not cross over to other high-risk industries and involve no high-leverage investments.

114

b. Policies regarding loans to others; reasons for profits or losses from such activities; and proposed response measures:

The Company makes no loans to others except subsidiaries, which follow related internal rules and produced no major impacts on profit and losses.

c. Policies regarding engagement in endorsements; reasons for profits or losses from such activities; and proposed response measures:

The Company makes no endorsements to others except subsidiaries, which follow related internal rules and produced no major impacts on profit and loss.

d. Policies regarding engagement in derivatives trading; reasons for profits or losses from such activities; and proposed response measures:

The Company has not engaged in derivative trading in the last year and in this year as of the date this Annual Report was put into print. Future engagement will follow related internal rules and depends on hedge needs.

6-4. R&D Plans and Projected Investment

R&D expense for 2013 and 2014 amounted to NT$17,561 thousand and $35,868 thousand, which was 0.12% and 0.20% of sales, respectively. Primary items of 2015 R&D plan include:

Plan	Current Progress	Estimated additional Funds to be Invested	Expected Date of Completion	Main Factors Determining the Success of Future R&D
New POS and related functions	Integration	Around NT$ 12 million	2015	Provide customers and stores with better shopping experience; Through integration of hardware, software, and the Internet, strengthen management of both stores and headquarters

6-5. Financial impacts of and responses to major changes to domestic and overseas laws and government policies

If policies, tax scheme, and economic environment in Taiwan and China see major changes and affect customers and suppliers, the Company's business will probably be impacted.

6-6. Financial impacts of and responses to technological and industry changes

The Company has continually paid close attention to the rise of new trends. In that case, related developments occurring over this past year did not significantly impact the Company's financial operations.

6-7. Impacts of changes in corporate image on corporate crisis management and related response measures

The Company does its utmost to provide the public with safe, convenient, high-quality products and services and currently incurs no events impacting corporate image and creating crisis.

6-8. Anticipated benefits, risks of M&A activity and appropriate responses

The Company has no M&A plans in the most recent year. If future M&A is considered, it cannot be guaranteed to produce no negative impacts on operation.

6-9. Anticipated benefits, risks of factory expansion and appropriate responses

The Company is in the process of fast expansion in China and the U.S., and will evaluate costs and benefits, test market size, minimize the risk of oversupply, and maximize the capacity utilization of central kitchens.

115

6-10. Anticipated risks of concentrating purchasing and distribution and appropriate responses: N/A
6-11. Possible effects and risks caused by large transfers or changing hands of shares by directors, supervisors, or major shareholders who hold an over 10% stake in the Company and proposed responses: N/A
6-12. Possible benefits and risks to the Company due to a change in operating rights and proposed responses: N/A
6-13. All major litigation, non-litigation disputes, and administrative disputes that involve the Company, the Company's Directors, Supervisors, CEO, responsible parties, major shareholders with over 10% stake, or affiliated enterprises should be disclosed as long as the outcome may have a significant impact on shareholder equity or share prices, whether said dispute has been settled or is still pending. The disclosure should include the factual matters of the dispute, underlying monetary values, date actions commenced, the main parties involved, and response measures taken as of the Annual Report publication date: N/A
6-14. Other major risks and proposed responses: None

