KINSUS - Annual Report 2014 | FinancialReports.eu

Stock Code：3189

Kinsus Interconnect Technology Corp.

2014 Annual Report

Notice to readers

This English version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English version and Chinese version, the Chinese version shall prevail.

Printed on MAY, 2015

Taiwan Stock Exchange Market Observation Post System: http://newmops.twse.com.tw Kinsus’s website:：http://www.kinsus.com.tw

Spokesperson

Name: Mu, Xian Jue Title: Senior Project Director of Planning Office Tel: 886-(03) 487-1919 EXT 6660 E-mail: [email protected]

Deputy Spokesperson

Name: Liu, Su Zhen Title: Director of Finance Department Tel: 886-(03) 487-1919 EXT 5005 E-mail: [email protected]

Headquarter, Branches and Plant

Headquarter in (Shilei): No.1245, Zhonghua Rd., Xinwu Dist., Taoyuan City 327, Taiwan (R.O.C.) Tel: 886-(03) 487-1919

Plant in Qinghua: No.810, Zhonghua Rd., Xinwu Dist., Taoyuan City 327, Taiwan R.O.C. Tel: 886 (03) 487-1988

Plant in Xinfeng: No.526, Sec. 2, Jianxing Rd., Xinfeng Township, Hsinchu County 304, Taiwan (R.O.C.) Tel: 886-(03) 557-1799

Stock Transfer Agent

KGI Securities Shareholder Services Department

Address: 5F., No.2, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei City 100, Taiwan (R.O.C.) Tel: 886-2-2389-2999

Website: https://www.kgieworld.com.tw

Auditors

EY Accounting Firm Auditors: Huang, Yi Hui; Zhang, Zhi Ming Address: 9F., No.333, Sec. 1, Keelung Rd., Songshan Dist., Taipei City 105, Taiwan (R.O.C.) Tel.: 886-2-2757-8888

Website: http://www.ey.com.tw

Overseas Securities Exchange (N/A)

Corporate Website

http://www.kinsus.com.tw

	Page
1. Letter to Shareholders ·····································································	1
2. Company Profile
(1)Date of Incorporation·······························································	4
(2)Company History····································································	4
3. Corporate Governance Report
(1)Organization···········································································	7
(2)Directors, Supervisors and Management Team······························	9
(3)Implementation of Corporate Governance····································	23
(4) Information on Professional Fees for CPAs ·······························	39
(5) Information on Replacement of CPAs ·······································	40
(6) The Company’s Chairman, President, Financial Officers or Accounting Officers
Who Are Required to Disclose Their Information for Holding a Position in the	40
Accounting Firm or Its Affiliated Enterprises in the Most Recent Year ············
(7) Changes in Equity Due to Transfer and Pledge by Directors, Supervisors,
Officers, and Greater-Than-10-Percent Shareholders in the Most Recent Year	40
and During the Current Period up to the Date of Printing of the Annual Report ··
(8) Relationship Information If Among the Company's Ten Largest Shareholders
Any One Is a Related Party, a Spouse, or a Relative Within the Second Degree	42
of Kinship of Another ··································································
(9) The Number of Invested Enterprises’ Shares Held by the Company, Its Directors,
Supervisors, and Officers, and Companies Directly or Indirectly Controlled by	43
the Company, as Well as Consolidated Shareholding Percentage ··················
4. Capital Raising
(1) Capital and Shares ········································································	47
(2) Issuance of Corporate Bonds ····························································	53
(3) Issuance of Preferred Shares ·····························································	53
(4) Issuance of Global Depository Receipts ················································	53
(5) Issuance of Employee Stock Warrants ··················································	53
(6) Award of New Restricted Shares ························································	54
(7) Mergers, Acquisitions, and Issuance of New Shares Due to Acquisition of Shares of Other Companies ······································································	54
(8) Implementation of the Capital Allocation Plans ·······································	54
5. Overview of the Operations
(1) Business Contents ··································································	55
(2) Overview of the Market and Sales ············································	67
(3)Human Resource Up-to-Date in the Latest Two Years·····················	74
(4)Environmental Protection Expenditure·········································	75

Page

(5) Labor Relations ······································································· 75 (6) Important Contracts ································································· 76 6. Financial Highlights (1) Last Five Years Brief Balance Sheet and Income Statement ········· 77 (2) Last Five Years Annual Financial Analysis ································ 83 (3) Latest Annual Financial Audit Report Approved by Audit 89 Committee ············································································ (4) Latest Annual Financial Report ················································ 89 (5) Latest Annual Company Entity Financial Report Certified by Accountant ·············································································[89 ] (6) Company and Associates Should Specified if They Have Ever Encountered Financial Turnover Difficulties that Would Affect 89 Company’s Financial Status from the Latest Annual up to the Published Date of this Report ···················································

7. Financial Status and Performance Review Analysis and Risk Items

(1) Financial Status ······································································ 90 (2) Financial Performance ····························································· 91 (3) Cash Flow ·············································································· 91 (4)Latest Major Capital Investment that Affects Financial Operation · 92 (5) Main Reasons, Improvement Plans and Investment Plans in the Coming Year for Gain or Loss Result from the Latest Shift Investment Policy. ·····················[92 ] (6)Risk Assessment for the Latest Annual up to the Published Date of This Report. ········································································[92 ] (7) Special Notes ········································································· 95 8. Special Note. (1) Company Associates Data ························································ 96 (2) Private stock raising status from the latest annual up to the 99 published date of this financial report. ·································· (3) Subsidiaries holding or managing parent’s company stock status from the 99 latest annual up to the published date of this financial report ···· (4) Other Remarks ··········································································· 99 (5) Incidents that would affect shareholder’s equity or stock price as defined in the Securities and Exchange Act Article 36 item 2.2 from the latest 99 annual up to the published date of this report. ·········································

1. Letter to Shareholders

(1) Dear Shareholders,

Although the semiconductor industry has become moderate in the fourth quarter of 2013, it gradually grows in 2014. On the market as a whole, DRAM prices flourished due to lower supplies and stabilized prices. As to other major device categories, such 、 as special ASIC discrete components and micro-components also show the trend of growth while the performance in RAM was mostly distinguished and reached 16.9% growth in 2014. Traditional PC production in 2013 declined by 10.1%, yet began to grow in 2014. Smart phone performance remains robust, even though the market trend has been evidently moving from the higher-end models into practical ones with lower prices. Compared with 2013, total production growth by 34% in 2014 was a little lower than the 39.5% in 2013. Besides, Pad production in 2014 declined substantially compared with 2013.

Acceding to the statistics published by international research and consulting institution Gartner, Global semiconductor revenue totaled 339.8 billion in 2014. This is a 7.9% growth compared to the 315 billion in 2014.

Semiconductor competition was fierce in2014. End-market demand for 4G LTE chip was growing fast, especially for LTE. Along with the manufacturing process development in next generation, the need for critical skills is urgent. Operators actively deepen their own technique, decrease the production cost, and fight for any opportunity in the market.

Our revenue grew unprecedentedly high either in individual or consolidated revenue. Individual revenue has reached NT$19,290,237,000, a 7.01% increase compared with NT$18,026,999,000 in 2013. Net income increased 12.20% to NT$3,617,327,000, compared with 2013 net income of NT$3,224,093,000. Total consolidated revenue for 2014 was NT$24,943,834.000 a 7.97% increase compared with NT$23,102,827,000 in 2013. Net income increased 12% to NT$3,490,233, 000 compared with 2013 net income of NT$3,116,254,000.

(2). Operating Performance in 2014

(A). Business Policy

Since our establishment, we have been upholding the principle of "Satisfying Customers, Pursuing of Excellence" as our business policy, developing leadership in technique to meet market demand, mastering new generation product demands, investing engineering resources to stay ahead, and striving for better profit under competition for the purpose of greater profit.

(B). Expected Sales and Its Bases

According to the forecast by international research and consulting institution Gartner, the global revenue of semiconductor will come to US$358 billion a 5.4% increase annually. Smartphones, SSD, and a variety of mobile devices are expected to grow in a larger scale. Yet, DRAM will slide down, the supply and demand will become levelling.

Calculus operation remains the Semiconductor's largest application market, followed by wireless and consumer applications. It is estimated that the revenue of wireless applications (especially for mobile phone) will remain its outstanding performance. These three devices categories combined accounted for more than two-thirds of total semiconductor revenues, which play the decisive roles in total performance of semiconductor market.

Due to the growth of industrial and household LED application and industrial electronics and Intelligent City Project, industrial electronics performed better than semiconductor and other electronic application categories. Besides, Internet of Things (IoT) is also another drive of growth now and in the future. Despite the growth of mobile phone semiconductor in LTE remains steady attributed to the market rapidly transfers to smartphones and 4G, what worries most is the trend of low price for high-end product which may be slowing semiconductor sales for the full year.

(C). Important Production and Marketing Policy

(a) Continuously investing more in R&D in order to meet the demand of clients’ multi-demand and expanding the production line of micro wire. Along with the wafer fab 16/14 NM, we will move on to 10 nm product production in order to seize the

market opportunity.

(b) Concerning the expanding scale in operation, we will continuously invite professionals and introduce high-end system and skill, aggressively invest in automated production for better quality and profit.

(c) Staying competitive in the way of maintaining partnerships with advanced chip design company, getting hold the latest market information, and completing the preparation of production process and capacity earlier

(d).Aggressively planning the next generation product in line with the Government policy to bring the investment back to Taiwan.

(3). Company development strategy

In 2015, portable, wearable device components of a micro-scale trend will continue. The related baseband chip, fingerprint identification chips and strong demand for advanced IC substrate such as power amplifiers will continuously drive the global IC market to grow. We will do whatever we can to seize key opportunities in market, and continue to adjust the layout in response to market changes in order to win a niche market for the benefit of share shareholder.

(4). Overall impact of business environment

In order to master the external competitive environment, regulatory environment and the overall business environment, we will pay more attention to corporate governance, corporate responsibility and implement environmental protection laws.

Thank you very much for your support, we will do our best to constantly create the maximum results to share with all shareholders

Sincerely Yours,

Chairman

Tung, Tzu-Hsien

CEO & President Guō, Míng Dòng

2. Company Profile

(1) Date of Incorporation: 9/11/ 2000

(2) Company History

Year	Milestones
2000/09	Founded with NT$2.5 billion capital and NT$12 billion paid-up capita. Manufacturingmainlyin BGA relatedproducts.
2000/12	Cash capital increased by issuing new shares of NT$100 million with NT$1.3 billionpaid-upcapita after increase in total
2001/04	Cash capital increased by issuing new shares of NT$600 million with NT$1.9 billionpaid-upcapita after increase in total
2001/05	Started operations
2001/07	Be certified toQS 9000.
2001/12	Be certified to ISO 14000 - Environmental management
2002/06	Corporation wentpublic.
2002/11	Cash capital increased by issuing new shares of NT$100 million with NT$2 billionpaid-upcapita after increase in total
2003/03	Plant expansion to the 3rdfloor and the 4th floor
2003/09	Listed for tradingin emergingmarkets
2003/12	Acquired the review by Industrial Science and Technology Committee on the submissions of "Science and technology product or technology successful development and marketketing.
2004/06	Surplus capital increased by issuing new shares of NT$220 million with NT$2.22 billionpaid-upcapita after increase in total
2004/11	Listed on Taiwan Stock Exchange
2004/11	Plant built in Qinghua: No.810, Zhonghua Rd., Xinwu Dist., Taoyuan City
2005/05	Operating performance ranked the 2nd, return on assets ranked 15th, return on equity ratio ranked 31st,growth drive ranked 33rd, profitability ranked 38th, and business revenue ranked 355th among top 1000 manufacturingcompanies byCommonwealth Magazine
2005/07	Surplus capital increased by issuing new shares of NT$378 million with NT$2.598 billionpaid-upcapita after increase in total
2005/8	Cash capital increased by issuing new shares of NT$300 million with NT$2.898 billionpaid-upcapita after increase in total
2005/10	Plany bought at No.8, Qingnian Rd., Yangmei Dist., Taoyuan City 32661, Taiwan (R.O.C.)

Cash capital increased by issuing new shares of NT$500 million with 2006/05 NT$3.398 billion paid-up capita after increase in total Ranked 19th as Taiwan's most profitable companies by Commonwealth 2006/05 Magazine Ranked 89th as Taiwan's most profitable companies by Digital Time 2006/07 Business among top 100 Taiwan Technology Surplus capital increased by issuing new shares of NT$492 million 2006/08 with NT$3.89 billion paid-up capita after increase in total Ranked 131[st] among Asia’s top 150 with 14 Taiwan Enterprises listed 2006/11 by Business Week Asia Be certified to ISO 14001 - Environmental management and OHSAS 2007/03 18001 2007/05 Ranked No. 212 on business revenue by Commonwealth Magazine Surplus capital increased by issuing new shares of NT$464 million 2007/08 with NT$4.354 billion paid-up capita after increase in total Ranked 52[nd] on return on assets, 146[th] on equity ratio, 22[nd] on 2008/05 profitability, and 595th on business revenue among top 1000 manufacturing companies by Commonwealth Magazine Surplus capital increased by issuing new shares of NT$106 million 2008/08 with NT$4.46 billion paid-up capita after increase in total Ranked 35[th] on profitability and 229th on business revenue among top 2009/05 1000 manufacturing companies by Commonwealth Magazine Ranked 48[th] on profitability and 234th on business revenue among top 2010/05 1000 manufacturing companies by Commonwealth Magazine 2010/08 Invested Bai Shuo Computer(Su Zhou) Ltd Ranked 115[th] on profitability and 192[nd] on business revenue among top 2011/05 1000 manufacturing companies by Commonwealth Magazine Ranked 108th on profitability and 162nd on business revenue among 2012/05 top 1000 manufacturing companies by Commonwealth Magazine Bought plant at Xinfeng: No.526, Sec. 2, Jianxing Rd., Xinfeng 2013/03 Township, Hsinchu County 304, Taiwan Being selected as 2012 Deloitte Asia Pacific top 500 high tech, high 2013/04 growth enterprises

Ranked 116th on profitability and 158[th] on business revenue among top 2013/05 1000 manufacturing companies by Commonwealth Magazine Ranked 720[th] on market capitalization among top 1000 entrprises in 2014/05 China, Taiwan, Hongkong, and Macau by Business Today. Ranked 139[th] on profitability and 56[th ] on net profit by Commonwealth 2015/05 Magazine

3. Corporate Governance Report

(1). Organization Chart

==> picture [516 x 461] intentionally omitted <==

----- Start of picture text -----

Shareholders’
Meeting
Audit Committee
Board of
Payroll Directors
Committee Audit Office
Chairman
Chairman Office
President
Vice President
R&D Division
General Manager
Sales
Substrate FPC Quality Administrat
Financial R&D &
Business Business Control ion
Dept. Division. Marketing
Dept. Dept. Dept. Dept.
Dept..
----- End of picture text -----

(2) Major Corporate Functions

Dept.	Job Description
President	1. Business planning and strategic planning, 2. Company long-term development policy planning 3. Business monitoring, promotingand implementation
Vice President	Assisting the President to promote company's businesses.
Audit Office	Identifying deficiencies in internal control system, assess the effectiveness and efficiency of operations, and provide appropriate improvement suggestions
R&D Division	Advanced product and technology research and development, equipment automation,and buildingnewplants
General Manager	Responsible for business plan development、business performance management and analysis、Investment analysis and benefit assessment、cost reduction and control、business process automation and improvement、annual budgeting、overseas business management、 promotion and performance evaluation in other important projects、 manufacturing capacity and standard work hours、rationalization of personnel standards
Administration Dept.	Responsible for the planning and execution of human resource, general affairs,.envionmrntal andpurchasing
Financial Dept.	Responsible for finance and investment, annual budgeting, credit control, and stocks services.
R&D Division	Responsible for coordinating the product, design, development, and facilityservices
Sales &Marketing Dept.	Responsible for the company's product sales and marketing
Substrate Business Dept.	Responsible for substrates related products manufacturing and work objectives and effectiveness management、manufacturing cost control analysis and improvement、andproductionplanning
FPC Business Dept.	Responsible for COF related products manufacturing and work objectives and effectiveness management、manufacturing cost control analysis and improvement、andproductionplanning
Quality Control Dept.	Responsible for the quality policy, objectives and systems developed and implemented in order to meet customers’needs

2. Directors, Supervisors and Management Team

(1). Directors and Supervisors 2015/04/13

Title	Nationality/ Country of Origin	Name	Date Elected	Term (Years)	Date First Elected	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
President	R.O.C.	Tong, Zi-Xian	2012.6.18	3	2000.9.1	200,000	0.04%	200,000	0.04%	－	－	－	－	Computer and Communication Engineering/Taipei Tech	Remark 1	－	－	－
														Chairman/ASUS TECHNOLOGY INCORP.
Board Member	R.O.C.	Guo, Ming-Dong	2012.6.18	3	2000.9.1	1,679,795	0.38%	1,179,795	0.26%	－	－	－	－	National Taipei Institute of Technology	Remark 2	－	－	－
														President/UNICAP ELECTRONICS
Board Member	R.O.C.	Lu, Jing	2012.6.18	3	2003.9.1	1,681,607	0.38%	1,151,607	0.26%	－	－	－	－	Master of Industrial Engineering/Univ. of Iowa	Remark 3	－	－	－
														Chungshan Institute of Science and Technology
														Vice President/UNICAP Electronics
Board Member	R.O.C.	Hua Xu Investment Corp. Rep. : Su, Yan-Xue	2012.6.18	3	2000.9.1	58,233,091	13.06%	58,233,091	13.06%	－	－	－	－	Master of Industrial Engineering/Carnegie Mellon Univ.	Remark 4	－	－	－
														Chief Investment Officer/ASUSTEK Computer Incorp.
														Chief Investment Officer/ASUS TECHNOLOGY INCORP.
Board Member	R.O.C.	Su, Yan-Xue	2012.6.18	3	2009.6.16	－	－	－	－	－	－	－	－	as above	as above	－	－	－
Board Member	R.O.C.	Hua Xu Investment Rep. : Wu, Xiang-Xiang	2012.6.18	3	2000.9.1	55,556,221	12.46%	55,556,221	12.46%	－	－	－	－	International Trade/Providence Univ.	Remark 5	－	－	－
														M.B.A./Univ. of St.Thomas
														Vice President/kunjian ConsultingCo.,
														Chief Investment Officer/PEGATRON Corp.
Board Member	R.O.C.	Wu, Xiang-Xiang	2012.6.18	3	2003.9.1	－	－	－	－	－	－	－	－	as above	as above	－	－	－
Board Member	R.O.C.	Zheng, Zhong-Ren	2012.6.18	3	2003.9.1	－	－	－	－	－	－	－	－	School of Law/Soochow Univ.	Remark 6	－	－	－
														PhD./Stanford University
														Dean&Professor/Law School of Shih Hsin Univ.
Independent Director	R.O.C.	Chen, Jin-Cai	2012.6.18	3	2003.9.1	－	－	－	－	－	－	－	－	Graduate School/TamkangUniv.	Remark 7	－	－	－
														M.P.A/Univ. of San Francisco
														President/Namchow Group
Independent Director	R.O.C.	Huang, Chun-Bao	2012.6.18	3	2003.9.1	－	－	－	－	－	－	－	－	Electrical Engineering/National Taipei Institute of Technology	Remark 8	－	－	－
														President& GM/HAVIX ELECTRONICS CO., LTD.
Independent Director	R.O.C.	Wu, Hui-Huang	2012.6.18	3	2010.6.18	－	－	－	－	－	－	－	－	Board Director& President/UNIVERSAL SCIENTIFIC INDUSTRIAL CO., LTD	Remark 9	－	－	－
														Director/Taiwan Electrical and Electronic Manufacturers'Asso.
														Director/Taiwan Federation of Industry
														Director/Taiwan Province Industry Asso.

Remark 1	Chairman	Asus Technology Incorp, Lumens Digital Optics Inc, Hua Wei Investment, Hua Xu Investment, Pegavision Investment,,Pegavision Corp, Casetek Holdings Limited,eslite Foundation for Culture and Arts,
	Board Directors	Ability Enterprise, Asrock Inc., Hua Yu Investment, Hua Yuan Investment, Hua Wei Investment, Hua Wei International, The Eslite Spectrum Corporation, Eslite Corp., Ezhi Technologies, Inc., AS Fly Travel Service, Azurewave Technologies, Inc., Pegatron Holding Ltd.、Unihan Holding Ltd.、Protek Global Holdings Ltd.、Magnificent Brightness Ltd.、Casetek Holdings Ltd.、Pegatron Holland Holding B.V.I.、Digitek Global Holdings Ltd.、AMA Holdings Ltd.、Kinsus Corp.(USA)、Powtek Holdings Limited、Cotek Holdings Limited、 RIH-LI International Limited、Mega Merit Limited、Huáng Aá Fu Medical Foundation, Hanguang Education Foundation,Public Television Service
	Chairman	Taipei Computer Association
Reamrk 2	Presiden	Director r:Pegavision Investment, Pegavision Corp, Kinsus Holding(Samoa) Limited、Kinsus Holding(Cayman) Limited、Piotek Holding Ltd.、Piotek Holdings Ltd.(Cayman) Independent Director:TAIFLEX Scientific Corp., SilergyCorp
Remark 3	Vice President	Director Pegavision Corp., Piotek(HK)TradingLimited
Remark 4	Chairman/WYSE Research Inc.	Director:Guang Dian Cinema, Pegavision Corp, The Eslite Spectrum Corporation
Remark 5		Director: OFCO Industrial Corp.,Pegavision Investment,
Remark 6	Professor of Patent School/Taipei Tech	Director:LOTES Co. Ltd.,Wistron Co. Ltd., Independent Director :Chem Co. Ltd., Board Supervisor:Asus TechnologyIncorp, Apacer Co. Ltd.,
Remark 7	Chairman	Win Semiconductors Corp.
	Vice Chairman	Hiwin Technologies Corp.
	Directors	Namchow Chemical Iudustrail Co., Ltd., Inventec Solar Energy Corp., Namchow (BVI), Nan Xin International, Brotzeit German restaurant and bar(ShangHai), . Tingyi (Cayman Islands), Namchow Oil, Namchow(Thailnad), WIN Semi USA Inc.,Win Semiconductors ,Cayman Island Co., Ltd.、WinMEMS Technologies Holdings Co., Ltd,、Chowhao Trading(ShangHai), Tianjin Yoshi Yoshi Food Co., Ltd., Yong Ju(Thailand), Namchow Oil(Guang Zhou), Xin Sheng SanVenture Capital, Lucky Royal Co., Ltd., Namchow Management Co., Tian Bo Co.,ITEQcorp., Inventec EnergyCorp.,
	Independent Director	TongHsingElectronucs Indstries Co.,
	Supervisor	Dian Shui Lou Restaurant,INFOTEL Inc.,TAIPEI 101
Remark 8	Chairman&President	HAVIX Electronics Co.,Ltd.
Remark 9	Director	LOGAH TechnologyCORP.,Taiwan Read Foundation MerryCorp. Payroll Committee Director

Major shareholders of the institutional shareholders

Nme	Major Shareholders
Hua Wei Investment	Pegatron Corp.(100.00%)
Hua Yu Investment,	Pegatron Corp.(100.00%)
Hua Xu Investment	Pegatron Corp.(100.00%)

Major shareholders of the Company’s major institutional shareholders

Nme	Major Shareholders
PegatronCorp.	AsustekComputer Incorporation(18.94%)

Professional qualifications and independence analysis of directors and supervisors

Criteria Name （Remark 1）	Meet One of the Following Professional Qualification Requirements, Together with at Least 5 Years Work Experience	Meet One of the Following Professional Qualification Requirements, Together with at Least 5 Years Work Experience	Meet One of the Following Professional Qualification Requirements, Together with at Least 5 Years Work Experience			Independence Criteria(Remark 2)	Independence Criteria(Remark 2)	Independence Criteria(Remark 2)	Independence Criteria(Remark 2)	Independence Criteria(Remark 2)	Independence Criteria(Remark 2)			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
Tong, Zi-Xian	-	-	YES			ˇ	ˇ		ˇ	ˇ	ˇ	ˇ	ˇ	-
Guo, Ming-Dong	-	-	YES				ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	2
Lu, Jing	-	-	YES				ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	-
Su, Yan-Xue	-	-	YES	ˇ		ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ		-
Wu, Xiang-Xiang	-	-	YES			ˇ	ˇ		ˇ	ˇ	ˇ	ˇ		-
Zheng, Zhong-Ren	YES	-		ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	2
Chen, Jin-Cai	YES	-	YES	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	1
Huang, Chun-Bao	-	-	YES	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	-
Wu, Hui-Huang	-	-	YES	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	-

Remark 1 ： The column will be adjusted as needed.

Remark 2 ： Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates.
Not a director or supervisor of the Company or any of its affiliates. Not applicable 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 third degree of kinship, of any of the persons in the preceding three subparagraphs.
Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company or who holds shares ranking in the top five holdings.
Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution which has a financial or business relationship with the Company.
Not a professional individual who is 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. These restrictions do not apply to any member of the remuneration committee who exercises powers pursuant to Article 7 of the “Regulations Governing the Establishment and Exercise of Powers of Remuneration Committees of Companies whose Stock is Listed on the TWSE or Traded on the TPEx“.

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.

(2) Management Team

2015/04/13

Title	Nationality/ Country of Origin	Name	Date Effective	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience（Education）	Other Position	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship
				Shares	%	Shares	%	Shares	%			Title	Name	Relatio
C.S.O	R.O.C.	Tong, Zi-Xian	2014.11.01	200,000	0.04%	－	－	－	－	Computer and Communication Engineering /Taipei Tech Chairman/ASUSTechnologyIncorp.	Page 8/Remark 1	－	－	－
C.E.O	R.O.C.	Guo, Ming-Dong	2000.09.11	1,179,795	0.26%	－	－	－	－	National Taipei Institute of Technology President/UNICAP Electronics	Page 8/Remark 2	－	－	－
Vice C.E.O	R.O.C.	Lu, Jing	2000.09.11	1,151,607	0.26%	－	－	－	－	Master of Industrial Engineering/Univ. of Iowa VicePresident/UNICAP Electronics	Page 8/Remark 3	－	－	－
C.T.O	R.O.C.	Zhang, Qian-Wei	2000.09.11	391,614	0.09%	－	－	－	－	Mechanics/National Central Univ. PCB Manager/MANZ Electronics	N/A	－	－	－
President	R.O.C.	Chen, He-Xu	2000.09.11	361,002	0.08%	－	－	－	－	Physics/Qinghua Univ. Production Manger/Motorola	N/A	－	－	－
Senior VP	R.O.C.	Yang, De-Sheng	2006.07.27	54,375	0.01%	－	－	－	－	M.B.A/NCCU Assistant VP/UNICAP Electronics	Chairman/Qiao Yin Investment	－	－	－
Senior VP	R.O.C.	Huang, Geng-Fang	2005.08.01	314,875	0.07%	－	－	－	－	Ta Hwa Univ. of Science&Technology Senior Manager/MITACInt'lCorp.	N/A	－	－	－
Vice President	R.O.C.	Lin, Zhi-Wei	2001.03.01	55,909	0.01%	－	－	－	－	Material Science & Enginnering /Qinghua Univ. QCManager/AU Optronics Corp	N/A	－	－	－
Vice President	R.O.C.	Huang, Sheng- Chuan	2015.02.01	－	－	－	－	－	－	~~Mechanical Engineering/Univ. of~~ Cambridge Senior Manager/UNICAP Electronics	N/A	－	－	－
Finance Suprvisor	R.O.C.	Liu, Su-Zhen	2000.08.01	19,400	0.00%	－	－	－	－	M.B.A/National Central Univ. Junior Manager/EY AccountingFirm	N/A	－	－	－

(3) Remuneration of Directors, Supervisors, President, and Vice President

Unit: NT$ thousands

Title	Name	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Ratio of Total Remuneration (A+B+C+D) to Net Income (%)(Rmk11)	Ratio of Total Remuneration (A+B+C+D) to Net Income (%)(Rmk11)	Relevant Remune	Relevant Remune	Relevant Remune	Relevant Remune	ration Received by Directors Who are Also Employees	ration Received by Directors Who are Also Employees	ration Received by Directors Who are Also Employees	ration Received by Directors Who are Also Employees	ration Received by Directors Who are Also Employees	ration Received by Directors Who are Also Employees	ration Received by Directors Who are Also Employees	ration Received by Directors Who are Also Employees	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%)(Rmk11)	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%)(Rmk11)	Compensation Paid to Directors from an Invested Company Other than the Company’s Subsidiar (Rmk12)
		Base Compensation (A) (Rmk.2)		Severance Pay (B)		Bonus to Directors (C)		Allowances(D)(Rmk.4)				Salary, Bonuses, and Allowances (E) (Rmk5)		Severance Pay (F)		Profit Sharing- Employee Bonus (G) (Rmk6)				Exercisable Employee Stock Options (H) (Rmk7)		New Restricted Employee Shares (I) (Rmk13)
		The Company	Companies in the consolidated financial statements (Rmk8)	The Company	Companies in the consolidated financial statements (Rmk8)	The Company	Companies in the consolidated financial statements (Rmk8)	The Company	Companies in the consolidated financial statements (Rmk8)	The Company	Companies in the consolidate d financial statements (Rmk8)	The Company	Companies in the consolidated financial statements (Rmk8)	The Company	Companies in the consolidate d financial statements (Rmk8)	The Company		Companies in the consolidated financial statements (Rmk8)		The Company	Companies in the consolidate d financial statements (Rmk8)	The Company	Companies in the consolidated financial statements (Rmk8)	The Company	Companies in the consolidated financial statements (Rmk8)
																Cash	Stock	Cash	Stock
Director	Tong, Zi-Xian	-	-	-	-	32,556	32,556	240	240	0.91%	0.94%	13,809	13,809	216	216	22,570	-	22,570	-	-	-	-	-	1.92%	1.99%	N/a
Director	Guo, Ming-Dong
Director	Lu, Jing
Director	Hua Xu Investment Rep.: Su, Yan- Xue
Director	Hua Xu Investment Rep.: Wu, Xiang- Xiang
Director	Zheng, Zhong- Ren
Independent Director	Chen, Jin-Cai
Independent Director	Huang, Chun- Bao
Independent Director	Wu, Hui-Huang

Remark:

1.Earning distribution in 2014 had been agreed in Board meeting on 2015/02/09, hadn’t approved in stochholder meeting. As of yet, the remuneration proportion as propsed above hadn’decided yet.
The Severance Pay listed above is appropriated only.

Range of Remuneration

Range of Remuneration	Name of Directors	Name of Directors	Name of Directors	Name of Directors
	Total of(A+B+C+D)		Total of(A+B+C+D+E+F+G)
	The company (Remark 9)	Companies in the consolidated financial statements(Remark10)	The company (Remark 9)	Companies in the consolidated financial statements(Remark10)
Under NT$ 2,000,000	Hua Xu Investment Rep. Su, Yan-Xue Hua Xu Investment Rep.： Wu, Xiang-Xiang Zheng, Zhong-Ren Chen, Jin-Cai Huang, Chun-Bao Wu,Hui-Huang	Hua Xu Investment Rep. Su, Yan-Xue Hua Xu Investment Rep.： Wu, Xiang-Xiang Zheng, Zhong Ren Chen, Jin-Cai Huang, Chun Bao Wu,Hui-Huang	Hua Xu Investment Rep. Su, Yan-Xue Hua Xu Investment Rep.： Wu, Xiang-Xiang Zheng, Zhong Ren Chen, Jin-Cai Huang, Chun Bao Wu,Hui-Huang	Hua Xu Investment Rep. Su, Yan-Xue Hua Xu Investment Rep.： Wu, Xiang-Xiang Zheng, Zhong Ren Chen, Jin-Cai Huang, Chun Bao Wu,Hui-Huang
NT$2,000,000 ~ NT$5,000,000	－	－	－	－
NT$5,000,000 ~ NT$10,000,000	Tong, Zi-Xian Guo, Ming-Dong Lu,Jing	Tong, Zi-Xian Guo, Ming-Dong Lu,Jing	－	－
NT$10,000,000 ~ NT$15,000,000	－	－	－	－
NT$15,000,000 ~ NT$30,000,000	－	－	Tong, Zi-Xian Guo, Ming-Dong Lu,Jing	Tong, Zi-Xian Guo, Ming-Dong Lu,Jing
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

Remark

1.Board directos should be disclosed seperately(Corporation-stockholder and Representative should be marked) ， and the payment should be displayed in a consolidated amount. The board directors who also act as Chairman or President should fill in the following Form (3-1) or (3-2).

Refers to the latest pay which includes basic base compensatio, professional allowance, severance pay, and the other bonuses.

Bonus to Directors had approved in board meeting before shareholder meeting.
Refers to the consolidated allowances which include honorarium 、 special disbursement 、 and the other allowances. The allowances which include housing, cars, and the other vehicles should be listed the nature and the cost of asset on actual or market value. If accompanied with drivers, plese remarktheir payment excluded from personal payment.
Refers to the consolidated remuneration received by directors who are also employees which include honorarium 、 special disbursement 、 and the other allowances. The allowances which include housing, cars, and the other vehicles should be listed the nature and the cost of asset on actual or market value. If accompanied with drivers, plese remarktheir payment excluded from personal payment.
Refers to the consolidated remuneration received by directors who are also employees (President, Vice President, and the other managers) which include stock bonus and cash bonus should be listed the approved number in board meeting before shareholder meeting. If unable to forecast, take reference to the last year, and fill in the Form 1-3
Refers to the directors who are also employees (President, Vice President, and the other managers) who had exercised employee stock option certificate (enexercised excluded) up to date should fill in this form and Form 15.
Disposed the consolidated payment of our company and all the other companies in this report.
The payment to all the board directors by our company would be disclosed.in the form of range of remuneration.
The consolidated payment to all the board directors by our company and the other companies would be listed in the form of range of remuneration. 11. The after-tax net profit refers to the one happened in personal or individual finacial statement in the latest year.
a. This column should dispose the remuneration to the board directors from our affliates and the other investments.
b. The remuneration to the board directors from our affliates and the other investments should be includedin the column J and defined as other investment.
c. The remuneration received by directors refers to the one paid by other investment other than the Company’s Subsidiary in the positions of the board director, supervisor, or manager which include honorarium 、 special disbursement 、 and the other allowances.
13.Refers to the directors who are also employees (President, Vice President, and the other managers) who had exercised restricted employee stock option should fill in Form15-1 and this form.

Remuneration of President and Vice President

								Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Title	Name	Base Compensation (A) (Rmk.2)		Severance Pay (B)		Bonus and Special Allowance (Rmk.3)		Disposition of Net Earning(D)（Rmk.4）				Ratio of Total Remuneration (A+B+C+D) to Net Income (%)(Rmk9)		Employee stock option exercised（Rmk.5）		Restricted Employee stock option (Rmk11)		Compensatio n Paid to Supervisors from an Invested Company Other than the Company ’s Subsidiary (Rmk.10)
		The Company	Companies in the consolidated financial statements (Rmk6)	The Company	Companies in the consolidated financial statements (Rmk6)	The Company	Companies in the consolidated financial statements (Rmk6)	The Company		Companies in the consolidated financial statements (Rmk6)		The Company	Companies in the consolidated financial statements (Rmk6)	The Company	Companies in the consolidated financial statements (Rmk6)	The Company	Companies in the consolidated financial statements (Rmk6)
								Cash	Stock	Cash	Stock
C.S.O	Tong,Zi-Xian	28,953	28,953	838	838	10,953	10,953	50,502	-	50,502	-	2.52%	2.61%	-	-	-	-	N/A
C.E.O	Guo, Ming- Dong
Vice C.E.O	Lu, Jing
C.T.O	Zhang, Qian- Wei
President	Chen, He-Xu
Executive V.P.	~~Xu, Sheng-~~ Xian (Dismissed in
Senior VP	~~2014)~~ Yang, De- Sheng
Senior VP	Huang, Geng-Fang
C.S.O	Lan, Jian-Dong (Dismissed in 2014)
Vice President	Lin, Zhi-Wei
Vice President	Huang, Sheng-Chuan (Effective in 2015)

＊Where a position equivalent to the General Manager, Deputy General Manager (example: President, CEO, Director ... And so on), it should be disclosed.

Remark:

The erning distribution in 2014 had been agreed in Board meeting on 2015/02/09, hadn’t approved in stochholder meeting. As of yet, the remuneration proportion as propsed above hadn’decided yet.
The Severance Pay listed above is appropriated only.

Range of Remuneration

Range of Remuneration	Name of Supervisors	Name of Supervisors
	The company (Rmk 7)	Companies in the consolidated financial statements(Rmk 8)
Under NT$ 2,000,000	Huang,ShengChuan	Huang,ShengChuan
NT$2,000,000 ~ NT$5,000,000	─	─
NT$5,000,000 ~ NT$10,000,000	Tong, Zi-Xian Xu, Sheng-Xian Yang, De-Sheng Huang, Geng-Fang Lan, Jian-Dong Lin,Zhi-Wei	Tong, Zi-Xian Xu, Sheng-Xian Yang, De-Sheng Huang, Geng-Fang Lan, Jian-Dong Lin,Zhi-Wei
NT$10,000,000 ~ NT$15,000,000	Lu, Jing Zhang, Qian-Wei Chen,He-Xu	Lu, Jing Zhang, Qian-Wei Chen,He-Xu
NT$15,000,000 ~ NT$30,000,000	Guo,Ming-Dong	Guo,Ming-Dong
NT$30,000,000 ~ NT$50,000,000	─	─
NT$50,000,000 ~ NT$100,000,000	─	─
Over NT$100,000,000	─	─
Total	11	11

Remark

President and Vice President should be disclosed separately, and the payment should be displayed in a consolidation. The board directors who also act as Chairman or President should fill in this form and the following Form (1-1) or (1-2).
Refers to the latest pay of the President and Vce President which include basic base compensatio, professional allowance, and severance pay.
Refers to the consolidated allowances of the President and Vce President which include honorarium 、 special disbursement 、 and the other allowances. The allowances which include housing, cars, and the other vehicles should be listed the nature and the cost of asset on actual or market value. If accompanied with drivers, plese remarktheir payment excluded from personal payment.
Refers to the consolidated remuneration received by the President and Vice President who are which include stock bonus and cash bonus should be disposed the approved number in board meeting before shareholder meeting. If unable to forecast, take reference to the last year, and fill in the Form 1-3. The after-tax net profit refers to the one happened in personal or individual finacial statement in the latest year.

Refers to the the President and Vice President who had exercised employee stock option should fill in this form and Form15-1.
Disposed the consolidated payment of our company and all the other companies in this report.
The payment to all the President and Vice President by our company would be disclosed.in the form of range of remuneration.
The payment to all the President and Vice President by our company and the other companies should be disclosed.in the form of range of remuneration.
The after-tax net profit refers to the one happened in personal or individual finacial statement in the latest year.
a. This column should dispose the remuneration to the President and Vice President from our affliates and the other investments. b. The remuneration to the President and Vice President from our affliates and the other investments should be included in column and defined as other investment.
c. The remuneration received by President and Vice President from our subsidiaries and the other investments other than the Company’s in the positions of the board director, supervisor, or manager which include honorarium 、 special disbursement 、 and the other allowances.
Refers to the directors who are also employees (President, Vice President, and the other managers) who had exercised restricted employee stock option should fill in Form15-1 and this form.

*The forms here are for the purpose of information disposal, not applicable for taxation if conflicts aroused with law.

Remuneration of Supervisors

Unit: NT$ thousands

						Unit: NT$thousands
	Title	Name	Stock Bonus	Cash Bonus	Total	Compared to Net Earing in Total (%)
Supervisors	C.S.O	Tong,Zi-Xian	─	50,502	50,502	2.52%
	C.E.O.	Guo,Ming-Dong
	ViceC.E.O.	Lu, Jing
	C.T.O.	Zhang, Qian-Wei
	Presient	Chen,He-Xu
	Executive V.P.	Xu, Sheng-Xian (Dismissed in 2014)
	SeniorV.P.	Yang,De-Sheng
	SeniorV.P.	Huang, Geng-Fang
	C.S.O.	Lan, Jian-Dong (Dismissed in 2014)
	Vice President	Lin,Zhi-Wei
	Vice President	Huang, Sheng-Chuan (effective in 2015)

The erning distribution in 2014 had been agreed in board meeting on 2015/02/09 but has not yet been approved at a stochholder meeting. As of yet, the detail of distribution which include stock bonus and cash bonus in 2013 hasn’t been certified yet. It will be estimated by the numbers given last year.
The erning distribution for the supervisors and employees approved in board meeting which include stock bonus and cash bonus will be estimated by the numbers given last year. The listing and the OTC listing company should refer to the establishment of the financial report of the securities issuer for the fair value. Non-listed companies in calculation of net earnings are based on the annual accounting period ending date. After-tax net profit refers to the recent annual one.

Remark:

Names and titles should be disposed individually and the erning distribution is displayed in consolidation

2.The erning distribution for the supervisors and employees approved in board meeting which include stock bonus and cash bonus will be estimated by the numbers given last year. The after-tax net profit refers to the one happened in personal or individual finacial statement in the latest year.

3.Scope of application of the Manager is regualted by TWSE file No.0920001301 on March 27, 2003 and defined as ： (1) President and equivalent rank (2) Vice President and equivalent rank (3) Junior President and equivalent rank (4) Financial Supervisor(5)Accounting Supervirsor(6) Other signed for management services and the rights of man.

4.Board directors, President, and Vice president who receive employee bonuses (including stock dividends and cash bonus) should fill in this form and Form1-2.

(4) Comparison of Remuneration for Directors, Supervisors, Presidents and 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 two most recent fiscal years to directors, supervisors, presidents and vice presidents of the Company, to the net income.

Unit: NT$ dollar

			Unit: NT$dollar	Unit: NT$dollar
Year Title	2014		2013
	Total remuneration	Total remuneration to net income(%)	Total remuneration	Total remuneration to net income(%)
Board Director	32,796	0.94%	30,001	0.96%
President and VP	91,246	2.61%	79,955	2.57%

Remark:

1.The erning distribution in 2014 had been agreed in board meeting on 2015/02/09, hadn’t approved in stochholder meeting. As of yet, the detail of distribution which include stock bonus and cash bonus hasn’t been certaified yet. It will be estimated by the numbers given last year. The listing and the OTC listing company should refer to the establishment of the financial report of the securities issuer for the fair value. 2.The erning distribution to board director and employees agreed in board meeting on 2014/02/09 was NT$ 32,556,000 and NT$545,679,000 respectively ， which totaled 578,235,000, 16.57% to net income.

3.The company provisions of the expensing of employee bonuses was applicable since January 1, 2008 ， Amount above has been recognized costs according to the articles of Association 。

(B).The ratios of remuneration paid to directors, presidents and vice presidents of the Company in the last two years, and the percentage to net income, in 2013 and 2014. The policy, standards, and portfolios for the payment of remuneration will be determined in annual stockholder meeting. The compensation is measured based on the employee’s personal achievements, contribution made to the business operation, and the market averages. It has a positive correlation with the performance of the Company's business. and approved by chairman.

3. Implementation of Corporate Governance

(1) Board of Directors

A total of 5 (A) meetings of the Board of Directors were held in the previous period. The attendance of director and supervisor were as follows:

Title	Name (Remark 1)	Attendance in Person (B)	By Proxy	Attendance Rate (%) 【Ｂ/ Ａ】 (Remark.2)
Chairman	Tong, Zi-Xian	3	2	60%
Director	Guo, Ming-Dong	5	0	100%
Director	Lu, Jing	5	0	100%
Director	Hua Xu Investment Rep. : Su, Yan-Xue	5	0	100%
Director	Hua Xu Investment Rep. : Wu,Xiang-Xiang	5	0	100%
Director	Zhang,Qian-Wei	5	0	100%
Independent director	Chen, He-Xu	5	0	100%
Independent director	Huang, Chun-Bao	4	1	80%
Independent director	Wu, Hui-Huang	5	0	100%
Other mentionable items: 1. If there are circumstances referred to in Article 14-3 of the 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 the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: None 2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, 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 an Audit Committee and a Remuneration Committee to assist the board in carrying out its various duties.

Remark:

1.Director, supervisor, who is a body corporate shareholders and their representatives should be revealed the name.

2.Supervisors resign before the end of the year, should be indicated in the notes column date of release, the actual attendance rate (%) based on the accumulation of attendance in board meeting.

3.If any supervisor re-election, the old and the new one should be revealed with remarks and the actual attendance rate (%) based on the accumulation of attendance in board meeting in the column.

(2) Audit Committee

A total of 5 (A) Audit Committee meetings were held in the previous period. The attendance of the independent directors was as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate (%)【Ｂ/Ａ】 Remark
Independent director	Chen, He-Xu	5	0	100%
Independent director	Huang, Chun-Bao	4	1	80%
Independent director	Wu, Hui-Huang	5	0	100%
Other mentionable items: 1. If there are the circumstances referred to in Article 14-5 of the Securities and Exchange Act and resolutions which were not approved by the Audit Committee but were approved by two thirds or more of all directors, the dates of meetings, sessions, contents of motion, resolutions of the Audit Committee and the Company’s response to the Audit Committee’s opinion should be specified: None 2. If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: None 3. Communications between the independent directors, the Company's chief internal auditor and CPAs (e.g. the items, methods and results of audits of corporate finance or operations, etc.)

Remark:

Independent Director resign before the end of the year, should be indicated in the notes column date of release, the actual attendance rate (%) based on the accumulation of attendance in board meeting.
If any Independent Director re-election, the old and the new one should be revealed with remarks and the actual attendance rate (%) based on the accumulation of attendance in board meeting in the column.

(3).Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?	Yes		"Code of practice for corporate governance" has been exposed on the company Web site and public observatories	No obvious deviation
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 trading with undisclosed information?	Yes Yes Yes Yes		(1). Spokesman system has been established according to regulations and the will handle related issues. (2) The board directors and the shareholders who hold more than 10%-owned holdings will be declared in accordance with the provisions of Declaration of Directors. (3) According to the company "internal control system", "internal audit system" and other related laws and regulations (4) According to the company "for possible insider trading, operating procedures," "code of conduct" and other related laws and regulations	No obvious deviation No obvious deviation No obvious deviation No obvious deviation

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
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 Remuneration 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?	Yes Yes	No No	(1)Member diversification is considered by the Board members. (2)Functional commissions will be created in order to meet the neeed of operating situation of the company and other various. (3) Will actively assessing relevant stipulations. (4) Board in assessing the independence of accountants and by appointment on103.12.31	(1)No obvious deviation (2)Will actively assessing the need of Functional commissions. (3) Will actively assessing relevant stipulations`。` (4)No obvious deviation
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?		No	Spokesman system has been established according to regulations and the will handle related issues.Aggresively assess to establish zones of the interested on website.	Aggresively assess to establish zones of the interested on website.
5. Does the company appoint a professional shareholder service agencyto deal with	Yes		Companies entrust KGI stock agency to handle the relevant Affairs of the Department`。`	No obvious deviation

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
shareholder affairs?
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, webcasting investor conferences)?	Yes Yes		(1)The Company has set up a Chinese/English website to disclose information regarding the Company’s financials, business and corporate governance status. (2) Spokesman system has been established	(1)No obvious deviation (2)No obvious deviation
7. Is there any other important information to facilitate a better understanding of the company’s 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 relationspolicies,	Yes		(1)The company in accordance with the relevant statutes provide personnel regulations to protect employees ' rights`。` (2)Spokesman system and company website have been established to keep good relationship witht the interests. (3) Directors decree training are held as regulated.`。` (4)Company crisis management policy`、`crisis measurement standard and relevant customer	No obvious deviation

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
and purchasing insurance for directors and supervisors)?			policy have been stipulated and put inot practice. (5) Company directors have been appropriated liabilityinsurance.
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.		No	Will aggressively do self-evaluation or entrust professional institution to deliver the report on relevant issues.	Will aggressively do self-evaluation or entrust professional institution to deliver the report on relevant issues.

4. Composition, Responsibilities and Operations of the Remuneration Committee

(1) Professional Qualifications and Independence Analysis of Remuneration Committee Members

Title（註1）	Criteria Name	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience(Remark 1)	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience(Remark 1)	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience(Remark 1)			Independence Criteria （Remark 2）	Independence Criteria （Remark 2）	Independence Criteria （Remark 2）	Independence Criteria （Remark 2）			Number of Other Public Companies in Which the Individual is Concurrently Serving as an Remuneration Committee Member	Remark(3)
		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	Has 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
Independent Director	Chen, He-Xu	Yes	-	Yes	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	0	N/A
Independent Director	Huang, Chun-Bao	-	-	Yes	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	0	N/A
Independent Director	Wu, Hui-Huang	-	-	Yes	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	1	N/A

Remark:

1.Please fill columns for directors, independent directors, respectively, or others.

2.Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office.

(1) Not an employee of the Company or any of its affiliates.

(2) Not a director or supervisor of affiliated companies. Not applicable in cases where the person is an independent director of the parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.

(3). 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.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three sub-paragraphs.
(5) Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company, or who holds shares ranking in the top five holdings.
(6) Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution which has a financial or business relationship with the Company.
(7) Not a professional individual, who is 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.
(8) Not a person of any conditions defined in Article 30 of the Company Law.
If the title is director, please state if it meets Securities dealer business premises on the provisions of article 6-5

(2) Attendance of Members at Remuneration Committee Meetings

A. There are 3 members in the Remuneration Committee.

B. Current member tenure: 2012/6/18-2015/06/17. A total of 3 (A) Remuneration Committee meetings were held in the previous period. The attendance record of the Remuneration Committee members was as follows:

Title	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%) 【Ｂ/Ａ】
Convener	Chen, He-Xu	3	0	100%
Committee Member	Huang, Chun-Bao	2	1	67%
Committee Member	Wu,Hui-Huang	3	0	100%
Other mentionable items: 1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the remuneration committee’s opinion (eg., the remuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): N/A 2.Resolutions of the remuneration committee objected to by members or subject to a qualified opinion and recorded or declared in writing, the date of the meeting,session,content of the motion,all members’ opinions and the response to members’ opinion should be specified: None.

Remark:

Remuneration committee member resign before the end of the year should be indicated in the notes column date of release, the actual attendance rate (%) based on the accumulation of attendance in board meeting.
If any Remuneration committee member re-election, the old and the new one should be revealed with remarks and the actual attendance rate (%) based on the accumulation of attendance in board meeting in the column.

5. Corporate Social Responsibility

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
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 disciplinarysystem?	Yes Yes Yes	No	(1)We have established the Corporate Social and Environmental Responsibility Regulation and examine regularly. (2) Holding on-the-job training and Environmental Safety training regularly. (3)The charity activity is exercised by administration department, which include donation to The metropolitan Association of Police Friends, Firefighter Volunteer and other minority groups. (4) Company regularly conducts employee education and training for enhancing corporate ethics. According to the assessment results, reward or punishment will be given along with for inspire growth altogether.	(1)No obvious deviation (2)No obvious deviation (3)Not submitting to the Board yet (4)No obvious deviation
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?	Yes Yes Yes		(1)Companies are implementing garbage classification and recycling to reducing environmental impact. (2)Establishing industrial characteristics of waste water and air pollution prevention and control regulations and exercise by environmental safety management Department. (3)Implementing Paperless offices，advocating for energy saving in air conditioning in summer and turning off the lights. Checking greenhouse gas emissions on a regular basis，and obtaining the ISO 14064 certification。	(1)No obvious deviation (2)No obvious deviation (3)No obvious deviation

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
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	Yes Yes Yes Yes Yes Yes Yes Yes Yes	No	(1)The company shall submit work rules to the LabourBureau for approval,and hold Labour Conference based on 「Measures for the implementation of the」quarterly and submit the report to Labor Bureau for approval. (2) HR suggestion boxes are available for suggestions to the company (3) Safety management plan is developed yearly, and carried out through meetings for self-inspection and occupational safety and health education training (4) HR suggestion boxes are available for suggestions to the company. Significant impacts on the company's operation will be issued in public timely. (5) Company regularly conducts employee education and training to enhance staff career development. (6) Company does not supply products or service directly to consumers. The operational staff will be responsible for follow-up services. Company products are clearly labeled. (7) Complete evaluations are completely appropriated before collaborating with suppliers. (8) Contracts are not stipulated to terminate or cancel at any time	(1)No obvious deviation (2)No obvious deviation (3)No obvious deviation (4)No obvious deviation (5)No obvious deviation (6)No obvious deviation (7)No obvious deviation (8)No obvious deviation (9)It’s not stipulated that the contract can be suspended or terminated at ny time.

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
responsibility policy and cause appreciable impact on the environment andsociety?
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)?	Yes		(1)The corporate social responsibilities(CSR) are revealed on its website and the Market Observation Post System (MOPS)	(1)No obvious deviation
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 anydiscrepancybetween the Principles and their implementation:
6. Other important information to facilitate better understanding of the company’s corporate social responsibility practices：None
7. A clear statement shall be made below if the corporate social responsibilityreports were verified byexternal certification institutions: None

6. Ethical Corporate Management

Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
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?	Yes Yes Yes		(1) The “Code of conduct for Integrity” approved at board meeting are revealed on its website and the Market Observation Post System (MOPS) (2)The “Code of conduct for Integrity” prohibits any dishonest behavior and prevention programmes. (3)The “Code of conduct for Integrity” stipulates the scope in the prohibition of any dishonest behavior and prevention programmes.	(1)No obvious deviation (2)No obvious deviation (3)No obvious deviation
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 accountingand internal control to facilitate ethical	Yes Yes Yes Yes		(1) The company evaluates business partners’ ethical records and include ethics-related clauses in business contracts (2) HR should implement credit management, and exercises investigation when receiving any of the acts referred to questioned, prosecutors to the company. And the result will be published, if necessary, through legal channels to seek solutions. (3) The”Code of Conduct for Integrity” is made as the business standard for the employees, contractors, suppliers,and businesspartners	(1)No obvious deviation (2)No obvious deviation (3)No obvious deviation (4)No obvious deviation (5)No obvious deviation

Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
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?	Yes		(4) Sound corporate accounting and internal control system, and audit plan is made and exercised by, internal auditors every year. (5) Company regularly conducts employee education and training,includingfor businee ethical business courses.
3.Operation of the integrity channel (4) Does the company establish both a reward or punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up? (5) Does the company establish standard operating procedures for confidential reporting on investigating accusation cases? (6) Does the company provide proper whistleblower protection?	Yes Yes Yes		(1) “Employee reporting and complaint handling procedures” is made for the protection of supplier and employee reporting and complaint rights. (2) “Employee reporting and complaint handling procedures” is clearly stipulated the relevant procedure and confidentiality. (3) “Employee reporting and complaint handling procedures” render protection to the petitioner from any possible revenge.	(1)No obvious deviation (2)No obvious deviation (3)No obvious deviation
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?	Yes		(1) The”Code of Conduct for Integrity” has been revealed on corporate website. (http://www.kinsus.com.tw)	(1)No obvious deviation
5.If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies,please describe anydiscrepancybetween thepolicies and their implementation.:None
6.Other important information to facilitate a better understanding of the company’s ethical corporate management policies: None

6.Other important information to facilitate a better understanding of the company’s ethical corporate management policies: None

7. Corporate Governance Guidelines and Regulations

Please refer to the Company’s website at http://www.kinsus.com.tw.

8. Other Important Information Regarding Corporate Governance

None.

9 Internal Control Systems

(1).Please refer to page 45 of the Statement of internal control.

(2).The entrusted accountant project review report：None.

10. The punishments and improvements to the personnel who violate the statement of

internal control shall be revealed in the latest annual report uptodate: None

11. Major Resolutions of Shareholders’ Meeting and Board Meetings

(1) Important resolutions at the 2014 annual meeting of shareholders

Item	Date	Major resolutions
Board meeting	June,19, 2014	A. Approval of the 2013 business report and financial statements with affirmative vote 306,304,956, negative vote 0, abstention 16,808,442. B. Approval of the distribution of 2013 retained earnings and employee profit sharing with affirmative vote 306,304,956,negative vote 0,abstention 16,808,442

Kinsus Interconnect Technology Corporation 2013 Profit Distribution Table

		Unit: NT$ dollar
Item	Total
Beginning retained earnings _ROC GAAP		$9,099,590,169
Less：Effects of adopting IFRS differences		(130,532,558)
subtotal:		8,969,057,611
Add:Other comprehensive income and loss
- the impact of the actuarial gains and
losses of benefits		13,394,792
Add: net profit after tax		3,224,093,240
Add：Special reserve U-turn		74,424,187
Divisible surplus		12,280,969,830
Less: 10% legal reserve		(322,409,324)
special reserve		-
shareholder dividend ($3.5/share)		(1,561,000,000)
subtotal:		(1,883,409,324)
Unappropriated retained earnings total		$10,397,560,506
Employee bonus sharing		$492,103,547
Compensation of directors and supervisors		$29,761,081

Item	Date	Major resolutions
Board meeting	06,19, 2014	C. Revise “Fund Loan to Other Party Procedure” The votes show the affirmative 296,140,056, negative vote 0, abstention 93,356,458. The affirmative weight exceeds the statutory amount and passed. D. Revise “Endorsement Guarantee Procedure” The votes show the affirmative 296,140,056, negative vote 0, abstention 93,356,458. The affirmative weight exceeds the statutory amount and passed. E. Revise “To Acquire or Dispose of the Assets Handling Procedures” The votes show the affirmative 296,140,056, negative vote 0, abstention 93,356,458. The affirmative weight exceeds the statutory amount and passed.

(2) Major Issues of Record or Written Statements Made by Any Director

Date	Major resolutions
2014/01/27	1. 2014 Business plan and the annual budget 2. 2013 Business report, financial report,、and concoilidated financial report . 3. 2013 Earning Distribution 4. The company management turnover case. 5. Approved of『Statement of internal control system』in 2013 6. Date of the annual shareholders meetingconvened and related matters in 2014
2014/05/05	1.2014 Capital expenditures budget changes 2. Approved of Annual accountant appointment and remuneration in 2014 3. The fixed asset of the company 4. Revise of「Fund loan and other procedure」 5. Revise of「To acquire or dispose of the assets handling procedures」 6. Revise of「Ethics Rules」 7. Revise of「Integriety Rule」 8. Stipulate「Corporate Governance Practices」 9. Stipulate「Code of Practice on Corporate Social Responsibility」 10. Revise of annual shareholders meetingconvened in 2014
2014/07/28	1. Capital expenditures budget changesin 2014 2. Approved of Shareholders dividend distribution of income base date in 2013 3. Issue 2013 annual Director's remuneration 4. 2014 Manager annual salary recommendation case 5. Manager bonus payment proposal in 2013 6. Bank for new and renewalquota application case

	7. Approved of Suzhou case Tong-Shuo technologylimited endorsement
2014/10/27	1. New appointment and dismiss of managers and compensation cases。 2. Approved of Bai Shuo (Su Zhou) Limited.endorsement 3. Stipulate『2015Annual Auditing Plan』。
2014/12/31	1. 2015 Business plan and the annual budget 2. 2014Annual managers ' year-end bonus case 3. Approved of Annual accountant appointment and remuneration in 2015 4. Revise of “Internal Control System”,”Internal Auditing System”,”Commitments and Contingent Liabilities Management”,”Subsidiary Monitoring Practices”,”Group Enterprise and Related Party Transaction Procedures”and nullify”Long term and Short term investment management measures” 5. Revised companyaccountingsystem
2015/02/09	1. Approved of Business report, financial report,、and concoilidated financial report in 2014. 2. Approved of.2014 Earning Distribution。 3. Approved of New appointed manager。 4. Approved of 2014”Statement of Internal Control System” 5. Approved of Comprehensive election directors 6. Nominating independent directors 7. The lifting of prohibition of business strife case for New Chairman. 8. 2015 Shareholders meetingrelated issues
2015/04/27	1. Review the qualifications of independent directors. 2. Revise of「Ethics Rules」 3. Revise of「Integriety Rule」 4. Revise of「Corporate Governance Practices」 5. Revise of「Code of practice on corporate social responsibility」. 6. Stipulate「Integrity management procedures and guidelines」.

Any disagreements of board directors or supervisors to the resolutionsmade in the board in annual report of last year and as of publication date: None
Any resignation or dismissal of Chairman, accounting supervisor, Treasurer、head of internal audit and R&D in annual report of last year and as of publication date: None

(4) Information on Professional Fees for CPAs

Name of AccountingFirm	Name of CPA	Audit Period	Remark
Ernst & Young	Huang,Yi-Hui	2014
	Zhang,Zhi-Ming

Category Range	Category Range	Audit Fee	Non- Audit Fee	Total
1	Less than $2,000 thousand		V
2	$2,000 thousand (inclusive) - $4,000 thousand	V		V
3	$4,000 thousand (inclusive) - $6,000 thousand
4	$6,000 thousand (inclusive) - $8,000 thousand
5	$8,000 thousand (inclusive) - $10,000 thousand
6	$10,000 thousand and more

(A) The amount of non-audit fees paid to the CPAs, their firm, and its affiliated enterprises accounting for at least one-fourth of the amount of audit fees: None
(B) Change of the accounting firm with a decrease in the audit fees paid in the year of change compared to the year before the change: None
(C) The audit fees reduced by 15% or more compared to the previous year: None
(5) Information on Replacement of CPAs: N/A
(6) The Company’s Chairman, President, Financial Officers or Accounting Officers Who Are Required to Disclose Their Information for Holding a Position in the Accounting Firm or Its Affiliated Enterprises in the Most Recent Year: None
(7) Changes in Equity Due to Transfer and Pledge by Directors, Supervisors, Officers, and Greater-Than-10-Percent Shareholders in the Most Recent Year and During the Current Period up to the Date of Printing of the Annual Report: Where the counterparty in any such transfer or pledge of equity is a related party, disclose the counterparty's name, its relationship with the Company as well as the Company's directors, supervisors, and greater-than-10-percent shareholders, and the number of shares acquired or pledged.
(A) Changes in equity due to transfer and pledge by directors, supervisors, officers, and greater-than-10-percent shareholders

a. Changes in Equity of Directors, Officers, and Major Shareholders

Unit: Shares

				Unit: Shares	Unit: Shares	Unit: Shares
Title	Name	2014		Current Year till April 13, 2015
		Increase (Decrease) in # of Shares Held	Increase (Decrease) in # of Shares Pledged	Increase (Decrease) in # of Shares Held		Increase (Decrease) in # of Shares Pledged
Chairman	Tung, Tzu-Hsien	─	─	─		─
Director & CEO	Guo, Ming-Dong	-150,000	─	─		─
Director & Vice CEO	Lu, Jing	-150,000	─	─		─
Director (major shareholder)	Hua Xu Investment Co., Ltd. Corporate representative: Su, Yan-Xue	─	─	─		─
	Su, Yan-Xue	─	─	─		─
Director (major shareholder)	Hua Yu Investment Co., Ltd. Corporate representative: Wu, Xiang-Xiang	─	─	─		─
	Wu, Xiang-Xiang	─	─	─		─
Director	Cheng, Chung-Jen	─	─	─		─
Independent Director	Huang, Chun-Bao	─	─	─		─
Independent Director	Chen, Jin-Cai	─	─	─		─
Independent Director	Wu, Hui-Huang	─	─	─		─
Major Shareholder	Hua Wei Investment Co., Ltd.	─	─	─		─
Technical Director	Chang, Chien-Wei	-23,000	─	─		─
President	Chen, He-Xu	-70,000	─	─		─
Executive Vice President	Xu, Sheng-Xian		Dismissed in 2014
Senior Vice President	Yang, De-Sheng	─	─	─	─
Senior Vice President	Huang, Geng-Fang	-60,000	─	─	─

Chief Technology Officer	Lan, Jian-Dong		Dismissed in 2014	Dismissed in 2014	Dismissed in 2014
Vice President	Lin, Zhi-Wei	-2,000	─	-10,000	─
Vice President	Huang, Sheng-Chuan		Promoted and appointed in 2015
Financial Accounting Manager	Liu, Su-Zhen	-2,000	─	─	─

(B) Where the counterparty in any transfer or pledge of equity is a related party, disclose the counterparty's name, its relationship with the Company as well as the Company's directors, supervisors, and greater-than-10-percent shareholders, and the number of shares acquired or pledged: None
(8) Relationship Information If Among the Company's Ten Largest Shareholders Any One Is a Related Party, a Spouse, or a Relative Within the Second Degree of Kinship of Another:

							Title or Name of Its	Title or Name of Its
Name	Shares Held		Shares Held by Spouse or Minor Children		Total Shares Held in the Name of Others		Related Party, Spouse, or Relative Within the Second Degree of Kinship That Is Among Ten Largest Shareholders and Their Relationship		Remark
	# of Shares	Shareholding Percentage	# of Shares	Shareholding Percentage	# of Shares	Shareholding Percentage	Title (or Name)	Relationship
Hua Wei Investment Co., Ltd.	60,128,417	13.48%	-	-	-	-	Hua Xu Investment Co., Ltd., Hua Yu Investment Co., Ltd.	All are 100% owned by Pegatron Corp.	-
							Hua Wei	All are
Hua Xu Investment Co., Ltd. (Representative: Su, Yan-Xue)	58,233,091	13.06%	-	-	-	-	Investment Co., Ltd., Hua Yu Investment Co., Ltd.	100% owned by Pegatron Corp.	-
Su, Yan-Xue	-	-	-	-	-	-	-	-	-

							Hua Wei	All are
Hua Yu Investment Co., Ltd. (Representative: Wu, Xiang-Xiang)	55,556,221	12.46%	-	-	-	-	Investment Co., Ltd., Hua Xu Investment Co., Ltd.	100% owned by Pegatron Corp.	-
Wu, Xiang-Xiang	-	-	-	-	-	-	-	-	-
Nan Shan Life Insurance Company, Ltd.	14,823,000	3.32%	-	-	-	-	-	-	-
Cathay Life Insurance Co., Ltd.	13,315,000	2.99%	-	-	-	-	-	-	-
Fubon Life Assurance Co., Ltd.	8,395,000	1.88%	-	-	-	-	-	-	-
Chunghwa Post	8,193,000	1.84%	-	-	-	-	-	-	-
Investment account at the central bank of Saudi Arabia entrusted to JPMorgan Chase	8,165,000	1.83%	-	-	-	-	-	-	-
Labor Pension Fund (Old Scheme)	5,898,500	1.32%	-	-	-	-	-	-	-
Labor Pension Fund (New Scheme)	5,131,500	1.15%	-	-	-	-	-	-	-

(9) The Number of Invested Enterprises’ Shares Held by the Company, Its Directors, Supervisors, and Officers, and Companies Directly or Indirectly Controlled by the Company, as Well as Consolidated Shareholding Percentage

Consolidated Shareholding Percentage

Base date: 03.31.2015; Unit: Shares; %

			Base date:	Base date:	03.31.2015; Unit: Shares; %	03.31.2015; Unit: Shares; %
Invested Enterprise	Investment by the Company		Investment by Directors, Supervisors, Officers, and Directly or Indirectly Controlled Companies		Consolidated Investment
	# of Shares	Shareholding Percentage	# of Shares	Shareholding Percentage	# of Shares	Shareholding Percentage
KINSUS CORP.(USA)	500,000	100%	－	－	500,000	100%
KINSUS HOLDING (SAMOA) LIMITED	166,308,720	100%	－	－	166,308,720	100%

KINSUS HOLDING (CAYMAN) LIMITED	－	－	72,000,000	100%	72,000,000	100%
KINSUS INTERCONNECT TECHNOLOGY (SUZHOU) CORP.	－	－	－	100%	－	100%
JING SHUO INVESTMENT CO., LTD.	39,800,000	100%	－	－	39,800,000	100%
PEGAVISION CORP.	－	－	37,219,339	62.03%	37,219,339	62.03%
PIOTEK HOLDINGS LTD.(CAYMAN)	－	－	187,755,000	100%	187,755,000	100%
PIOTEK HOLDING LTD.	－	－	139,840,790	100%	139,840,790	100%
PIOTEK (H.K.) TRADING LIMITED.	－	－	200,000	100%	200,000	100%
PIOTEK COMPUTER CORP.	－	－	－	100%	－	100%
PEGAVISION HOLDINGS CORPORATION	－	－	880,000	100%	880,000	100%
PEGAVISION (SHANGHAI) LIMITED	－	－	－	100%	－	100%
XIANG SHUO TRADING (SUZHOU) LIMITED	－	－	－	100%	－	100%

Remark: The number of shares held by PEGAVISION and its shareholding percentage are based on the

information as of April 18, 2015, the base date of share transfer suspension before the meeting of the company’s shareholders.

Kinsus Interconnect Technology Corp. Statement on Internal Control Systems

Date: February 9, 2015

Based on the results of self-inspection of the Company’s internal control system in 2014, the Company hereby states the following:

(1) The Company is fully aware that establishing, implementing, and maintaining an internal control system are the responsibilities of its board of directors and officers. The Company has established such a system to provide reasonable assurance regarding the achievement of such objectives as effectiveness and efficiency of operations (including profits, performance, and safeguarding of assets), reliability of financial reporting, and compliance with applicable laws and regulations.
(2) There are inherent limitations to every internal control system. An effective internal control system can only provide reasonable assurance regarding the achievement of the aforesaid three objectives in spite of how well-designed it is. Moreover, the effectiveness of an internal control system may vary with changes in environments or circumstances. Nevertheless, the internal control system of the Company comes with a self-supervision mechanism. The Company will take corrective actions immediately after a deficiency is identified.
(3) The Company determines whether the design and implementation of its internal control system are effective according to the criteria for effectiveness of internal control systems as prescribed in the Regulations Governing Establishment of Internal Control Systems by Public Companies (hereinafter referred to as “the Regulations”). The internal control system criteria adopted in the Regulations divide an internal control system into five constituent elements based on the management and control processes: a. control environment; b. risk assessment; c. control activities; d. information and communications; and e. monitoring. Each constituent element also comprises several items. See the Regulations for the above-mentioned items.
(4) The Company has adopted the aforesaid internal control system criteria to inspect the effectiveness of the design and implementation of its internal control system.
(5) According to the results of the inspection mentioned above, the Company believes that its internal control system (the supervision and management of its subsidiaries are included) as of December 31, 2014, including the design and implementation of the internal control system regarding the perceived level of achievement of the objectives of operational effectiveness and efficiency, reliability of financial reporting, and compliance with applicable

laws and regulations, is effective, and that it can reasonably assure the achievement of the aforesaid objectives.

(6) This statement will become an essential part of the Company’s annual report and prospectus and be disclosed to the public. If the Company is found to make a false statement, conceal information, or violate regulations regarding the disclosed content, it will be subject to the legal liabilities of Articles 20, 32, 171, and 174 of the Securities and Exchange Act.
(7) This statement was adopted by the board of directors of the Company on February 9, 2015. None of the nine attending directors (one of them was a proxy) objected to this statement as all of them approved the content of this statement. Thus, a pronouncement is made herein.

Kinsus Interconnect Technology Corp.

Chairman: Tung, Tzu-Hsien

President: Chen, He-Xu

4. Capital Raising

(1) Capital and Shares

(A) Sources of Capital Stock
a. Types of Shares

April 13, 2015; Unit: Shares

a. Types of Shares	April 13,	April 13,	April 13,	2015;Unit: Share
Type of Shares	Authorized Capital Stock			Remark
	Outstanding Shares (Note)	Unissued Shares	Total
Registered common stock	446,000,000	104,000,000	550,000,000	Note

Note: The Company went public on November 1, 2004. The shares outstanding are shares of the listed stocks.

b. Formation of Capital Stock

April 13, 2015

						April 13,2015	April 13,2015	April 13,2015
Month & Year	Issue Price ($)	Authorized Capital Stock		Paid-Up Capital Stock		Remark
		# of Shares (Thousand Shares)	Amount (Thousand Dollars)	# of Shares (Thousand Shares)	Amount (Thousand Dollars)	Source of Capital Stock	Offsetting Payment of Shares with Properties Other Than Cash	Others
September 2000	10	250,000	2,500,000	120,000	1,200,000	Startup capital 1,200,000	None	－
December 2000	10	250,000	2,500,000	130,000	1,300,000	Cash capital increase 100,000	None	Note 1
April 2001	10	250,000	2,500,000	190,000	1,900,000	Cash capital increase 600,000	None	Note 2
November 2002	10	250,000	2,500,000	200,000	2,000,000	Cash capital increase 100,000	None	Note 3
July 2004	10	288,000	2,880,000	222,000	2,220,000	Capitalization of earnings 220,000	None	Note 4
August 2005	10	370,000	3,700,000	259,800	2,598,000	Capitalization of earnings 378,000	None	Note 5
September 2005	10	370,000	3,700,000	289,800	2,898,000	Cash capital increase 300,000	None	Note 6
June 2006	10	550,000	3,700,000	339,800	3,398,000	Cash capital increase 500,000	None	Note 7

September 2006	10	550,000	5,500,000	389,000	-+3,890,000	Capitalization of earnings 492,000	None	Note 8
September 2007	10	550,000	5,500,000	435,400	4,354,000	Capitalization of earnings 464,000	None	Note 9
September 2008	10	550,000	5,500,000	446,000	4,460,000	Capitalization of earnings 106,000	None	Note 10

Note 1: Approved by the Ministry of Economic Affairs with the Letter of Jing-(090)-Shang No. 09001013780 dated January 15, 2001

Note 2: Approved by the Ministry of Economic Affairs with the Letter of Jing-(090)-Shang No. 09001129300 dated April 17, 2001

Note 3: Letter of (91)-Tai-Cai-Zheng-(Yi)-Zi No. 0910149830 issued by the Securities and Futures Commission, Ministry of Finance on September 11, 2002

Note 4: Letter of (93)-Tai-Cai-Zheng-(Yi)-Zi No. 0930124569 issued by the Securities and Futures Commission, Ministry of Finance on June 2, 2004

Note 5: Letter of Jin-Guan-Zheng-Yi-Zi No. 0940126584 issued by the Financial Supervisory Commission, Executive Yuan on July 1, 2005

Note 6: Letter of Jin-Guan-Zheng-Yi-Zi No. 0940130374 issued by the Financial Supervisory Commission, Executive Yuan on August 2, 2005

Note 7: Letter of Jin-Guan-Zheng-Yi-Zi No. 0950108623 issued by the Financial Supervisory Commission, Executive Yuan on March 24, 2006

Note 8: Letter of Jin-Guan-Zheng-Yi-Zi No. 0950128559 issued by the Financial Supervisory Commission, Executive Yuan on July 5, 2006

Note 9: Letter of Jin-Guan-Zheng-Yi-Zi No. 0960031093 issued by the Financial Supervisory Commission, Executive Yuan on June 21, 2007

Note 10: Letter of Jin-Guan-Zheng-Yi-Zi No. 0970030373 issued by the Financial Supervisory Commission, Executive Yuan on June 18, 2008

(B) Shareholder Structure

April 13, 2015; Unit: Shares

					April 13,2015;	Unit: Shares
Shareholder Structure Quantity	Government Agencies	Financial Institutions	Other Corporations	Individuals	Foreign Institutions & Foreigners	Total
# of Persons	0	20	115	23,969	374	24,478
# of Shares Held	0	45,884,000	206,880,700	86,466,787	106,768,513	446,000,000
Shareholding Percentage	0.00%	10.29%	46.38%	19.39%	23.94%	100%
Note: No shares are held by investors in Mainland China.

(C) Diffusion of Ownership

$10 per share; April 13, 2015

Scale of Shareholding	# of Shareholders	# of Shares Held	Shareholding Percentage
1 to999	4,209	501,052	0.11%
1,000 to 5,000	16,859	31,780,990	7.13%
5,001 to 10,000	1,763	14,096,372	3.16%
10,001 to 15,000	489	6,276,738	1.41%
15,001 to 20,000	332	6,138,283	1.38%
20,001 to 30,000	271	7,052,596	1.58%
30,001 to 50,000	183	7,394,973	1.66%
50,001 to 100,000	147	10,292,986	2.31%
100,001 to 200,000	74	10,727,088	2.40%
200,001 to 400,000	57	16,559,496	3.71%
400,001 to 600,000	28	14,083,399	3.16%
600,001 to 800,000	11	7,568,541	1.70%
800,001 to 1,000,000	10	8,677,754	1.94%
1,000,001 to 1,000,000,000	45	304,849,732	68.35%
Total	24,478	446,000,000	100.00%

(D) List of Major Shareholders

The names, numbers of owned shares, and shareholding percentages of those who own 5% or more of the total issued shares or whose shareholding percentage is among the top ten

April 13, 2015; Unit: Shares

Shares Name of Major Shareholders	# of Shares Held	Shareholding Percentage
Hua Wei Investment Co.,Ltd.	60,128,417	13.48%
Hua Xu Investment Co.,Ltd.	58,233,091	13.06%
Hua Yu Investment Co.,Ltd.	55,556,221	12.46%
Nan Shan Life Insurance Company,Ltd.	14,823,000	3.32%
CathayLife Insurance Co.,Ltd.	13,315,000	2.99%
Fubon Life Assurance Co.,Ltd.	8,395,000	1.88%
Chunghwa Post	8,193,000	1.84%
Investment account at the central bank of Saudi Arabia entrusted to JPMorgan Chase	8,165,000	1.83%
Labor Pension Fund(Old Scheme)	5,898,500	1.32%
Labor Pension Fund(New Scheme)	5,131,500	1.15%

(E) Market Price, Net Worth, Earnings, and Dividends per Share as Well as Relevant Information for the Past Two Years

March 31, 2015; Unit: NTD

Item	Year	Year	Year	2013	2014	Current Year till March 31, 2015
Market Price per Share	Highest			118.50	139.50	106.50
	Lowest			88.60	96.70	99.30
	Average			102.74	116.81	101.50
Net Worth per Share	Before Distribution			56.23	61.43	62.66
	After Distribution			52.73	(Note)	－
Earnings per Share	Weighted Average # of Shares			446,000,000 shares	446,000,000 shares	446,000,000 shares
	Earnings per Share	Before Adjustment		7.23	8.11	1.38
		After Adjustment		7.23	( Note )	－
Dividends per Share	Cash Dividends			3.00	( Note )	－
	Stock Dividends		Stock Dividends from Retained Earnings	－	( Note )	－
			Stock Dividends from Capital Reserves	－	( Note )	－
	Accumulated Unpaid Dividends			－	－	－
Analysis of Return on Investment	Price/Earnings Ratio			14.21	14.40	－
	Price/Dividend Ratio			34.25	( Note )	－
	Cash Dividend Yield			2.92%	( Note )	－

Note: The distribution of earnings in 2014 has been approved by the board of directors, but has not been resolved at the shareholders’ meeting.

(F) The Company's Dividend Policy and Its Implementation
a. The Company's Dividend Policy
- (a) The Company’s rules for distribution of earnings are as follows: If there are earnings

after the settlement of accounts for the current year, the earnings shall be distributed in the

following order:

A. Pay taxes and dues;
B. Offset losses;
C. Set aside 10% of the earnings as legal reserve;

D. Appropriate or reverse a special reserve according to law or as required by the competent authorities;

E. Set aside 1% of the remaining earnings after the deduction of items A-D as compensation for directors;

F. In principle, the bonuses to be allocated to employees should not be less than 1% of the sum of employee bonuses and shareholder bonuses.

Employee bonuses may be distributed in the form of cash or stocks. The employees to whom stock dividends are allocated may include the subordinate companies’ employees that meet certain requirements. The requirements should be set by the board of directors.

G. For the remaining earnings after the aforesaid deductions, plus the accumulated undistributed earnings in prior years, the board of directors should submit a distribution proposal to the shareholders’ meeting for a resolution.

Considering long-term financial planning in an ever-changing industrial environment and to meet the shareholders’ needs for cash inflows, the Company has formulated a steady and balanced dividend policy which stipulates that the cash dividends to be distributed each year must not be less than 10% of the sum of the cash and stock dividends.

The board of directors is authorized to determine the remuneration for the directors of the Company based on the level of their involvement in the operation of the Company and the value of their contributions. Moreover, the Company should purchase liability insurance for performance of duties for all of the directors during their tenure.

b. Dividend Distributions to Be Proposed at the Shareholders' Meeting

In 2014, the Company had a distributable earning of NT$14,030,596,629 after

taxes, and set aside 10% of the amount, that is NT$361,732,668, as legal reserve. The following distribution is proposed in accordance with the Articles of Incorporation:

(1) Shareholder dividends: NT$1,784,000,000, all distributed in the form of cash

(2) Employee bonuses: NT$545,679,473, all distributed in the form of cash

(3) Director compensation: NT$32,555,940
(4) Unappropriated retained earnings at the end of the period: NT$11,884,863,961

Kinsus Interconnect Technology Corp. Earnings Distribution Schedule

2014

Kinsus Interconnect Technology Corp. Earnings Distribution Schedule 2014
Item	Unit: NTD Amount
Unappropriated retained earnings (at beginning of period) Add: Other comprehensive income in 2014 - actuarial gains of defined benefit plans Add: Net income in 2014 Distributable earnings Less: 10% legal reserve Shareholder bonuses ($4 per share in cash) Subtotal Unappropriated retained earnings (at end of period) Employee bonuses (cash) Director compensation	10,397,560,506 15,709,446 3,617,326,677
	14,030,596,629 (361,732,668) (1,784,000,000)
	(2,145,732,668)
	11,884,863,961
	4,460,000,000 545,679,473
	32,555,940

c. Explanation of Expected Material Changes in the Dividend Policy: None
(G) Effect of Stock Dividend Distribution to Be Proposed at the Shareholders' Meeting on the Company’s Operating Performance and Earnings per Share

Regarding the distribution of earnings of the Company for 2014, the board of directors approved the proposal on February 9, 2015 to distribute shareholder bonuses totaling $1,784,000 thousand in the form of cash only. Thus, it is not applicable.