7. Other important items: None

116

08. Special Notes

1. Information about Affiliated Enterprises

1-1. Affiliated Enterprises

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117

1-2. Information on Affiliated Enterprises

December 31, 2014 Unit: NT$ and other currency 1,000; shares

Affiliated Enterprises	Relationship	Investment in Affiliated Enterprises by the Company	Investment in Affiliated Enterprises by the Company	Investment in Affiliated Enterprises by the Company	Investment in the Company by Affiliated Enterprises	Investment in the Company by Affiliated Enterprises	Investment in the Company by Affiliated Enterprises
		Shareholding percentage	Number of shares	Investment Amount	Shareholding percentage	Number of shares	Investment Amount
Prime Scope Trading Limited	Subsidiary of the Company	100%	46,742,963	USD46,743	-	-	-
85 Degree Co., Ltd.	Subsidiary of the Company	100%	12,899,078	553,447	-	-	-
85 Degrees Café International Pty. Ltd	Subsidiary of the Company	51%	1,785,000	AUD1,785	-	-	-
Lucky Bakery Limited	Subsidiary of the Company	100%	5,500,000	USD5,500	-	-	-
Perfect 85 Degrees C, Inc.	Subsidiary of the Company	100%	5,301,000	USD7,553	-	-	-
WinPin 85 Investments, Inc.	Subsidiary of the Company	100%	8,800,000	USD8,800	-	-	-
Golden 85 Investments, Inc.	Subsidiary of Perfect 85 Degrees C,Inc.	65%	Note	USD1,971	-	-	-
Profit Sky International Ltd.	Subsidiary of Lucky Bakery Limited	100%	Note	HKD41,600	-	-	-
Wincase Limited	Subsidiary of Profit Sky International Ltd.	100%	Note	HKD28,000	-	-	-
Worldinn Limited	Subsidiary of Profit Sky International Ltd.	100%	Note	HKD30,000	-	-	-
Comestibles Master Co., Ltd	Subsidiary of 85 Degree Co.,Ltd.	100%	17,054,268	553,447	-	-	-
Mei Wei Master Co., Ltd.	Subsidiary of Comestibles Master Co.,Ltd.	100%	22,060,600	220,606	-	-	-
The Hot Pot Food and Beverage Management Co., Ltd.	Equity method investee of Comestibles Master Co., Ltd.	23%	5,784,050	57,841	-	-	-
Mei Wei Fu Xing Co., Ltd	Subsidiary of Mei Wei Master Co.,Ltd.	60%	Note	1,800	-	-	-
Shanghai Gourmet Master Food & Beverage Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD9,961	-	-	-
He-Shia Food & Beverage Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD2,454	-	-	-
Sheng-Pin (Hangzhou) Food Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD2,000	-	-	-
He-Shia (Nanjing) Food & Beverage Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD2,000	-	-	-
Beijing 85 Food & Beverage Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD2,000	-	-	-
Zhejiang 85 Food & Beverage Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD2,000	-	-	-
Sheng-Pin (Beijing) Food Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD4,000	-	-	-
Fuzhou 85 Food & Beverage Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD500	-	-	-
Sheng-Pin (Jiangsu) Food Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD4,500	-	-	-
Sheng-Pin (Xiamen) Food Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD2,000	-	-	-
Sheng-Pin (Qingdao) Food Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD2,500	-	-	-
Xiamen 85 Food & Beverage Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD1,000	-	-	-
Shenyang 85 Food & Beverage Ltd.	Subsidiary of Prime Scope TradingLimited	100%	Note	USD1,000	-	-	-

118

Affiliated Enterprises	Relationship	Investment in Affiliated Enterprises by the Company	Investment in Affiliated Enterprises by the Company	Investment in Affiliated Enterprises by the Company	Investment in the Company by Affiliated Enterprises	Investment in the Company by Affiliated Enterprises	Investment in the Company by Affiliated Enterprises
		Shareholding percentage	Number of shares	Investment Amount	Shareholding percentage	Number of shares	Investment Amount
Sheng-Pin (Shenyang) Food Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD4,000	-	-	-
85 Degree (Qingdao) Food & Beverage Management Ltd.	Subsidiary of Prime Scope Trading Limited	100%	Note	USD2,000	-	-	-
85 Degree (Jiangsu) Food Ltd.	Subsidiary of Prime Scope Trading Limited	25%	Note	USD5,000	-	-	-
Sheng-Pin (Shanghai) Food Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	100%	Note	RMB18,000	-	-	-
Mai-Jai (Shanghai) Food Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	100%	Note	RMB7,100	-	-	-
Shanghai Howco Jing Way Food & Beverage Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	100%	Note	RMB15,000	-	-	-
Chengdu 85 Food & Beverage Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	100%	Note	RMB6,590	-	-	-
Shenzheng 85 Food & Beverage Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	85%	Note	RMB11,359	-	-	-
Sheng-Pin (Wuhan) Food Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	100%	Note	RMB6,000	-	-	-
Wuhan Jing Way Food & Beverage Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	57%	Note	RMB26,000	-	-	-
Jianxi Jing Way Food & Beverage Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	100%	Note	RMB6,000	-	-	-
Jin Wei Industrial (Shanghai) Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	100%	Note	RMB2,000	-	-	-
Guangzhou 85 Degree Food & Beverage Management Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	100%	Note	RMB6,000	-	-	-
Mai-Jai (Chengdu) Food Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	100%	Note	RMB24,750	-	-	-
85 Degree (Jiangsu) Food Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	75%	Note	RMB92,710	-	-	-
Jai Ding Jing Way Food & Beverage Ltd.	Subsidiary of Shanghai Gourmet Master Food & Beverage Ltd.	100%	Note	RMB1,000	-	-	-
Sheng-Pin (Shenzheng) Food Ltd.	Subsidiary of Shenzheng 85 Food & Beverage Ltd.	100%	Note	RMB6,500	-	-	-
Qingdao Jie Wei Food & Beverage Management Ltd.	Subsidiary of 85 Degree (Qingdao) Food & Beverage Management Ltd.	100%	Note	RMB1,500	-	-	-
Wuhan Jing Way Food & Beverage Ltd.	Subsidiary of He-Shia Food & Beverage Ltd.	43%	Note	RMB20,000	-	-	-