(H) Employee Bonuses and Compensation for Directors and Supervisors

a. The percentages or ranges with respect to employee bonuses and director/supervisor compensation, as set forth in the Company's Articles of Incorporation: Please refer to the explanation in (1)-(F)-a on p.51.
b. The basis for estimating the amount of employee bonuses and director/supervisor compensation, for calculating the number of shares to be distributed as stock bonuses, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period: None
c. Information on the employee bonus distribution proposals approved by the board of directors:
(a) Regarding the distribution of earnings of the Company for 2014, the board of directors approved the proposal on February 9, 2015 to distribute shareholder

bonuses totaling $1,784,000 thousand in the form of cash, as well as to allocate a sum of $32,556 thousand for director compensation and a sum of $545,679 thousand for employee bonuses.

(b) The proposed amount of employee stock bonuses to be distributed, and the size of such an amount as a percentage of the sum of the after-tax net income stated in the separate or individual financial reports for the current period and total employee bonuses: N/A
(c) The effect of proposed distribution of employee bonuses and director/supervisor compensation on imputed earnings per share:

The director compensation and employee bonuses have been capitalized as expenditure; thus, it is not applicable.

d. The actual distribution of employee bonuses and director/supervisor compensation for the previous year (including the number, amount, and stock price of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized employee bonuses and director/supervisor compensation, the discrepancy, cause, and how it is treated

The actual distribution of employee bonuses and director/supervisor compensation by the Company for 2013 is as follows:

Item	Earnings Distribution for 2013	Earnings Distribution for 2013	Discrepancy	Cause and Explanation of Discrepancy
	Adopted at Shareholders’ Meeting on June 19, 2014 $29,761 thousand $492,104 thousand	Actual Distribution
Director/Supervisor Compensation Employee Cash Bonuses		$29,761 thousand $492,104 thousand	- -	- -

(I) Share repurchase: The Company didn’t repurchase its own shares in the most recent year and during the current period up to the date of printing of the annual report.
(2) Issuance of Corporate Bonds: None
(3) Issuance of Preferred Shares: None
(4) Issuance of Global Depository Receipts: None
(5) Issuance of Employee Stock Warrants: None

(6) Award of New Restricted Shares: None

(7) Mergers, Acquisitions, and Issuance of New Shares Due to Acquisition of Shares of Other Companies
一
( ) Where the Company completed a merger, acquisition, or issuance of new shares due to acquisition of shares of other companies in the most recent year and during the current period up to the date of printing of the annual report, the following matters shall be disclosed: None
(二) Where, in the most recent year and during the current period up to the date of printing of the annual report, the board of directors adopted a resolution approving a merger, acquisition, or issuance of new shares due to acquisition of shares of other companies, the state of the plan's implementation together with the basic information of the company (or companies) to be merged, acquired, or purchased through acquisition of shares shall be disclosed. Where a merger, acquisition, or issuance of new shares due to acquisition of shares of other companies is currently in progress, the state of the plan's implementation and its effect on shareholders' equity shall be disclosed: None
(8) Implementation of the Capital Allocation Plans
(A) Description of the plans: Each uncompleted public issue or private placement of securities, and issues or placements that were completed in the most recent three years but have not yet fully yielded the planned benefits: N/A
(B) Status of implementation: N/A

5. Overview of the Operations

(1). Business Contents

(A) Scope of Business
a. Primary Business Areas
- (1) CC01080 Manufacturing of electronic components.
- (2) CC01990 Manufacturing of other electrical and electronic mechanical equipment.
- (3) CB01990 Manufacturing of other machinery.
- (4) CQ01010 Manufacturing of dies.
- (5) F401010 International trade.
b. Sales Percentages of Primary Products

Unit: One thousand New Taiwan Dollars (NTD)

Percentage Primary product	2014	2014
	Sales	Percentage
Division of carrier boards	19,285,334	77.32%
Division of PCBs	5,658,500	22.68%
Total	24,943,834	100.00%

c. Current Products
(a) Manufacturing & sales of PBGA (Plastic Ball Grid Array) substrates.
(b) Manufacturing & sales of MCM (Multi-Chip-Module) BGA substrates.
(c) Manufacturing & sales of CSP (Chip Scale Package) mini-BGA substrates.
(d) Manufacturing & sales of High Dissipation Cavity Down substrates and TEBGA (Thermal Enhanced-BGA) substrates.
(e) Manufacturing & sales of Flip Chip substrates and Flip Chip CSP substrates.
(f) Manufacturing & sales of Flip Chip Film COF (Chip on Flex).
(g) Manufacturing & sales of Core-less substrates.
(h) Manufacturing & sales of All Layer Build Up substrates.
(i) Manufacturing & sales of Embedded Pattern substrates.
(j) Manufacturing & sales of Embedded Passive substrates.
(k) Manufacturing & sales of High Density Copper Bump substrates.
(l) Manufacturing & sales of High Band Width Package-On-Package substrates.
(m) Manufacturing & sales of Core-less Embedded Passive substrates.
d. New Products to Be Developed

Since the founding of the company, we have always maintained the principle of

"Satisfy customers; pursue excellence.” Furthermore, we also positioned our R&D to achieve technology leadership and satisfy market demands. We always strive to

increase the profitability of our products by entering the market early, as well as plan future investments of engineering resources by fully grasping the requirements of new generation products. Listed below are new products that we plan to develop in the future:

(a) Introduction of Ultra-low Expansion/Shrinkage, High Tg, High Young's Modulus base materials

(b) Development of Fine Pitch Copper Pillar and Solder Bump substrate technology.

(d) Development of Embedded Passive substrate technology.

(e) Cooperative project of 20~14 nanometer chip packaging.

(f) Development of automatic production technology for ultra-thin boards.

(g) Development of integration technology of Embedded Active and Embedded Passive components.

(h) Development of ultra-fine circuit (<8um), and high contact density products (<30um pitch)

(i) Development of ultra-micropore (diameter<=30um) technology.
(j) Development of low-cost fine circuit (<=20um) technology.
(k) Development of Via Filling technology.

(B) Overview of the Industry

a. Overview and Development of the Industry

Looking back to 2014, the global growth rate of electronic products was about 3.0%, a slightly better performance than 2013. It could be somewhat considered as the result of the steady recovery of global economy. Looking ahead to 2015, the worldwide production value of electronic products should also follow the growth pattern of the global economy, with an estimated growth rate of 3.3%.

The table below shows the development of different categories of products. We can see that the growth rate of the previously fast growing cell phone had dropped from 9% in 2014/2013 down to 3.2% in 2015/2014. The numbers seemingly showed that its rate of growth had slowed down.

However, further study proved that this was not the case. The growth rate of the global market was simply diluted because the growth rate of the low-cost, high-spec smart phones far exceeded the growth of the high-end smart phones.

Unit: One billion US Dollars (USD)

	Item	2013	14/13 Growth Rate(%)	2014 Estimate	15/14 Growth Rate(%)	2015 Estimate
Computers	Personal computers	274	-4.4	262	0.8	264
	Servers/storage devices	101	3.0	104	2.9	107
	Others	115	0.0	115	1.7	117
Communication devices	Cell phones	311	9.0	339	3.2	350
	Base stations	148	2.0	151	2.6	156
	Others	23	5.3	24	5.5	25
Consumer products		147	3.4	152	3.3	157
Automobile products		177	6.8	189	6.8	202
Industry/medical	Industry	123	4.9	129	4.7	135
	Solar energy	28	16.6	33	12.1	37
	Medical	96	0.0	96	3.1	99
Military/Aerospace		128	0.0	128	1.6	130
Total		1,671	3.0	1,722	3.3	1,779

Source: Prismark 2015

If we extend the development period of the global electronic products to a 5-year cycle, we can see that the global market continues to climb at a 3.5% annual compound rate from 2013 to 2018. This matches the growth trend of global GDP and implies that the probability of a market decline is not high; enterprises can still conduct stable investment in their respective product fields.

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其他 : Others

汽車電子 : Automobile electronics

伺服器 / 儲存裝置 / 基地台 : Servers/storage devices/base stations 傳統個人電腦 : Conventional PCs

手機 / 平板 : Cell phones/tablets

After analyzing the compound growth rates of individual products in the table below, we can observe two additional noteworthy trends, in addition to the low-cost, high-spec development trend mentioned earlier:

(a) The arrival of the age of IoT (Internet of Things) - this is indicated by the higher growth rate of the product category of "servers/storage devices/base stations", which is reaching 4.1%.

(b) The rapid development of networked cars and intelligent/automatic driving technology- this is revealed by the 5.5% growth rate of the product category of
"Automobile electronics."

Unit: One billion US Dollars (USD)

Item	2013	2018F	CAAGR
Cellphones/tablets	389	428	1.90%
Conventional PCs	196	214	1.80%
Servers/storage devices/base stations	249	305	4.10%
Automobile electronics	177	231	5.50%
Others	660	803	4.00%
Total	1,671	1,981	3.50%

Source: Prismark 2015

b. Interrelationships between the Upstream, Midstream and Downstream of the Industry

The relative relationships between the upstream and downstream sectors of the industrial chain of PCB and IC substrate are shown in the figure below. Our company is positioned in the sector of "Circuit board." Upstream suppliers include Epoxy CCL (Copper Clad Laminate), copper foil, and various specialty chemicals suppliers. Downstream clients include IC packaging industry, and electronic product assembly EMS companies. Taiwan's companies control a significant portion of this supply chain while facing the challenge of competitors from Korea and China. Through upstream-downstream integration and cooperation, Taiwan's companies have always had strong a competitive advantage.

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Source: IEK

	Source: IEK
原物料: Raw materials	酚醛樹脂: Phenolic resin；溴化環氧樹脂: Brominated epoxy resin；銅箔: Copper foil;玻纖紗: Fiberglass yarn；PI (Polymide)；玻纖布: Fiberglass cloth 南亞: Nan Ya Plastics Corporation；長春: Chang Chun Group;長興: Eternal Materials Co., Ltd.；聯仲: UPC Group；台灣銅箔: Taiwan Copper Foil Corporation, Ltd.；台日古河；FCFT (Furukawa Circuit Foil Taiwan) Corporation；金居: Co-Tech Development Corporation；李長榮: LCY Chemical Corporation；台玻: Taiwan Glass Group；必成: PFG Fiber Glass Corporation；富喬: Fulltech Fiber Glass Corporation；建榮: Baotek Inc.；德宏: Glotech Industrial Corp.；橡樹: Asahi-Schwebel Taiwan；達邁: Taimide Technology, Ltd.
銅箔基板: Copper clad laminate	紙質基板: Paper-based substrate；複合基板: Composite substrate；玻纖環氧基板: Fiberglass epoxy substrate；軟質基板: Flexible substrate；樹脂基板: Resin substrate 台光: Elite Material Co., Ltd.；台燿: Taiwan Union Technology Corporation；松電工: Song Dian Gong/Taiwan Song Electrical Multi-layer Materials Co., Ltd.；聯茂: ITEQ Corporation；合正: Uniplus Electronics Co., Ltd.；台光電: Elite Material Co., Ltd.；華韡: Hwa Woei Laminate Corporation；宏泰: Hong Tai Electric Industrial Co., Ltd.；台虹: Taiflex Scientific Co., Ltd.；律勝: Microcosm Technology Co., Ltd.；新揚科: ThinFlex
	蝕刻液: Etching solution；電鍍化學品: Electroplating chemicals；綠漆: Green paint；乾膜: Dry film；生產設備: Production equipment；製程代工: Process OEM
電路板: Circuit boards	單面板: Single sided boards；雙面板: Double sided boards；多層板: Multi-layer boards；軟板: Flexible boards；軟硬板: Rigid-flex boards；IC載板: IC substrate

敬鵬 : Chin Poon Industrial Co., Ltd. ；競國 : APCB Group ；華通 : Compeq Manufacturing Co., Ltd. ；欣興 : Unimicron Technology Corporation ；金像 : Gold Circuit Electronics Co., Ltd. ；南電 : Nan Ya Printed Circuit Board Corporation ；燿華 : Uniteh Printed Circuit Board Corporation ；健鼎 : Tripod Technology Corporation ；先豐 : BoardTek Chemical Engineering Corporation ；旗勝 : Mektek Industrial Corporation, Ltd. ；台郡 : Flexium Interconnect, Inc. ；嘉聯益 : Career Technology Co., Ltd. ；同泰 : Uniflex Technology Inc. ；楠梓電 : WUS Printed Circuit Co., Ltd. ；景碩 : Kinsus Interconnect Technology Corporation 應用產品 : 資訊 : Information ；通訊 : Communication ；光電 : Photoelectric ；民生 : Daily Application necessities ；消費性 : Consumer products ；精密儀器 : Precision instruments ；汽 products 車 : Automobiles ；航太 : Aerospace

c. Various Product Development Trends

Looking at the development directions of electronic products, we must again watch for business opportunities in the areas we have been engaged in- PCB and IC Packaging substrate.

As shown in the table below, the overall PCB industry will have a 3.4% compound growth rate in recent years to come. Further analysis of its two sub-industries of PCB and IC Packaging revealed the following noteworthy points:

(a) In terms of PCB industry, PC products continue to provide the largest sales, while cell phones and automobile electronics offer opportunities for growth. The same types of technologies must be used to develop products of servers/storage devices and cultivate customer needs, in order to prepare us for the coming of the IoT (Internet-of-Things) age.
(b) In terms of IC Packaging industry, wafer manufacturing technology continues to move towards miniaturization and drives the demands of high-density circuit and complex structure packaging substrate. Companies that can meet the demands of these two markets will be able to win with their new products and enjoy an extended pioneer's advantage of higher gross profit margin.

Unit: One billion US Dollars (USD)

Item	2013	2018F	CAAGR
Conventional PCs	9,329	10,914	3.20%
Servers/storage devices	3,313	3,878	3.20%
Other types of computers	4,456	4,920	2.00%
Cellphones	8,863	11,063	4.50%
Base stations	4,800	5,673	3.40%
Other communication equipment	1,014	1,119	2.00%
Consumerproducts	7,858	8,955	2.70%
Automobile electronics	3,266	3,973	4.00%
Industries/medical	3,448	3,803	2.00%
Military/aerospace	2,147	2,279	1.20%
ICpackaging	7,658	8,548	2.20%
Total	56,152	65,125	3.10%

Source: Prismark 2015

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IC 封裝 : IC packaging

軍事 / 航太 : Military/aerospace

工業 / 醫療 : Industries/medical

汽車電子 : Automobile electronics

消費性產品 : Consumer products

其他通訊設備 : Other communication equipment

基地台 : Base stations

手機 :Cell phones

其他電腦 : Other types of computers

伺服器 / 儲存裝置 : Servers/storage devices

傳統個人電腦 : Conventional PCs

Overall, electronic products have a strong worldwide growing trend. The rise of IoT and automobile electronics could be huge opportunities. Hand-held portable devices continue to play a big role in the continuous evolution while cell phones take up the largest percentage (see figure below.) Enterprises must take hold of these trends.

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手機 : Cell phones

傳統個人電腦 : Conventional PCs 平板電腦 : Tablet PCs

Categorizing the developing trends of the above mentioned products according to their companies (IC packaging substrate) and further analyze them, as shown in the table below, we can see that the fastest growing product is the Flipchip CSP substrate. This matches the trends of the growth of cell phones and the increase of cell phone IC's feature specifications. The future product development of our company will follow this same trend.

One product development to watch for is the application of the QFN type of low pin count, simple-function IC. Even though its application area does not overlap with our primary products, however, we still need to observe carefully whether if there is a technology diffusion effect.

IC Packaging substrate Growth Trends			Unit: One billion
Package type/ Bn units	2014	2019	CAAGR
Traditional leadframe(SO,TSOP, QFP)	105	113	1.6%
QFN	35	61	12.0%
Wirebond CSP(include stacked and BOC/DRAM)	29	34	3.4%
Wirebond BGA(>19mmpackage size)	0.9	0.8	-2.3%
Wirebond bare die(COB)	12.5	16	4.4%
FlipchipCSP(include DRAM and RF module)	6.6	14	17.0%
FlipchipBGA/PGA/LGA	0.9	1	2.0%
Wafer Level CSP(exclude discrete and IPD)	23	41	12.0%
COF/COG for displaydrivers	9.5	12	4.6%
Total	222	293	5.7%

Source: Prismark 2015

d. Product Competitions

As shown in the table below, PCB products, especially IC substrate, have significantly different trends of growth and declines. As the IC wafer technology moves towards 20 nanometers, or even 16/14 nanometers, FC CSP products commonly used for smart phone chips also grow rapidly and could reach a compound growth rate of 11.6% in 2011-2017. Not only does it show a brilliant growth, but it also suppresses conventional WB PBGA/CSP products. The growth and declines of products subsequently cause the rise and fall of suppliers with different technical proficiency levels. Since FC PGA/LGA/BGA products are used primarily in PC products, it also causes the decline of this type of products.

Products in the category of Module will have more connectivity, wireless access functions after 2014, including 2015 and 2016, such as WiFi, Bluetooth, and other basic features necessary for hand-held devices. These functions are already being integrated into a smaller, in both surface area and volume, common module by the chip or module designers, in order to compete for the opportunity of wearable product application. Its annual growth rate has already risen to 12%. There will be many opportunities for the development of this type of products. We should be able to find another drive for growth in the future, with the new development of diversified wearable devices.

Product Category	2014	2018F	2013-2018 Compound Growth Rate
FC PGA/LGA/BGA	$3,113	$3,615	-0.5%
FC CSP/FC BOC	$1,824	$2,852	11.6%
WB PBGA/CSP	$2,091	$2,046	-2.2%
Module	$914	$1,850	12.0%
Total	$7945	$9,231	2.1%

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Source: Prismark 2015

(C) Overview of Technology and R&D
a. R&D expenses during recent years and up to the publication date of this annual report

Unit: One thousand New Taiwan Dollars (NTD); %

Item Year	2014	By March 31, 2015
R&D expenses	1,370,969	356,459
Net income	24,943,834	5,346,221
Percentage of R&D expenses(%)	5.50%	6.67%

b. Successfully developed technology or products
(a) Manufacturing technology and products of PBGA (Plastic Ball Grid Array) substrate.
(b) Manufacturing technology and products of MCM (Multi-chip-Module) BGA substrate.
(c) Manufacturing technology and products of CSP (Chip Scale Package) substrate.
(d) Manufacturing technology and products of High Dissipation Cavity Down substrate, and TEBGA (TEBGA-Thermal Enhanced BGA) substrate.
(e) Manufacturing technology and products of Flip Chip substrate, and Flip Chip CSP substrate.
(f) Manufacturing technology and products of Flip Chip film COF (Chip on Flex).
(g) Manufacturing technology and products of Core-less substrate.
(h) Peripheral and array wire type Copper Bump Packaging substrate
(i) Miniature Heatsink Packaging substrate.

(j) Manufacturing technology and products of Embedded Pattern substrate.

(k) Technology and design specifications of Embedded Thin capacitors.

(l) Technology of No-wiring Bump Ni/Au electroplating.

(m) Manufacturing technology of Copper Bump.
(n) Anisotropic Etching technology.
(o) Asymmetric structural board technology and odd-numbered-layer board technology.
(p) High Band Width Package-On-Package substrates technology.

(q) Electroless Nickel/Electroless Palladium/Immersion Gold (EPIG) surface treatment technology.

(r) Embedded Thermal Bar technology.
(D) Long & Short Term Business Development Plans
a. Short Term Plan
- (a) Marketing Strategies
  - Maintain close cooperation with key clients; stay up-to-date with the new products updates and customer needs.

� Multi-directional product development strategy; be attentive to the development of small and mid-sized clients, as well as product changes.

Develop business opportunities in new application fields; introduce different product design concepts and achieve technology-preparedness early.
Establish rapid prototyping unit, and enhance new product development services.
Increase R&D capacity and shorten design time; provide timely introduction of new products in order to satisfy customer demands.

� Continue to promote the TS16949 quality assurance certification system; ensure product quality; establish worldwide quality reputation by receiving certifications from major international manufacturers.

(b) Production Strategy

In response to the continuously expanding business scale, we will strive to simplify the technologies, improve manufacturing processes, implement automation & unattended operations, and conduct enhancements & maintenance, in order to increase productivity, reduce defective ratio, and lower costs.

(c) Directions of Product Development
Increase R&D capabilities; actively invest in product R&D, design, and improvements; shorten product development time and try to lower costs; continue to simplify and accelerate processes, as well as improve quality.
Reinforce product development and communication with potential customers, in order to fully grasp the market trends and maintain technical leadership.
(d) Operation Scale and Finance
Continue to expand facility, invest in technologies, and increase utilization rate in order to expand the scale of operation.
Establish sound, complete fundraising channels; establish close cooperative and mutually beneficial relationships with financial institutions; identify long-term low-interest loans, in order to supply the capitals needed for expanding the operation of the company.
b. Long Term Plan
(a) Marketing Strategies
Train marketing professionals on a long-term basis; gather information about other companies in the same industry as well as future development trends; stay informed about the status of current and new competitors; gain insights into market opportunities and establish operational bases widely; adjust individual product strategies immediately following changes in the market; increase market share.
Maintain partnership relations with advanced chip develop and design companies; always be in possession of first-hand information; achieve process technology and production capacity preparedness, in order to maintain the company's long-term competitiveness.
(b) Production Strategies
Continue to increase production quality, technical strength, product yield, and lower production cost.
Actively invest in automatic production equipment; bring in professional talents and advanced production technology; and improve process efficiency, in order to achieve the goal of increase the company's profitability.
Increase flexibility in production, in order to be able to respond to rapid market changes and unexpected urgent demands.

     - (c) Directions of Product Development

     - Bring together related manufacturers in the nation to form R&D alliance, in order to actively and collaboratively develop and integrate advanced products, to create high added-value and head-start opportunities.

     - In fields of high technical difficulties, adopt the strategies of technology transfer and authorization, as well as international cooperation; or commission domestic or foreign research institutes to conduct R&D projects, in order to lower the risks, shorten development time, exert the combined results of R&D, and increase R&D strength.

     - (d) Operation Scale and Finance

     - Cultivate operational strength; expand quickly the operational scale; move towards the goal of diversified product development.

     - As the company continues to expand its business, in the future, we will establish marketing and production bases around the world, and actively build worldwide operation management and R&D centers.

     - Raise long/mid-term funds and build up long-term development strength, in order to expand the operation scale of the company.

(2). Overview of the Market and Sales
(A) Analysis of the Market
- a. Sales (available) areas of primary products (services)

Unit: One thousand New Taiwan Dollars (NTD)

Sales area	2014 Sales Value	Percentage
Taiwan	10,924,071	43.79%
Mainland China	10,623,438	42.59%
United States	2,798,862	11.22%
Japan	263,453	1.06%
Europe	188,058	0.75%
Others	145,952	0.59%
Total	24,943,834	100.00%

Our company's primary product is the spherical array (BGA) substrate for IC. It is

used as the chip carrier for semi-conductor packaging and acts as the connecting channel to external circuit. It is categorized as a raw material for the packaging industry or a carrier component. Its main sales targets are domestic and foreign IC packaging, design and system businesses.

b. Market Share

Currently, Japan remains to be the leading country of IC substrate production. It is the priority choice of the majority of packaging companies. This is mainly because of the overall strength of Japan's electronics industry, its certification numbers, excellent process capabilities, peripheral materials, and the support capability of its equipment industry. These factors enable Japan's substrate manufacturers to outperform others.

Our nation ranks as the second largest producing country. We have complete industrial chain and world's largest IC OEM manufacturing scale, which successfully drives the demands for substrate and packaging. Through technology authorization, along with their own process control technology, integrated industry environment & peripheral resources, etc., our IC substrate industry made our nation to become the second largest producer; second only to Japan, Currently, the industry has moved the production of substrate products with lower technical levels to mainland China. In the future, the local production scale will grow significantly, as the electronics industrial chain expands.

In recent years, Japan, Korea, and Taiwan's IC substrate manufacturers have been engaged in fierce competition. Looking at the numbers from 2014, Taiwan's IC substrate manufacturers grabbed a significant market share of 32%. Even though Japanese Yen depreciated over 20% against USD (US dollars) since 2013, however, our IC substrate manufacturers stood firm and continued to exhibit their competitive power.

c. Future Demand and Supply Condition, and Growth Potential of the Market

Currently, IC substrate are used 100% in the packaging market. They are categorized as one of the high-end electronic packaging materials. In addition to the drive from the global electronics market, as the complexity of the products and the speed of signals increase, IC substrate industry has become an important factor in elevating the level of packaging. According to data published by Prismark, the production value of IC substrate was about $7.782 billion dollars in 2013, which was about 13.8% of the overall PCB production value. It is estimated that by 2017, as the global market continues to grow moderately, the global PCB production value could reach $65.6 billion, with an annual compound growth rate of 4.04%. The annual production value of IC substrate is estimated to reach $9.231 billion in 2017, with an annual compound growth rate of 4.36%; which is slightly above the industrial level. Among its products, FC CSP shows the strongest growth with an annual compound growth rate reaching 11.83% in 2013-2017, due to the expanding applications of

smart phones and other portable devices. This shows that as the functions of electronic products become more complex, the corresponding packaging forms will also make progresses, and the ratio of high-end packaging will definitely continue to grow.

d. Competitive Niche

Our technical team is primarily consisted of research institutes, well-known professionals, related industries, and foreign and domestic experts. Both the quality of our products and the production capacity meet the international standards. Systems manufacturers from various countries are also gradually affirming our production technology and price competitiveness, and are starting to use substrate produced by our domestic manufacturers.

Our company is a Full Process Workshop. We are capable of providing our customers with the full manufacturing process service from circuit design, photomask manufacturing, substrates production, to automatic electric testing. Customers can access our computer system through the Internet and query relevant real-time information. This can help to maintain good and stable cooperative relations with our customers.

e. Favorable and Unfavorable Factors for Development Perspectives, and the Responding Measures

(a) Favorable factors

IDM factory releases production capacity to system chipset manufacturers, which gives domestic system chipset manufacturers and packaging factories more space to grow as well as more business opportunities. Furthermore, packaging technology is moving towards the direction of high pin count and small pin pitch to achieve the goals of light, thin, short, and small; BGA substrate are certainly the right technology that is in line with such a product trend.
Since the founding of our company thirteen years ago, our R&D and manufacturing technology teams have already accumulated rich experiences and acquired excellent skills. Their capabilities in continued innovation and rapid development have also grown to a level that allow them to compete with other nations. The packaging factories are adopting broader and diversified certification systems to allow them to work closely with domestic substrate manufacturers in order to lower costs and shorten delivery times. Such practice of local procurement has become a trend and can facilitate the continuous development of the industry in the future.
Professional Full Process Workshop can provide customers with technical

services and consultation in areas of circuit design, photomask manufacturing, substrate production, automatic inspection, and others. Customers can receive all the services they need at the same time, thus saving them time, effort, and money.

(b) Unfavorable factors

Because BGA substrate and packaging technologies change as the chip design companies' products change, therefore, the life cycles of these technologies often are shorter. When the chip design companies change the specifications of their products, the substrate design of BGA and packaging technologies will have to be modified in sync with the market.
Responding measures: In order to keep up with the market trends, our company actively strives to increase R&D capacity, as well as strengthen our design and manufacturing abilities in multi-layer boards and thin boards. In the future, the company will continue to develop various types of Flip Chip substrates, ultra-thin boards, and high-density substrate needed, and at the same time extend patented technologies that we currently own in order to compete for market opportunities.
Since BT base material are Mitsubishi's proprietary material, therefore, if Mitsubishi's production capacity tightens, it will definitely affect our product delivery and consequently cause us to lose customers.
Responding measures: In addition to maintain good relations with current BT base material manufacturer, we will conduct development testing of related substitute materials at the same time, in order to prevent the risk of material shortage; thus allowing us to have multiple sources of suppliers and maintain a stable supply of the primary raw material. (For instance, material from Hitachi and others.)
Although the company's financial structure, solvency and profitability have been improving every year, however, in order to be able to support the continued expansion and development of new technologies, we still need to reinforce our fundraising efforts.
Responding measures: The company will raise funds through open capital markets to increase fundraising channels, improve company's financial structure, solvency and profitability.

(B) Major Applications and Manufacturing Processes of the Primary Products

(a) Major applications of the primary products

PrimaryProduct	Major Application
PBGA Substrates	BGApackaging;applicationproducts include chipsets andgraphics chips.
MCM（Multi chip Module）Substrates	MCM packaging; application products include IC that combines analog, digital, power control circuit,as well as memoryand logical IC control.
CSP Substrates	CSP packaging; application products include Flash, high-speed DRAM, and logical chips.
Flip chip	Application products include chipsets, graphics chips, Flash memory, and logical IC.
FC CSP	High-end hand-held devices' system chips, communication chips, and chipsets.
Embedded Substrates	Embeddedsubstratecan shorten spacing between components, in order to improveproducts' electricalproperties.

(b) Manufacturing Process of the Primary Products

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Multi-layer
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----- Start of picture text -----

START Double layer
Drilling
Solder Mask
Circuit Formation Drilling
Inner AOI DP+Cu Plating Ni/Au
Plating
Layer Brown
Plug Hole AEI
Oxide
Circuit
Lamination AVI
Formation
X-ray Drilling AOI
Packing
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(C) Supply Condition of the Primary Raw Materials

The company's primary materials include BT substrates, gold potassium cyanide, films, copper sheets, etc. Among them, BT substrates and films are purchased from major foreign manufacturers. In order to ensure a stable supply of the materials and their quality, the company does not easily change suppliers once they have been rated and gone through the trial production. In addition, we actively seek to maintain good long-term relationships with our suppliers. Through the long-term cooperative relationships, lowered costs, fast and flexible delivery schedules, we strive to increase the competitive power of our products and create the maximum profits.

Supply Areas (Manufacturers) of the Primary Raw Materials

Primary Raw Material	Supply Area	Supplier
Substrates	Japan	Mitsubishi、Hitachi、Ajinomoto fine
Gold potassium	Taiwan	Hon Hai
Copper sheets	Japan	OFUNA
Films	Japan	Mitsubishi、Hitachi

(D) Major Suppliers in the Last Two Calendar Years

(1).Major Clients in the Last Two Calendar Years

Unit: NT$ thousands

Item		2013	2013		2014	2014	2014		2015 (As of Last Season)	2015 (As of Last Season)	2015 (As of Last Season)
		IFRS consolidated report			IFRS consolidated report				IFRS consolidated report
	Company Name	Amount	%	Relation with Issuer	Company Name	Amount	%	Relatio n with Issuer	Company Name	Amount	%	Relation with Issuer
1	Client A	2,166,516	9.38	No	Client A	2,258,344	9.05	No	Client A	383,378	7.17	No
2	Client B	1,946,782	8.43	No	Client B	1,898,187	7.61	No	Client B	361,002	6.75	No
3	Client C	1,653,032	7.15	No	Client C	1,834,048	7.35	MH	Client C	333,615	6.24	MH
4.	Others	17,336,497	75.04		Others	18,953,255	75.99		Others	4,268,226	79.8 4
	Net Sales	23,102,827	100		Net Sales	24,943,834	100		Net Sales	5,346,221	100

Due to continued upgrading product packaging from Lead Frame to BGA, even flip chip, IC substrate market demand continues. The main customers of the sales amount do not change much.

(2).Major Suppliers in the Last Two Calendar Years

Unit: NT$ thousands

Item		2013	2013		2014	2014	2014		2015 (As of Last Season)	2015 (As of Last Season)	2015 (As of Last Season)
		IFRS consolidated report			IFRS consolidated report				IFRS consolidated report
	Company Name	Amount	%	Relation with Issuer	Company Name	Amount	%	Relatio n with Issuer	Company Name	Amount	%	Relation with Issuer
1	A	1,419,797	15.79	No	A	1,321,111	14.32	No	A	231,077	12.3 9	No
2	B	1,331,756	14.82	No	B	1,287,890	13.96	No	B	228,402	12.2 4	No
3	C	920,155	10.24	No	C	890,304	9.65	MH	C	95,154	5.10	MH
4.	Others	5,317,008	59.15		Others	5,728,309	62.07		Others	1,310,844	70.2 7
	Net Total Supplies	8,988,716	100		Net Total Supplies	9,227,614	100		Net Total Supplies	1,865,477	100

The company's principal raw materials including gold potassium cyanide, base material, film, copper sheets, drills, milling cutters, dry film and chemicals.Since established, our exposure in the market goes higher, and sales continues to grow under market demand. The cost of raw materials such as copper and gold prices go up which caused the purchasing value continues to rise too.

， As to the major raw material supplier customers require high quality control in Substrate base. Due to long attestation and short life cycles, the major material would not be easily replaced.

Therefore, we only use 1 to 2 suppliers as the main supplier.The major suppliers don’t change much respectively in 2013 and 2014.

(E). Production in the Last Two Years

Unit: NT$ thousands

Year Output Major Products (or bydepartment)		2014			2013
	Capacity	Quantity	Amount	Capacity	Quantity	Amount
support plate	6,545,348	6,009,353	21,433,597	5,249,549	4,819,666	20,275,245

(F). Sales in the Last Two Years

	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year Shipments & Sales Major Products (or bydepartments)	2014				2013
	Local		Export		Local		Export
	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
Support plate	1,305,259	6,500,076	4,595,669	12,790,161	960,641	6,023,375	3,847,850	12,003,624
Others	-	4,423,995	-	1,229,602	-	3,275,194	-	1,800,634
Total	-	10,924,071	-	14,019,763	-	9,298,569	-	13,804,258

(3). Human Resources

	Year	2013	2014	Data as of in 2015/04/30
Number of Employees	Management	222	226	234
	R&D/Technician	478	555	566
	operating personnel	2,776	2,899	2,904
	Total	3,476	3,680	3,704
Average Age		31.6		32.2
			31.9
Average Years of Service		3.93		4.3
			4.2
Education	Ph.D.	0.12%		0.11%
			0.11%

	Masters	7.62%		8.80%
			8.37%

	Bachelor’s Degree	45.83%		49.27%
			48.48%

	Senior High School	42.78%		38.71%
			39.78%

	Below Senior High School	3.65%		3.10%
			3.26%

(4). Environmental Protection Expenditure

The loss or penalty caused by environmental pollution during the latest year and up to the printing date of this annual report: None

Lately, due to high awareness of environmental protection, requirements of environmental quality are growing continuously. Concurrently with the discharge standard of pollutants are gradually improving, we spent hundreds of millions of dollars investment in pollution prevention equipment in order to make every effort to prevent pollution even though we are only a 14 years old company. As of the date of annual report published, there is no pollution disputes found.

(5). Labor Relations

1.Companies of various welfare measures, further education, training, retirement systems and their implementation status, as well as the agreement between labor and employee rights protection measures

(A). Benefits and their implementation.
�Employee Stock Bonus
�Group Insurance
�Festival Prizes: the Dragon Boat Festival, Mid-Autumn Festival bonus
�Year-End Bonus
�SSA benefits: marriages, births, deaths, serious injuries, disasters, major accidents
�On-the-JobTraining
�Employee benefits Committee provides：
(a).Travelling
(b).Club
(c) Birthday Voucher
(B) Further education and training and its implementation status

For the purpose of enhancing staff quality and job skills, we stipulate "Administrative Measures on Education and Training" in orientation training, and for all employees to implement general training and professional training on schedule to become outstanding professionals, and improve the operating performance and effective utilization of human resources.

The company established Retirement Oversight Committee in 2001 under the approval of House of labor of Taoyuan County Government letter of No 126197. Total monthly salaries to be made 2% of the labor pension fund to the Central Trust Bureau Accounts in the same

year. Exercising Labor Pension Act on 2005/07/01. After practice, employees can either adopt ， in "Labor Standards Law" provisions relating to pensions or adopt new Act to the pension 。 system and retain the application of the regulations before the length To those who apply the Act，the employee pension contribution will be made monthly, which shall not be less than 6%.of monthly salary.

(D) Agreement between labor and employee rights protection measures

We have always been treasured the spirit of labour integration, coexistence and common prosperity dealing with the labour relations. We take preciously of employee comments and employees’ comments are welcomed at any time through the company's formal and informal channels of communication to reflect their problems of life and work. Through the opportunities for two-way communication between the company and employees, we are able to have greater mutual understanding and awareness to build consensus and success in the long run.

�Labor Coordination Meeting

Labor coordination meetings held on a regular basis, pushed by the employers represented, promoted mainly focus on the company's system of communication with employees on the company's orders, work environment, safety and health issues for two-way communication. The communication through this consultation between employers and business owner, It srengthen not only the mutual trust but also the mutual understanding.

�Employee benefits Committee

Members of the Employee benefits Committee are elected by employees directly and openly who are good at communication. At the Welfare Committee meeting, both employers and employees are able to reach adequate communication to the company's various welfare measures,

Losses due to labour disputes, and current and future estimated amount of responses may occur as of the date of annual report publishe:No.

The company collective bargaining agreements are based on the Labor Standards Law. Humane management is applied in operation management, the rapport between employers has never caused any loss by labour disputes.

(6). Important Contracts: None

6. Financial Highlights

(1) Last Five Year’s Balance Sheet and Consolidated Income Statement
(A) Brief Balance Sheet and Consolidated Income Statement
- a. Brief Consolidated Balance Sheet- Adopting IFRSs

Unit: NT$1,000

					Unit: NT$1,000
Year Item		2012	2013	2014	Financial Data collected from the end of last annual to March （Note1）
Current Assets		21,018,448	21,812,172	23,471,268	23,040,347
Fixed Assets		14,136,096	14,756,743	15,429,778	15,393,262
Intangible Assets		8,098	14,159	19,982	22,046
Other Assets		1,027,392	1,529,268	2,130,646	2,170,111
Total Assets		36,190,034	38,112,342	41,051,674	40,625,766
Current Assets	before appropriation	8,167,617	9,003,298	10,103,181	9,317,109
	after appropriation	9,505,617	10,341,298	(Note 2)	(Note 2)
Fixed Liabilities		2,689,899	1,579,904	895,719	774,135
Total Liability	before appropriation	10,857,516	10,583,202	10,998,900	10,091,244
	after appropriation	12,195,516	11,921,202	(Note 2)	(Note 2)
Owner’s Equity
Capital		4,460,000	4,460,000	4,460,000	4,460,000
Capital Surplus		5,853,673	5,863,612	5,939,819	5,939,819
Reserved Surplus	before appropriation	12,746,962	14,646,450	16,718,487	17,335,676
	after appropriation	11,408,962	13,308,450	(Note 2)	(Note 2)
Other Equities		(74,424)	108,879	279,703	212,984
Treasury Stock		-	-	-	-
Non-controlling Interests		2,346,307	2,450,199	2,654,765	2,586,043
	before appropriation	25,332,518	27,529,140	30,052,774	30,534,522
Total Equity	after appropriation	23,994,518	26,191,140	(Note 2)	(Note 2)

Note 1: Adopting IFRSs since year 2013. The first quarterly report of 2015 was certified by accountant Note 2: Earning appropriation of 2014 has not received approved by the board of shareholders

b. Brief Entity Balance Sheet –after adopting IFRSs

Unit: NT$1,000

Year Item	Year Item	2012	2013	2014（Note 1）
Current Assets		16,954,391	17,879,353	19,880,887
Fixed Assets		7,370,315	7,970,375	8,914,836
Intangible Assets		2,298	7,408	11,927
Other Assets		4,253,720	5,114,118	5,453,133
Total Assets		28,580,724	30,971,254	34,260,783
Current Assets	before appropriation	4,999,895	5,391,312	6,311,775
	after appropriation	6,337,895	6,729,312	(Note 2)
Fixed Liabilities		594,618	501,001	550,999
Total Liabilities	before appropriation	5,594,513	5,892,313	6,862,774
	after appropriation	6,932,513	7,230,313	(Note 2)
Owner’s Equity
Capital		4,460,000	4,460,000	4,460,000
Capital Surplus		5,853,673	5,863,612	5,939,819
Retained Earning	before appropriation	12,746,962	14,646,450	16,718,487
	after appropriation	11,408,962	13,308,450	(Note 2)
Other Equity		(74,424)	108,879	279,703
Treasury Stock		-	-	-
Non-controlling Interests		-	-	-
	before appropriation	22,986,211	25,078,941	27,398,009
Total Equity	After appropriation	21,648,211	23,740,941	(Note 2)

Note 1: Adopting IFRSs since year 2013. The company entity financial report of the first quarter

2015 has not yet completed.

Note 2: Earning appropriation of 2014 has not received approved by the board of shareholders

c. Brief Consolidated Income Statement-after adopting IFRSs

Unit: NT$1,000

				Unit: NT$1,000
Year Item	2012	2013	2014	Financial Data collected from the end of last annual to March 31,2015.（Note）
Total Operating Revenue	22,034,283	23,102,827	24,943,834	5,346,221
Gross Profit	5,224,055	6,204,434	6,946,880	1,307,731
Operation Profit (Loss)	2,801,424	3,435,401	4,009,159	594,430
Non-Operating Income and Expense	70,552	227,947	141,913	76,518
Profit (loss) from Continuing Operation Before Tax	2,871,976	3,663,348	4,151,072	670,948
Net Profit of Continuing Operation Unit	2,375,672	3,116,254	3,490,233	578,693
Non-Operation Unit Loss	-	-	-	-
Profit (loss) From Continuing Operation	2,375,672	3,116,254	3,490,233	578,693
Other Comprehensive Income	(266,968)	317,234	301,864	(96,945)
Total Comprehensive Income	2,108,704	3,433,488	3,792,097	481,748
Profit (loss) Attributable to Owners of Parents	2,790,562	3,224,093	3,617,327	617,189
Profit(loss)Attributable to Non-ControllingInterests	(414,890)	(107,839)	(127,094)	(38,496)
Comprehensive Income Attributable to Owners of Parents	2,619,178	3,420,791	3,803,861	550,470
Comprehensive Income Attributable to Non-Controlling Interests	(510,474)	12,697	(11,764)	(68,722)
Earnings Per Share	6.26	7.23	8.11	1.38

Note: Adopting IFRSs since year 2013. The first quarterly report of 2015 was certified by accountant.

d. Brief Entity Financial Statement-after adopting IFRSs

Unit: NT$1,000

			Unit: NT$1,000
Year Item	2012	2013	2014（Note）
Operating Revenue	17,651,784	18,026,999	19,290,237
Operating Gross profit	5,767,213	6,038,599	6,273,087
Operation Profit (Loss)	4,029,648	4,100,235	4,300,134
Income and Expense from Non-Operation activities	(744,794)	(331,174)	(150,430)
Profit (loss) from continuing operations before tax	3,284,854	3,769,061	4,149,704
Net profit of continuing operations unit	2,790,562	3,224,093	3,617,327
Non-operations unit loss	-	-	-
Profit (loss) from continuing operations	2,790,562	3,224,093	3,617,327
Other comprehensive income, net	(171,384)	196,698	186,534
Total comprehensive income	2,619,178	3,420,791	3,803,861
Earnings per share	6.26	7.23	8.11

Note: Adopting IFRSs since year 2013. The entity financial report of the first quarter 2015 has not yet completed.

(B) Brief Balance Sheet and Income Statement-adopting ROC GAAP
a. Brief Balance Sheet –adopting ROC GAAP

Unit: NT$1,000

				Unit: NT$1,000
Year Item		Partial financial data from last (Note)		five years
		2010	2011	2012
Current Assets		11,758,477	14,461,721	16,978,716
Mutual Fund and Investment		4,922,174	4,655,632	3,671,070
Fixed Assets		7,564,021	8,171,834	7,906,248
Intangible Assets		9,786	22,977	2,298
Other Assets		39,852	35,605	35,349
Total Assets		24,294,310	27,347,769	28,593,681
Current Liabilities	before appropriation	3,307,546	4,709,926	4,962,645
	after appropriation	4,645,546	6,047,926	6,300,645
Long Term Liabilities		1,018,407	839,822	514,292
Other Liabilities		1,337	10,607	－
Total Liabilities	before appropriation	4,327,290	5,560,355	5,476,937
	after appropriation	5,665,290	6,898,355	6,814,937
Capital		4,460,000	4,460,000	4,460,000
Capital Surplus		5,850,000	5,850,000	5,853,673
Retained Earning	before appropriation	9,957,148	11,417,801	12,877,495
	after appropriation	8,619,148	10,079,801	11,539,495
Financial Product Unredeemed Profit(loss)		9,698	7,826	15,646
Cumulative Translation Adjustment		(309,826)	51,787	(90,070)
Net Loss Not Recognized as Pension Cost		－	－	－
Shareholder’s Equity	before appropriation	19,967,020	21,787,414	23,116,744
Total Amount	after appropriation	18,629,020	20,449,414	21,778,744

Note: Annual reports for 2010~2012 were certified by Account and adopting IFRSs since year 2013.

b. Brief Income Statement- adopting ROC GAAP

Unit: NT$1,000

	Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000
	Partial financial data from last fiveyear(Note1)
	2010	2011	2012
OperatingGross Sales	14,663,886	16,870,553	17,651,784
OperatingGrossprofit	4,440,652	5,461,101	5,772,776
Operation Profit(Loss)	3,028,497	3,651,032	4,037,328
Income and Profit from Non-Operation Activities	113,428	87,393	114,600
Expense and Loss from Non-Operation Activities.	(262,070)	(550,173)	(859,942)
Profit (Loss) of Continuing Operation Unit Before Tax	2,879,855	3,188,252	3,291,986
Profit (Loss) of Continuing Operation Unit	2,452,539	2,798,653	2,797,694
Non-Operating Unit Profit (Loss)	－	－	－
ExtraordinaryItems	－	－	－
Cumulative Effect of Changes in AccountingPrinciple	－	－	－
Total Profit(Loss)	2,452,539	2,798,653	2,797,694
Earnings Per Share(Note 2)	5.5	6.28	6.27

Note: Annual Reports for 2010~2012 were certified by accountant and adopting IFRSs since year 2013.

Note 2: Earning per share equals to adjustment of annual surplus and capital surplus increase divided by weighted average common stock issued in the stock market.

(C) Certified Accountants’ Names from Past Five Years

Year	Name of Accountant	Firm	Opinion	Reason for Changing
2010	Zhang, Zhi Ming Hong,Mao Yi	Ernst & Young Global Limited	No reserved opinion	None
2011	Hong, Mao Yi Guo,Shao Bin	Ernst & Young Global Limited	No reserved opinion	Internal job rotation
2012	Guo, Shao Bin Xu,Xin Min	Ernst & Young Global Limited	No reserved opinion	Internal job rotation
2013	Huang, Yi Hui Zhang,Zhi Ming	Ernst & Young Global Limited	No reserved opinion	Internal job rotation
2014	Huang, Yi Hui Zhang,Zhi Ming	Ernst & Young Global Limited	No reserved opinion	None

(2) Last Five Years Annual Financial Analysis

a. Adopting IFRSs-Consolidated

Year Note 1) Analysis Items (Note 2)	Year Note 1) Analysis Items (Note 2)	Year Note 1) Analysis Items (Note 2)	2012	2013	2014	From the due date of last annual to March 31, 2015 (Note 1)
Capital Structure Analysis (%)	Debt Ratio		30.00	27.77	26.79	24.84
	Long Term Funds to Fixed Assets		189.14	182.31	180.16	182.17
Liquidity Analysis (%)	Current Ratio		257.34	242.27	232.32	247.29
	Quick Ratio		232.08	218.74	209.93	222.72
	Interest Guarantee		41.10	66.90	74.49	55.87
Operation Performance Analysis	Average Collection Turnover (times)		5.81	6.19	6.89	6.13
	Average Collection Days		63	59	53	60
	Inventory Turnover (times)		6.86	7.46	7.26	6.04
	Average Payable Turnover (times)		8.77	8.71	9.10	8.37
	Average Inventory Turnover Days		53	49	50	60
	Fixed Assets Turnover (times)		1.45	1.50	1.56	1.24
	Total Assets Turnover (times)		0.62	0.62	0.63	0.52
Return On Investment Analysis	Return on Total Assets (%)		6.82	8.51	8.92	5.76
	Return on equity (%)		9.55	11.79	12.12	7.64
	Income to Capital (%)	Operation Income to Capital	62.81	77.03	89.89	53.31
		Pre-Tax Income to Capital	64.39	82.14	93.07	60.17
	Net Income to Sales		10.78	13.49	13.99	10.82
	Earning Per Share (NT$)		6.26	7.23	8.11	1.38
Cash Flow	Cash Flow Ratio (%)		66.59	67.50	68.17	51.32
	Cash Flow Adequacy Ratio (%)		95.09	94.87	107.97	107.62
	Cash Flow Re-investment Ratio		10.61	11.80	11.81	10.37
Leverage	Operation Leverage		2.47	2.29	2.17	3.01
	Financial Leverage		1.03	1.02	1.01	1.02
Please explain why financial ratio has changed up to 20 %: Not Applicable.

Note 1: Adopting IFRSs since year 2013, every annual report has certified by Account. The quarterly report of Q1 2015 has been certified by accountant.

Note 2. Calculation methods will be stated in the following sections.

b. Adopting IFRSs-Entity

Year (Note1) Item(Note 2)	Year (Note1) Item(Note 2)	Year (Note1) Item(Note 2)	2012	2013	2014
Capital Structure Analysis (%)	Debt Ratio		19.57	19.03	20.03
	Long Term Funds to Fixed Assets		297.10	283.55	269.96
Liquidity Analysis (%)	Current Ratio		339.09	331.63	314.98
	Quick Ratio		311.75	308.32	292.83
	Interest Guarantee		164.11	222.16	211.52
Operation Performance Analysis	Average Collection Turnover (times)		6.72	6.75	7.60
	Average Collection Days		54	54	48
	Inventory Turnover (times)		7.22	8.48	8.56
	Average Payable Turnover (times)		12.17	12.58	11.79
	Average Inventory Turnover Days		51	43	43
	Fixed Assets Turnover (times)		2.19	2.13	1.99
	Total Assets Turnover (times)		0.63	0.61	0.59
Return On Investment Analysis	Return on Total Assets (%)		10.04	10.88	11.14
	Return on Equity (%)		12.49	13.42	13.79
	Income to Capital (%)	Operation Income to Capital	90.35	91.93	96.42
		Pre-Tax Income to Capital	73.65	84.51	93.04
	Net Income to Sales (%)		15.81	17.88	18.75
	Earning Per Share (NT$)		6.26	7.23	8.11
Cash Flow	Cash Flow Ratio (%)		100.45	110.42	96.28
	Cash Flow Adequacy Ratio (%)		138.54	139.63	146.63
	Cash Flow Re-investment Ratio		12.03	14.47	12.52
Leverage	Operation Leverage		1.50	1.49	1.50
	Financial Leverage		1.01	1.00	1.00
。Please explain why financial ratio has changed up to 20 %: Not Applicable.

Note 1: Adopting IFRSs since year 2013, every annual report has certified by Account. The quarterly report of Q1 2015 has not been published.

Note 2. Calculation methods will be stated in the following sections.

(A). Capital Structure Analysis
(a)Debt Ratio= Total Liabilities/ Total Assets
(b) Long Term Funds to Fixed Assets= (Total Equity + non-current liabilities)/ Net value of fixed capital

(B). Liquidity

(a) Current Ratio= Current Assets/ Current Liabilities
(b) Quick Ratio= (Current Assets-Inventory-Prepaid Expense)/ Current Liabilities
(c) Interest Guarantee=Net Profit before Income Tax and Interest Expense/ Interest

Expense

(C). Operation Performance Analysis
(a) Account Receivable (including account receivable and note receivable that derived from operation activities) Turnover Rate= Next Sales/ Average Account Receivable (including account receivable and note receivable that derived from operation activities) remaining amount.
(b) Average Collection Days= 365/ Account Receivable Turnover Ratio
(c) Inventory Turnover= Cost of Sales/ Average Inventory
(d) Account Payable (including account payable and note payable result from business operation) Turnover rate= Cost of Sales/ Average Account Payable (including account payable and note payable that derived from operation activities) remaining amount.
(e) Average Inventory Turnover Days= 365/ Inventory Turnover
(f) Fixed Assets (Land, Equipment Turnover) = Net Sales/ Average Fixed Assets.
(g) Total Assets Turnover= Net Sales/ Average Total Assets
(D). Return on Investment
(a) Return on Total Assets=〔Profit(Loss) after tax + Interest Expense×（１－Interest Rate）〕 /Average Total Assets.
(b) Return on Equity= Profit (Loss) after tax/Average Total Equity
(c) Net Income to Sales= Profit (Loss) after tax/ Net Sales
(d) Earning per Share= (attributed to parents profit (loss)-Preferred dividend)/weight average stock share issue. (Note 4)
(E). Cash Flow
(a) Cash Flow Ratio=Operation Activities Cash Flow/Current Liabilities
(b) Cash Flow Adequacy Ratio (%) =Last five years Operation Activities Cash Flow/last five annual years (Cash Expenditure + Increase in Inventory+ Cash Dividends)
(c) Cash Flow Re-investment Ratio= (Operation Activities Cash Flow-Cash Dividends)/ (Gross Fixed Assets + Long Term Investment + Other Non-Current Assets + Operation Capital) (Note 5)
(F). Leverage
(a) Operation Leverage = (Net Operating Income-Variable Cost and Expense)/ Operating Income (Note 6)
(b) Financial Leverage = Operating Income / (Operating Income- Interest Expense)

c. Adopting ROC GAAP-Consolidated

Year (Note 1) Analysis Items (Note 2)	Year (Note 1) Analysis Items (Note 2)	Year (Note 1) Analysis Items (Note 2)	Last Five Years Financial Analysis	Last Five Years Financial Analysis	Last Five Years Financial Analysis
			2010	2011	2012
Capital Structure Analysis (%)	Debt Ratio		25.22	30.55	29.66
	Long Term Funds to Fixed Assets		189.28	182.21	189.21
Liquidity Analysis (%)	Current Ratio		303.88	280.28	258.75
	Quick Ratio		259.77	244.24	232.98
	Interest Guarantee		177.11	68.41	41.2
Operation Performance Analysis	Average Collection Turnover(times)
			5.86	5.89	5.81

	Average Collection Days		62	62	63
	Inventory Turnover (times)
			7.46	7.48	7.75

	Average Payable Turnover(times)
			8.12	8.23	8.76

	Average Inventory Turnover Days
			49	49	47

	Fixed Assets Turnover (times)
			1.61	1.59	1.45

	Total Assets Turnover (times)
			0.67	0.69	0.62

Return On Investment Analysis	Return on Total Assets		9.05	7.66	6.82
	Return on equity		11.4	10.51	9.54
	Income to Capital (%)	Operation Income to Capital
			63.77	61.04	62.97

		Pre-Tax Income to Capital
			63.03	64.35	64.55

	Net Income to Sales (%)		13.51	10.92	10.81
	Earnings Per Share (NT$)		5.5	6.28	6.27
Cash Flow	Cash Flow Ratio (%)		43.99	53.05	66.79
	Cash Flow Adequacy Ratio(%)
			105.86	99.8	97.06

	Cash Flow Re-investment Ratio(%)		4.07	6.12	10.64
Leverage	Operation Leverage		2.07	2.31	2.46
	Financial Leverage		1.01	1.01	1.03

Note 1: Adopting IFRSs since year 2013, every annual report has certified by Account Note 2. Calculation methods will be stated in the following sections.

d. Adopting ROC GAAP-Entity

Year (Note1) Item (Note 2)	Year (Note1) Item (Note 2)	Year (Note1) Item (Note 2)	Last Five Years Financial Analysis	Last Five Years Financial Analysis	Last Five Years Financial Analysis
			2010	2011	2012
Capital Structure Analysis (%)	Debt Ratio		17.81	20.33	19.16
	Long Term Funds to Fixed Assets		277.95	276.89	298.89
Liquidity Analysis (%)	Current Ratio		355.5	307.05	342.13
	Quick Ratio		301.54	271.25	314.09
	Interest Guarantee		181.43	175.08	164.46
Operation Performance Analysis	Average Collection Turnover(times)
			7.01	7.35	6.72

	Average Collection Days		52	50	54
	Inventory Turnover (times)
			7.04	6.96	8.21

	Average Payable Turnover (times)
			10.98	11.16	12.17

	Average Inventory Turnover Days
			52	52	44

	Fixed Assets Turnover (times)
			1.86	2.14	2.2

	Total Assets Turnover (times)
			0.63	0.65	0.63

Return On Investment Analysis	Return on Total Assets		10.62	10.89	10.06
	Return on Equity
			12.65	13.41	12.46

	Income to Capital (%)	Operation Income to Capital
			67.9	81.86	90.52

		Pre-Tax Income to Capital
			64.57	71.49	73.81

	Net Income to Sales (%)		16.73	16.59	15.85
	Net Income to Sales (%)		5.5	6.28	6.27
Cash Flow	Earnings Per Share (NT$)		154.86	83.7	101.21
	Cash Flow Ratio (%)		130.43	143.25	141.38
	Cash Flow Adequacy Ratio (%)		14.18	6.53	12
Leverage (%)	Cash Flow Re-investment Ratio(%)		1.61	1.46	1.5
	Operation Leverage		1.01	1.01	1.01

Note 1: Adopting IFRSs since year 2013, every annual report has certified by Account Note 2. Calculation methods will be stated in the following sections.

(A). Capital Structure Analysis

(a)Debt Ratio= Total Liabilities/ Total Assets

(b) Long Term Funds to Fixed Assets= (Total Equity + non-current liabilities)/ Net value of fixed capital

(B). Liquidity
(a) Current Ratio= Current Assets/ Current Liabilities
(b) Quick Ratio= (Current Assets-Inventory-Prepaid Expense)/ Current Liabilities
(c) Interest Guarantee=Net Profit before Income Tax and Interest Expense/ Interest Expense
(C). Operation Performance Analysis
(a) Account Receivable (including account receivable and note receivable that derived from operation activities) Turnover Rate= Next Sales/ Average Account Receivable (including account receivable and note receivable that derived from operation activities) remaining amount.
(b) Average Collection Days= 365/ Account Receivable Turnover Ratio
(c) Inventory Turnover= Cost of Sales/ Average Inventory
(d) Account Payable (including account payable and note payable result from business operation) Turnover rate= Cost of Sales/ Average Account Payable (including account payable and note payable that derived from operation activities) remaining amount.
(e) Average Inventory Turnover Days= 365/ Inventory Turnover
(f) Fixed Assets (Land, Equipment Turnover) = Net Sales/ Average Fixed Assets.
(g) Total Assets Turnover= Net Sales/ Average Total Assets
(D). Return on Investment
－
(a) Return on Total Assets=〔Profit(Loss) after tax + Interest Expense×（1 Interest Rate）〕 /Average Total Assets.
(b) Return on Equity= Profit (Loss) after tax/Average Total Equity
(c) Net Income to Sales= Profit (Loss) after tax/ Net Sales
(d) Earning per Share= (attributed to parents profit (loss)-Preferred dividend)/weight average stock share issue. (Note 4)
(E). Cash Flow
(a) Cash Flow Ratio=Operation Activities Cash Flow/Current Liabilities
(b) Cash Flow Adequacy Ratio (%) =Last five years Operation Activities Cash Flow/last five annual years (Cash Expenditure + Increase in Inventory+ Cash Dividends)
(c) Cash Flow Re-investment Ratio= (Operation Activities Cash Flow-Cash Dividends)/ (Gross Fixed Assets + Long Term Investment + Other Non-Current Assets + Operation Capital) (Note 5)
(F). Leverage
(a) Operation Leverage = (Net Operating Income-Variable Cost and Expense)/ Operating Income (Note 6)
(b) Financial Leverage = Operating Income / (Operating Income- Interest Expense)

(3) Latest Annual Audit Report Approved by the Audit Committee

KINSUS INTERCONNECT TECHNOLOGY CORP.

AUDIT REPORT APPROVED BY THE AUDIT COMMITTEE

The Board of Directors has submitted Company Business Operation Report, Financial Report, Consolidated Income Statement and Profit Appropriation Proposal for a period of Jan. 1[st] to Dec. 31[st] 2014. The Financial Report, Consolidated Income Statement were verified and certified by Ernst & Young Global Limited and issued certified reports. Above mentioned reports have confirmed by the audit committee and complied with requirements of Securities and Exchange Act Article 14- 4 and Company Act Article 219.

Please kindly review and accept.

KINSUS INTERCONNECT TECHNOLOGY CORP.

Audit Committee Convener: Chen, Jin-Cia

(4) For the latest annual financial report please refers to page 190 to 288.
(5) For the latest accountant certificated Entity financial Report please refers to page 100 to 189.
(6) Is there any s incident of financial turnover difficulties that the company and associates have

encounter from the latest annual and up to the published date of this report: None.

7. Financial Status and Performance Review Analysis and Risk Items

(1) Financial Status

(A) Financial Status Review and Analysis Chart

Unit: NT$1,000

Year Item	2014	2013	Differences	Differences	Remark
			Amount	%
Current Assets Fixed Assets Prepayment for Equip. Other Assets Total Assets Current Liabilities Non-Current Liabilities Total Liabilities Capital Capital Surplus Retained Earning Other Shareholder Equity Total Shareholder Equity	23,471,268 15,429,778 1,748,657 401,971 41,051,674 10,103,181 895,719 10,998,900 4,460,000 5,939,819 16,718,487 2,934,468 30,052,774	21,812,172 14,756,743 1,210,342 333,085 38,112,342 9,003,298 1,579,904 10,583,202 4,460,000 5,863,612 14,646,450 2,559,078 27,529,140	$1,659,096 $673,035 $538,315 $68,886 $2,939,332 $1,099,883 ($684,185) $415,698 $0 $76,207 $2,072,037 $375,390 $2,523,634	7.61 4.56 44.48 20.68 7.71 12.22 (43.31) 3.93 0.00 1.30 14.15 14.67 9.17	Note 1 Note 2 Note 3
Note 1：Result from business operation expansion. Note 2：Result from purchasing computer equipment. Note 3：Result from transfer to short term borrowing before the mature date of long term borrowing.

(2) Financial Performance

(A) Financial Performance Comparison Analysis

Unit: NT$1,000

	2014	2013	plus(minus) Amount	plus (minus ) Variation ratio (%)	Note
Gross Sales Cost Of Goods Sold Gross Profit Operating Expenses Operating Income Other Non-Operate Inc. Pre-Tax Income Income Tax Expense Net Profit Other Income Total Income	24,943,834 17,996,954 6,946,880 2,937,721 4,009,159 141,913 4,151,072 660,839 3,490,233 301,864 3,792,097	23,102,827 16,898,393 6,204,434 2,769,033 3,435,401 227,947 3,663,348 547,094 3,116,254 317,234 3,433,488	1,841,007 1,098,561 742,446 168,688 573,758 (86,034) 487,724 113,745 373,979 (15,370) 358,609	7.97 6.50 11.97 6.09 16.70 (37.74) 13.31 20.79 12.00 (4.85) 10.44	Note 1 Note 2
a. 1. Plus or minus of ratio variation analysis explanation: Note 1：Result from net foreign exchange rate loss and other income decreased Note 2：Result from pre-tax profit increase and other related allowances went matured b. Reasons for changing company’s major operation: None

(3) Cash Flow：Cash Flow Analysis for the Coming Year

Unit: NT$1,000

				Unit: NT$1,000	Unit: NT$1,000
Beginning cash balance�	Cash flow expecting from whole year operation activities�	Estimate whole year cash outflow amount�	Estimate available cash balance (insufficient) amount �+�-�	Remedies for Insufficient cash
				Investment Plan	Financial Management Plan
$11,541,615	$19,878,558	$(21,637,139)	$9,783,034	-	-
a. Cash flow variation analysis: Cash flow generated from business operation activities has increased continuously because of slow sales growth forecast. Investment and financial management activities tend to be conservative, thus estimate cash remains NT$9,783,034 thousands. b. Estimate cash insufficient remedies and liquidity analysis: no cash liquidity concerns.

(4). Impacts of the latest major capital expenditure on financial operation:

Our company has established a new production facility in Shin-Feng for the purpose of business operation expansion. This facility will be the production base for high end products in the coming years.

(5) Main reasons for gain or loss result from recent annual reinvestment policy and its improving plan and investment plans for the coming year:

The company's focal reinvestments are all long-term strategic investment. In year 2014, the parent’s company annual reinvestment loss dropped to NT$ 319,590 thousand in comparison with in year 2013, the amount reduced NT$ 153,954 thousand which mainly due to partial invested enterprises gradually emerging economies of scale or capital expenditures are in place, the short-term profitability has improved. The company’s future investment plan will focus on long-term strategic investment strategy. We will continuous evaluate our investment plans in order to create the greatest possible values to the company.

(6) Risk assessments for a period of the latest annual up to the published date of this financial report

(A) Impacts on Company’s Income and Future Counter Measures for Interest rate,

Exchange rate Fluctuation and Inflation

Our company’s 2014 interest rate and exchange rate gain or loss is list as below:

Unit: NT$1,000

Unit: NT$1,000
Year Item	2014
Net ExchangeGain(loss)	32,414
NetSales	24,943,834
Income beforeTax	4,151,072
NetExchange Gain(loss)	0.13%
Net ExhangeGain(Loss)toNet Pre-Tax Profit Ratio	0.78%
Interest Revenue	96,170
Interest Revenue toNetSales Income	0.39%
Interest Income to Pre-TaxNet Profit Ratio	2.32%
InterestExpense	56,482
InterestExpense to Net SalesInterestRatio	0.23%
Interest Expense toNet Pre-Tax Profit Ratio	1.36%
Interest Income (Expense) to Net Pre-Tax Profit Ratio	0.96%

Sources: financial reports certified by the accountant

a. Impacts on Interest Rate Fluctuation

Our company always has been in a financial health status. We have assigned financial specialty personnel to cooperate with banks closely and obtain preferred mid to long term fund for our automatic equipments. Recently, annual interests gain (loss) amount only account for 0.96% of our company’s pre-tax profit. Thus, interest fluctuation doesn’t impose serious effects on our company.

b. Impacts of Exchange Rate Fluctuation
(a) We use US dollars as main quotation currency for exporting business. Our long term borrowing and major importing items are in US dollars currency. For these reasons, impact of exchange rate change between New Taiwan’s Dollar (NTD) vs. US. Dollars (USD) is minimal to our company. In year 2014, annual foreign exchange gain (loss) only account for 0.13% of net sales.
(b) Counter-Measures for Exchange Rate Fluctuation
- Open foreign currency deposit account in banks. Buying NTD or USD depends on money collected from sales and fund needed at the moment. Payment for importing raw materials depends on the exchange rate. We can choose to use foreign currency acquired from exporting or to use foreign currency borough in advance to reduce the effect of exchange rate fluctuation.
- We try to use USD as major currency when importing raw materials. Borrowing USD loan in order to balance the ratio of USD assets vs. liabilities in order avoid impacts result from exchange rate fluctuation.
c. Impacts of Inflation

We keep close look on market price fluctuation and maintain good interaction with suppliers and clients Thus, in 2014 there is no serious incident caused by inflation.

(B) Reasons for company policy ,gain or loss and future counter measures for engaging in high risk, highly leveraged investments, loans to others, endorsement and financial derivatives.

Latest years our company has not engaged in high risk, highly leveraged

investments, loans to others, endorsement. Please refer to this report page 182 and 279. Moreover, our company established rules to regulate financial derivatives transaction and loan with others, endorsement risk management. For these reasons, those activities will not induce serious impacts on our company.

Our company benefit from expertise in R&D and production experiences that accumulated for many years which allows us to meet product safety and diversity by launching “Modularized Product Design” production method to promote R&D capabilities, speed up new product development in order to satisfy variety product specifications that requested by different customers.

In the latest years, we have purchased new machines and equipments in order to reach the best production practice and to rejuvenate current products. We expect to invest NT$ 1,144,818 thousands more in R&D related field in 2015.

(D) Changes in domestic and foreign policy and legal impact on the company's financial operations and counter measures

Lately, our company’s financial operations haven’t affected by critical policy or legal changes in domestic and oversea because our main target market is in domestic, legal and critical policies are relatively stable also there is no military or political risks in the short term in the domestic. Conclude above reasons, we estimate our company will not suffer from negative effects due to major policy and legal changes in domestic and oversea.

(E) Influence and Counter-Measures for Technology and Industry Shift Company’s Financial Operation

We pay attention on technology shifting in the industry and assigned specialist to evaluate and research certain changes might influence company’s financial operation and found its counter-measures. In recent years, there is no critical technology shifting that will impose threat on company’s financial operation.

(F) Crisis Management and Counter Measures Result from Company’s Image Change Impact.

Our company’s image is always being good; in the recent years there is no significant incidents that would require corporation crisis management.

(G) Expected income from merger and potential risk counter-measures: Not Applicable.
(H) Expected income from production facilities expansion and potential risk counter-measures: please refer to this report section “G” point “e” and (b).
(I) Potential risk and counter-measures derived from buying and selling products: The major raw materials that our company purchased are potassium gold, substrate, transparent film, and copper sheet, drill bit, milling cutter, dry film and chemical substances. Once those materials were approved, changing materials is less likely thus, we only maintain 1~2 suppliers. Meanwhile, we keep good cooperation with other supplies in order to spread risk. Besides, one of our key product- IC BGA substrate, mostly we sell to leading IC design companies in domestic and oversea. Their applications rages are broad so, we are free from centralized sales risk.
(J) Risk counter-measures for directors, supervisors, shareholders owns more ten percent of company’s shares, bulk share transfer or redemption: Our company’s directors and. Shareholders own more than 10% of company’s share do not engage bulk share transfer.
(K) The impact of the change on the company's right to operate, risks and counter-measures: None
(L) Litigation or non-litigation case, should list the company and its directors, supervisors, general manager, the sustainable person in charge of, shareholders own more than ten percent of company’s shares and the company has the judgment or the slave system is still in the case of significant litigation non-litigation or administrative contentious event, the results could affect shareholders' equity or securities, should disclose its disputed fact, the subject of money, lawsuits start date, the major parties and deal with the case of the suit before the published this annual report: None.
(M) Other Risk and Counter-Measure: None.
(7) Special Remarks: None

8. Special Note

(1) Company Associates Data
(A) Associates Consolidated Business Operation Report:
(a) Up to December 31, 2014, our company organization chart as shown below:

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----- Start of picture text -----

PIOTEK (SUZHOU) PIOTEK (H.K.)
LIMITED TRADING LIMITED
Share Holding Share Holding
Share Holding 100% 100%
100%
PIOTEK HOLDING LIMITED
KINSUS CORP. (USA)
Share Holding Share Holding 100%
51%
PIOTEK HOLDINGS LTD.
(CAYMAN)
KINSUS KINSUS KINSUS
KINSUS HOLDING
INTERCONNECT HOLDING INTERCONNECT
(SAMOA) LIMITED
TECHNOLOGY Share (CAYMAN) TECHNOLOGY
Share
CORP Holding Share Holding100% LIMITED (SUZHOU) CORP
Holding
100%
100%
PEGAVISION
INVESTMENT LIMTED
Share Holding 100%
Share
Share Holding
Holding KINSU TRADING
36.81%
100% (SUZHOU)
PEGAVISION LIMTED LIMITED
Share Holding
100%
PEGAVISION HOLDINGS
CORPORATION
Share Holding
100%
PAGAVISION (SHANG HAI)
LIMTED
----- End of picture text -----

(b) Consolidated Financial Report for following entities:

CompanyInvested	Subsidaries’Name KINSUS CORP. (USA) KINSUS HOLDING (SAMOA) LIMITED PEGAVISION INVESTMENT LIMTED KINSUS HOLDING (CAYMAN) LIMITED PIOTEK HOLDINGS LTD. (CAYMAN) PEGAVISION LIMTED KINSUS INTERCONNECT TECHNOLOGY (SUZHOU) CORP	Major Business PCB design, marketing strategy analysis and customer relation building, new product technology R&D Investment Investment Investment Medical instruments manufacturing PCB (not narrow stripe line with high density) production and	HoldingEquityPercentage	HoldingEquityPercentage
			2014.12.31 100.00% 100.00% 100.00% 100.00% 51.00% 36.81% 100.00%	2013.12.31 100.00% 100.00% 100.00% 100.00% 51.00% 41.28% 100.00%
Parent Company Parent Company Parent Company KINSUS HOLDING (SAMOA) LIMITED KINSUS HOLDING (SAMOA) LIMITED PEGAVISION INVESTMENT LIMTED KINSUS HOLDING (CAYMAN) LIMITED

		sales
KINSUS	KINSU TRADING	PCB (not narrow	100.00%	100.00%
HOLDING	(SUZHOU)	stripe line with
(CAYMAN)	LIMITED	high density)
LIMITED		production and
		other related
		materials sales
PIOTEK	PIOTEK	Investment	100.00%	100.00%
HOLDINGS	HOLDING
LTD. (CAYMAN)	LIMITED
PIOTEK	PIOTEK	R&D, produced	100.00%	100.00%
HOLDING	(SUZHOU)	and sell new
LIMITED	LIMITED	type of
		precision
		electronic
		components,
		PCB,other
		related products
		and provide
		product services
PIOTEK	PIOTEK (H.K.)	Trading Business	100.00%	100.00%
HOLDING	TRADING
LIMITED	LIMITED
PEGAVISION	PEGAVISION	Investment	100.00%	100.00%
LIMTED	HOLDINGS
	CORPORATION
PEGAVISION	PAGAVISION	Medical	100.00%	100.00%
HOLDINGS	(SHANG HAI)	instruments sales
CORPORATION	LIMTED

(c)Associates Operating Status in year 2014: please refer to page 176 and 272-Mainland China investment information and Page 186 and 283-invested companies’ information.

(B) Associates Consolidated Financial Report: please refer to page 190 to 288.

(2) Latest annual until the published date of this report, private common stock managing status should disclose following: the effective date, the amount and price agreed and rationale based on, specific method chosen by particular personnel, and reason for private fund raising approved by the board of shareholders: None.

(3) Private stock raising status from the latest annual to the published date of this financial report. Latest annual until the published date of this report, subsidiaries holding or managing parent’s company’s stock status: None.

(4) Other necessary remarks: None.

(5) Incidents that would affect shareholder’s equity or stock price as defined in the Securities and Exchange Act Article 36 item 2.2 from the latest annual report until the published date of this report: None.