Note: Limited Companies do not issue shares.

1-3. Common Shareholders of the Company and Its Subsidiaries with Actual of Deemed Control: None

119

1-4. Rosters of Directors, Supervisors, Presidents, and Operational Highlights of Affiliates

			December 31, 2014 Unit: Shares; %;NT$1,000	December 31, 2014 Unit: Shares; %;NT$1,000	December 31, 2014 Unit: Shares; %;NT$1,000	December 31, 2014 Unit: Shares; %;NT$1,000	December 31, 2014 Unit: Shares; %;NT$1,000	December 31, 2014 Unit: Shares; %;NT$1,000	December 31, 2014 Unit: Shares; %;NT$1,000	December 31, 2014 Unit: Shares; %;NT$1,000	December 31, 2014 Unit: Shares; %;NT$1,000	December 31, 2014 Unit: Shares; %;NT$1,000
Affiliate	Position	Name and representing	Shares held		Paid-in capital	Total assets	Total Liabilities	Net worth	Operating Revenues	Operating Income	Net income /loss	EPS
			Shares	Percentage
Prime Scope Trading Limited	Director	Gourmet Master Co. Ltd.-Representative: Wu Cheng Hsueh	46,742,963	100%	1,556,802	4,597,049	147	4,596,902	587	226	381,948	8.17
85 Degree Co., Ltd.	Director	Gourmet Master Co. Ltd.-Representative: Wu Cheng Hsueh	12,899,078	100%	553,447	1,410,574	46,401	1,364,173	-	-138	132,920	10.30
85 Degrees Café International Pty. Ltd	Director	Gourmet Master Co. Ltd.-Representative: Wu Cheng Hsueh	1,785,000	51%	90,667	80,173	15,904	64,270	164,470	-3,526	-9,610	-2.75
Lucky Bakery Limited	Director	Gourmet Master Co. Ltd.-Representative: Wu Cheng Hsueh	5,500,000	100%	174,953	114,891	-	114,891	-	-143	-54,837	-9.97
Perfect 85 Degrees C, Inc.	Director	Gourmet Master Co. Ltd.-Representative: Wu Cheng Hsueh	5,301,000	100%	226,562	640,975	335,076	305,899	743,324	-74,029	19,814	3.74
WinPin 85 Investments, Inc.	Director	Perfect 85 Degrees C, Inc..-Representative: Chris Lin	8,800,000	100%	274,190	463,126	142,800	320,326	1,356,500	87,029	51,766	5.88