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100

Kinsus Interconnect Technology Corp. Individual Balance Sheet Dec. 31, 2014 & Dec. 31, 2013 (Currency unit: NT thousand dollars )

Assets	Assets	Assets	Dec.31,2014	Dec.31,2014	Dec.31,2015	Dec.31,2015
Code	Accountingitems	Note	Amount	％	Amount	％
	Current Asset
1100	Cash and Cash equivalents	(4)&(6).a	NT$10,082,304	30	NT$8,097,835	26
1110	Financial assets at fair value throughprofit or loss	(4)&(6).b	5,081,578	15	5,053,791	16
1125	Available-for-sale financial assets	(4)&(6).c	40,369	-	57,715	-
1147	Debts investment without active market	4)&(6).d	420,000	1	420,000	2
1150	Net Notes Receivables	4)&(6).e	4,358	-	69,383	-
1170	Net Account Receivables	4)&(6).f	2,403,669	7	2,447,303	8
1180	Accounts Receivables-Relatedparties	4)、(6).f&7	1,008	-	29,377	-
1200	Other Receivables		392,702	1	395,162	2
1210	Other Receivables-Relatedparties	7	9,197	-	12,502	-
1310	Net inventory	4)&(6).g	1,321,824	4	1,179,885	4
1410	Advances		76,320	-	77,165	-
1470	Other current assets		47,558	-	39,235	-
11XX	Total current assets		19,880,887	58	17,879,353	58

	Non-current assets
1550	Investment byequitymethod	4)&(6).h	4,009,504	12	4,058,620	13
1600	Property,Plant & Equipment	4)、(6).i、(8)&(9)	8,914,836	26	7,970,375	26
1780	Intangible Assets	4)&(6).j	11,927	-	7,408	-
1840	Deferred tax assets	4)&(6).w	-	-	-	-
1915	Advance equipment	(4)、(6).i&9	1,438,282	4	1,050,996	3
1995	Other non-current assets	(6).k、(7)&(8)	5,347	-	4,502	-
15XX	Total non-current assets		14,379,896	42	13,091,901	42

1XXX	Total assets		NT$34,260,783	100	NT$30,971,254	100

(Please view notes of individual financial statement)

Chairman: T.H. Tung CEO: Ming-Dong Guo Head of Accounting: Su-Zhen Liu

101

Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.
Indivisual Balance Sheet(Continued)
Dec. 31,2014 & Dec. 31,2013
(Currencyunit: NT thousand dollars)

Liabilities & Equity			Dec.31,2014		Dec.31,2013
Code	Accountingitems	Note	Amount	％	Amount	％
	Current Liability
2100	Short term borrowings	(6).l2	NT$730,798	2	NT$866,133	3
2150	Notespayable		39,864	-	39,594	-
2170	Accountspayable		927,069	3	770,794	2
2180	Accountspayable-Relatedparties	(7)	247,315	1	183,102	1
2200	Otherpayables	(6).13&(7)	2,981,520	9	2,082,230	7
2230	Current tax liability	(4)&(6).23	893,791	3	1,066,845	3
2300	Other current liability	(6).14	491,418	1	382,614	1
21XX	Total current liability		6,311,775	19	5,391,312	17

	Non-current liability
2540	Longterm borrowings	(6).15&(8)	467,335	1	425,268	1
2570	Deferred tax liability	(4)&(6).23	53,996	-	26,382	-
2600	Other non-current liability	(4)、(6).16&(6).17	29,668	-	49,351	1
25XX	Total non-current liability		550,999	1	501,001	2

2XXX	Total liability		6,862,774	20	5,892,313	19

	Equity
3100	Capital Stocks	(6).18
3110	Common Stock		4,460,000	13	4,460,000	14
3200	Additionalpaid-in capital	(6).18	5,939,819	17	5,863,612	19
3300	Retained earnings	(6).18
3310	Legal Reserve		2,687,890	8	2,365,481	8
3320	Special Reserve		-	-	74,424	-
3350	Undistributed Earnings		14,030,597	41	12,206,545	40
3400	Other Equity		279,703	1	108,879	-
3XXX	Total equity		27,398,009	80	25,078,941	81

	Liability& Equity		NT$34,260,783	100	NT$30,971,254	100

(Please view notes of individual financial statement)

Chairman: T.H. Tung

CEO: Ming-Dong Guo

Head of Accounting: Su-Zhen Liu

102

Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.
Indivisual comprehensive income statement
Jan.1 to Dec.31,2014
Jan.1 to Dec.31,2013
(Except Earnings Per Share,Currencyunit: NT thousand dollars)

Code	Items		2014		2013
		Note	Amount	%	Amount	%
4000	Operatingincome	(4)、(6).19&(7)	NT$19,290,237	100	NT$18,026,999	100
5000	Operating cost		(13,017,150)	(68)	(11,988,400)	(67)
5900	Operating profit		6,273,087	32	6,038,599	33
6000	Operating expense	(7)
6100	Selling expense		(376,656)	(2)	(395,503)	(2)
6200	General & Administrative expense		(624,714)	(3)	(606,358)	(3)
6300	Research & Development expense		(971,583)	(5)	(936,503)	(5)
	Total Operating expense		(1,972,953)	(10)	(1,938,364)	(10)
6900	Income from operating activities		4,300,134	22	4,100,235	23

7000	Non-operating income & expense
7010	Other income	(6).21&(7)	113,102	1	95,060	1
7020	Other gain & loss	(6).21&(7)	75,770	-	64,352	-
7050	Financial cost	(6).21	(19,712)	-	(17,042)	-
7070	Profit or loss of subsidiary, associate, and joint venture by equity method.		(319,590)	(2)	(473,544)	(3)
	Total non-operating income & expense		(150,430)	(1)	(331,174)	(2)

7900	Net profit before tax		4,149,704	21	3,769,061	21
7950	Taxation expense	(4)&(6).23	(532,377)	(2)	(544,968)	(3)
8200	Net income		3,617,327	19	3,224,093	18
8300	Other comprehensive income	(6).22
8320	Unrealized value for available-for-sale financial assets.		9,583	-	(535)	-
8360	Defined benefit plan of actual gain and loss.		15,710	-	13,395	-
8380	Profit or loss of subsidiary, associate, and joint venture of other comprehensive income by equity method.		194,267	1	203,043	1
8399	Composed partial relevant icome taxation with other comprehensive income		(33,026)	-	(19,205)	-
	Other current comprehensive income		186,534	1	196,698	1
8500	Total comprehensive income		NT$3,803,861	20	NT$3,420,791	19

9750	Basic EPS (dollar)	(6).24	NT$8.11		NT$7.23
9850	Diluted EPS (dollar)	(6).24	NT$7.98		NT$7.12

(Please view note of individual financial statement)

Chairman: T.H. Tung CEO: Ming-Dong Guo Head of Accounting: Su-Zhen Liu

103

Kinsus Interc	Kinsus Interc	Kinsus Interc	Kinsus Interc	Kinsus Interc	Kinsus Interc	onnect Technology Corp.	onnect Technology Corp.	onnect Technology Corp.	onnect Technology Corp.	onnect Technology Corp.	onnect Technology Corp.	onnect Technology Corp.	onnect Technology Corp.
Indivusual stat						ement of changes in equity
Jan.1						to Dec.31, 2014
& Jan						.1 to Dec.31,2013
(Currency un						it: NT thousand dollars)

	Items	Note	Capital Stock		ditionalpaid-in cap		Retained Earnings			Other items of equity			Total equity
				d		i	Legal Reserve	Special Reserve	Undistributed Earnings	Translation of financial statement of foreign exchange differences bythe foreign operation		Unrealized gain or loss on available-for-sale financial assets
Code			3100		3200		3310	3320	3350		3410	3425	3XXX
A1	Beginningbalance of 2013		NT$4,460,000		NT$5,853,673		NT$2,085,712	NT$-	NT$10,661,250		NT$(90,070)	NT$15,646	NT$22,986,211
	Earnings appropriated and distributed in 2012	(6).18
B1	Legal reserve appropriated						279,769		(279,769)				0
B3	Special reserve appropriated							74,424	(74,424)				0
B5	Cash dividend on common stock								(1,338,000)				(1,338,000)
D1	Net income in 2013								3,224,093				3,224,093
D3	Other comprehensive income in 2013	(6).22							13,395		183,838	(535)	196,698
D5	Total comprehensive income		0		0		0	0	3,237,488		183,838	(535)	3,420,791

M5	Allowance for change of acquiring or liquidating subsidiary in stocks and books values				9,939								9,939

A1	Endingbalance of 2013		4,460,000		5,863,612		2,365,481	74,424	12,206,545		93,768	15,111	25,078,941
	Earnings appropriated and distributed in2013	(6).18
B1	Legal reserve appropriated						322,409		(322,409)				0
B5	Cash dividend on common stock								(1,561,000)				(1,561,000)
B17	Special reserve reversal							(74,424)	74,424				0
D1	Net income in 2014								3,617,327				3,617,327
D3	Other comprehensive income in 2014	(6).22							15,710		161,241	9,583	186,534
D5	Total comprehensive income		0		0		0	0	3,633,037		161,241	9,583	3,803,861

M5	Allowance for change of acquiring or liquidating subsidiary in stocks and books values				50,925								50,925
M7	Changes of ownershipinterests to subsidiary				25,282								25,282
Z1	Endingbalance of 2014		NT$4,460,000		NT$5,939,819		NT$2,687,890	NT$-	NT$14,030,597		NT$255,009	NT$24,694	NT$27,398,009

	(Please view note of individual financial statement)

Chairman: T.H. Tung

CEO: Ming-Dong Guo

Head of Accounting: Su-Zhen Liu

104

				Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.
				Indivisual statement of cash flows
				Jan.1 to Dec.31,2014
				& Jan.1 to Dec.31,2013
				(Currencyunit: NT thousand dollars)

Code	Items				2014	2013	Code	Items			2014	2013
AAAA	Cash flows from operatingactivities:						BBBB	Cash flows from investingactivities：
A10000		Net earnings			NT$4,149,704	NT$3,769,061	B01800		Acquisition of investments byequitymethod		-	(650,140)
A20000		Adjustment items					B02700		Acquisition ofproperty, plant and equipment		(2,636,178)	(2,910,872)
A20010		Non-affectedgain or loss from cash flows					B02800		Dispostion ofproperty, plant and equipment		6,635	6,284
A20300			Doubtful debts expense(recovery gains)		5,418	(13,653)	B00400		Disposition of financial assets on available-for-sale		51,620	10,597
A21200			Interests revenue		(71,135)	(59,530)	B03800		(Increase)decrease in refundable deposits		(845)	63
A20900			Interest expense		19,712	17,042	B04500		Acquisition of intangible assets		(25,231)	(17,923)
A20100			Depreciation expense		1,911,643	1,867,088	BBBB			Net cash inflows(outflows)from investingactivities	(2,603,999)	(3,561,991)
A20200			Amortization expense		20,712	12,813
A22500			Gain on dispostition ofproperty, plant and equipment		(602)	(5,207)	CCCC	Cash flows from financingactivies：
A22500			Loss on dispostition ofproperty, plant and equipment		1,231	2,234	C00100		Repayment of short-term borrowings		(135,335)	(351,717)
A23100			Gain on disposition of investments		(24,691)	(10,732)	C01600		Proceeds from long-term borrowings		474,750	190,066
A20400			Financial assets at fair value throughprofit or loss		(27,787)	(22,456)	C01700		Repayment of long-term borrowings		(267,000)	(277,036)
A22300			Profit/loss of subsidiary, associate, andjoint ventures byequitymethod.		319,590	473,544	C04500		Issuance of cash dividend		(1,561,000)	(1,338,000)
A30000		Changes in asset/liability for operating activities：					CCCC			Net cash inflows(outflows)from financingactivities	(1,488,585)	(1,776,687)
A31110			Financial assets at fair value throughprofit or loss－Net current increase(decrease)		-	(700,000)
A31130			Increase or decrease in net notepayable		65,025	(13,234)	EEEE	Net increase(decrease)in cash & cash equivalents			1,984,469	614,318
A31150			(Increase)decrease in Accounts receivable		38,216	149,626	E00100	Beginningbalance of cash & cash equivalents			8,097,835	7,483,517
A31160			(Increase)decrease in Accounts receivable-relatedparties		28,369	(7,562)	E00200	Endingbalance of cash & cash equivalents			NT$10,082,304	NT$8,097,835
A31180			(Increase)decrease in Other receivable		2,968	198,257
A31190			(Increase)decrease in Other receivable-relatedparties		3,305	(6,625)
A31200			(Increase)decrease in net inventory		(141,939)	119,106
A31220			(Increase)decrease inprepayments		845	(8,951)
A31240			(Increase)decrease in other current assets		(8,323)	(5,487)
A32130			(Increase)decrease in notespayable		270	684
A32150			(Increase)decrease in accountspayable		156,275	(66,849)
A32160			(Increase)decrease in accountspayable-relatedparties		64,213	147,880
A32180			(Increase)decrease in other accountspayable		284,537	427,508
A32210			(Increase)decrease in advance sales revenue		(4,638)	982
A32230			(Decrease)increase in other current liability		(52,241)	61,558
A32240			(Decrease)increase in otherpension liability		(3,973)	(4,184)
A33000			Netcash(outflows) inflows from operatingactivities		6,736,704	6,322,913
A33100			Interests acquisition		70,627	59,465
A33300			Interestspayment		(19,435)	(17,108)
A33500			Income taxationpayments		(710,843)	(412,274)
AAAA			Net cash inflows(outflows)from operatingactivities		6,077,053	5,952,996

				(Please view note of indivivusal financial statement)

Chairman: T.H. Tung

CEO: Ming-Dong Guo

Head of Accounting: Su-Zhen Liu

105

KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Ex ~~(Amounts Ex~~ pressed in Thousands of New Taiwan Dollars unless Otherwise S ~~pressed in Thousands of New Taiwan Dollars unless Otherwise S~~ pecified ~~pecified~~ ) ~~)~~

1. History and Organization

Kinsus Interconnect Technology Corp. (“the Company”) was incorporated on 11 September 2000. The main services currently provided by the Company are electronic component manufacturing, electronic material wholesale, electronic material retail, and business management consultation, among others. The Company’s IPO was approved on 20 May 2004 in accordance with Ref. No. Tai-Tsai-Cheng-I-0930123462 issued by the Securities and Futures Institute (SFI). The Company’s common shares were publicly listed on the Taiwan Stock Exchange (TWSE) on 1 November 2004. The Company’s registered office and main business location is No. 1245, Chunghwa Road, Hsinwu District, Taoyuan City.

2. Date and Procedures of Authorization of Financial Statements for Issue

The consolidated financial statements of the Company for the years ended 31 December 2014 and 2013 were authorized for issue by the Board of Directors on 9 February 2015.

3. Newly Issue or Revised Standards and Interpretations

(1) International Financial Reporting Standards, International Accounting Standards, and Interpretations issued revised or amended, which are recognized by Financial Supervisory Commission (“FSC”) and would be applicable for annual periods beginning on or after 1 January 2015, but not yet adopted by the Company at the date of issuance of the Company’s financial statements are listed below.
(a) Improvements to International Financial Reporting Standards (issued in 2010)

IFRS 1 “First-Time Adoption of International Financial Reporting Standards”

The annual improvements to International Financial Reporting Standards (“IFRS”) issued in 2010 made the following amendments to IFRS 1: If a first-time adopter changes its accounting policies or its use of the exemptions in IFRS1 after it has published an interim financial report, it needs to explain those changes and update the reconciliations between previous GAAP and IFRS in accordance with paragraph 23 of IFRS1.

Furthermore, the amendment allows first-time adopters to use an event-driven fair value as deemed cost, even if the event occurs after the date of transition, but before the first IFRS financial statements are issued. The amendment also expands the scope of ‘deemed cost’ for property, plant, and equipment or intangible assets to include items used subject to rate regulated activities. The exemption will be

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applied on an item-by-item basis. All such assets will also need to be tested for impairment at the date of transition. The amendment allows entities with rate-regulated activities to use the carrying amount of their property, plant, and equipment and intangible balances from their previous GAAP as its deemed cost upon transition to IFRS. These amendments became effective for annual periods beginning on or after 1 January 2011.

IFRS 3 “Business Combinations”

Under the amendment, IFRS 3 (as revised in 2008) do not apply to contingent consideration that arose from business combinations whose acquisition dates precede the application of IFRS 3 (as revised in 2008). Furthermore, the amendment limits the scope of the measurement choices for non-controlling interest. Only the components of non-controlling interests that are present ownership interests that entitle their holders to a proportionate share of the entity’s net assets, in the event of liquidation could be measured at either fair value or at the present ownership instruments’ proportionate share of the acquiree’s identifiable net assets. Other components of non-controlling interest are measured at their acquisition date fair value.

The amendment also requires an entity in a business combination to account for the replacement of the acquiree’s share-based payment transactions (when the acquirer is not obliged to do so) as new share-based payment awards in the post-combination and allocated between NCI and post-combination expense.

These amendments became effective for annual periods beginning on or after 1 July 2010.

IFRS 7 “Financial Instruments: Disclosure”

The amendment emphasizes the interaction between quantitative and qualitative disclosures and the nature and extent of risks associated with financial instruments. The amendment became effective for annual periods beginning on or after 1 January 2011.

IAS 1 “Presentation of Financial Statements”

The amendment clarifies that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements. The amendment became effective for annual periods beginning on or after 1 January 2011.

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IAS 34 “Interim Financial Reporting”

The amendment clarifies that if a user of an entity’s interim financial report have access to the most recent annual financial report of that entity, it is unnecessary for the notes to an interim financial report to provide relatively insignificant updates to the information that was reported in the notes in the most recent annual financial report. Furthermore, the amendment adds disclosure requirements around disclosures of financial instruments and contingent liabilities/assets. The amendment is effective for annual periods beginning on or after 1 January 2011.

IFRIC 13 “Customer Loyalty Programs”

The amendment clarifies that when the fair value of award credits is measured based on the value of the awards for which they could be redeemed, the amount of discounts or incentives otherwise granted to customers not participating in the award credit scheme is to be taken into account. The amendment is effective for annual periods beginning on or after 1 January 2011.

(b) IFRS 1 “First-Time Adoption of International Financial Reporting Standards”” – Limited Exemption from Comparative IFRS 7 Disclosures for First-Time Adopters

IFRS 1 has been amended to allow first-time adopters to utilize the transitional provisions of IFRS 7 Financial Instruments: Disclosures . These provisions give relief from providing comparative information in the disclosures required by amendments to IFRS 1 in the first year of application. The amendment is effective for annual periods beginning on or after 1 July 2010.

(c) IFRS 1 “First-Time Adoption of International Financial Reporting Standards” – Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters

The amendment has provided guidance on how an entity should resume presenting IFRS financial statements when its functional currency ceases to be subject to severe hyperinflation. The amendment also removes the legacy fixed dates in IFRS 1 relating to derecognition and day one gain or loss transaction. The amended standard has these dates coinciding with the date of transition to IFRS. The amendment is effective for annual periods beginning on or after 1 July 2011.

(d) IFRS 7 “Financial Instruments: Disclosures” (Amendment)

The amendment requires additional quantitative and qualitative disclosures relating

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to transfers of financial assets, when financial assets are derecognized in their entirety, but the entity has a continuing involvement in them, or financial assets are not derecognized in their entirety. The amendment is effective for annual periods beginning on or after 1 July 2011.

(e) IAS 12 “Income Taxes” – Deferred Taxes: Recovery of Underlying Assets

The amendment to IAS 12 introduces a rebuttable presumption that deferred tax on investment properties measured at fair value will be recognized on a sale basis, unless an entity has a business model that would indicate the investment property will be consumed in the business. The amendment also introduces the requirement that deferred tax on non-depreciable assets measured using the revaluation model in IAS 16 should always be measured on a sale basis. As a result of this amendment, SIC 21 Income Taxes – Recovery of Revalued Non-Depreciable Assets has been withdrawn. The income amendment is effective for annual periods beginning on or after 1 January 2012.

(f) IFRS 10 “Consolidated Financial Statements”

IFRS 10 replaces the portion of IAS 27 that addresses the accounting for consolidated financial statements and SIC-12. The changes introduced by IFRS 10 primarily relate to the elimination of the perceived inconsistency between IAS 27 and SIC-12 by introducing a new integrated control model. That is, IFRS 10 primarily relates to whether to consolidate another entity, but does not change how an entity is consolidated. The standard is effective for annual periods beginning on or after 1 January 2013.

(g) IFRS 11 “Joint Arrangements”

IFRS 11 replaces IAS 31. The change introduced by IFRS 11 primarily relate to increased comparability within FIRS by removing the choice for jointly controlled entities to use proportionate consolidation, so that the structure of the arrangement is no longer the most important factor when determining the classification as a joint operation or a joint venture, which then determines the accounting. The standard is effective for annual periods beginning on or after 1 January 2013.

(h) IFRS 12 Disclosures of Interests in Other Entities

IFRS 12 primarily integrates and makes consistent the disclosure requirements for subsidiaries, joint arrangements, associates, and unconsolidated structured entities and presents those requirements in a single IFRS. The standard is effective for

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annual periods beginning on or after 1 January 2013.

(i) IFRS 13 “Fair Value Measurement”

IFRS 13 primarily relates to defining fair value, setting out in a single IFRS a framework for measuring fair value and requiring disclosures about fair value measurements to reduce complexity and improve consistency in application when measuring fair value. However, IFRS 13 does not change existing requirements in other IFRS as to when the fair value measurement or related disclosures required. The standard is effective for annual periods beginning on or after 1 January 2013.

(j) IAS 1 “Presentation of Financial Statements” - Presentation of Items of Other Comprehensive Income

The amendments to IAS 1 change the grouping of items presented in Other Comprehensive Income. Items that would be reclassified (or recycled) to profit or loss in the future would be presented separately from items that will never be reclassified. The amendment is effective for annual periods beginning on or after 1 July 2012.

(k) IAS 19 “Employee Benefits” (Revised)

The revision includes: (1) For defined benefit plans, the ability to defer recognition of actuarial gains and losses (i.e., the corridor approach) has been removed. Actuarial gains and losses are now recognized in Other Comprehensive Income. (2) Amounts recorded in profit or loss are limited to current and past service costs, gains or losses on settlements, and net interest income (expense). (3) New disclosures include quantitative information about the sensitivity of the defined benefit obligation to a reasonably possible change in each significant actuarial assumption. (4) Termination benefits will be recognized at the earlier of when the offer of termination cannot be withdrawn, or when the related restructuring costs are recognized under IAS 37 Provisions, Contingent Liabilities, and Contingent Assets , etc. The revised standard is effective for annual periods beginning on or after 1 January 2013.

(l) IFRS 1 “First-Time Adoption of International Financial Reporting Standards” - Government Loans

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transition to IFRS. However, entities may choose to apply the requirements of IFRS 9 (or IAS 39, as applicable) and IAS 20 to government loans retrospectively if the information needed to do so had been obtained at the time of initially accounting for those loans. The amendment is effective for annual periods beginning on or after 1 January 2013.

(m) IFRS7 “Financial Instruments: Disclosures” – Disclosures - Offsetting Financial Assets and Financial Liabilities

These amendments require an entity to disclose information about rights of set-off and related arrangements. The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity’s financial position. The new disclosures are required for all recognized financial instruments that are set off in accordance with IAS 32 Financial Instruments: Presentation . The disclosures also apply to recognized financial instruments that are subject to an enforceable master netting arrangement or ‘similar agreement.’ The amendment is effective for annual periods beginning on or after 1 January 2013.

(n) IAS 32 “Financial Instruments: Presentation” - Offsetting Financial Assets and Financial Liabilities

The amendment clarifies the meaning of “currently has a legally enforceable right to set-off” in IAS 32. The amendment is effective for annual periods beginning on or after 1 January 2014.

(o) IFRIC 20 “Stripping Costs in the Production Phase of a Surface Mine”

This Interpretation applies to waste removal (stripping) costs incurred in surface mining activity, during the production phase of the mine. If the benefit from the stripping activity will be realized in the current period, an entity is required to account for the stripping activity costs as part of the cost of inventory. When the benefit is the improved access to ore, the entity recognizes these costs as a non-current assets (“stripping activity asset”), only if certain criteria are met. The stripping activity asset is accounted for as an addition to, or as an enhancement of, an existing asset. The interpretation is effective for annual periods beginning on or after 1 January 2013.

(p) Improvements to International Financial Reporting Standards (2009-2011 cycle):
IFRS 1 “First-Time Adoption of International Financial Reporting Standards”

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The amendment clarifies that an entity that has stopped applying IFRS may choose to either: Re-apply IFRS 1, even if the entity applied IFRS 1 in a previous reporting period; or apply IFRS retrospectively in accordance with IAS 8 (i.e., as if it had never stopped applying IFRS) in order to resume reporting under IFRS. The amendment is effective for annual periods beginning on or after 1 January 2013.

IAS 1 “Presentation of Financial Statements”

The amendment clarifies the difference between voluntary additional comparative information and the minimum required comparative information. Generally, the minimum required comparative period is the previous period. An entity must include comparative information in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period. The additional comparative period does not need to contain a complete set of financial statements. The opening statement of financial position (known as “the third balance sheet”) must be presented when an entity changes its accounting policies (making retrospective restatements or reclassifications) and those changes have a material effect on the statement of financial position. The opening statement would be at the beginning of the preceding period. However, unlike the voluntary comparative information, the related notes are not required to include comparatives as of the date of the third balance sheet. The amendment is effective for annual periods beginning on or after 1 January 2013.

IAS 16 “Property, Plant, and Equipment” (Amendment)

The amendment clarifies that major spare parts and servicing equipment that meet the definition of property, plant, and equipment are not inventory. The amendment is effective for annual periods beginning on or after 1 January 2013.

IAS 32 “Financial Instruments: Presentation” (Amendment)

The amendment removes existing income tax requirements from IAS 32 and requires entities to apply the requirements in IAS 12 to any income tax arising from distributions to equity holders. The amendment is effective for annual periods beginning on or after 1 January 2013.

IAS 34 “Interim Financial Reporting” (Amendment)

The amendment clarifies the requirements in IAS 34 relating to segment information for total assets and liabilities for each reportable segment to enhance

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consistency with the requirements in IFRS 8 Operating Segments . Besides, total assets and liabilities for a particular reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change in the total amount disclosed in the entity’s previous annual financial statements for that reportable segment. The amendment is effective for annual periods beginning on or after 1 January 2013.

(q) IFRS 10 “Consolidated Financial Statements” (Amendment)

The Investment Entities amendments provide an exception to the consolidation requirements in IFR S 10 and require investment entities to measure particular subsidiaries at fair value through profit or loss, rather than consolidate them. The amendments also set out disclosure requirements for investment entities. The amendment is effective for annual periods beginning on or after 1 January 2014.

The abovementioned standards and interpretations issued by the IASB and recognizing by the FSC so that they are applicable for annual periods beginning on or after 1 January 2015. Apart from items (i) to (p) which would affect the presentation of financial statements and increase the level of disclosure in the financial reports, the remaining standards and interpretations have no material impact on the Company.

(2) Standards or interpretations issued by IASB but not yet recognized by FSC at the date of issuance of the Company’s financial statements are listed below

(a) IAS 36 “” Impairment of Assets” (Amendment)

This amendment relates to the amendment issued in May 2011 and requires entities to disclose the recoverable amount of an asset (including goodwill) or a cash-generating unit when an impairment loss has been recognized or reversed during the period. The amendment also requires detailed disclosure of how the fair value less costs of disposal has been measured when an impairment loss has been recognized or reversed, including valuation techniques used, level of fair value hierarchy of assets and key assumptions used in measurement. The amendment is effective for annual periods beginning on or after 1 January 2014.

(b) IFRIC 21 “Levies”

This interpretation provides guidance on when to recognize a liability for a levy imposed by a government (both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities, and Contingent Assets and those where

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the timing and amount of the levy is certain). The interpretation is affective for annual periods beginning on or after 1 January 2014.

Under the amendment, there would be no need to discontinue hedge accounting if a hedging derivative was novated, provided certain criteria are met. The interpretation is effective for annual periods beginning on or after 1 January 2014.

(d) IAS 19 “Employee Benefits” (Defined benefit plans: employee contributions)

The amendment apply to contribution from employees or third parties to defined benefit plans. The objective of the amendments is to provide a policy choice for a simplified accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. The amendment is effective for annual periods beginning on or after 1 July 2014.

(e) Improvements to International Financial Reporting Standards (2010-2012 cycle):

IFRS 2 “Share-Based Payment”

The annual improvements amend the definitions of ‘vesting condition’ and ‘market condition’ and adds definitions for ‘performance condition’ and ‘service condition’ (which were previously part of the definition of ‘vesting condition’). The amendment prospectively applies to share-based payment transactions for which the grant date is on or after 1 July 2014.

IFRS 3 “Business Combinations”

The amendments include: (1) deleting the reference to “other applicable IFRSs” in the classification requirements; (2) deleting the reference to “IAS 37 Provisions, Contingent Liabilities, and Contingent Assets or other IFRSs as appropriate,” other contingent consideration that is not within the scope of IFRS 9 shall be measured at fair value at each reporting date and changes in fair value shall be recognized in profit or loss; (3) amending the classification requirements of IFRS 9 Financial Instruments to clarify that contingent consideration that is a financial asset or financial liability can only be measured at fair value, with changes in fair value being presented in profit or loss depending on the requirements of IFRS 9. The amendments apply prospectively to business combinations for which the acquisition date is on or after 1 July 2014.

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IFRS 8 “Operating Segments”

The amendments require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments. The amendments also clarify that an entity shall only provide reconciliation of the total of the reportable segments’ assets to the entity’s assets if the segment assets are reported regularly. The amendment is effective for annual periods beginning on or after 1 July 2014.

IFRS 13 “Fair Value Measurement”

The amendment to the Basis for Conclusions of IFRS 13 clarifies that when deleting paragraph B5.4.12 of IFRS 9 Financial Instruments and paragraph AG79 of IAS 39 Financial Instruments: Recognition and Measurement as consequential amendments from FIRS 13 Fair Value Measurement , the IASB did not intend to change the measurement requirements for short-term receivables and payables.

IAS 16 “Property, Plant, and Equipment”

The amendment clarifies that when an item of property, plant, and equipment is revalued, the accumulated depreciation at the date of revaluation is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset. The amendment is effective for annual periods beginning on or after 1 July 2014.

IAS 24 “Related Party Disclosures”

The amendment clarifies that an entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a related party of the reporting entity. The amendment is effective for annual periods beginning on or after 1 July 2014.

IAS 38 “Intangible Assets”

The amendment clarifies that when an intangible asset is revalued, the accumulated amortization at the date of revaluation is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset. The amendment is effective for annual periods beginning on or after 1 July 2014.

(f) Improvements to International Financial Reporting Standards (2011-2013 cycle)

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IFRS 1 “First-Time Adoption of International Financial Reporting Standards”

The amendment clarifies that an entity, in its first IFRS financial statements, has the choice between applying an existing and currently effective IFRS or applying early for a new or revised IFRS that is not yet mandatorily effective, provided that the new or revised IFRS permits early application.

IFRS 3 “Business Combinations”

This amendment clarifies that paragraph 2(a) of IFRS 3 Business Combinations excludes the formation of all types of joint arrangements as defined in IFRS 11 Joint Arrangements from the scope of IFRS 3; and the scope exception only applies to the financial statements of the joint venture or the joint operation itself. The amendment is effective for annual periods beginning on or after 1 July 2014.

IFRS 13 “Fair Value Measurement”

The amendment clarifies that paragraph 52 of IFRS 13 includes a scope exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis. The objective of this amendment is to clarify that this portfolio exception applies to all contracts within the scope of IAS 39 Financial Instruments: Recognition and Measurement or IFRS 9 Financial Instruments , regardless of whether they meet the definitions of financial assets or financial liabilities as defined in IAS 32 Financial Instruments: Presentation . The amendment is effective for annual periods beginning on or after 1 July 2014.

IAS 40 “Investment Property”

The amendment clarifies the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property; in determining whether a specific transaction meets the definition of both a business combination as defined in IFRS 3 Business Combinations and investment property as defined in IAS 40 Investment Property , separate application of both standards independently of each other is required. The amendment is effective for annual periods beginning on or after 1 July 2014.

(g) IFRS 14 “Regulatory Deferral Accounts”

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do not recognize such amounts, the Standard requires that the effect of rate regulation must be presented separately from other items. IFRS 14 is effective for annual periods beginning on or after 1 January 2016.

(h) IFRS 11 “ Joint Arrangements ” (Accounting for Acquisitions of Interests in Joint Operations)

The amendments provide new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business. The amendments require the entity to apply all of the principles on business combinations accounting in IFRS 3 “Business Combinations,” and other IFRS (that do not conflict with the guidance in IFRS 11), to the extent of its share in a joint operation acquired. The amendment also requires certain disclosure. The amendment is effective for annual periods beginning on or after 1 January 2016.

(i) IAS 16 “Property, Plant, and Equipment” and IAS 38 “Intangible Assets” – Clarification of Acceptable Methods of Depreciation and Amortization

(j) IFRS 15 “Revenue from Contracts with Customers”

The core principle of the new Standard is for companies to recognize revenue to depict the transfer of goods and services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods and services. The new Standard will also result in enhanced disclosures about revenue, provide guidance for transactions that were previously addressed comprehensively and improve guidance for multiple-element arrangements. The Standard is effective for annual periods beginning on or after 1 January 2017.

(k) IAS 16 “Property, Plant, and Equipment” and IAS 41 “Agriculture” – Agriculture: Bearer Plants

The IASB decided that bearer plants should be accounted for in the same way as property, plant, and equipment in IAS 16 Property, Plant, and Equipment , because

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their operation is similar to that of manufacturing. Consequently, the amendments include then within the scope of IAS 16, and the produce growing on bearer plants will remain within the scope of IAS 41. The amendment is effective for annual periods beginning on or after 1 January 2016.

(l) IFRS 9 “Financial Instrument”

The IASB has issued the final version of IFRS 9, which combines classification and measurement, the expected credit loss impairment model, and hedge accounting. The Standard will replace IAS 39 Financial Instruments: Recognition and Measurement and previous versions of IFRS 9 Financial Instruments (which include standards issued on classification and measurement of financial assets and liabilities and hedge accounting).

Classification and measurement: Financial assets are measured at amortized cost, fair value through profit or loss, or fair value through other comprehensive income, based on both the entity’s business model for managing the financial assets and the financial asset’s contractual cash flow characteristics. Financial liabilities are measured at amortized cost or fair value through profit or loss. Furthermore, there is requirement that ‘own credit risk’ adjustments are not recognized in profit or loss.

Impairment: Expected credit loss model is used to evaluate impairment. Entities are required to recognize either 12-mont or lifetime expected credit losses, depending on whether there has been a significant increase in credit risk since initial recognition.

Hedge accounting: Hedge accounting is more closely aligned with risk management activities and hedge effectiveness is measured based on the hedge ratio.

The new standard is effective for annual periods beginning on or after 1 January 2018.

(m) IAS 27 “Separate Financial Statements” – Equity Method in Separate Financial Statements

The IASB restored the option to use the equity method under IAS 28 for an entity to account for investments in subsidiaries and associates in the entity’s separate financial statements. In 2003, the equity method was removed from the options. This amendment removes the only difference between the separate financial statements prepared in accordance with IFRS and those prepared in accordance

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with the local regulations in certain jurisdictions. The amendment is effective for annual periods beginning on or after 1 January 2016.

(n) IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” – Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investment in Associates and Joint Ventures , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full. IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture. The amendment is effective for annual periods beginning on or after 1 January 2016.

(o) Improvements to International Financial Reporting Standards (2012-2014 cycle)

IFRS 5 “Non-Current Assets Held for Sale and Discontinued Operations”

The amendment clarifies that a change of disposal method of assets (or disposal groups) from disposal through sale or through distribution to owners (or vice versa) should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. The amendment also requires identical accounting treatment for an asset (or disposal group) that ceases to be classified as held for sale or as held for distribution to owners. The amendment is effective for annual periods beginning on or after 1 January 2016.

IFRS 7 “Financial Instruments: Disclosure”

The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset and therefore the disclosure for any continuing involvement in a transferred asset that is derecognized in its entirety under IFRS 7 Financial Instruments: Disclosures is required. The amendment also

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clarifies that whether the IFRS 7 disclosure related to the offsetting of financial assets and financial liabilities are required to be included in the condensed interim financial report would depend on the requirements under IAS 34 Interim Financial Reporting . The amendment is effective for annual periods beginning on or after 1 January 2016.

IAS 19 “Employee Benefits”

The amendment clarifies that the requirement under IAS 19.83, that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. The amendment is effective for annual periods beginning on or after 1 January 2016.

IAS 34 “Interim Financial Reporting”

The amendment clarifies what is meant by “elsewhere in the interim financial report” under IAS 34; the amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report. The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. The amendment is effective for annual periods beginning on or after 1 January 2016.

(p) IAS 1”Presentation of Financial Statements” (Amendment)

The amendments contain (1) clarifying that an entity must not reduce the understandability of its financial statements by obscuring material information with immaterial information or by aggregating material items that have different natures or functions. The amendments reemphasize that, when a standard requires a specific disclosure, the information must be assessed to determine whether it is material and, consequently, whether presentation or disclosure of that information is warranted, (2) clarifying that specific line items in the statements of profit or loss and OCI and the statement of financial position may be disaggregated, and how an entity shall present additional subtotals, (3) clarifying that entities have flexibility as to the order in which they present the notes to financial statements, but also emphasize that understandability and comparability should be considered by an entity when deciding on that order, (4) removing the examples of the income taxes accounting policy and the foreign currency accounting policy, as these were considered unhelpful in illustrating what significant accounting policies could be,

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and (5) clarifying that the share of OCI of associates and joint ventures accounted for using the equity method must be presented in aggregate as a single line item, classified between those items that will or will not be subsequently reclassified to profit or loss. The amendment is effective for annual periods beginning on or after 1 January 2016.

(q) IFRS 10 “Consolidated Financial Statements,” IFRS 12 “Disclosure of Interests in Other Entities,” and IAS 28 “Investments in Associates and Joint Ventures” – Investment Entities: Applying the Consolidation Exception

The amendments contain (1) clarifying that the exemption from presenting consolidated financial statements applied to a parent entity that is a subsidiary of an investment entity when the investment entity measures all of its subsidiary at fair value, (2) clarifying that only a subsidiary that is not an investment entity itself and provides support services to the investment entity is consolidated when all other subsidiaries of an investment entity are measured at fair value, and (3) allowing the investor, when applying the equity method, to retain fair value measurement applied by the investment entity associate or joint venture to its interests in subsidiaries. The amendment is effective for annual periods beginning on or after 1 January 2016.

The abovementioned standards and interpretations issued by IASB have not yet been recognized by FSC at the date of issuance of the Company’s financial statements, the local effective dates are to be determined by FSC. As the Company is still currently determining the potential impact of the standards and interpretations listed under (a), (o), and (p), it is not practical to estimate their impact on the Company at this point in time. All other standards and interpretations have no material impact on the Company.

4. Summary of Major Accounting Policies

(1)Statement of Compliance

This company’s 2013 and 2014 individual financial report was prepared according to the Regulations Governing the Preparation of Financial Reports by Security Issuers.

(2)Basis of Preparation

This company prepared the individual financial report according to the Regulations Governing the Preparation of Financial Reports by Security Issuers. According to Article 21 of the Regulations Governing the Preparation of Financial Reports by Security Issuers, the

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current gains or losses and other combined gains or losses in the individual financial report and the consolidated financial report is equal to the apportionment of the parent company. Furthermore, the owner equity in the individual financial report and that in the consolidated financial report is the same as the equity of the parent company. Thus, invested subsidiary companies shall be shown using equity investment in the individual financial report and necessary evaluation adjustments shall be made.

In addition to financial instruments measured at fair value, individual financial reports shall be prepared according to historic cost. Except where otherwise noted, individual financial reports shall use NTD 1,000 as a unit.

(3)Foreign Currency Transaction

This company’s individual financial report is expressed in NTD as the functional currency.

Foreign currency exchange record is based on the exchange rate conversion of the functional currency on the day of the transaction. On each closing day, foreign currency monetary items shall be converted based on that day’s closing exchange rate. Fair valuation of foreign currency non-monetary items shall be converted using the fair value of that day’s exchange rate. Foreign currency non-monetary items measured with historic cost shall be converted using the exchange rate of the original transaction date.

Except for the following, exchange difference that results from delivery or conversion of monetary items shall be recognized as current gains or losses:

(a) If the exchange difference from foreign currency borrowing required to conform to asset requirements causes changes to interest costs, the change is considered a part of the borrowing cost and shall be capitalized as the cost for that asset.
(b) Foreign currency items that conform to International Financial Reporting Standards number 39 “Financial instruments: Recognition and Measurement” shall be handled according to financial instrument accounting policies.
(c) Exchange differences produced by monetary items from net investment in foreign operating agencies shall be initially recognized as other consolidated gains or losses in the constituency report. When disposing the net investment, the net investment shall be re-categorized as gains or losses based on equity.

When gains or losses from non-monetary items are recognized as other consolidated gains or losses, any converted portion of the gains or losses shall be recognized as other consolidated gains or losses. When the gains or losses of non-monetary items are recognized as gains or

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

losses, any converted portions of the gains or losses are recognized as gains or losses.

(4) Conversion of the Foreign Currency Financial Report

Each foreign operating agencies of this company shall decide their own functional currency and use this functional currency to measure their financial report. When preparing individual financial reports, the assets and liabilities of foreign operating agencies shall be listed in the daily asset/liability table in converted NTD based on that day’s closing exchange rate. Revenue and expenses shall be converted based on current average exchange rate. Exchange difference caused by conversion is recognized as other consolidated gains or losses. When recognizing and disposing of gains or losses from foreign operating agencies, change the individual accumulated exchange difference of accumulated equity previously recognized as other consolidated gains or losses from equity to gains or losses. When the company loses control, major influence, or jointly control of foreign operating agencies, but maintains partial equity, handle with disposal.

When the disposed controlled portion includes subsidiary companies of foreign operating agencies, recognize according to proportion in the accumulated exchange difference of other consolidated gains or losses and adjust using equity investment. Do not recognize as gains or losses. When retaining major influence or when jointly controlled, and when disposal includes affiliated companies of foreign operating agencies or jointly controlled individual, the accumulated exchange difference shall be categorized as gains or losses based on proportion.

Fair value adjustment as a result of the reputation and asset and liability carrying amount of acquired foreign operating agency shall be viewed as that foreign operating agency’s asset and liability, and be listed by its functional currency.

(5) Category Standards for Separating Current and Non-Current Assets and Liabilities

Items that conform to any one of the following conditions shall be categorized as current assets. Items not categorized as current assets shall be categorized as non-current assets:

(a) Asset expected to be realized, sold, or consumed during the normal operating cycle.

(b) Asset held primarily for transaction purposes.

(d) Cash or cash equivalents, except for assets that are to be exchanged or have their liabilities paid off within 12 months after the reporting period.

Items that conform to any one of the following conditions shall be categorized as current liability. Items not categorized as current liability shall be categorized as non-current liability:

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(a) Liability expected to be paid off during the normal operating cycle.
(b) Liability held primarily for transaction purposes.
(c) Liability expected to be paid off within 12 months after the reporting period.

(d) Liability with payoff period that cannot be deferred to within 12 months after the reporting period without conditions. Liability provisions with issued equity instrument chosen by the transaction party that causes the liability to be paid off shall not affect its categorization.

(6) Cash and Cash Equivalents

Cash and cash equivalents refers to cash on hand, deposits in bank accounts, and short-term and highly liquid investments with low risk of value change that can readily be converted to set cash amounts (including time deposits with remaining contractual period of less than three months).

(7) Financial Instruments

Financial assets and financial liabilities are recognized when the company becomes party to contractual provisions of a financial instrument.

When initially recognizing financial asset and financial liabilities that are in the application scope of International Financial Reporting Standards Number 39 “Financial instruments: Recognition and Measurement,” use fair value measurement to directly categorize the financial assets and financial liabilities (except for financial assets and liabilities categorized through gains or losses based on fair value measurement) to obtain or issue transaction costs, which should be added or deducted from the fair value of the financial assets or financial liabilities.

(a) Financial asset

All the company’s routinely transacted financial asset shall be recognized and derecognized based on settlement date accounting.

The company’s financial asset shall be categorized as financial asset, financial asset available-for-sale, and loans and receivables based on gains or losses or fair value. The category of financial assets shall be initially recognized based on its characteristic and objective.

Financial assets measured by fair value through gains or losses.

Financial assets measured by fair value through gains or losses include those held for trading, initially recognized, and designated to be measured with fair value through gains or losses.

Assets that conform to any one of the following conditions shall be categorized as held for trading:

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

A. Assets obtained with the objective of being sold within a short period;
B. During initial recognition the asset is categorized as part of financial instruments under merged management, and have basis for turning the combination into short-term gain; or
C. is a derivative (except for assets with a financial guarantee contract or has been designated and is an effective hedging tool derivative).

For contracts with one or more embedded derivative(s), financial assets that can be designated as overall mixed (combined) contract and measured by fair value through gains or losses; or, when conforming to one of the following conditions and can provide information regarding more at stake information, and has been designated for fair value measurement based on gains or losses during initial recognition:

A. Designated as can be eliminated, significantly reduce measure, or recognized as inconsistent; or
B. A set of financial asset, financial liabilities, or both. Performance managed and evaluated based on book risk management or investment strategy and fair value. Investment portfolio information provided by the company’s internal management shall be integrated as a basis for fair value.

This type of financial asset is measured at fair value. The gains or losses during measurement are recognized as gains or losses. Recognize gains or losses shall include all the dividend or interest obtained from the financial asset (including those received in the current year’s investment).

If no public reporting from active market is available, and fair value cannot be reliably measured for this type of financial asset, measure with the amount after impairment loss is deducted from the cost at the end of the reporting date. Use cost measured financial asset to list in the assets/liabilities table.

Financial Assets Available-for-Sale

Financial assets available-for-sale refers to non-derivative financial asset that has been designated as available-for-sale or financial assets, held-to-maturity investments, or loans and receivables that have not been categorized by fair value measurement though gains or losses.

The interest revenue and dividend revenue from available-for-sale equity investment resulting from changes in carrying amount of available-for-sale financial assets in monetary financial assets shall be calculated using the effective interest rate method and recognized as gains or losses. Other remaining changes in the carrying amount of available-for-sale financial assets shall be recognized under equity before derecognizing the investment. Prior

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

to derecognizing, categorize the accumulated amount from previously recognized equity items under gains or losses.