120

Affiliate	Position	Name and representing	Shares held	Shares held	Paid-in capital	Total assets	Total Liabilities	Net worth	Operating Revenues	Operating Income	Net income /loss	EPS
			Shares	Percentage
Golden 85 Investments, Inc.	Director	Perfect 85 Degrees C, Inc..-Representative: Chris Lin	Note	65%	28,042	115,414	59,004	56,410	417,695	48,522	45,946	-
Comestibles Master Co., Ltd	Director	85 Degree Co., Ltd.-Representative: Wu Cheng Hsueh	17,054,268	100%	170,543	1,843,451	436,299	1,407,152	2,779,205	236,951	180,992	10.61
Mei Wei Master Co., Ltd.	Director	Comestibles Master Co., Ltd.-Representative: Wu Ming Long	22,060,600	100%	220,606	299,194	173,132	126,062	645,060	-77,581	-81,194	-3.68
The Hot Pot Food and Beverage Management Co., Ltd.	Director	Comestibles Master Co., Ltd.-Representative: Wu Ming Long	5,784,050	23%	255,000	317,804	58,940	258,864	280,244	3,933	3,864	0.15
Mei Wei Fu Xing Co., Ltd	Director	Mei Wei Master Co., Ltd.-Representative: Wu Ming Long	Note	60%	3,000	5,953	2,393	3,560	15,801	-134	-122	-
Shanghai Gourmet Master Food & Beverage Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	268,175	2,858,683	1,467,457	1,391,226	3,281,042	-30,225	-17,402	-
He-Shia Food & Beverage Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	76,500	1,925,833	178,057	1,747,776	1,987,892	212,716	167,974	-

121

Affiliate	Position	Name and representing	Shares held	Shares held	Paid-in capital	Total assets	Total Liabilities	Net worth	Operating Revenues	Operating Income	Net income /loss	EPS
			Shares	Percentage
Sheng-Pin (Shanghai) Food Ltd.	Director	Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	100%	91,656	385,918	258,904	127,014	1,204,143	34,222	26,066	-
Mai-Jai (Shanghai) Food Ltd.	Director	Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	100%	33,098	86,603	21,551	65,052	129,435	19,830	15,678	-
Shanghai Howco Jing Way Food & Beverage Ltd.	Director	Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	100%	76,380	111,210	12,756	98,454	137,693	-5,271	444	-
Sheng-Pin (Hangzhou) Food Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	69,527	324,767	150,437	174,330	973,586	52,662	39,202	-
He-Shia (Nanjing) Food & Beverage Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	69,525	885,068	287,749	597,319	2,477,260	183,429	140,262	-
Beijing 85 Food & Beverage Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	68,997	302,938	407,859	-104,921	999,337	-46,536	-56,400	-
Zhejiang 85 Food & Beverage Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	67,458	222,832	242,302	-19,470	487,309	-7,329	-11,020	-

122

Affiliate	Position	Name and representing	Shares held	Shares held	Paid-in capital	Total assets	Total Liabilities	Net worth	Operating Revenues	Operating Income	Net income /loss	EPS
			Shares	Percentage
Shenzheng 85 Food & Beverage Ltd.	Director	Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	85%	68,046	199,205	209,059	-9,854	678,703	36,364	33,006	-
Sheng-Pin (Shenzheng) Food Ltd.	Director	Shenzheng 85 Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	100%	33,098	128,897	153,517	-24,620	308,451	-580	-782	-
Sheng-Pin (Beijing) Food Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	129,812	188,641	147,501	41,140	402,202	-17,765	-22,378	-
Fuzhou 85 Food & Beverage Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	16,368	320,271	145,437	174,834	973,158	128,626	94,330	-
Sheng-Pin (Jiangsu) Food Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	146,208	340,523	181,180	159,343	1,013,656	44,353	36,905	-
Chengdu 85 Food & Beverage Ltd.	Director	Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	100%	33,556	149,678	164,664	-14,986	383,536	-36,246	-38,996	-
Profit Sky International Ltd.	Director	Lucky Bakery Limited-Representative: Wu Cheng Hsueh	Note	100%	244,800	201,887	91,706	110,181	-	-86	-54,837	-

123

Affiliate	Position	Name and representing	Shares held	Shares held	Paid-in capital	Total assets	Total Liabilities	Net worth	Operating Revenues	Operating Income	Net income /loss	EPS
			Shares	Percentage
Wincase Limited	Director	Profit Sky International Ltd.	Note	100%	114,240	214,626	161,317	53,309	223,318	-30,391	-28,736	-
Worldinn Limited	Director	Profit Sky International Ltd.	Note	100%	122,400	171,823	118,669	53,154	95,776	-29,807	-26,011	-
Sheng-Pin (Xiamen) Food Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	57,023	216,245	188,019	28,226	557,194	20,347	20,422	-
Sheng-Pin (Qingdao) Food Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	81,123	74,690	46,600	28,090	131,124	-16,989	-17,430	-
Xiamen 85 Food & Beverage Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	32,471	172,607	75,885	96,722	431,785	81,729	60,668	-
Shenyang 85 Food & Beverage Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	32,484	117,804	164,495	-46,691	125,030	-31,721	-40,051	-
Sheng-Pin (Shenyang) Food Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	129,937	151,994	73,251	78,743	37,654	-16,397	-16,741	-

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Affiliate	Position	Name and representing	Shares held	Shares held	Paid-in capital	Total assets	Total Liabilities	Net worth	Operating Revenues	Operating Income	Net income /loss	EPS
			Shares	Percentage
85 Degree (Qingdao) Food & Beverage Management Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh	Note	100%	65,193	100,215	10,173	90,042	93,049	10,466	9,364	-
85 Degree (Jiangsu) Food Ltd.	Director	Prime Scope Trading Limited -Representative: Wu Cheng Hsueh Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	25% 75%	631,057	685,678	35,742	649,936	53,884	10,650	15,638	-
Jai Ding Jing Way Food & Beverage Ltd.	Director	Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	100%	5,092	10,994	3,093	7,901	32,155	4,065	3,048	-
Sheng-Pin (Wuhan) Food Ltd.	Director	Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	100%	30,552	70,398	114,483	-44,085	180,572	-23,066	-25,493	-
Wuhan Jing Way Food & Beverage Ltd.	Director	Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang He-Shia Food & Beverage Ltd. -Representative: Wang Jian Yao	Note	57% 43%	234,232	160,151	31,801	128,350	342,066	-22,533	-30,075	-
Jianxi Jing Way Food & Beverage Ltd.	Director	Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	100%	30,552	32,572	17,910	14,662	32,003	-5,289	-7,053	-

125

Affiliate	Position	Name and representing	Shares held	Shares held	Paid-in capital	Total assets	Total Liabilities	Net worth	Operating Revenues	Operating Income	Net income /loss	EPS
			Shares	Percentage
Jin Wei Industrial (Shanghai) Ltd.	Director	Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	100%	10,184	184,302	140,156	44,146	198,260	16,097	12,146	-
Guangzhou 85 Degree Food & Beverage Management Ltd.	Director	Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	100%	30,552	66,532	64,945	1,587	82,797	-22,055	-22,436	-
Mai-Jai (Chengdu) Food Ltd.	Director	Shanghai Gourmet Master Food & Beverage Ltd.-Representative: Sun Wu Liang	Note	100%	126,027	203,636	110,153	93,483	220,676	-16,290	-16,550	-
Qingdao Jie Wei Food & Beverage Management Ltd.	Director	85 Degree (Qingdao) Food & Beverage Management Ltd.-Representative: Wang Jian Yao	Note	100%	7,638	14,420	5,871	8,549	25,451	1,180	859	-

Note: Limited Companies do not issue shares.

126

2. Private Placement Securities in 2014 and as of the Date of this Annual Report: None.

3. Status of Common Shares Acquired, Disposed of, and Held by Subsidiaries: None.

4. Special Notes

4-1. Major differences in the Company's articles of association and R.O.C. regulations on shareholders protection:

Differences	Cayman Islands regulations	Articles of Association
Definition of special resolution: In the case of a company limited by shares: a resolution adopted, at a shareholders' meeting, by a majority of the shareholders present who represent two-thirds or more of the total number of its outstanding shares. In the event the total number of shares represented by the shareholders present at a shareholders' meeting of a company whose shares have been issued in public is less than the percentage of the total shareholdings required in the preceding paragraph, the resolution may be adopted by two-third of the voting rights exercised by the shareholders present at the shareholders' meeting who represent a majority of the outstanding shares of The Company.	A resolution shall be a special resolution when it has been passed at a general meeting of the Company by a majority of not less than two-thirds of the votes	Per Taiwan Stock Exchange April 13 2010 Tai-Zheng-Shan-Zhi 0991701319 and opinion of Cayman Islands attorney, the Company's articles of association dictates the latter half of R.O.C. regulations on shareholders protection.
Any or a plural number of shareholder(s) of a company who has (have) continuously held 3% or more of the total number of outstanding shares for a period of one year or a longer time may, by filing a written proposal setting forth therein the subjects for discussion and the reasons, request the board of directors to call a special meeting of shareholders. If the board of directors fails to give a notice for convening a special meeting of shareholders, the proposing shareholder(s) may, after obtaining an approval from the competent authority, convene a special meeting of shareholders on his/their own.	Cayman Islands does not have such a competent authority.	Per Taiwan Stock Exchange April 13 2010 Tai-Zheng-Shan-Zhi 0991701319, the Company's articles of association does not dictate "after obtaining an approval from the competent authority". If the board of directors fails to give a notice for convening a special meeting of shareholders within 15 days after the filing of the request, the proposing shareholder(s) may convene a special meeting of shareholders on his/their own.
Any proposal to distribute cash and/or stock dividends or distributions out of legal reserve and capital surplus in whole or in part by way of issuance of new shares of the Company may not be considered, discussed or proposed for approval at a general meeting unless they have been included in the notice of general meeting with reasonable amount of explanation	Item 8, Article 28, of the Company's articles of association dictates that any proposal to distribute cash and/or stock dividends or distributions out of surplus in whole or in part by way of issuance of new shares of the Company may not be considered, discussed or proposed for approval at a general meeting unless they have been included in the notice of general meeting with reasonable amount of explanation. Since Cayman Islands laws do not dictate legal reserve, the Company's articles of association already covered the R.O.C. regulations.	Item 8, Article 28, of the Company's articles of association dictates that any proposal to distribute cash and/or stock dividends or distributions out of surplus in whole or in part by way of issuance of new shares of the Company may not be considered, discussed or proposed for approval at a general meeting unless they have been included in the notice of general meeting with reasonable amount of explanation. Since Cayman Islands laws do not dictate legal reserve, the Company's articles of association already covered the R.O.C. regulations.

127

Differences	Cayman Islands regulations	Articles of Association
1. If a shareholder holds shares for other persons, he/she can assert the exercise of split voting. 2. The provisions of R.O.C. regulations shall be complied with when exercising split voting.	Per the Company's articles of association, no person shall be recognized by the Company as holding any Share upon any trust, and the Company shall not be bound by or be compelled in any way to recognize any equitable, contingent, future or partial interest in any Share or any other rights in respect of any Share, and a shareholder is defined as a person who is registered in the Register of Members as the holder of any Share in the Company. Thus, where a Member is a clearing house, depositary, custodian and/or trustee (or its/their nominee(s) and, in each case, being a corporation, "Third Party Holder"), it may authorize such persons as it thinks fit to act as its representatives at any meeting of the Company or at any meeting of any class of Members.	Per Article 39(c) and (d) of the Company's articles of association, where a Member is a clearing house, depositary, custodian and/or trustee (or its/their nominee(s) and, in each case, being a corporation, "Third Party Holder"), it may authorize such persons as it thinks fit to act as its representatives at any meeting of the Company or at any meeting of any class of Members provided that the authorization shall specify the number and class of shares in respect of which each such representative is so authorized. Each person so authorized under the provisions of these Articles shall be entitled to exercise the same rights and powers on behalf of the Third Party Holder as if such person was the registered holder of the shares of the Company held by the Third Party Holder in respect of the number and class of shares specified in the relevant authorization. To the extent permissible under the laws of the Cayman Islands and these Articles, the qualifications, scopes, methods, procedures, and other details for the Member to exercise the voting rights shall be in compliance with the Applicable Law.

4-2. Certification Details of Employees Whose Jobs are Related to the Release of the Company’s Financial Information Taiwan Certified Public Accountant: 3

United States Certified Public Accountant: 2

Taiwan Qualified Internal Auditor: 1

Certified Internal Auditor: 1

Certified Financial Analyst: 1

5. Any Events in 2014 and as of the Date of this Annual Report that Had Significant Impacts on Shareholders’ Right or Security Prices as Stated in Item 2 Paragraph 2 of Article 36 of Securities and Exchange Law of Taiwan: None.