If no public reporting from active market is available, and fair value cannot be reliably measured for this type of equity instrument, measure with the amount after impairment loss is deducted from the cost at the end of the reporting date. Use cost measured financial asset to list in the assets/liabilities table.

Loans and Receivables

Loans and receivables refer to non-derivative financial assets with no market price from active markets and that can fixed or determine amount collected. These items must also conform to the following conditions: (1) not classified through gains or losses according to fair value measurement and not designated as available-for-sale; (2) factors other than credit deterioration that resulted in the holder unable to recover all initial investment.

These financial assets are independently shown in the assets/liabilities table as receivables and bond investments with no active market. After initial measurement, measure with impairment deducted amortized cost calculated with the effective interest rate method. Calculation of amortized cost considers the discount or premium at the time of purchase or the premium and transaction cost. Amortization with effective interest rate is recognized in gains or losses.

Financial Asset Impairment

Other than fair value financial assets measured through gains or losses, impairment for other financial assets shall be evaluated at the end of each reporting period. When objective proof shows that single or multiple losses occurred after the initial recognition of financial asset, which resulted in the loss of the financial asset’s estimated future cash flow, the financial asset is considered impaired. Except for receivables reduced through contra accounts, decreases in financial asset carrying amount shall be directly deducted from the carrying amount and the loss recognized in gains or losses.

When the fair value of available-for-sale equity investment is lower than the cost, and significant or permanent decreases occur, it is recognized as a loss.

Other financial asset losses may include:

(a) The issuer or the transaction party has major financial difficulty; or

(b) Violates the contract, such as delay or non-payment of interest or principle payment; or
(c) The debtor may face bankruptcy or other financial restructuring; or
(d) The active market of the financial asset disappears as a result of the issuer’s financial

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

difficulty.

The company shall measure held to maturity financial assets, loans, and receivables based on amortized cost. First, the company shall evaluate whether objective proof of impairment exists for individual major financial assets. Individual small financial assets shall be evaluated in groups. If evaluation shows that no objective proof of impairment exists for individual financial assets, financial assets with the same credit risk rating, regardless of importance, shall be combined into one group, and the impairment evaluation shall be conducted for the group as a whole. If objective proof of impairment loss exists, difference between the asset’s carrying amount and estimated present value of future cash flow shall be used to determine the loss. The present value of estimated future cash flow shall be discounted according to the asset’s original effective interest rate. Only loans with floating rate shall use current effective interest rate to measure the discount rate of the impairment loss. Interest revenue is based on the reduced asset carrying amount and continuously assessed and included into the account based on the cash flow discount rate used to calculate impairment loss.

When receivables are expected to become uncollectable in the future, the receivables and related allowance items should be written off. If events in the year after recognizing the impairment loss cause the estimated impairment loss amount to increase or decrease, then adjust the allowance to increase or decrease previously recognized impairment loss. If write off is recovered, then recognize the recovery in gains or losses.

Category is available-for-sale equity instrument. Recognized impairment amount is the accumulated loss measured from the difference between the cost of purchase and current fair value. Deduct the previously recognized impairment loss in the gains or losses and categorize gains or losses under equity. Impairment loss from equity investment is not reversed through gains or losses. The fair value increase after impairment is directly recognized in the equity.

For debt instrument categorized as available-for-sale, the recognized impairment amount is measured by the asset’s previously recognized impairment loss in gains or losses from the accumulated loss measured from the difference between amortized cost and current fair value. Future interest revenue is based on the reduced asset carrying amount. Measured impairment loss is used to calculate the effective interest rate of the discounted cash flow, and the interest revenue is recognized in the gains or losses. If the fair value of the debt instrument increases in the following year, and the increase is clearly related to events that occurred after recognizing the impairment loss, then the impairment loss should be reversed through gains or losses.

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Financial Asset Derecognition

Company held financial assets shall be derecognized when conforming to any of the following conditions derecognized:

a. Contractual rights from the financial asset cash flow became invalid.
b. Has been transferred to financial asset and the almost all the risk and the reward from the asset ownership have been transfer to others.
c. Have not been transferred and retain almost all the risk and reward of asset ownership, but have transferred the control of the asset.

When derecognizing a financial asset, its carrying amount has been collected or additional collectable consideration has been recognize in any amount difference of other accumulated total gains or losses in other consolidated gains or losses, and recognize in gains or losses.

(b)Financial liabilities and equity instrument

Categorization of Liabilities or Equity

Liabilities and equity instruments issued by this company are categorized as financial liabilities or equity according to the substance of the contract agreement and the definition of financial liabilities and equity instruments.

Equity Instrument

Equity instrument refers to any contract recognized in the company asset with remaining equity after all liabilities are deducted. Equity instruments issued by this company shall be recognized as the amount of the obtained price with the cost of issuance directly deducted.

Financial Liabilities

When initially recognizing financial liabilities that conform to the scope of International Financial Reporting Standards Number 39 “Financial Instruments: Recognition and Measurement,” financial liabilities are categorized as fair value (measured through gains or losses) or amortized cost (measured through amortized cost) financial liabilities.

Fair Value Measuring of Financial Liabilities Through Gains or losses

Financial liabilities measured with fair value through gains or losses, including held for trading financial liabilities and initially recognized financial liabilities designated for fair value measurement through gains or losses.

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Categorize as held for trading when conforming to any one of the following conditions:

A. The primary procurement objective is for sale in the short-term;
B. During initial recognition, as part of consolidated management’s recognizable financial instruments, and can be proved as being recently combined into short-term gain operation; or
C. A derivative (except for derivatives with a financial guarantee contract or has been designated and is an effective hedging tool).

For contracts with one or more embedded derivative(s), financial liabilities that can be designated as overall mixed (combined) contract and measured by fair value through gains or losses; or, when conforming to one of the following conditions and can provide information regarding more at stake information, and has been designated for fair value measurement based on gains or losses during initial recognition:

A. Designated as can be eliminated, significantly reduce measure, or recognized as inconsistent; or
B. A set of financial asset, financial liabilities, or both. Performance managed and evaluated based on book risk management or investment strategy and fair value. Investment portfolio information provided by the company’s internal management shall be integrated as a basis for fair value.

When measuring produced gains or losses and recognizing it as gains or losses for this type of financial liability, the recognized gains or losses should include all interests paid for this financial liability.

For this type of financial liability, if no market price is available from an active market and fair value cannot be reliably measured, measure with cost at the end of the reporting period and list the resulting financial liability in the assets/liabilities table.

Cost Measurement of Amortized Financial Liabilities

Financial liabilities measured with amortized cost shall include payables and loans. After initially recognition of the financial liability, measure liability with the effective interest rate method. When a financial liability is derecognized and has been amortized through the effective interest rate method, recognize related gains or losses and amortization in gains or losses.

Amortization cost calculation shall consider the discount, premium, and transaction cost at the time of procurement.

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Derecognition of Financial Liabilities

When obligation for a financial liability is lifted, canceled, or expires, derecognize that financial liability.

When this company conducts exchange of debt instrument with major provisional differences with a lender or make major changes to parts or all provisions of a current financial liability (regardless of financial difficulty), the original liability shall be derecognized and new liability recognized. When derecognizing a financial liability, recognize its carrying amount and the difference between all payments or payable to the total value (including transferred non-cash asset or assumed liabilities) in the gains or losses.

(c) Fair Value of Financial Instruments

The fair value of a financial instrument traded in an active market refers to the market price at the end of each reporting period that does not include transaction cost.

For financial instrument not traded in an active market, the fair value is determined by an appropriate evaluation method. This evaluation method include the use of recent fair market transaction, referencing the current fair value of other similar financial instruments, or discounted cash flow analysis or other evaluation models.

(8) Inventory

Itemized cost comparison and the net realizable value or lower of cost method is used to evaluate inventory.

Cost refers to costs incurred for inventory to be saleable or for providing production capability and location for production:

－ Raw material based on actual purchase cost and use weighted average method.

－ Finished and semi-finished products include raw material, labor, and apportioned normal production capability fixed manufacturing costs. Weighted average method is used for finished and semi-finished products.

Net realizable value refers to the estimated balance after deducting costs required for completion and sales costs from the sales price under normal conditions.

(9) Use Equity Method Investment

This company shows the investments of subsidiary companies using equity investment method and makes necessary evaluation adjustments according to Article 21 of the Regulations

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Governing the Preparation of Financial Reports by Security Issuers. The current gains or losses in the individual financial reports, and other consolidated gains or losses in the current gains or losses in the consolidated financial report and other consolidated gains or losses is attributed to the apportionment of the parent company owner. The individual financial report’s owner equity in the consolidated financial report is attributed the same equity as the parent company owner. Such adjustment process invested subsidiary company in the consolidated financial report according primarily based on the International Financial Reporting Standards Number 27 “Consolidated Financial Report” and differences in International Financial Reporting Standards appropriate for reporting different individual levels. Equity investment, subsidiary companies that use the equity method, affiliated companies and joint venture gains or losses shares, or subsidiary companies, affiliated companies, and joint venture and other consolidated gains or losses shares that use equity method shall be debited or credited.

Except for assets categorized as held for sale, investments of affiliated companies are processed through the equity method. Affiliated companies refer to companies that have significant influence on this company.

Under the equity method, listing of invested affiliated companies in the assets/liabilities table is based on the recognized amount of this company’s share of the invested affiliated company proportional to its net asset obtained through cost additions. The equity method is used on the carrying amount and other related long-term equity of affiliated company investments to reduce the amount to zero, after which, the amount of legal obligation, constructive obligation, or amount paid on the behalf of the affiliated company shall be recognized as additional losses and liabilities. Unrealized gains or losses as a result of transactions between this company and affiliated companies shall be written off based the amount’s ratio in the affiliated company’s equity.

When changes in the equity of affiliated companies is not attributed to gains or losses and other consolidated gains or losses items, and does not affect the proportion of shares held by this company in the affiliated company, this company shall recognize related ownership equity changes according to the proportion of shares held. When disposing affiliated companies, the resulting recognized capital reserve shall be converted to gains or losses according to disposal ratio.

When affiliated companies issue new shares investment ratio changes because this company did not purchase according to proportion of shares held, and this company’s net asset proportion invested in the affiliated company changes, capital reserve and equity investment shall be used to make adjustments. When investment ratio decreases, items previously recognized in other consolidated gains or losses shall be re-categorized as gains or losses or other appropriate categories based on the proportion of decrease. When disposing of affiliated companies, previously described recognized capital reserve shall be listed as gains or losses

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

based on disposal proportion.

Financial reports of affiliated companies are prepared in during the same reporting period as this company and adjusted to make the accounting policy of affiliated companies consistent with this company’s.

At the end of each reporting period this company uses International Financial Reporting Standards Number 39 “Financial Instruments: Recognition and Measurement” regulations to confirm whether objective proof exists that show impairment has occurred in the investment of affiliated companies. If objective proof of impairment exists, then this company shall use International Financial Reporting Standards Number 36 “Asset Impairment” regulations to calculate the impairment amount using the difference between the affiliated company’s recoverable amount and carrying amount. This amount is recognized in the affiliated company’s gains or losses. If the value in use of the investment is used for the aforementioned recoverable amount, this company shall estimate and determine related value in use based on the following:

(a) The share of affiliated company’s estimated present value of future cash flow enjoyed by this company, including the cash flow amount from the operation of the affiliated company and the final amount generated by the disposal of the investment; or
(b) The expected dividend that should be obtained from this company’s investments and estimated present value of future cash flow generated by the disposal of the investment.

Business reputation items constituted from investments in affiliated company’s carrying amount is not individually recognize; thus, business reputation impairment test stipulated in International Financial Reporting Standards Number 36 “asset impairment” is not required.

When major influence on an affiliate company is lost, this company shall use fair value measurement and recognize retained investments. When major influence is lost, the difference between the carrying forward amount of the invested affiliated company and the fair value added disposed income amount of the retained investment is recognized as gains or losses.

In addition to categorizing jointly controlled individual investment as held for sale assets, previously mentioned equity method the processing of the investment. Jointly controlled individual refers to companies, partnerships, or other individual bodies that this company is involved in setting up.

(10) Real estate, Factory Buildings, and Equipment

Cost is obtained as the basis for recognizing real estate, factory buildings, and equipment,

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

which are listed and shown after deducting accumulated depreciation and accumulated impairment. The aforementioned cost includes the dismantling and removal of factory buildings and equipment and restoration of the real estate location, and interest incurred from the incompletion of the construction. If the composition of the real estate, factory buildings, and equipment is considered major, then depreciation is listed individually. When major composition of the real estate, factory buildings, and equipment must be periodically reset, this company shall view the item as individual asset and recognize them with designated service life and depreciation method. The carrying amount of the parts to be reset shall be derecognized according to derecognition stipulations in the International Financial Reporting Standards Number 16 “Real Estate, Factory Buildings, and Equipment.” If major overhaul costs conform to recognition conditions, they are viewed as replacement cost and recognized as part of factory buildings and equipment carrying amount. Other maintenance and repair expenditure is recognized in gains or losses.

Depreciation for the following assets is accrued based on their estimated service life using the straight-line method:

～ Houses and buildings: 10 25 years ～ Machine equipment: 5 6 years Transportation equipment: 5 years ～ Office equipment: 3 5 years ～ Other equipment: 3 25 years

If disposal of real estate, factory buildings, and equipment or any major component do not result in economic benefit, or economic benefit is not expected from the future use or disposal after initial recognition, then they should be derecognized and gains or losses recognized.

The residual value of real estate, factory buildings, and equipment, their service life, and depreciation method are evaluated at the end of each fiscal year. If the expected value is different than previous estimated value, the change is viewed as accounting estimation change.

(11) Intangible Assets

Individually obtained intangible asset is cost measured during initial recognition. After intangible assets are initially recognized, their cost with accumulated amortization and accumulated impairment loss deducted is used as the carrying amount. Internally incurred intangible assets that do not conform to recognition conditions are not capitalized, and are recognized in gains or losses at the time of occurrence.

The service life of intangible assets can be divided into limited or not determined service life.

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Intangible asset in limited service life is amortized within its service life and impairment test shall be conducted when impairment is suspected. The amortization of intangible asset in limited service life and the amortization period shall be reviewed at least once at the end of each fiscal year. If the estimated service life of the asset is different than previous estimation, or the expected pattern of future economic benefit consumption has changed, then the amortization method or amortization period shall be adjusted and viewed as accounting estimation change.

Intangible asset in undetermined service life is not amortized, but shall still be tested for impairment each fiscal year according to individual asset or the level of the cash generating unit. Intangible asset in undetermined service life shall be evaluated each period to estimate whether the events and situation allows asset’s service life to remain undetermined. If service life changed from undetermined to limited service life, then deferment is applicable.

Gains or losses from derecognition of an intangible asset is recognized in gains or losses.

Summary of this company’s intangible asset accounting policy is as follows:

Computer software cost Service life 1 year Amortization of use Straight-line amortization during the effective contract period Obtained internally or Obtained externally externally

(12) Impairment of Non-Financial Assets

At the end of each reporting period this company shall estimate whether impairment exist in assets that are within the scope of International Financial Reporting Standards Number 36 “Asset Impairment.” If impairment exists, or impairment test needs to be conducted annually for a specific asset, this company shall test individual asset of the cash producing unit of the asset. If impairment test results show that the carrying amount of the asset or cash producing unit of the asset is larger than their recoverable amount, then recognize impairment loss. Recoverable amount is the net fair value or the value in use, whichever is higher.

Other than business reputation asset, at the end of each reporting period this company shall evaluate whether previously recognized impairment may no longer exist or have decreased. If such evidence exists, this company shall evaluate the recoverable amount of the asset or its cash producing unit. If the recoverable amount increased because of changes in the asset’s estimated service potential, then reverse the impairment. However, if the carrying amount

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

after reversal does not exceed the asset when impairment loss is unrecognized, the decrease should list the carrying amount of the depreciation or amortization.

The impairment loss and reversal number of continuously operated units are recognized in gains or losses.

(13) Revenue Recognition

Recognize revenue when economic benefits to the company are very possible and that the amount can be reliably measured. Fair value of revenue shall be obtained from its received or receivable value. Conditions and listing method for various revenue recognitions are shown below:

Product Sales

Recognize revenue from product sales when all the following conditions are met: (1) major risks and rewards of product ownership have been transferred to the buyer; (2) do no participate in the management of sold products nor retaining effective control; (3) revenue amount can be reliably measured; (4) the company can benefit economically from the transaction; and (5) cost related to the transaction can be reliably measured.

Interest Revenue

Interest revenue of financial assets measured with amortized cost (including loans, receivables, and held to maturity financial assets) and financial assets available-for-sale is evaluated and listed using the effective interest rate method, and recognized in gains or losses.

Dividend Revenue

When this company has the right to receive dividend, related dividend revenue shall be recognized.

(14) Borrowing Cost

Asset borrowing cost that can be directly attributed to purchase, construction, or production shall be capitalized as part of asset costs. All other borrowing costs shall be recognized as fees incurred during the production period. Borrowing cost includes interest and other costs related to borrowing.

(15) Benefit Plan after Retirement

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

This company’s employee retirement method is appropriate for all formally appointed employees. Employees’ pension funds are wholly saved in the designated pension account and managed by the Labor Pension Reserve Oversight Committee. The aforementioned pensions are saved under the name of the Labor Pension Reserve Oversight Committee, which is completely separated from the company. Thus, it is not listed in the individual financial report.

For the post-retirement benefit plan under the defined contribution plan the company’s portion of the monthly employee pension contribute rate cannot be lower than 6% of the employee’s monthly salary. All contributed amount are recognized as current costs.

The post-retirement benefit plan under the defined contribution plan is listed in the actuarial report based on the projected unit credit method at the end of the annual reporting period. When actuarial gains or losses occurs, list it under other consolidated gains or losses and immediately recognize it in the retained earnings.

(16) Income Tax

Income tax cost (gain) refers to the current income tax and deferred income tax related aggregate that is included this period’s gains or losses.

Current Income Tax

This period’s and previous period’s current income tax liabilities (asset) is measured with legislative or substantive legislation tax rate and tax method at the end of the reporting period. Current income tax and other items recognized in other consolidated gains or losses or directly recognized in equity are separately recognize in other consolidated gains or losses or equity, and not in gains or losses.

The 10% profit-seeking enterprise income tax on undistributed earnings shall be listed as income tax fees on the day shareholders’ meeting resolve to distribute earnings.

Deferred Income Tax

Deferred income tax is calculated based on the temporary difference incurred between the taxable base of assets and liabilities and the carrying amount in the assets/liabilities table at the end of the reporting period.

Except for the two of the following, all taxable temporary differences are recognized at deferred income tax liabilities:

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(a) Initially recognized business reputation; or, initially recognized asset or liability that is produced outside of company consolidated transactions, and that does not affect accounting gain or taxable gain (loss) at the time of the transaction;
(b) Taxable temporary difference produced by investments in subsidiary company, affiliated company, and joint venture equity, and which the reversal point can be controlled and will not likely be reversed in the foreseeable future.

Except for the two items listed below, deferred income tax asset produced by deductible temporary difference, unused taxable loss, and unused income tax credit shall be recognized as within the scope of very possible future taxable gain:

(a) Related to assets outside of corporate consolidated transaction that does not affect accounting gain or taxable gain (loss) at the time of the transaction or deductible temporary difference produced by initial recognition of liabilities;
(b) Related to deductible temporary difference produced by investment in subsidiary company, affiliated company, and joint venture equity. Recognize only when reversal is very likely in the foreseeable future and sufficient taxable gain can be used for the temporary difference during reversal.

Deferred income tax assets and liabilities are measured with the current tax rate of expected asset realization or liabilities pay off. The tax rate is based on legislated or substantive legislated tax rate and tax law at the end of the reporting period. Measuring of deferred income tax assets and liabilities should reflect expected asset recovery or the land tax produced by the pay-off of the liability carrying amount at the end of the reporting period. Deferred income tax that is related to items not listed in gains or losses shall not be recognized in gains or losses, but its related transaction is recognized in other consolidated gains or losses or directly recognized in equity. Deferred income tax asset shall be reviewed and recognized at the end of each reporting period.

Deferred income tax assets and liabilities only have statutory enforcement power in current income tax asset and liability offset. Deferred income tax belongs to the same taxable entity and can be offset when related to income tax levied by the same tax authority.

Source of Uncertainty for Major Accounting Determinations, Estimations, and Assumptions

When this company is preparing the individual financial report, the management must judge, estimate, and assume the reporting amount that affects revenue, costs, assets and liabilities or liability disclosure at the end of the reporting period. However, the uncertainty of these major assumptions and estimates can cause the carrying amount of assets or liabilities to undergo

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

major adjustments in the future.

Estimates and Assumptions

The following are descriptions of primary information sources of estimation and assumption uncertainty at the end of the reporting period that can cause the carrying amount of assets and liabilities to undergo major adjustment in the following fiscal year:

(1) Benefit plan after retirement

Pension cost and current value of defined benefit obligation in the post-retirement benefit plan is determined by actuarial valuation. Actuarial valuation involves different assumptions, including discount rate determination, future salary increase, mortality rate, and future increase in pension payment. For details on assumptions in the measure of pension costs and defined benefit obligations, see Remark 6.

(2) Income tax

The uncertainty of income tax is the result of complex tax regulation interpretations, produced future taxable gains, and time point. Extensive international commercial relationships and the complexity and length of contracts can cause differences between assumptions and actual results. Changes in future assumptions can force future adjustments in recorded income tax gains and costs. This company makes reasonable estimates in income tax listing based on possible audit results of tax authorities in countries where this company operates in. The amount listed is based on different factors. For example, past tax audit experience and different tax law interpretation by the taxable body and the tax authorities the body belongs to. This difference in interpretation can cause issues because of the location of the company’s individual entities.

Unused taxable loss and income tax credit carried forward can reduce temporary difference. If within the scope of possible future taxable gain or taxable temporary difference, recognize as deferred income tax asset. To determine the amount of recognizable deferred income tax asset, use the possible occurrence time and level of future taxable gain and taxable temporary difference combined with future tax strategy as a reference. For description of this company’s unrecognized deferred income tax asset as of December 31, 2014, see Remark 6.

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

6. Statements of major accounting subjects

a. Cash and cash equivalents

Cash and petty cash Checking and saving Time deposits Total	December 31, 2014 $200 2,066,693 8,015,411 $10,082,304	December 31,2013
		$200 1,512,224 6,585,411
		$8,097,835

b. Financial assets at fair value through profit or loss

Held for trading purpose: Money funds Financial assets held for trading purpose-valuation adjustment Total	December 31, 2014 $4,980,352 101,226 $5,081,578	December 31,2013
		$4,980,352 73,439
		$5,053,791

The Corporation does not provide any collateral for financial assets at fair value through profit or loss.

c. Available-for-sale financial assets

Shares Financial assets held available-for-sale-valuation adjustment Total	December 31, 2014 $15,675 24,694 $40,369	December 31,2013
		$42,604 15,111
		$57,715

The Corporation does not provide any collateral for financial assets held available-for-sale.

d. Investments in Debt Securities with No Active Market

Time deposits Current	December 31, 2014 $420,000 $420,000	December 31,2013
		$420,000
		$420,000

The Corporation does not provide any collateral for investments in debt securities with no

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

active market.

e. Notes receivable

Notes receivable
Notes receivable－From operation Less: Allowance for doubtful accounts Total	December 31, 2014 $4,358 - $4,358	December 31,2013
		$69,383 -
		$69,383

The Corporation does not provide any collateral for notes receivable.

f. Net accounts receivable and Net accounts receivable – related parties
(a) Details of net accounts receivable are as follows:

Total accounts receivable Less: Allowance for doubtful accounts Subtotal Total accounts receivable from related parties Less: Allowance for doubtful accounts Subtotal Total	December 31, 2014 $2,468,239 (64,570) 2,403,669 1,008 - 1,008 $2,404,677	December 31,2013
		$2,506,455 (59,152)
		2,447,303
		29,377 -
		29,377
		$2,476,680

(b) The Corporation entered into the contract relating to acquisition of accounts receivable with the bank and transferred accounts receivable from specific clients to the bank without the right of recourse. As of December 31, 2014 and 2013, the agreed credits of transfer and accounts receivable transferred to the bank were as follows:

December 31, 2014 December 31, 2013	Object for sale	Derecognized accounts receivable	Advance	Collateral	Credit
	Mega International Commercial Bank－ Lanya Branch Mega International Commercial Bank－ Lanya Branch	$ 509,292 375,933	$153,968 300	None None	Note Note

Note: The credit limits are US$ 30,000 thousand as of both December 31, 2014 and 2013.

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(c) The term of accounts receivables are generally on 60 to 120 day after monthly closing. The movements in the provision for impairment of accounts receivables and accounts receivable - related parties, and the ageing analysis are as follows (please refer to Note 12 for credit risk disclosure):

January 1, 2014 Current (reversed) impairments Effect of exchange rate changes December 31, 2014 January 1, 2013 Current (reversed) impairments Effect of exchange rate changes December 31, 2013	Impairments and loss of individual assessment $- - - $- $- - - $-	Impairments and loss of group assessment $59,152 5,418 - $64,570 $72,805 (13,653) - $59,152	Total
			$59,152 5,418 -
			$64,570
			$72,805 (13,653) -
			$59,152

Aging analysis of accounts receivable and net accounts receivable – related parties is as follows:

December 31, 2014 December 31, 2013	Not yet overdue or impaired	Accounts	receivable overdue but notyet impaired	receivable overdue but notyet impaired	receivable overdue but notyet impaired	Total
		1-60 days	61-90 days	91-120 days	More than 121 days
	$2,337,761 2,421,879	$66,916 54,801	$- -	$- -	$- -	$2,404,677 2,476,680

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

g. Inventories

(a) Inventories, net:

Raw materials Materials Work in process Finished goods Products Total Less: Allowance for inventory falling price Net	December 31, 2014	December 31,2013
	$396,384 36,841 521,032 706,718 27,730	$335,320 33,262 499,393 477,912 6,764
	1,688,705 (366,881)	1,352,651 (172,766)
	$1,321,824	$1,179,885

(b) The costs of inventories recognized as expenses in 2014 and 2013 were NT$13,017,150 thousand and NT$11,988,400 thousand respectively. The following captions were also included in cost:

Item Loss from (Gains on recovery of) inventory valuation Loss (gain) on physical Unallocated fixed manufacturing overhead Total	Year 2014 $194,115 34,935 45,640 $274,690	Year 2013
		$(1,966) (4,682) 73,579
		$66,931

Given that the partial inventories recognized in allowances for inventory falling price loss and obsolescence loss have been disposed in 2013, gains from price recovery of inventory were recognized accordingly.

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

h. Investments accounted for using equity method

	December 31,2014	December 31,2014	December 31,2013	December 31,2013
Name of investees		Share-hold		Share-hold
	Amount	ing (%)	Amount	ing (%)
Investing subsidiaries:
KINSUS CORP. (USA)	$29,528	100.00%	$25,138	100.00%
KINSUS HOLDING (SAMOA) LIMITED	3,458,036	100.00%	3,616,524	100.00%
Pegavision	521,940	100.00%	416,958	100.00%
Total	$4,009,504		$4,058,620

(a) Investing subsidiaries

The investment in subsidiaries was presented as “Investments accounted for using equity method” in the parent company only financial statement along with necessary valuation adjustment.

(b) No collateral was provided for the abovementioned investments accounted for using equity method.
i. Property, plant and equipment

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Land		Buildings	Machinery and Equipment	Office Equipment	Transportation Equipment	Transportation Equipment	OtherEquipment	Construction in progress and equipment awaiting inspection (including prepaid equipment)
$1,237,179 8,939 - - 120,308		$2,464,872 - (2,500) - 9,708	$8,284,351 55,093 (78,591) - 1,416,083	$8,630 6,196 - - 8,800	$1,525 830 - - 380		$2,098,092 44,526 (9,897) - 61,554	$1,243,287 3,135,070 - - (1,616,833)
$1,366,426		$2,472,080	$9,676,936	$23,626	$2,735		$2,194,275	$2,761,524
$552,539 - - - 684,640		$1,847,325 7,851 (5,424) - 615,120	$9,711,101 (1,811) (2,400,888) - 975,949	$7,282 5,357 (4,009) - -	$- 1,525 - - -		$2,238,307 13,036 (217,273) - 64,022	$654,238 2,928,780 - - (2,339,731)
$1,237,179		$2,464,872	$8,284,351	$8,630	$1,525		$2,098,092	$1,243,287
	$644,443 122,841 - (1,269) - -		$4,468,329 1,529,876 - (72,558) - -		$237 486 - - - -	$1,200,556 253,448 - (9,897) - -		$- - - - - -

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

$-	$766,015	$5,925,647	$7,992	$723	$-	$8,144,484
$- - - - - -	$541,252 108,491 - (5,300) - -	$5,359,043 1,508,057 - (2,398,771) - -	$4,105 2,722 - (3,827) - -	$- 237 - - - -	$- - - - - -	$7,073,760 1,867,088 - (2,624,283) - -
$-	$644,443	$4,468,329	$3,000	$237	$-	$6,316,565
$1,366,426	$1,706,065	$3,751,289	$15,634	$2,012	$2,761,524	$10,353,118 $9,021,371
$1,237,179	$1,820,429	$3,816,022	$5,630	$1,288	$1,243,287

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(a) The major components of buildings of the Corporation were main buildings and auxiliary equipment, and the depreciation with the service life of 20~25 years and 10~20 years was recognized respectively.
(b) Details of property, plant and equipment and prepayment for equipment are as follows:

Property, plant and equipment Prepayment for equipment Total	December 31, 2014 $8,914,836 1,438,282 $10,353,118	December 31, 2013
		$7,970,375 1,050,996
		$9,021,371

  - (c) Collaterals were provided for property, plant and equipment. Please refer to Note 8.

(d) The Company purchased 31 parcels of land with a total area of 28,019.24 square meters. Lands are located at following address: No. 965, 1113, 1114, 1438 to 1443 at ShiLeiZi Sub-section, ShiLeiZi Section; No. 1047 to 1049 at QingHua Section; and No. 0001, 697 to 700 and 712 to 726 at RongHua Section, XinFeng Village. Due to regulatory restrictions, land cannot be registered under the Company’s name. It is temporarily registered under the Chairman’s name. To secure the Company’s right to the land, mortgage registration is completed with the Company being the obligee.
j. Intangible assets

Cost: January 1, 2014 Addition－Acquired separately Derecognition upon maturity Effect of exchange rate changes December 31, 2014 January 1, 2013 Addition－Acquired separately Derecognition upon maturity Effect of exchange rate changes December 31, 2013 Amortization and impairments: January 1, 2014	Computer software cost
	$26,401 25,231 (28,552) -
	$23,080
	$21,566 17,923 (13,088) -
	$26,401
	$18,993

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Amortization Derecognition upon maturity Effect of exchange rate changes December 31, 2014 January 1, 2013 Amortization Derecognition upon maturity Effect of exchange rate changes December 31, 2013 Net book value: December 31, 2014 December 31, 2013	20,712 (28,552) -
	$11,153
	$19,268 12,813 (13,088) -
	$18,993
	$11,927
	$7,408

The recognized amortization of intangible assets was as follows:

Operating expenses Other non-current assets Refundable deposits	2014		2013
	$20,712		$12,813
	December 31, 2014
	$5,347

k. Other non-current assets
l. Short-term loans

Range of interest rate(%)	December 31,	December 31,
	2014	2013
Unsecured bank loans 0.88% ~0.89%
	$730,798	$866,133

As of December 31, 2014 and 2013, the unused credits of short-term loans were NT$2,687,402 thousand and NT$2,352,807 thousand respectively.

m. Other payables

Accrued expenses Payables on equipment	December 31, 2014	December 31,2013 $1,800,232 281,456
	$2,084,769 895,932

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Interest payable Total Other current liabilities Other current liabilities Advance sales receipts Long-term loans due within one year Total	December 31, 2014	December 31,2013
	819	542
	$ 2,981,520	$2,082,230
	December 31, 2014	December 31,2013
	$28,151 4,259 459,008	$80,392 8,897 293,325
	$491,418	$382,614

n. Other current liabilities
o. Long-term loans

As of December 31, 2014 and 2013, details of long-term loans were as follows:

Date of maturity	Amount	Method of repayment
	December 31, 2014
October 27, 2015- December 15, 2016 October 27, 2015- August 12, 2018 July 15, 2015 December 15, 2017	$141,159 279,575 30,859 474,750	Note 1 and Note 2 Note 1 and Note 3 Note 4 Note 5
	926,343 (459,008)
	$467,335

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Date of maturity	Amount	Method of repayment
	December 31, 2013
October 27, 2015- December 15, 2016 October 27, 2015- August 12, 2018 June 23, 2014- July 15, 2015	$221,750 359,647 137,196	Note 1 and Note 2 Note 1 and Note 3 Note 2 and Note 4
	718,593 (293,325)
	$425,268

Note 1: The term is three months, starting from the date of use; the grace period is two years (eight terms); the rest of loans are repaid evenly in twenty terms.

Note 2: The monthly interest is paid for the first twelve months, starting from the date of use; starting from the thirteenth month, the monthly interest is paid and the principals are repaid evenly in every three months.
Note 3: The term is three months, starting from the date of use; the grace period is one year (four terms); the rest of loans are repaid evenly in sixteen terms.
Note 4: The term is three months, starting from the date of use; the loans are repaid evenly in twenty terms.
Note 5: The first term is one year, starting from the date of use; later, the term is six months, and the principals are repaid evenly in five terms.
(1) The first priority of pledge for the secured loans of Mega International Commercial Bank and The Shanghai Commercial & Saving Bank, Ltd. is set up based on partial property, plant and equipment. Please refer to Note 8 for pledges.
(2) As of December 31, 2014 and 2013, the interest rate intervals for long-term loans were 0.72% ~1.597% and 0.74%~1.53%, respectively.

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

p. Other non-current liabilities

Accrued pension liabilities	December 31, 2014	December 31,2013
	$29,668	$49,351

q. Retirement benefit plans

Defined contribution plans

The regulation of employee retirement set up by the Corporation based on “Labor Pension Act” belongs to the defined contribution plans. According to the Act, the contribution rate of pension born by the Corporation should not be lower than 6% of employees’ monthly salaries. The Corporation has set up the regulation of employee retirement based on “Labor Pension Act” and contributes 6% of employees’ monthly salaries to the personal retirement account of Bureau of Labor Insurance.

The expenses of defined contribution plans recognized in 2014 and 2013 were NT$88,653 thousand and NT$77,999 thousand respectively.

Defined benefit plans

The regulation of employee pensions set up by the Corporation based on “Labor Standards Act” belongs to the defined benefit plans. The payment of employee pensions is calculated by the base units of years of service and approved average monthly salary upon retirement. Employees with years of service within 15 are provided with two base units, and those with years of service more than 15 are provided with one base unit each year. The maximum base units are limited to 45. According to Labor Standards Act, the Corporation contributes pension funds based on 2% of total monthly salary to the special bank account of Bank of Taiwan under the title of Supervisory Committee of Labor Retirement Reserve.

The costs of defined benefit plans recognized in profit or loss were summarized as follows:

Current service cost Interest cost Expected return on plan assets Past service cost Total	2014	2013
	$232 2,645 (1,658) -	$288 2,154 (1,342) -
	$1,219	$1,100

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The expenses of defined benefit plans recognized were as follows:

Operating cost Marketing General & administrative Research and development Total	2014	2013
	$968 45 114 92	$870 37 127 66
	$1,219	$1,100

The accumulated amount of actuarial gains and losses recognized in other comprehensive gain or loss is as follows:

Actuarial gains and losses, beginning of year Current actuarial gains and losses Actuarial gains and losses, end of year	2014	2013
	$23,952 (15,710)	$37,347 (13,395)
	$8,242	$23,952

The adjustments on present value of defined benefit obligation and faire value of plan assets were as follows:

Defined benefit obligation Fair value of plan assets Status of contribution Unrecognized pass service cost Accrued pension liabilities	December 31,2014	December 31,2013
	$116,697 (87,029)	$132,275 (82,924)
	29,668 -	49,351 -
	$29,668	$49,351

Changes in the present value of defined benefit obligations were as follows:

Defined benefit obligation, beginning of year Current service cost Interest cost Benefits paid Actuarial losses (profits) Effect of exchange rate changes Defined benefit obligation, end of year	2014	2013
	$132,275 232 2,645 (2,993) (15,462) -	$143,622 288 2,154 - (13,789) -
	$116,697	$132,275

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Changes in the present value of plan assets are as follows:

Fair value of plan assets, beginning of year Expected return on plan assets Contributions from employer Benefits paid Actuarial losses Effect of exchange rate changes Fair value of plan assets, end of year	2014	2013
	$82,924 1,658 5,192 (2,993) 248 -	$76,692 1,342 5,284 - (394) -
	$87,029	$82,924

The Company expects to contribute NT$ 5,192 thousand to its defined benefit plan in the following 12 months after December 31, 2014.

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

Cash	Pensionplan(%)	Pensionplan(%)
	December 31,2014	December 31,2013
	100.00%	100.00%

In 2014 and 2013, the actual returns of plan assets were NT$1,087 thousand and NT$948 thousand respectively.

All employee pension funds are contributed to Department of Trust, Bank of Taiwan. The rate of expected return on plan assets is estimated based on the historical remuneration and the market forecast made by analyst during the existence of defined benefit obligation. In addition, the use of labor pension funds by the Labor Pension Fund Supervisory Committee and the minimum income not lower than the two-year interest of time deposits set up by local banks are also taken into account.

The major assumptions used to determine on the defined benefit plans of the Corporation are as follows:

Discount rate Expected rate of return on plan assets Expected salary growth rate	December 31,2014	December 31,2013
	2.25% 2.25% 3.00%	2.00% 2.00% 3.00%

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The changes in Discount rate at 0.5% will lead to the following influences:

Influence of defined benefit obligation	2014	2014	2013	2013
	Discount rate Increase by0.5%	Discount rate Decrease by0.5%	Discount rate Increase by0.5%	Discount rate Decrease by0.5%
	$ (11,487)	$13,023	$(13,526)	$15,424

In 2014 and 2013, the items relating to defined benefit plans are as follows:

Present value of defined benefit obligation, beginning of year Fair value of plan assets, end of year Surplus or deficit Experience adjustments on plan liabilities Experience adjustments on plan assets	2014	2013
	$116,697 (87,029)	$132,275 (82,924)
	$29,668 (15,462) (248)	$49,351 (13,789) 394

r. Equity

(a) Common shares

As of December 31, 2014 and 2013, the Company’s authorized capital and paid-in capital were NT$ 5,500,000 thousand and NT$ 4,460,000 thousand, respectively, each at par value of NT$10, divided into 446,000 thousand shares. Each share represents a voting right and a right to receive dividends.

(b) Capital surplus

依法 A Additional paid-in capital Differences betweenequity purchase price and carrying amount arising from actual acquisition or disposal of subsidiaries All changes in interests in subsidiaries Total	December 31, 2014	December 31,2013
	$5,850,000 50,925 38,894	$5,850,000 13,612 -
	$5,939,819	$5,863,612

According to the Company Act, the capital surplus shall not be used except for making good the deficit of the company. When a company incurs no loss, it may distribute the

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

capital surplus related to the income derived from the issuance of new shares at a premium or income from endowments received by the company up to a certain percentage of paid-in capital. The said capital surplus could be distributed in cash to its shareholders in proportion to the number of shares being held by each of them. Capital surplus related to long-term equity investments cannot be used for any purpose.

A. Earnings distribution

The Company’s earnings in current year, if any, shall firstly be made to pay all taxes and dues and then to offset prior year’s operation losses. 10% of the remaining amount shall be set aside as legal reserve and special reserve shall be provided pursuant to Article 41 of the Securities and Exchange Act. Any remaining earnings after the said deductions shall be appropriated as follows:

1% as remuneration to directors
Bonues to employees cannot be less than 1% of the total bonus to employees and shareholders. Bonus to employees can be distributed in cash or stocks. The parties receiving the stock dividends shall include employees in affiliated companies who met certain conditions stipulated by the Board of Directors.
The Board of Directors would propose an earning distribution plan based on the remaining balance combined with the undistributed earnings accumulated during previous years to be resolved at the shareholders’ meeting.
B. Dividend policies

The Company is in an industry with versatile environment. For long-term finance planning requirements and to meet the shareholders’ demand for cash, dividend policy aims for a steady balance. Cash dividends distributed each year cannot be less than 10% of the total dividends paid.