6. Key Performance Indicator

	2013	2014
Netprofit margin	4.00%	3.03%
EPS (NT$)	4.07	3.74
ROE	9.66%	8.33%
Inventoryturnover (times)	15.77	15.73

7. Goal and methodology of hedge accounting: N/A

128

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AI assistant

Gourmet — Annual Report 2014

52189_rns_2015-07-30_6ee079fd-353e-4d43-ae9d-5e53ce2a69a2.pdf

1-1 Head office

Gourmet Master Co. Ltd.

1-2 Main Operation ：

Shanghai Gourmet Master Food & Beverage Ltd.

Perfect 85 Degrees C, Inc.

85 Degree Co., Ltd.

Prime Scope Trading Limited

Lucky Bakery Limited

Profit Sky International Ltd.

Golden 85 Investments, LLC

WinPin 85 Investments, LLC

Wincase Limited

Mei Wei Master Co., Ltd.

Jin Wei Industrial (Shanghai) Ltd.

Shenzheng 85 Food & Beverage Ltd.

He-Shia (Nanjing) Food & Beverage Ltd.

Chengdu 85 Food & Beverage Ltd.

Wuhan Jing Way Food & Beverage Ltd.

Worldinn Limited

Mei Wei Fu Xing Ltd.

Shanghai Howco Jing Way Food & Beverage Ltd.

Sheng-Pin (Shenzheng) Food Ltd.

Sheng-Pin (Hangzhou) Food Ltd.

Sheng-Pin (Beijing) Food Ltd.

Sheng-Pin (Jiangsu) Food Ltd.

Sheng-Pin (Wuhan) Food Ltd.

Sheng-Pin (Xiamen) Food Ltd.

Sheng-Pin (Shenyang) Food Ltd.

Jianxi Jing Way Food & Beverage Ltd.

Sheng-Pin (Qingdao) Food Ltd.

Mai-Jai (Chengdu) Food Ltd.

85 Degree (Jiangsu) Food Ltd.

Jai Ding Jing Way Food & Beverage Ltd.

CONTENTS

01. Letter to shareholders

Dear Shareholders,

02. Corporate Profile

1. Company and Group Profile

1-1. Date of Incorporation and Group Profile

1-2. Group Structure

1-3. Risk assessment: Please refer to Chapter 07.

2. Corporate History

03. Corporate Governance

1. Organization

1-1. Organization Chart

1-2. Responsibilities of Key Functions

2. Information on Directors, Supervisors, and Management of the Company and Various Departments and Branches

2-1. Directors and Supervisors

Major shareholders of the institutional shareholders

Independence and Professional Expertise of Board Members and Supervisors

2-2. Information on the CEO, senior vice presidents, vice presidents, and division heads

2-3. Remuneration paid to Company directors, supervisors, CEO, and senior vice presidents over the past year a. Remuneration of Directors

b. Remuneration of Supervisors

c. Remuneration of CEO and Senior Vice Presidents

2-4. Comparison of Remuneration for Directors, Supervisors, CEO and Senior Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents

3. Corporate Governance

3-1. Board of Directors

3-2. Attendance of Supervisors for Board Meetings

3-3. Corporate Governance Execution Status and Deviations from “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”

3-4. Composition, responsibilities, and operation of the Compensation Committee

a. Compensation Committee Members

b. Operations of the Compensation Committee

3-5. Social Responsibility

3-6. Ethical corporate management at the Company and related implementation

2014.05.14 resolution:

2014.08.06 resolution:

2015.01.05 resolution:

2015.03.11 resolution:

4. External audit fees

5. Changing of auditors: None

7-1. Recent changes

7-2. Shares trading information: Not applicable

7-3. Shares pledge information: None

8. Information Disclosing the Relationship between any of the Company’s Top Ten Shareholders

9. Company director, supervisor, and manager direct and indirect ownership of shares in affiliated enterprises

04. Capital Overview

1. Capitalization

Gourmet Annual Report 2014

1-2 Main Operation `：`

`◎` Taiwan

`◎` Mainland China

`◎` U.S. and Australia