C. Legal reserve

According to the Company Act, Legal reserve shall be set aside until such amount equal total authorized capital. Legal reserve can be used to offset deficits. If the company does not incur any loss, the portion of legal reserve exceeding 25% of the paid-in capital may be distributed to shareholders by issuing new shares or by cash in proportion to the number of shares held by each shareholder.

D. Special reserve

Pursuant to existing laws and regulations, the Company shall set aside a special reserve

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

equivalent to the net debit balance of the other components of shareholders’ equity when distributing earnings for 2013 and 2012. For any subsequent reversal of net deductions from the other components of shareholders’ equity, the amount reversed may be distributed as earnings.

Following the adoption of Taiwan IFRS, the Company complies with Order No. Jin-Guan-Zheng-Fa 1010012865 issued by FSC on April 6, 2012. On the Company’s first-time adoption of the Taiwan IFRS, for any unrealized revaluation gains and cumulative translation adjustments recorded under shareholders’ equity that the Company elects to transfer to retained earnings by application of the exemption under IFRS 1, an equal amount of special capital reserve shall be set aside. After the adoption of Taiwan IFRS for the preparation of financial statements, the Company shall set aside supplemental special reserve based on the difference between the amount already set aside according to the requirements in the preceding point and other net deductions from shareholders’ equity when appropriating distributable earnings. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reserved may be distributed as earnings.

The special reserve for the first-time adoption of Taiwan IFRS amounted to zero as of January 1, 2014 and 2013. The Company did not use, dispose or reclassify relevant assets which lead to reversal of special reserves for the years ended December 31, 2014 and 2013. The special reserve for the first-time adoption of Taiwan IFRS amounted to zero as of December 31, 2014 and 2013.

E. The Company estimated the amounts of the employee bonuses and remuneration to directors and supervisors to be NT$ 545,679 thousand and NT$ 32,099 thousand, respectively, for the years ended December 31, 2014; and the estimated amounts of the employee bonuses and remuneration to directors and supervisors to be NT$ 492,104 thousand and NT$ 28,947 thousand, respectively, for the years ended December 31, 2013. The amounts are estimated based on the net income for the period and the percentage stated in the Article of Incorporation, after taking into account factors such as legal reserves. The estimated employee bonuses and remuneration to directors and supervisors are recognized as operating costs or operating expense for the period. If the board modified the estimates significantly in the subsequent periods, the Company will recognize the change as an adjustment to current income. The difference between the estimates and the resolution of shareholders’ meeting will be recognized in profit or loss of the subsequent year. If the shareholders’ meeting resolves to pay the employee bonus in the form of stocks, the number of shares distributed is determined by dividing the amount of bonuses by the closing price (after considering the effect of dividends) of shares on the day preceding the shareholders’ meeting.
The appropriations of earnings for 2014 and 2013 were approved through the Board of Directors’ meeting and shareholders’ meeting held on February 9, 2015 and June 9,

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

2014, respectively. The details of the distributions are as follows:

Earnings appropriated and distributed	Earnings appropriated and distributed	Dividends per share (NT$)	Dividends per share (NT$)
2014 $361,733 1,784,000 32,556 545,679 $2,723,968	2013	2014	2013
	$322,409 1,561,000 29,761 492,104	4.00	3.50
	$2,405,274

The information about employees’ bonuses and remuneration to directors and supervisors which were resolved by the Board of Directors’ meeting and shareholders’ meeting is available at the Market Observation Post System website.

The actual payment of 2012 earning distribution comprised the employees’ bonuses of NT$428,551 thousand and the remuneration to directors and supervisors of NT$24,435 thousand. There was a difference of NT$ 3,687 thousand between the actual payment and the NT$428,551 thousand of employees’ bonuses and NT$28,122 thousand of remuneration to directors and supervisors in the financial statements for the year ended December 31, 2012. The difference was adjusted in the profit or loss for the year ended December 31, 2013.

The actual payment of 2013 earning distribution comprised the employees’ bonuses of NT$492,104 thousand and the remuneration to directors and supervisors of NT$29,761 thousand. There was a difference of NT$ 814 thousand between the actual payment and the NT$492,104 thousand of employees’ bonuses and NT$28,947 thousand of remuneration to directors and supervisors in the financial statements for the year ended December 31, 2013. The difference was adjusted in the profit or loss for the year ended December 31, 2014.

s. Operating income

Operating income
Sales revenue Less: Sales return and allowance Service revenue Other operating income	2014	2013
	$19,141,507 (318,035) 186,656 280,109	$17,827,159 (267,257) 165,081 302,016

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Total $19,290,237 $18,026,999

t. The functions of employee benefits, depreciation and amortization are summarized as follows:

Function Nature		2014	2014	2013	2013	2013
	Cost of goods sold	Operating expense	Total	Cost of goods sold	Operating expense	Total
Employee benefits
Salary	$1,846,109	$427,974	$2,274,083	$1,653,734	$428,066	$2,081,800
Labor and health insurance	156,840	40,937	197,777	127,156	35,925	163,081
Pension	70,324	19,548	89,872	62,051	17,048	79,099
Other employee benefits	89,993	16,548	106,541	90,720	17,008	107,728
Depreciation	1,804,313	107,330	1,911,643	1,769,782	97,306	1,867,088
Amortization	-	20,712	20,712	-	12,813	12,813

Note: As of 2014 and 2013, the number of employees in the Corporation was 3,661 and 3,473 respectively.
u. Non-operating income and expenses
(a) Other income

Interest income Dividend income Other income－Others Total	2014	2013
	$71,135 1,531 40,436	$59,530 2,226 33,304 $95,060
	$113,102

(b) Other gains and losses

2014 Gains (losses) on disposal of property, plant and equipment $(629) Net profits on currency exchange 23,921 Gains on evaluation of financial assets at fair value through profit or loss 27,787 Gains on disposal of investment 24,691	2014	2013
		$2,973 28,191 22,456 10,732

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Total (c) Finance costs Interest on bank loans	$75,770	$64,352
	2014	2013 $17,042
	$19,712

v. Other comprehensive income

Other comprehensive income in 2014 is as follows:

Current amount	Subtotal	After-tax amount
$194,267 34,474 15,710	$194,267 9,583 15,710	$161,241 9,583 15,710
$244,451	$219,560	$186,534
	Subtotal $203,043 (535)	After-tax amount $183,838 (535)

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Actuarial gain (loss) from defined benefit plans Other comprehensive income for the year	13,395	- $(5,054)	13,395	- $(19,205)	13,395
	$220,957		$215,903		$196,698

w. Income tax
(a) Major components of income tax expenses (benefits) are as follows:

Income tax recognized in profit or loss

Current income tax expenses (benefits): Current income tax payable Adjustments to prior years’ tax Deferred income tax expenses (benefits): Temporary difference Income tax expenses	2014	2013
	$537,789 - (5,412)	$551,791 (14,000) 7,177
	$532,377	$544,968

(b) Income tax recognized in other comprehensive profit or loss

Deferred income tax expenses (benefits): Exchange difference in conversion of financial statement of foreign institutions	2014	2013
	$33,026	$19,205

2014 Net income from continuous operating units $4,149,704 Tax calculated based on the applicable income tax rate $705,450 Additional income tax expense at 10% of unappropriate earnings 141,511 Effect of changes in income tax on tax-free earnings (330,477) Effect of changes in income tax on non-deductible expenses (564)	2014	2013
	$4,149,704	$3,769,061
		$640,740 117,993 (85,460) (27,033)

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Effect of changes in income tax on deferred income tax assets/liabilities 16,457 Total income tax expenses recognized in profit or loss $532,377	16,457	(101,272)
		$544,968

(d) Balance of deferred income tax assets (liabilities) relating to the following items:

2014

Balance, beginning of year	Recognized in profit or loss	Recognize d in other comprehe nsive profit or loss	Directly recognized in equity	Accrued upon consolidat ion	Difference in exchange	Balance, end ofyear
$(7,177) (19,205)	$5,412 -	$- (33,026)	$- -	$- -	$- -	$(1,765) (52,231)
$(26,382)	$5,412	$(33,026)	$-	$-	$-	$(53,996)

						$-
$(26,382)						$(53,996)

2013

Temporary difference Inventory falling price and obsolescence loss Foreign exchange (gain) loss Adjustment in accumulated	Balance, beginning of year	Recognized in profit or loss	Recognized in other comprehensi ve profit or loss	Directly recognized in equity	Accrued upon consolidati on	Difference in exchange	Balance, end ofyear
	$13,396 (13,396) -	$(13,396) 6,219 -	$- - (19,205)	$- - -	$- - -	$- - -	$- (7,177) (19,205)

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)


$-	$(7,177)	$(19,205)	$-	$-	$-	$(26,382)

						$-
$(13,396)						$(26,382)

(e) Unrecognized deferred income tax assets

As of December 31, 2014 and 2013, the total amounts of deferred income tax assets which were not recognized due to unlikely taxable income were NT$436,749 thousand and NT$420,292 thousand respectively.

(f) The investment and capital increase of the Corporation comply with the incentive regulation of manufacturing technical service industries in emerging important strategic industries and the incentive regulation of five-year exemption from business income tax for new investments of manufacturing and related technical service industries. Accordingly, the Corporation enjoys the 5-year exception from business income tax. The details are summarized as follows:

Item 1	Approval authority Industrial Development Bureau, Ministry of Economic Affairs	Document number approved Gong-Zhong-Zi-Di No.10005112010 on August 25, 2011	Exemption period
			January 1, 2013~December 31, 2017

(g) Information on unused income tax exemption (exemption from investment) is as follows:

Legal basis	Deductible item	Unused	Unused	Deductibl eyear 2014 2015
		December 31, 2014 $- -	December 31, 2013
Statute for Upgrading Industry Statute for Upgrading Industry	Exemption from investment in equipment Exemption from investment in equipment		$43,488 23,195

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

$- $66,683

(h) Integrated income tax

Imputation credit account	December 31,2014	December 31,2013
	$1,434,884	$940,384

The tax deduction ratio of actual earnings for distribution in 2013 and 2012 was 11.68% and 10.23% respectively.

The Corporation has no undistributed earnings before 1997 (inclusive).

(i) Income tax assessment

As of December 31, 2014, the income tax assessment of the Corporation is as follows:

The Corporation	Income tax assessment
	2011

x. Earnings per share

The calculation of basic earnings per share is based on the net income from shareholders of parent company’s common shares divided by current weighted average number of common shares outstanding.

The calculation of diluted earnings per share is based on the net income from shareholders of parent company’s common shares (after adjustments in interests on corporate bonds) divided by current weighted average number of common shares outstanding and added the weighted average number of common shares converted from potential common shares with dilution effect.

(a) Basic earnings per share

Net profit for the year (in thousands of NT$) Weighted average number of common shares in computation of basic earnings per share (in thousands of shares) Basic earnings per share (in NT$)	2014	2013
	$3,617,327	$3,224,093
	446,000	446,000
	$8.11	$7.23

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(b) Diluted earnings per share

Net profit for the year (in thousands of NT$) Net profit for the year (in thousands of NT$) after dilution effect Weighted average number of common shares in computation of basic earnings per share (in thousands of shares) Dilution effect: Employee bonus－Shares (in thousands of shares) Weighted average number of common shares after dilution effect (in thousands of shares) Diluted earnings per share (in NT$)	2014	2013
	$3,617,327	$3,224,093
	$3,617,327	$3,224,093
	446,000 7,305	446,000 6,775
	453,305	452,775
	$7.98	$7.12

(7) Transactions with related parties

a. Major transactions with related parties are as follows:

(a) Sales

Subsidiaries Other related parties Total	2014	2013
	$4,903 58,775	$2,156 127,676
	$63,678	$129,832

The selling price to related parties and regular clients in 2014 and 2013 was about the same. The collection term was both 30~60 days on a monthly basis through telegraphic transfer.

(b) Purchase

Subsidiaries	2014	2013
	$1,526,521	$948,296

The specifications of purchase from related parties were different to other suppliers in 2014 and 2013. Accordingly, the prices of transaction could not be compared. The payment term for the related parties was 60 days on a monthly basis, while that for regular suppliers was 30 days on a monthly basis through telegraphic transfer.

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Other related parties Less: Allowance for doubtful accounts Net	December 31, 2014	December 31,2013
	$1,008 -	$29,377 -
	$1,008	$29,377

(d) Accounts payable

Subsidiaries	December 31,2014 $247,315	December 31,2013
		$183,102

(e) The commission fees recognized and paid to subsidiaries for the business promotion service authorized by the Corporation in 2014 and 2013 were NT$36,895 thousand and NT$26,363 thousand respectively.
(f) The travel expenses recognized and paid to subsidiaries for the travel agents authorized by the Corporation in 2014 and 2013 were NT$47 thousand and NT$76 thousand respectively.

The travel expenses recognized and paid to other related parties for the travel agents authorized by the Corporation in 2014 and 2013 were NT$341 thousand and NT$955 thousand respectively.

(g) The processing expenses recognized and paid to subsidiaries for the processing authorized by the Corporation in 2014 and 2013 were NT$51,319 thousand and NT$48,431 thousand respectively.
(h) The testing expenses recognized and paid to subsidiaries for the research and development testing authorized by the Corporation in 2014 were NT$152 thousand.
(i) The general and administrative expenses collected from subsidiaries for the technical service provided by the Corporation in 2014 and 2013 were NT$3,845 thousand and NT$6,089 thousand respectively and were recognized as other income.
(j) The operating expenses recognized by the Corporation for the service provided by the other

164

KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

related parties in 2014 and 2013 were NT$693 thousand and NT$43 thousand respectively.

The operating expenses recognized by the Corporation for service provided by the parent company in 2013 were NT$27 thousand.

(k) The other income recognized by the Corporation for sales of fixture and spare parts to subsidiaries in 2014 and 2013 were NT$2,145 thousand and NT$8,678 thousand respectively.
(l) As of December 31, 2014, the amount of guarantee provided by the Corporation for loans of subsidiaries was NT$7,094,348 thousand. Due to its nature of contingent liability, it was not recognized in the financial statement.
(m) Compensation of key management personnel

Short-term employee benefits Post-employment benefits Total	2014	2013
	$82,908 838	$84,996 864
	$83,746	$85,860

(n) Other accounts receivable

Accrued expenses Subsidiaries Subsidiaries Other related parties Total	December 31,2014 $9,197 December 31,2014 $12,704 14 $12,718	December 31,2013
		$12,502
		December 31,2013 $12,279 108 $12,387

(o) Accrued expenses
(p) Details of transactions with related parties in 2013 and 2014 are as follows:

Type of assets 2014	Related parties	Book value	Selling price	Gains (losses) on disposal	Reference to price determination

165

KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Equipment Subsidiaries 2013 Equipment Subsidiaries	$6,032 $1,077	$6,511 $6,284	$479 Negotiated price $5,207 Negotiated price

(8) Assets pledged as collateral or for security

The Corporation uses the following assets as collaterals:

Item	Book value	Book value	Content of secured debts
	December 31,2014	December 31,2013
Property, plant and equipment－equipment (book value) Refundable deposits Total	$112,720 3,057	$157,460 3,057	Long-term secured loans Customs bonded factories
	$115,777	$160,517

(9) Significant contingent liabilities and unrecognized contractual commitments

a. As of December 31, 2014, the amount of unused letters of credit issued by the Corporation is as follows (in thousands of foreign currency):

Currency JPY USD EUR	Total amount of letter of credit JPY 2,465,614 thousand USD 4,140 thousand EUR 415 thousand	Securitydepositpaid
		$- - -

b. As of December 31, 2014, the details of contracts relating to unfinished projects and property, plant and equipment are as follows:

Nature of contract Equipment and projects	Amount of contract $3,094,144	Amount paid $1,467,074	Amount unpaid
			$1,627,070

c. As of December 31, 2014, the amount of guarantee provided by the Corporation for loans of subsidiaries was NT$7,094,348 thousand. Due to its nature of contingent liability, it was not recognized in the financial statement.

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(10). Major loss of disasters

None

(11). Major subsequent events

None

(12). Others

a. Categories of financial instruments

Financial assets

Financial assets at fair value through profit or loss: Held for trading Available-for-sale financial assets Loans and receivables: Cash and cash equivalents (excluding cash on hand) Investments in Debt Securities with No Active Market Notes receivable Accounts receivable Accounts receivable from related parties Other accounts receivable Other accounts receivable－related parties Total	December 31, 2014	December 31, 2013
	$5,081,578 40,369 10,082,104 420,000 4,358 2,403,669 1,008 392,702 9,197	$5,053,791 57,715 8,097,635 420,000 69,383 2,447,303 29,377 395,162 12,502
	$18,434,985	$16,582,868

Financial liabilities

Financial liabilities measured at amortized cost: Short-term loans	December 31, 2014	December 31, 2013
	$730,798	$866,133

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Accounts payable Long-term loans (including loans due within one year) Total	December 31, 2014	December 31, 2013
	4,195,768 926,343	3,075,720 718,593
	$5,852,909	$4,660,446

b. Financial risk management objectives and policies

The purpose of financial risk management is to manage market risks, credit risks and current risks relating to operating activities. The Corporate identifies, measures, and manages the abovementioned risks based on corporate policies and risk preferences. The Corporate has set up proper policies, procedures, and internal control for the abovementioned financial risks in accordance with related regulations. The important financial activities should be reviewed by board of directors and auditors in accordance with related regulations and internal control systems. During the implementation of financial management, the Corporate should follow related regulations of financial risk management.

c. Market risk

The market risks of the Corporation are risks of fluctuation of fair value or cash flow of financial instruments caused by changes in market price. The market risks include foreign currency risk, interest risk and other price risk (such as equity instruments).

In practice, changes in single variable of risk alone seldom happen. In addition, changes in various variables of risk generally connect with each other. However, the sensitivity analysis of the following risks did not take the interaction among related variables of risk into account.

Foreign currency risk

The foreign currency risks of the Corporate are mainly correlated with operating activities (when the currency of income or expenses used varies from the functional currency of the Corporation) and investment in foreign operating institutions.

Since the foreign currencies in accounts receivable were the partially same as those in accounts payable, the hedging effect occurs naturally. Accordingly, the Corporation did not adopt the hedge accounting.

The sensitivity analysis focused on the influence of appreciation/depreciation of foreign currencies relating to the main monetary items in foreign currencies on the profit or loss and

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

equity upon the end of financial statement. The foreign currency risk was mainly influenced by the fluctuation of USD. The information on sensitivity analysis is as follows:

When the NTD to USD appreciate/depreciate by 1%, the gains or losses of the Corporate in 2014 and 2013 increased/decreased NT$1,926 thousand and NT$587 thousand respectively.

Interest rate risk

The interest rate risks are risks of fluctuation of fair value or cash flow of financial instruments caused by changes in market price. The interest rate risks mainly include investments with the floating rate, loans with the fixed rate, and loans with the floating rate.

The sensitivity analysis of interest rate risk mainly focused on the items with interest rate exposed to risks, including investments with the floating rate and loans with the floating rate, upon the end of financial statement. Assume that the Corporation holds such item for one fiscal year. When the interest rate increases/decreases 0.1%, the gains or losses in 2014 and 2013 will decrease/increase NT$410 thousand and NT$73 thousand respectively.

Equity price risk

The Corporation holds the equity securities listed in Taiwan. The price of such equity securities will be influenced by uncertainty of future value of investment subjects. The listed equity securities held by the Corporation belong to the available-for-sale category. The Corporation sets up the quota for single and entire equity securities through diversified investments in order to manage risks of price of equity securities. The information on portfolio of equity securities should be provided for the executive management of the Corporation. The board of directors will review and approve the decision on investments in equity securities.

Regarding the listed equity securities held available for sale, when the price of such equity securities decreases 1%, it will influence the equity of the Corporation in 2014 and 2013 by NT$404 thousand and NT$577 thousand respectively; if the price of such equity securities increases 1%, only the equity will be influenced.

d. Credit risk management

The credit risks are risks of financial losses due to counterparties’ failure in performance of contracts. The credit risks of the Corporation are mainly due to operating activities (mainly Accounts receivable and notes receivable) and financial activities (mainly bank deposits and various financial instruments).

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Every business unit should follow the corporate policy, procedure, and control in order to manage customer credit risks. The assessment of customer credit risk considers the financial status of customers, rating of credit rating agencies, past transactions, current economic climate, and the internal rating standard of the Corporation. In addition, the Corporation also uses certain credit enhancing instruments (such as advance sales receipts and insurance) at appropriate timing in order to reduce credit risks of specific customers.

As of December 31, 2014 and 2013, the percentage of accounts receivable from top 10 clients of the Corporation to the total accounts receivable was 47.90% and 63.42% respectively. The aggregate risk of other accounts receivable was relatively low.

The financial department of the Corporation manages the credit risks of bank deposits, fixed income from securities, and other financial instruments in accordance with corporate policies. Since the trading partners of the Corporation are decided through the internal control procedure and belong to financial institutions, corporations and governmental agencies with good credits and investment grades, no major credit risks exist.

e. Liquidity risk management

The Corporation maintains the financial elasticity through contracts relating to cash and cash equivalents, negotiable securities with high liquidity, and loans from banks. The expiration of payment specified in contracts relating to financial liabilities of the Corporation is summarized as follows. The table was compiled based on the earliest date of repayment required and the undiscounted cash flow. The listed amount also included agreed interests. The amount of undiscounted interest paid with a floating interest rate was derived from the yield curve upon the end of financial statement.

Non-derivative financial instruments

December 31, 2014 Loans Accounts payable December 31, 2013 Loans Accounts payable	Less than 1 year	2 to 3years	3 to 4years	4 to 5years	Total
	$1,203,240 4,195,768 1,180,072 3,075,720	$303,647 - 352,844 -	$151,499 - 50,511 -	$30,471 - 38,589 -	$1,688,857 4,195,768 1,622,016 3,075,720

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

f. Fair value of financial instruments
(a) Evaluation technology and assumption used for measurement of fair value

The fair value of financial assets and financial liabilities is the amount of purchase under current transaction with buyers willing to make deals (without enforcement or liquidation). The methods and assumptions of estimation of fair value of financial assets and financial liabilities are as follows:

A.The fair values of cash and cash equivalents, accounts receivables, accounts payable, and other current liabilities almost equal the book values due to short period of maturity.
B. Regarding the financial assets and financial liabilities with standard terms and conditions and traded in the active market, the fair values are determined based on the market price (including listed shares and bonds).
C. Regarding equity instruments traded in the non-active market (including corporate shares of public offering and non-public offering traded in the non-active market), the fair values are estimated at the market method, where the latest fundraising activities, corporate valuation of the same type and scale, technical development of the corporations, market status, and other economic indicators are referred to.
D. The fair values of other financial assets and financial liabilities are determined based on the analysis of discounted cash flow. Regarding the assumptions of interest rate and discount rate, the information on similar instruments and applicable yield curve during the existence are referred to.
(b) Fair value of financial instruments measured at amortized cost

The book value of financial assets and financial liabilities measured at amortized cost almost equals the fair value.

The information on the analysis of financial instruments measured at fair value after original recognition is provided in the following table. The fair value is divided into three levels for disclosure of analysis:

First level: the public offer of the same assets or liabilities in the active market

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(unadjusted).

Second level: the fair value is derived from the input value of assets or liabilities which can be observed directly (based on prices) or indirectly (derived from prices), except for the public offer included in the first level.

Third level: the fair value is not derived from the input value of assets or liabilities based on the information on the observable market (non-observable input value) through evaluation technique.

December 31, 2014

Financial assets: Financial assets at fair value through profit or loss Funds Available-for-sale financial assets Shares Financial liabilities: None December 31, 2013 Financial assets: Financial assets at fair value through profit or loss Funds Available-for-sale financial assets Shares Financial liabilities: None	First level	Second level	Third level	Total
	$5,081,578 40,369 First level	$- - Second level	$- - Third level	$5,081,578 40,369 Total
	$5,053,791 57,715	$- -	$- -	$5,053,791 57,715

In 2014 and 2013, no transfer between the first level and the second level of measurement of fair value existed.

g. Information on financial assets and liabilities in foreign currency with significant influence

The information on financial assets and liabilities in foreign currency with significant

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

influence is as follows:

Financial assets Monetary item: USD Non-monetary item: USD Financial liabilities Monetary item: USD	December 31,2014 Foreign currency Exchange rate New Taiwan Dollar $74,866 31.65 $2,369,519 $110,192 31.65 $3,487,564 $81,011 31.65 $2,564,008	December 31,2014 Foreign currency Exchange rate New Taiwan Dollar $74,866 31.65 $2,369,519 $110,192 31.65 $3,487,564 $81,011 31.65 $2,564,008	In thousands of New Taiwan Dollars December 31,2013 Foreign currency Exchange rate New Taiwan Dollar $76,690 29.81 $2,285,640 $122,183 29.81 $3,641,662 $74,718 29.81 $2,226,955	In thousands of New Taiwan Dollars December 31,2013 Foreign currency Exchange rate New Taiwan Dollar $76,690 29.81 $2,285,640 $122,183 29.81 $3,641,662 $74,718 29.81 $2,226,955
	Foreign currency $74,866 $110,192 $81,011	Exchange rate 31.65 31.65 31.65	Foreign currency $76,690 $122,183 $74,718	Exchange rate
				29.81 29.81 29.81

h. Capital management

The main purpose of capital management is to ensure that the Corporation maintains the sound credit rating and good capital ratio in order to support the corporate operation and maximize the shareholders’ equity. Based on the economic status, the Corporation manages and adjusts capital structures through adjustments in payment of dividends, return of capital, or issuance of new shares.

(13) Additional note disclosures

(A) Significant transactions

a. Loans to others: None
b. Endorsement and guarantees: Appendix 1
c. Marketable securities held at end of period (excluding investments in subsidiaries, associates and joint ventures): Appendix 2
d. Buying or selling the same marketable securities cumulatively amounting to at least NT$ 300 million or exceeding 20% of paid-in capital: None
e. Acquisition of real estate amounting to at least NT$ 300 million or exceeding 20% of

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

paid-in capital: Appendix 3

f. Disposal of real estate amounting to at least NT$ 300 million or exceeding 20% of paid-in capital: None
g. Purchases from and sales to related parties amounting to at least NT$ 100 million or exceeding 20% of paid-in capital: Appendix 4
h. Accounts receivable from related parties amounting to least NT$ 100 million or exceeding 20% of paid-in capital: None
i. Trading activities in financial derivatives: None
(B) Reinvestment information
a. When having great influence or being able to control the investee companies, the Corporation should disclose the related information on investee companies (excluding those in Mainland China) specified in Appendix 5.
b. When being able to control the investee companies, the Corporation should disclose the related information on investee companies specified in Note 13 (1):
(a) Loans to others: None
(b) Endorsement and guarantees: None
(c) Marketable securities held at end of period (excluding investments in subsidiaries, associates and joint ventures): Appendix 6
(d) Buying or selling the same marketable securities cumulatively amounting to at least NT$ 300 million or exceeding 20% of paid-in capital: None
(e) Acquisition of real estate amounting to at least NT$ 300 million or exceeding 20% of paid-in capital: None
(f) Disposal of real estate amounting to at least NT$ 300 million or exceeding 20% of paid-in capital: None
(g) Purchases from and sales to related parties amounting to at least NT$ 100 million or exceeding 20% of paid-in capital: Appendix 7

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS (Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(h) Accounts receivable from related parties amounting to least NT$ 100 million or exceeding 20% of paid-in capital: Appendix 8
(i) Trading activities in financial derivatives: None

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(C) Investments in Mainland China:

a. Name of investee companies in Mainland China, scope of business, paid-up capital, method of investment, capital export and import, shareholding percentage, gains or losses on investment, book value of investment at end of year, recovered gains or losses on investment, and the quota for investment in Mainland China:

In Thousands of New Taiwan Dollars

Name of investee compani es in Mainlan d China	Scope of business	Paid-up capital	Met hod of inve stme nt	Accumulate d investment exported from Taiwan, beginning of year	Investment exported or recovered	Investment exported or recovered	Accumulated investment exported from Taiwan, end of year	Gains or losses of investee company	Shareholdi ng percentage of investment directly and indirectly	Gains or losses on investment recognized for the year	Book value of investment, end of year	Gains on recovered investment as of December 31, 2014	Accumulated investment exported from Taiwan in Mainland China, end of year	Amount of investment approved by Investment Commission, Ministry of Economic Affairs	Quota for investment in Mainland China stipulated by Investment Commission, Ministry of Economic Affairs
					Export	Reco ver
Kinsus Interconne ct Technolog y Suzhou	Production and sale of printed circuit board (non-high- density wires)	$2,215,500 (Note 2)	(Note 1)	$2,215,500 (Note 2)	$-	$-	$2,215,500 (Note 2)	$(187,969) (Note 2 and Note 3)	100%	$(187,969) (Note 2 and Note 3)	$1,229,223 (Note 2 and Note 3)	$-	$2,215,500 (Note 2)	$2,215,500 (Note 2)	Unlimited (Note 4)

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KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Boardtek Computer (Suzhou) Co., Ltd.	Research and developm ent, productio n, and sale of new sophistica ted electronic compone nts, circuit boards, and related products, as well as after-sale service	$5,276,055 (Note 2)	(Note 1)	$2,983,139 (Note 2)	$-	$-	$2,983,139 (Note 2)	$(365,558) (Note 2 and Note 3)	51%	$(186,435) (Note 2 and Note 3)	$2,134,810 (Note 2 and Note 3)	$-	$2,983,139 (Note 2)	$2,983,139 (Note 2)

177

KINSUS INTERCONNECT TECHNOLOGY CORP. NOTES TO PARENT-COMPANY-ONLY FINANCIAL STATEMENTS

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Kinsus Holdings (Cayman) Limited	Purchase and sale of printed circuit board (non-high- density wires) and related product and materials	$63,300 (Note 2)	(Note 1)	$63,300	$-	$-	$63,300	$4,273 (Note 2 and Note 3)	100%	$4,273 (Note 2 and Note 3)	$67,731 (Note 2 and Note 3)	$-	$63,300 (Note 2)	$63,300 (Note 2)	Unlimited (Note 4)
Pegavision Holdings Corporatio n	Sale of medical equipment	$10,598 (Note 2)	(Note 1)	$2,981 (Note 2)	$7,617 (Note 2)	$-	$10,598 (Note 2)	$(4,819) (Note 2 and Note 3)	100%	$(4,819) (Note 2 and Note 3)	$1,601 (Note 2 and Note 3)	$-	$10,598 (Note 2)	$10,598 (Note 2)	$549,257 (Note 5)

Note 1: Founded the company through the investment in the third area and invested in Mainland China.

Note 2: The amount of foreign currency was exchanged to that of New Taiwan Dollar based on the exchange rate on the date of balance sheet.

Note 3: The basis of recognition of gains or losses of investment was based on the financial statement reviewed by the certified public accountant from the parent company in Taiwan
Note 4: The Corporation complies with the regulation of headquarters of enterprises engaging in investment or technical cooperation in Mainland China. The amount of investment is unlimited accordingly.
Note 5: The quota for investment in Mainland China for Pegavision Holdings Corporation is based on 60% of net equity of Pegavision Holdings Corporation.

178

Kinsus Interconnect Technology Corporation Notes to Individual Financial Statements (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

b. Major transactions with investee companies in Mainland China:
(a) Amount and percentage of purchase and related ending balance of accounts payable:

Purchase of Interconnect Technology Corp from Kinsus Interconnect Technology Suzhou	Purchase Amount % of net purchase $1,526,521 21.35%	Accountspayable	Accountspayable
	Amount	Amount $247,315	% of subject balance
	$1,526,521		21.06%

In 2014, since the product specifications purchased by the Corporation from Kinsus Interconnect Technology Suzhou were different with other suppliers, the price of transaction could not be compared; the payment term for the related parties was 60 days on a monthly basis, while that for regular suppliers was 60~90 days on a monthly basis through telegraphic transfer.

(b) Amount and percentage of sales and related ending balance of accounts receivable:

Sales Amount % of net sales USD30,268 19.60% USD19,059 12.34% RMB24,544 16.66% RMB 4,439 3.01%	Accounts receivable	Accounts receivable
Amount	Amount USD6,770 USD1,491 RMB 3,889 RMB 649	% of subject balance
USD30,268		21.06%
USD19,059		4.64%
RMB24,544		27.65%
RMB 4,439		4.61%

179

Kinsus Interconnect Technology Corporation Notes to Individual Financial Statements (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Sales from Kinsus Interconnect Technology Corp to Kinsus Holdings (Cayman) Limited Sales from Kinsus Interconnect Technology Corp to Kinsus Interconnect Technology Suzhou	$1,484	-% -%	$- $-	-%
	$3,419			-%

In 2014, since the product specifications sold to subsidiaries were different with other clients, the price of transaction could not be compared reasonably. However, the product prices offered by Kinsus Interconnect Technology Corp to Kinsus Interconnect Technology Suzhou and Kinsus Holdings (Cayman) Limited were about the same with those offered to regular clients; the collection term for Kinsus Interconnect Technology Suzhou and Kinsus Holdings (Cayman) Limited and regular clients was 30~60 days on a monthly basis through telegraphic transfer.

i. Details of transaction of property between Kinsus Interconnect Technology Suzhou and related parties are as follows:

Category of assets	Related parties	Book value	Selling price RMB286	Gains (losses) on disposal	Reference to price determination
Other equipment	Boardtek Computer (Suzhou) Co., Ltd.	RMB 304		RMB18	Negotiated price

ii. Details of transaction of property between Kinsus Interconnect Technology Corp and related parties are as follows:

Category of assets	Related parties	Book value	Selling price	Gains (losses) on disposal	Reference to price determinatio n
Equipment	Boardtek Computer (Suzhou) Co., Ltd.	$6,032	$6,511	$479	Negotiated price

180

Kinsus Interconnect Technology Corporation Notes to Individual Financial Statements (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(d) The endorsement and guarantee or the ending balance and purpose of guarantee provided: Appendix 1.
(e) Maximum balance, ending balance, range of interest rate, and current interest of funding: None
(f) Other transactions which have significant influences on current gains or losses or financial status, such as service provided or receipt:
j. The processing expenses and testing expenses recognized by the Corporation for the processing and research and development testing provided by Kinsus Interconnect Technology Suzhou in 2014 were NT$51,319 thousand and NT$152 thousand respectively. The accrued expenses at end of year were NT$9,318 thousand.
ii. The other income recognized by the Corporation for sales of fixture and spare parts to Boardtek Computer (Suzhou) Co., Ltd., Kinsus Interconnect Technology Suzhou, and Kinsus Holdings (Cayman) Limited in 2014 was NT$2,145 thousand.
iii. As of December 31, 2014, the balances of other accounts receivable generated from the sales of property, plant and equipment and fixture to Boardtek Computer (Suzhou) Co., Ltd. and Kinsus Interconnect Technology Suzhou were NT$8,210 thousand and NT$987 thousand respectively.
ix. As of December 31, 2014, the balance of other accounts receivable generated from the collections and payment transfer of Kinsus Holdings (Cayman) Limited for Boardtek Computer (Suzhou) Co., Ltd. was RMB 24 thousand.

(14). Segment information

The Corporation has disclosed the segment information in the consolidated financial statement.

181


Kinsus Interconnect TechnologyCorp.
Endorsements andguarantees for otherpeople
Jan.1 to Dec.31,2014
													Attachment 1
											Unit：Foreign currency/NT thousand dollars
Endorser for others		Endorsee		Limited amounts of	Current	Ending	Actual	Guaranteed	The ratio of accumulated	Maximum amounts	Guaranteed	Guaranteed	Guaranteed
Code				guaranteed endorsement	maximum	endorsement		endorsement	guaranteed endorsement to net	ofguaranteed	endorsement ofparent	endorsement of subsidiary	endorsement for
(Note 1)	Names	Name of company	Nature of relationship	for single corporation	endorsement balance	balance	payment	by property	income in current financial statement	endorsement	entityto subsidiary	entitytoparent entity	Mainland areas
0	Kinsus Interconnect	Suzhou TongShuo	Investee byequitymethod	The amount ofguaranteed endorsement for holding	NT$4,431,000	NT$4,431,000	NT$1,494,613	NT$0	16.17%	Should not exceed	Y	N	Y
	Technology	Corporation		more than 50% interests in subsidiaryis not more than	(USD 140,000)	(USD 140,000)				the 50% net income
	Corporation			20% in current net financial statement. $5,479,602	(Note 2)	(Note 2)				in current financial statement
										NT$13,699,005
0	Kinsus Interconnect	Boardtek Computer	Investee byequitymethod	The amount ofguaranteed endorsement for holding	NT$3,066,885	NT$2,663,348	NT$281,151	NT$0	9.72%	Should not exceed	Y	N	Y
	TechnlogyCorporation	(Suzhou)Corporation		more than 50% interests in subsidiaryis not more than	(USD 96,900)	(USD 84,150)				the 50% net income
				20% in current net financial statement. $5,479,602	(Note 2)	(Note 2)				in current financial statement
										NT$13,699,005



Note 1：0 means our company.
Note 2：Foreign currencyexchanged to NTD bythe ratio
on the date of balance sheet.

182

			Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.
			Year-to-date marketable securities holders
			Dec.31,2014
								Attachment 2
							Unit：NT thousand dollars
		Relationshipwith the	Listed	The end of term
Companyholders	Marketable Securities types & names	issuing entity of marketable securities	account titles	Number of shares/Unit	Book value	Share holdingratio	Fair value(Note)	Remark
Kinsus Interconnect TechnologyCorporation	Monetaryfunds：
	Capital MoneyMarket	-	Financial assets at fair value throughprofit or loss	32,783,435	NT$510,667	0.00%	NT$519,614
	Yuanta De-Bao MoneyMarket Fund	-	Financial assets at fair value throughprofit or loss	30,422,974	353,891	0.00%	359,323
	Yuanta Wan Tai MoneyMarket	-	Financial assets at fair value throughprofit or loss	48,495,532	700,000	0.00%	722,050
	Fuh Hwa You Li MoneyMarket	-	Financial assets at fair value throughprofit or loss	20,789,636	265,794	0.00%	275,637
	Fuh Hwa MoneyMarket	-	Financial assets at fair value throughprofit or loss	21,596,707	300,000	0.00%	306,950
	Hua Nan Phoenix MoneyMarket	-	Financial assets at fair value throughprofit or loss	9,633,540	150,000	0.00%	154,154
	Taishin Ta-ChongMoneyMarket	-	Financial assets at fair value throughprofit or loss	33,095,605	450,000	0.00%	461,727
	Taishin 1699 MoneyMarket	-	Financial assets at fair value throughprofit or loss	30,522,218	400,000	0.00%	405,500
	FSITC MoneyMarket	-	Financial assets at fair value throughprofit or loss	1,168,258	200,000	0.00%	204,698
	Mega Diamond MoneyMarket	-	Financial assets at fair value throughprofit or loss	41,465,474	500,000	0.00%	510,286
	Jih Sun MoneyMarket	-	Financial assets at fair value throughprofit or loss	31,315,952	450,000	0.00%	455,328
	Union MoneyMarket	-	Financial assets at fair value throughprofit or loss	35,032,705	450,000	0.00%	454,682
	UPAMC James Bond MoneyMarket	-	Financial assets at fair value throughprofit or loss	15,322,946	250,000		251,629
	Subtotal				4,980,352		NT$5,081,578
	Add：Adjustments for change in value of held-for-tradingfinancial assets				101,226
	Total				NT$5,081,578

Kinsus Interconnect TechnologyCorporation	Stock：
	Public Comapny－Pegacasa	Investors measure	Available-for-sale financial assets－current	553,000	NT$15,675	0.02%	NT$40,369
	Corporation	our companyby
	Add：Valuation adjustments on financial assets a	equitymethod			24,694
	Total				NT$40,369


Note：Without thepublicprice,fillingin the net share values.

183

			Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.
			Acquisition of property with 300 million NTD or actual paid-in capital amo						unt with more than 20%
			Jan.1 to Dec 31, 2014
													Attachment 3
												Unit：NT thousand dollars
Companywith the	Property	al transaction	Transaction d	Payments	Trading		Trading partner is relate information from		d parties, transferred previous time		Reference price	Acquiring purposes and	Other terms &
acquisition ofproperty	names		amount	situations	partners	Relationship	Owner	Relationship with the company	Transfer date	Amount	bydecision	usingconditions	conditions
Kinsus Interconnect	Buildings and sreuctures
Technology	Xin Feng plant	103.02.13	NT$1,781,850	Already paid 712,740 thousand dollars	Guogong	No	No	No	No	No	Public bidding	For the use of capacity expansion	No
Corporation	construction and engineering			until Dec.31,2014	construction							plan & company operation plan
					corporation

184

Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.
Purchase and sale amount with relatedparties is 100 million dollars or actualpaid-in capital amount with more than 20%
Jan 1 to Dec.31,2014
											Attachment 4
											Unit：NT thousand dollars
			Tradingconditions				Difference between business conditions &general terms		Notes receivable(payable)、Accounts receivable			Remark
Companywithpurchase(sale)	Trading partners	Relationship	Purchase(Sale)	Amount	The ratio of total purchase (sale)	The creditperiod	Unitprice	The creditperiod		Balance	The ratio of total notes receivable (payable)、 accounts receivable (payable)
Kinsus Interconnect	Suzhou TongShuo	Investees measure the company	Purchase	NT$1,526,521	21.35%	Monthly60 days	Different specification of	Monthly60 days		Accountspayable	(21.06)%
TechnologyCorporation	TechnologyCorporation	byequitymethod					purchase;unable to	forgeneral		NT$(247,315)
		indirectly					reasonablycompared.	manufacturers

185

			Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.
	With material effects or controllingabilityto investees;it is a must to disclose the relevant information							to	investees
Dec.31,2014
											Attachment 5
										Unit：Foreign currency/NT thousand dollars
			Initial investment amount			Held-to-maturity				Net income	Investing gain or loss
Investor name	Investee name	Location	Primarybusiness items	Previous term	Current term	Number of shares	Ratio%		Book value	of investee	in current recognition	Remark
Kinsus Technology	KINSUS CORP.(USA)	CA. U.S.A.	Substrate design,make	USD500	USD500	500,000shares	100.00%		NT$29,528	NT$2,713	NT$2,713
Corporation			market strategyanalysis
			and customers development,
			newproduct research and development

Kinsus Technology	KINSUS HOLDING	Independant State of Samoa	Investingbusiness	USD166,309	USD166,309	166,308,720shares	100.00%		NT$3,458,036	NT$(350,943)	NT$(350,943)
Corporation	(SAMOA)LIMITED

Kinsus Technology	Pegavision investment corporation	Taoyuan city	Investingbusiness	NT$398,000	NT$398,000	39,800,000shares	100.00%		NT$521,940	NT$28,640	NT$28,640
Corporation				(Note)	(Note)

Pegavision investment	Pegavision Corporation	Taoyuan city	Manufacturingof	NT$212,666	NT$286,418	22,088,736shares	36.81%		NT$337,011	NT$68,962	NT$27,802
Corporation			medical facility

KINSUS HOLDING	KINSUS HOLDING	British Cayman Islands	Investingbusiness	USD72,000	USD72,000	72,000,000shares	100.00%		USD 40,978	USD(5,804)	USD(5,804)
(SAMOA)LIMITED	(CAYMAN)LIMITED

KINSUS HOLDING	PIOTEK HOLDINGS	British Cayman Islands	Investingbusiness	USD94,309	USD94,309	95,755,000shares	51.00%		USD 68,281	USD(11,335)	USD(5,781)
(SAMOA)LIMITED	LTD.(CAYMAN)

PIOTEK HOLDINGS	PIOTEK HOLDING	British Virgin Islands	Investingbusiness	USD139,841	USD139,841	139,840,790shares	100.00%		USD 133,893	USD(11,335)	USD(11,335)
LTD.(CAYMAN)	LIMITED

PIOTEK HOLDING	PIOTEK(H.K.)	HongKong	Tradingbusiness	USD26	USD26	200,000shares	100.00%		USD 1,597	USD 221	USD 221
LIMITED	TRADING LIMITED

Pegavision Corporation	PEGAVISION HOLDINGS	Independant State of Samoa	Investingbusiness	USD120	USD380	380,000shares	100.00%		NT$2,320	NT$(4,810)	NT$(4,810)
	CORPORATION
Note：Our companyinvested in Pegavision investment corporation for 500,000 thousand dollars，and reduced capital for covering
accumulated deficits in 2013 for 102,000 thousands. The investment		amount is 398,000 thousand dollars after capital reduction.

186

Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Corp.
Year-to date marketable securities holders (Not included investing in subsidiary,associate and joint venture of control part)
Dec.31, 2014
										Attachment 6
								Unit：NT thousand dollars
	Marketable securities	Relationshipbetween issuer of	Listed account	The end of term			Warranty、Pledge or other limited situation
Holdingof company	types & name	marketable securities and our company	titles	Number of share(Unit)	Book value	Ratio	Fair value(net value)	Number of share	Book value	Remark
Pegavision investment	Monetaryfunds:
corporation	Taishin Ta-ChongMoneyMarket	-	Financial assets at fair vale	829,070	NT$11,314	0.00%	NT$11,565	0	$-
	Adjustments for change in value of held-for- tradingfinancial assets		throughprofit or loss		251
	Total				NT$11,565

Pegavision investment	Stock：
corporation	Yi shuo cultural creativitycorporation	-	Financial assets carried at	5,000,000	NT$50,000	7.49%	$-	0	$-
			cost				(Note)
Pegavision corporation	Monetaryfunds:
	Yuanta Wan Tai MoneyMarket	-	Financial assets at fair vale	2,554,934	NT$38,000	0.00%	NT$42,291	0	$-
	Yuanta RMB MoneyMarket		throughprofit or loss	81,086	4,097
	Adjustments for change in value of held-for-tradingfinancial assets				194
	Total				NT$42,291

Note：Without offering price of non-active market and the fair value could not be measured.

187

Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.
Purchase and sale amount with relatedparties is 100 million dollars or actualpaid-in capital amount with more than 20%
Jan.1 to Dec.31,2014
											Attachment 7
											Unit：UDS thousand dollars
			Tradingconditions				Difference between business conditions andgeneral terms		Notes receivable(payable),Accounts receivable(payable)			Remark
Companywithpurchase and(sale)	Trading partner	Relationship	Purchase(sale)	Amount	The ratio of total purchase(sale)	The creditperiod	Unitprice	The creditperiod		Balance	The ratio of total notes receivable (payable)、accounts receivable (payable)
Boardtek computer	Pegacasa corporation	Parent entity	Sale	USD 60,545	39.20%	Monthly60 days	Different specification of	Without related		Accounts receivable	42.79%
(Suahou)corporation							sale;unable to reasonably	parties to be compared		USD 13,757
							compare.
Boardtek computer	Suzhou xiangshuo	Subsidiarycontrolled	Sale	USD 19,059	12.34%	Monthly60 days	Different specification of	Without related		Accounts receivable	4.64%
(Suahou)corporation	tradingcompanyltd	byKinsus Technology					sale;unable to reasonably	parties to be compared		USD 1,491
		Corporation					compare.
Suzhou xiangshuo	Boardtek computer	Subsidiarycontrolled	Purchase	USD 19,059	80.48%	Monthly60 days	Different specification of	Without related		Accountspayable	(45.96)%
tradingcompanyltd	(Suahou)corporation	byKinsus Technology					sale;unable to reasonably	parties to be compared		USD(1,491)
		Corporation					compare.
Boardtek computer	Boardtek corporation	Subsidiarycontrolled	Sale	USD 30,268	19.60%	Monthly60 days	Different specification of	Without related		Accounts receivable	21.06%
(Suahou)corporation		byKinsus Technology					sale;unable to reasonably	parties to be compared		USD 6,770
		Corporation					compare.
Boardtek computer	Boardtek computer	Subsidiarycontrolled	Purchase	USD 30,268	100.00%	Monthly60 days	Different specification of	Without related		Accountspayable	(100.00)%
	(Suahou)corporation	byKinsus Technology					sale;unable to reasonably	parties to be compared		USD(6,770)
		Corporation					compare.
Suzhou tongshuo technology	Kinsus interconnect	Parent entity	Sale	USD 52,217	100.00%	Monthly60 days	Different specification of	Without related		Accounts receivable	100.00%
corporation	technologycorporation						sale;unable to reasonably	parties to be compared		USD 8,108
							compare.

188

Kinsus Interconnect Technology Corp.

Accounts receivable-related parties with 100 million or actual paid-in capital amount is more than 20%

Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.	Kinsus Interconnect TechnologyCorp.
Accounts receivable-relatedparties with 100 million or actualpaid-in capital amount is more than 20%

Dec. 31,2014
									Attachment 8
							Unit：USD thousand dollars
Listed accounts			Balance of accounts		Accounts receivable-related parties of the past due amount		Accounts receivable-related		Allowance for
receivable company	Names of trading partners	Relationship	receivable- relatedparties	Turnover ratio	Amount	Treatment	parties recoveryvalue after event	doubtful accounts
Boardtek computer	Pegacasa corporation	Parent entity	USD 13,757	3.84	NT$0	-	NT$0		NT$0
(Suzhou)corporation			(Note)

Boardtek computer	Boardtek corporation	Subsidiarycontrolled	USD 6,770	4.85	NT$0	-	NT$0		NT$0
(Suzhou)corporation		byKinsus Technology	(Note)
		Corporation

Suzhou TongShuo	Kinsus Interconnect	Parent entity	USD 8,108	7.10	NT$0	-	NT$0		NT$0
TechnologyCorporation	TechnologyCorporation		(Note)


Note：Belongto accounts receivable.

189

Representation Letter

The entities that are required to be included in the combined financial statements of Kinsus Interconnect Technology Corp. as of and for the year ended December 31, 2014, under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Accounting Standards 27, “Consolidated and Separate Financial Statements”. In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Kinsus Interconnect Technology Corp. does not prepare a separate set of combined financial statements.

Very truly yours,

Kinsus Interconnect Technology Corp.

Chairman: T.H. Tung February 9, 2015

190

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191

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Balance Sheets

As of December 31, 2014 and 2013

(In Thousands of New Taiwan Dollars)

Assets	Assets	Assets		December 31,2014	December 31,2014		December 31,2013	December 31,2013
Code	Accounts	Notes		Amount	%		Amount	%
1100 1110 1125 1147 1150 1170 1180 1200 1210 1310 1410 1470 11XX 1544 1546 1600 1780 1840 1915 1995 15XX 1XXX	Current assets Cash and cash equivalents Financial assets at fair value through profit or loss, current Available-for-sale financial assets Bond investments with no active market Notes receivable, net Accounts receivable, net Accounts receivable - related parties Other receivables Other receivables - related parties Inventories, net Prepayments Other current assets Total current assets Non-current assets Financial assets carried at cost Bond investments with no active market Property, plant and equipment Intangible assets Deferred income tax assets Prepaid equipment Other non-current assets Total non-current assets Total Assets	4, 6(1) 4, 6(2) 4, 6(3) 4, 6(4), 8 4, 6(6) 4, 6(7) 4, 6(7), 7 7 4, 6(8) 4, 6(5) 4, 6(4), 8 4, 6(9), 8 4, 6(10) 4, 6(25) 4, 6(9), 9 6(11), 7, 8		$11,541,615 5,135,434 40,369 463,827 6,252 3,040,343 436,406 452,265 1,307 2,162,969 98,501 91,980 23,471,268 50,000 - 15,429,778 19,982 276 1,748,657 331,713 17,580,406 $41,051,674	28 13 - 1 - 8 1 1 - 5 - - 57 - - 38 - - 4 1 43 100		$9,787,827 5,135,128 57,715 507,379 69,383 3,013,640 560,469 494,726 1,929 2,005,497 112,669 65,810 21,812,172 - 49 14,756,743 14,159 20 1,210,342 318,857 16,300,170 $38,112,342	26 14 - 1 - 8 2 1 - 5 - - 57 - - 39 - - 3 1 43 100

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

Chairman: T.H. Tung

CEO: Ming-Dong Guo

Head of Accounting: Su-Zhen Liu

192

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Balance Sheets-(Continued)

As of December 31, 2014 and 2013

(In Thousands of New Taiwan Dollars)

Liabilities and Equity	Liabilities and Equity	Liabilities and Equity		December 31,2014	December 31,2014		December 31,2013	December 31,2013
Code	Accounts	Notes		Amount	%		Amount	%
2100 2150 2170 2180 2200 2230 2250 2300 21XX 2540 2570 2600 25XX 2XXX 31XX 3100 3110 3200 3300 3310 3320 3350 3400 36XX 3XXX	Current liabilities Short-term loans Notes payable Accounts payable Accounts payable - related parties Other payables Current income tax liabilities Provisions Other current liabilities Total current liabilities Non-current liabilities Long-term loans Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities Equity attributable to shareholders of the parent Capital Common stock Capital surplus Retained earnings Legal capital reserve Special capital reserve Unappropriated earnings Other components of equity Non-controlling interests Total equity Total liabilities and equity	6(12) 7 6(13), 7 4, 6(25) 4, 6(14) 6(15) 6(16), 8 4, 6(25) 4, 6(17), 6(18) 6(19) 6(19) 6(19) 6(19)		$1,806,896 41,011 1,986,749 - 3,828,752 896,540 302 1,542,931 10,103,181 730,722 54,377 110,620 895,719 10,998,900 4,460,000 5,939,819 2,687,890 - 14,030,597 279,703 2,654,765 30,052,774 $41,051,674	4 - 5 - 9 2 - 4 24 2 - - 2 26 11 14 7 - 34 1 7 74 100		$1,581,454 40,069 1,885,552 163 2,849,160 1,068,279 - 1,578,621 9,003,298 1,389,521 26,402 163,981 1,579,904 10,583,202 4,460,000 5,863,612 2,365,481 74,424 12,206,545 108,879 2,450,199 27,529,140 $38,112,342	4 - 5 - 8 3 - 4 24 4 - - 4 28 12 15 6 - 32 - 7 72 100

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

Chairman: T.H. Tung

CEO: Ming-Dong Guo

Head of Accounting: Su-Zhen Liu

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Kinsus Interconnect Technology Corp. 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)

Code	Accounts	Notes	2014		2013
			Amount	%	Amount	%
4000 5000 5900 6000 6100 6200 6300 6900 7000 7010 7020 7050 7900 7950 8200 8300 8310 8320 8360 8399 8500 8600 8610 8620 8700 8710 8720 9750 9850	Net revenue Cost of revenue Gross profit Operating expenses Sales and marketing expenses General and administrative expenses Research and development expenses Total operating expenses Operating income Non-operating income and expenses Other income Other gains and losses Finance costs Total non-operating income and expenses Income before income tax Income tax expense Net income Other comprehensive income (loss) Exchange differences arising on translation of foreign operations Unrealized valuation gain (loss) on available-for- sale financial assets Actuarial gain (loss) from defined benefit plans Income tax related to components of other comprehensive income Total other comprehensive income, net of tax Total comprehensive income Net income (loss) attributable to: Shareholders of the parent Non-controlling interests Total comprehensive income (loss) attributable to: Shareholders of the parent Non-controlling interests Earnings per share - basic (NT$) Earnings per share - diluted (NT$)	4, 6(20), 7 7 6(23), 7 6(23), 7 6(23) 4, 6(25) 6(24) 6(26) 6(26)	$24,943,834 (17,996,954) 6,946,880 (593,616) (973,136) (1,370,969) (2,937,721) 4,009,159 133,961 64,434 (56,482) 141,913 4,151,072 (660,839) 3,490,233 309,597 9,583 15,710 (33,026) 301,864 $3,792,097 $3,617,327 (127,094) $3,490,233 $3,803,861 (11,764) $3,792,097 $8.11 $7.98	100 (72) 28 (2) (4) (6) (12) 16 1 - - 1 17 (3) 14 1 - - - 1 15 15 (1) 14 15 - 15	$23,102,827 (16,898,393) 6,204,434 (580,280) (891,691) (1,297,062) (2,769,033) 3,435,401 178,917 104,619 (55,589) 227,947 3,663,348 (547,094) 3,116,254 323,579 (535) 13,395 (19,205) 317,234 $3,433,488 $3,224,093 (107,839) $3,116,254 $3,420,791 12,697 $3,433,488 $7.23 $7.12	100 (73) 27 (2) (4) (6) (12) 15 1 - - 1 16 (2) 14 1 - - - 1 15 14 - 14 15 - 15

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

Chairman: T.H. Tung CEO: Ming-Dong Guo Head of Accounting: Su-Zhen Liu

194

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Statements of Changes in Equity

For the Years Ended December 31, 2014 and 2013

(In Thousands of New Taiwan Dollars)

Code	Items	Notes				Equity Attributable to Shareholde	Equity Attributable to Shareholde	rs of the Parent			Non- controlling Interests	Total Equity
			Capital	Capital Surplus		Retained Earnings		Othe	rs	Total
					Legal Reserve	Special Reserve	Unappropriated Earnings	Exchange differences arising ontranslationof	Unrealized valuation gain (loss) on available-for-sale
			3100	3200	3310	3320	3350	3410	3425	31XX	36XX	3XXX
A1 B1 B3 B5 D1 D3 D5 M5 O1 A1 B1 B5 B17 D1 D3 D5 M5 M7 O1 Z1	Balance as of January 1, 2013 Appropriation and distribution of 2012 earnings: Legal reserve Special reserve Cash dividends - common shares Net income (loss) for 2013 Other comprehensive income (loss) for 2013 Total comprehensive income Differences between equity purchase price and carrying amount arising from acquisition or disposal of subsidiaries Changes in non-controlling Interests Balance as of December 31, 2013 Appropriation and distribution of 2013 earnings: Legal reserve Cash dividends - common shares Reversal of special reserve Net income (loss) for 2014 Other comprehensive income (loss) for 2014 Total comprehensive income Differences between equity purchase price and carrying amount arising from acquisition or disposal of subsidiaries Changes in equities of subsidiaries Changes in non-controlling Interests Balance as of December 31, 2014	6(19) 6(24) 6(19) 6(24)	$4,460,000 - 4,460,000 - $4,460,000	$5,853,673 - 9,939 5,863,612 - 50,925 25,282 $5,939,819	$2,085,712 279,769 - 2,365,481 322,409 - $2,687,890	$- 74,424 - 74,424 (74,424) - $-	$10,661,250 (279,769) (74,424) (1,338,000) 3,224,093 13,395 3,237,488 12,206,545 (322,409) (1,561,000) 74,424 3,617,327 15,710 3,633,037 $14,030,597	$(90,070) 183,838 183,838 93,768 161,241 161,241 $255,009	$15,646 (535) (535) 15,111 9,583 9,583 $24,694	$22,986,211 - - (1,338,000) 3,224,093 196,698 3,420,791 9,939 25,078,941 - (1,561,000) - 3,617,327 186,534 3,803,861 50,925 25,282 $27,398,009	$2,346,307 (107,839) 120,536 12,697 (9,939) 101,134 2,450,199 (127,094) 115,330 (11,764) (50,925) (25,282) 292,537 $2,654,765	$25,332,518 - - (1,338,000) 3,116,254 317,234 3,433,488 - 101,134 27,529,140 - (1,561,000) - 3,490,233 301,864 3,792,097 - - 292,537 $30,052,774

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

Head of Accounting: Su-Zhen Liu

Chairman: T.H. Tung

CEO: Ming-Dong Guo

195

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2014 and 2013

(In Thousands of New Taiwan Dollars)

Code	Items	2014	2013	Code	Items	2014	2013
AAAA A10000 A20000 A20010 A20100 A20200 A20300 A20400 A20900 A21200 A22500 A23100 A30000 A31110 A31130 A31150 A31160 A31180 A31190 A31200 A31220 A31240 A31990 A32130 A32150 A32160 A32180 A32200 A32210 A32230 A32240 A33000 A33100 A33300 A33500 AAAA	Cash flows from operating activities: Income before income tax Adjustments: Income and expense adjustments: Depreciation Amortization Bad debt expense (gain on recovery) Net loss (gain) of financial assets (liabilities) at fair value through profit or loss Interest expense Interest income Loss (gain) on disposal of property, plant and equipment Gain on disposal of investment Changes in operating assets and liabilities: Decrease (increase) in financial assets at fair value through profit or loss, current Decrease (increase) in notes receivable, net Decrease (increase) in accounts receivable Decrease (increase) in accounts receivable - related parties Decrease (increase) in other receivables Decrease (increase) in other receivables - related parties Decrease (increase) in inventories, net Decrease (increase) in prepayments Decrease (increase) in other current assets Decrease (increase) in long-term prepaid rents Increase (decrease) in notes payable Increase (decrease) in accounts payable Increase (decrease) in accounts payable - related parties Increase (decrease) in other payables Increase (decrease) in provisions Increase (decrease) in unearned sales revenue Increase (decrease) in other current liabilities Increase (decrease) in accrued pension liabilities Cash generated from (used in) operations Interest received Interest paid Income tax paid Net cash provided by (used in) operating activities	$4,151,072 3,018,003 26,567 5,876 (26,895) 56,482 (96,170) 724 (26,135) 28,033 63,131 (32,739) 124,063 45,116 622 (157,472) 14,168 (26,170) (9,195) 942 101,197 (163) 411,866 302 21,638 (2,478) (3,973)	$3,663,348 2,915,154 15,563 (27,767) (22,949) 55,589 (87,324) (5,074) (10,732) (700,000) (13,234) 150,701 (84,700) 188,275 (917) (31,882) (22,896) (8,492) (9,058) (243) (28,573) 163 515,199 - (12,026) 16,059 (4,184)	BBBB B02700 B02800 B00400 B00600 B00700 B01200 B03800 B04500 BBBB CCCC C00100 C01600 C01700 C04500 C03000 C05800 CCCC DDDD EEEE E00100 E00200	Cash flows from investing activities: Acquisition of property, plant and equipment Disposal of property, plant and equipment Disposal of available-for-sale financial assets Acquisition of bond investments with no active market Disposal of bond investments with no active market Acquisition of financial assets carried at cost Decrease (increase) in refundable deposits Acquisition of intangible assets Net cash provided by (used in) investing activities Cash flows from financing activities: Increase in (repayment of) short-term loans Increase in long-term loans Repayment of long-term loans Payment of cash dividends Increase (decrease) in deposits received Increase (decrease) in non-controlling interests Net cash provided by (used in) financing activities Effect of exchange rate changes Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	(3,348,791) 8,113 51,620 - 43,601 (50,000) (3,661) (32,271) (3,331,389) 225,442 524,402 (1,238,051) (1,561,000) (33,678) 292,537 (1,790,348) (11,563) 1,753,788 9,787,827 $11,541,615	(3,629,501) 17,859 10,597 (78,426) - - 24,578 (21,302) (3,676,195) (217,195) 305,065 (1,070,196) (1,338,000) 14,349 221,670 (2,084,307) (163,629) 153,102 9,634,725 $9,787,827
		7,688,412	6,450,000
		93,723 (57,162) (837,885)	98,539 (56,613) (414,693)
		6,887,088	6,077,233

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

Chairman: T.H. Tung

CEO: Ming-Dong Guo

Head of Accounting: Su-Zhen Liu

196]

Kinsus Interconnect Technology Corp. and SubsidiariesKinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In Thousands of New Taiwan Dollars, Unless Otherwise S (In Thousands of New Taiwan Dollars, Unless Otherwise Specified) pecified)

1. HISTORY AND ORGANIZATION

Kinsus Interconnect Technology Corp. (the Company) was incorporated on September 11, 2000. The Company mainly engages in manufacture of electronic components, wholesale and retail of electronic materials and provision of managerial consultation services for enterprises. Shares of the Company were approved to be listed via Tai-Cai-Zheng-Yi-Zi No. 0930123462 issued by Securities and Futures Commission, Ministry of Finance on May 20, 2004; and commenced trading at Stock Exchange Market on November 1, 2004. The registered address and main business location is at No. 1245, ZhongHua Rd., XinWu Dist., Taoyuan City.

2. DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS

The consolidated financial statements of the Company and its subsidiaries (the Group) for the years ended December 31, 2014 and 2013 were approved and authorized for issue in the Board of Directors’ meeting on February 9, 2015.

3. NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

(1)As of the date of issuance of the Company’s financial statements, the Group has not adopted the following issued, revised or amended International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC) which are recognized by Financial Supervisory Commission (FSC) and effective for annual periods beginning on or after January1, 2015:
A. Improvements to International Financial Reporting Standards issued in 2010

IFRS 1 “First-time Adoption of International Financial Reporting Standards”

The annual improvements to IFRS issued in 2010 made the following amendments to IFRS 1:

If a first-time adopter changes its accounting policies or its use of the exemptions in IFRS 1 after it has published an interim financial report, it needs to explain those changes and update the reconciliations between previous GAAP and IFRS in Paragraph 32 in accordance with Paragraph 23 of IFRS 1.

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for property, plant and equipment or intangible assets to include items used which are subject to rate-regulated activities. The exemption will be applied on an item-by-item basis. All such assets will also need to be tested for impairment at the date of transition. The amendment allows entities with rate-regulated activities to use the carrying amount of their property, plant and equipment and intangible balances from their previous GAAP as the deemed cost upon transition to IFRS. These amendments became effective for annual periods beginning on or after January1, 2011.

IFRS 3 “Business Combinations”

Under the amendment, IFRS 3 (as revised in 2008) does not apply to contingent consideration that arose from business combinations whose acquisition dates precede the application of IFRS 3 (as revised in 2008). Furthermore, the amendment limits the scope of the measurement choices for non-controlling interest (“NCI”). Only the components of NCIs that are present ownership interests that entitle their holders to a pro rata share of the entity’s net assets in the event of liquidation could be measured at either fair value or at the present ownership instruments’ proportionate share of the acquiree’s identifiable net assets. Other components of NCI are measured at their acquisition date fair value. The amendment also requires an entity in a business combination to account for the replacement of the acquiree’s share-based payment transactions (when the acquirer is not obliged to do so) as new share-based payment awards in the post-combination financial statements. Outstanding share-based payment transactions that the acquirer does not exchange for its share-based payment awards: if vested — they are part of NCI; if unvested — they are measured at market based value as if granted at acquisition date, and allocated between NCI and post-combination expense. These amendments became effective for annual periods beginning on or after July 1, 2010.

IFRS 7 “Financial Instruments: Disclosures”

IAS 1 “Presentation of Financial Statements”

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

IAS 34 “Interim Financial Reporting”

The amendment clarifies that if a user of an entity's interim financial report have access to the most recent annual financial report of that entity, it is unnecessary for the notes to an interim financial report to provide relatively insignificant updates to the information that was reported in the notes in the most recent annual financial report. Furthermore, the amendment adds disclosure requirements for disclosures of financial instruments and contingent liabilities/assets. The amendment is effective for annual periods beginning on or after January 1, 2011.

IFRIC 13 “Customer Loyalty Programmes”

B. Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters (Amendment to IFRS 1 “First-time Adoption of International Financial Reporting Standards”)

IFRS 1 has been amended to allow first-time adopters to utilize the same transitional provisions that Improving Disclosures about Financial Instruments (Amendments to IFRS 7) provides to current IFRS preparers. The amendment is effective for annual periods beginning on or after July 1, 2010.

C. Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (Amendment to IFRS 1 “First-time Adoption of International Financial Reporting Standards”)

The amendment has provided guidance on how an entity should resume presenting IFRS financial statements when its functional currency was, or is, subject to severe hyperinflation. The amendment also removes the fixed dates in IFRS 1 relating to derecognition and day-one gain or loss transactions. The amended standard has these dates coinciding with the date of transition to IFRS. The amendment is effective for annual periods beginning on or after July 1, 2011.

D. Amendment to IFRS 7 “Financial Instruments: Disclosures”

The amendment requires additional quantitative and qualitative disclosures relating to transfers of financial assets, when financial assets are derecognised in their entirety, but the

199

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

entity has a continuing involvement in them, or financial assets are not derecognised in their entirety. The amendment is effective for annual periods beginning on or after July 1, 2011.

E. Deferred Taxes: Recovery of Underlying Assets (Amendment to IAS 12 “Income Taxes”)

The amendment to IAS 12 introduces a rebuttable presumption that deferred tax on investment properties measured at fair value will be recognized on a sale basis, unless an entity has a business model that would indicate the investment property will be consumed in the business. The amendment also introduces the requirement that deferred tax on non-depreciable assets measured using the revaluation model in IAS 16 should always be measured on a sale basis. As a result of this amendment, SIC 21 Income Taxes — Recovery of Revalued Non-Depreciable Assets has been withdrawn. The amendment is effective for annual periods beginning on or after January 1, 2012.

F. IFRS 10 “Consolidated Financial Statements”

IFRS 10 replaces the portion of IAS 27 that addresses the accounting for consolidated financial statements and SIC 12. The changes introduced by IFRS 10 primarily relate to the elimination of the perceived inconsistency between IAS 27 and SIC 12 by introducing a new integrated control model. That is, IFRS 10 primarily relates to whether to consolidate another entity, but does not change how an entity is consolidated. The standard is effective for annual periods beginning on or after January 1, 2013.

G. IFRS 11 “Joint Arrangements”

IFRS 11 replaces IAS 31. The changes introduced by IFRS 11 primarily relate to increase comparability within IFRS by removing the choice for jointly controlled entities to use proportionate consolidation, so that the structure of the arrangement is no longer the most important factor when determining the classification as a joint operation or a joint venture (joint venture is accounted for in accordance with IAS 28). The standard is effective for annual periods beginning on or after January 1, 2013.

H. IFRS 12 “Disclosures of Interests in Other Entities”

IFRS 12 primarily integrates and makes consistent the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. It presents those requirements in a single IFRS. The standard is effective for annual periods beginning on or after January 1, 2013.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

I. IFRS 13“Fair Value Measurement”

IFRS 13 primarily relates to defining fair value, setting out in a single IFRS a framework for measuring fair value and requiring disclosures about fair value measurements to reduce complexity and improve consistency in application when measuring fair value. However, IFRS 13 does not change existing requirements in other IFRS as to the timing of fair value measurement or related disclosure. The standard is effective for annual periods beginning on or after January 1, 2013.

J. Presentation of Items of Other Comprehensive Income (Amendment to IAS 1 “Presentation of Financial Statements”)

The amendments to IAS 1 change the grouping of items presented in Other Comprehensive Income. Items that would be reclassified to profit or loss in the future would be presented separately from items that will never be reclassified. The amendment is effective for annual periods beginning on or after July 1, 2012.

K. Amendment to IAS 19 “Employee Benefits”

The revisions include: (a) for defined benefit plans, the ability to defer recognition of actuarial gains and losses (i.e., the corridor approach) has been removed. Actuarial gains and losses are now recognized in Other Comprehensive Income; (b) amounts recorded in profit or loss are limited to current and past service costs, gains or losses on settlements, and net interest on the net defined benefit liability (asset); (c) new disclosures include quantitative information about the sensitivity of the defined benefit obligation to a reasonably possible change in each significant actuarial assumption; and (d) termination benefits will be recognized at the earlier of when the offer of termination cannot be withdrawn, or when the related restructuring costs are recognized under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The revised standard is effective for annual periods beginning on or after January 1, 2013.

L. Government Loans (Amendment to IFRS 1 “First-time Adoption of International Financial Reporting Standards”)

The IASB has added an exception to the retrospective application of IFRS 9 (or IAS 39) and IAS 20. These amendments require first-time adopters to apply the requirements of IAS 20 prospectively to government loans existing at the date of transition to IFRS. However, entities may choose to apply the requirements of IFRS 9 (or IAS 39, as applicable) and IAS 20 to government loans retrospectively if the information needed to do so had been obtained at the time of initially accounting for those loans. The amendment is effective for annual periods beginning on or after January 1, 2013.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

M.Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendment to IFRS 7 “Financial Instruments: Disclosures”)

These amendments require an entity to disclose information about rights of set-off and related arrangements. The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity’s financial position. The new disclosures are required for all recognized financial instruments that are set off in accordance with IAS 32 Financial Instruments: Presentation. The disclosures also apply to recognized financial instruments that are subject to an enforceable master netting arrangement or ‘similar agreement’. The amendment is effective for annual periods beginning on or after January 1, 2013.

N. Offsetting Financial Assets and Financial Liabilities (Amendment to IAS 32 “Financial Instruments: Presentation”)

The amendment clarifies the meaning of “currently has a legally enforceable right to set-off” in IAS 32. The amendment is effective for annual periods beginning on or after January 1, 2014.

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

This Interpretation applies to waste removal (stripping) costs incurred in surface mining activity, during the production phase of the mine. If the benefit from the stripping activity will be realized in the current period, an entity is required to account for the stripping activity costs as part of the cost of inventory. When the benefit is the improved access to ore, the entity recognizes these costs as a non-current asset (“stripping activity asset”), only if certain criteria are met. The stripping activity asset is accounted for as an addition to, or as an enhancement of, an existing asset. The interpretation is effective for annual periods beginning on or after January 1, 2013.

P. Improvements to International Financial Reporting Standards (2009-2011 cycle):

IFRS 1 “First-time Adoption of International Financial Reporting Standards”

The amendment clarifies that an entity that has stopped applying IFRS may choose to either re-apply IFRS 1 (even if the entity applied IFRS 1 in a previous reporting period); or apply IFRS retrospectively in accordance with IAS 8 (i.e. as if it had never stopped applying IFRS) in order to resume reporting under IFRS. The amendment is effective for annual periods beginning on or after January 1, 2013.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

IAS 1 “Presentation of Financial Statements”

The amendment clarifies three points. (a) The difference between voluntary additional comparative information and the minimum required comparative information. Generally, the minimum required comparative period is the previous period. (b) An entity must include comparative information in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period. The additional comparative period does not need to contain a complete set of financial statements. (c) The opening statement of financial position (known as ’the third balance sheet’) must be presented when an entity applies an accounting policy retrospectively, makes a retrospective restatement or reclassifies items in its financial statement and those changes have a material effect on the statement of financial position. The opening statement would be as at the beginning of the earliest comparative period. However, the related notes are not required. The amendment is effective for annual periods beginning on or after January 1, 2013.

IAS 16 “Property, Plant and Equipment”

The amendment clarifies that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventories. The amendment is effective for annual periods beginning on or after January 1, 2013.

IAS 32 “Financial Instruments: Presentation”

IAS 34 “Interim Financial Reporting”

The amendment clarifies the requirements in IAS 34 relating to segment information for total assets and liabilities for each reportable segment to enhance consistency with the requirements in IFRS 8 “Operating Segments”. Besides, total assets and liabilities for a particular reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change in the total amount disclosed in the entity’s previous annual financial statements for that reportable segment. The amendment is effective for annual periods beginning on or after January 1, 2013.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Q. Amendment to IFRS 10 “Consolidated Financial Statements”

The Investment Entities amendments provide an exception to the consolidation requirements in IFRS 10 and require investment entities to measure particular subsidiaries at fair value through profit or loss, rather than consolidate them. The amendments also set out disclosure requirements for investment entities. The amendment is effective for annual periods beginning on or after January 1, 2014.

The abovementioned issued, revised or amended standards or interpretations issued by International Accounting Standards Board (IASB) and endorsed by FSC are effective for annual periods beginning on or after January1, 2015. Except for items from I to P which would impact on the presentation of financial statements and increase the disclosure of consolidated financial statements, the Group does not expect any significant impact from the remaining issued, revised or amended standards or interpretations.

(2)As of the date of issuance of the Company’s financial statements, the Group has not adopted the following standards or interpretations issued by IASB, but not yet endorsed by FSC:
A. Amendment to IAS 36 “Impairment of Assets”

This amendment relates to the amendment issued in May 2011 and requires entities to disclose the recoverable amount of an asset (including goodwill) or a cash-generating unit when an impairment loss has been recognized or reversed during the period. The amendment also requires detailed disclosure of how the fair value less costs of disposal has been measured in determining the recoverable amount of impaired assets, including valuation techniques used, level of fair value hierarchy of assets and key assumptions used in measurement. The amendment is effective for annual periods beginning on or after 1 January 2014.

B. IFRIC 21 “Levies”

This interpretation provides guidance on when to recognize a liability for a levy imposed by a government (both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy are certain). The interpretation is effective for annual periods beginning on or after January 1, 2014.

C. Novation of Derivatives and Continuation of Hedge Accounting

Under the amendment, there would be no need to discontinue hedge accounting if a hedging derivative was novated, provided certain criteria are met. The interpretation is

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

effective for annual periods beginning on or after January 1, 2014.

D. Amendment to IAS 19 “Employee Benefits” - Defined benefit plans: employee contributions

The amendments apply to contributions from employees or third parties to defined benefit plans. The objective of the amendments is to provide a policy choice for a simplified accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. The amendment is effective for annual periods beginning on or after July 1, 2014.

E. Improvements to International Financial Reporting Standards (2010-2012 cycle)

IFRS 2 “Share-based Payment”

The annual improvements amend the definitions of 'vesting condition' and 'market condition' and add definitions for 'performance condition' and 'service condition' (which were previously part of the definition of 'vesting condition'). The amendment prospectively applies to share-based payment transactions for which the grant date is on or after July 1, 2014.

IFRS 3 “Business Combinations”

The amendments include: (a) deleting the reference to "other applicable IFRSs" in the classification requirements; (b) deleting the reference to "IAS 37 Provisions, Contingent Liabilities and Contingent Assets or other IFRSs as appropriate", other contingent consideration that is not within the scope of IFRS 9 shall be measured at fair value at each reporting date and changes in fair value shall be recognized in profit or loss; and (c) amending the classification requirements of IFRS 9 Financial Instruments to clarify that contingent consideration, that is a financial asset or financial liability, can only be measured at fair value, with changes in fair value being presented in profit or loss depending on the requirements of IFRS 9. The amendments apply prospectively to business combinations for which the acquisition date is on or after July 1, 2014.

IFRS 8 “Operating Segments”

The amendments require an entity to disclose the judgments made by management in applying the aggregation criteria to operating segments. The amendments also clarify that an entity shall only provide reconciliations of the total of the reportable segments' assets to the entity's assets if the segment assets are reported regularly. The amendment is effective

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for annual periods beginning on or after July 1, 2014.

IFRS 13 “Fair Value Measurement”

The amendment to the Basis for Conclusions of IFRS 13 clarifies that when deleting paragraph B5.4.12 of IFRS 9 Financial Instruments and paragraph AG79 of IAS 39 Financial Instruments: Recognition and Measurement as consequential amendments from IFRS 13 Fair Value Measurement, the IASB did not intend to change the relevant measurement requirements.

IAS 16 “Property, Plant and Equipment”

The amendment clarifies that when an item of property, plant and equipment is revalued, the accumulated depreciation at the date of revaluation is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset. The amendment is effective for annual periods beginning on or after July 1, 2014.

IAS 24 “Related Party Disclosures”

IAS 38 “Intangible Assets”

F. Improvements to International Financial Reporting Standards (2011-2013 cycle):

IFRS 1 “First-time Adoption of International Financial Reporting Standards”

The amendment clarifies that an entity, in its first IFRS financial statements, has the choice between applying an existing and currently effective IFRS and applying early a new or revised IFRS that is not yet mandatorily effective, provided that the new or revised IFRS permits early application.

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IFRS 3 “Business Combinations”

This amendment clarifies that paragraph 2(a) of IFRS 3 Business Combinations excludes the formation of all types of joint arrangements as defined in IFRS 11 Joint Arrangements from the scope of IFRS 3; and the scope exception only applies to the financial statements of the joint venture or the joint operation itself. The amendment is effective for annual periods beginning on or after July 1, 2014.

IFRS 13 “Fair Value Measurement”

The amendment clarifies that paragraph 52 of IFRS 13 includes a scope exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis. The objective of this amendment is to clarify that this portfolio exception applies to all contracts within the scope of IAS 39 Financial Instruments: Recognition and Measurement or IFRS 9 Financial Instruments, regardless of whether they meet the definitions of financial assets or financial liabilities as defined in IAS 32 Financial Instruments: Presentation. The amendment is effective for annual periods beginning on or after July 1, 2014.

IAS 40 “Investment Property”

The amendment clarifies the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property. In determining whether a specific transaction meets the definition of both a business combination as defined in IFRS 3 “Business Combinations” and investment property as defined in IAS 40 “Investment Property”, separate application of both standards independently of each other is required. The amendment is effective for annual periods beginning on or after July 1, 2014.

G. IFRS 14 “Regulatory Deferral Accounts”

IFRS 14 permits first-time adopters to continue to recognize amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that already apply IFRS and do not recognize such amounts, the Standard requires that the effect of rate regulation must be presented separately from other items. IFRS 14 is effective for annual periods beginning on or after January 1, 2016.

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H. Amendment to IFRS 11 “Joint Arrangements” – Accounting for Acquisition of Joint Operations

The amendment provides new guidance for acquisition of an interest in a joint operation (in which the activity constitutes a business). The entity is required to apply all of the principles in IFRS 3 “Business Combinations” (and other IFRSs with the exception of those principles that conflict with the guidance in IFRS 11). Information is disclosed based on those standards. The amendment is effective for annual periods beginning on or after January 1, 2016.

I. Amendments to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets” – Clarification of Acceptable Methods of Depreciation or Amortization

J. IFRS 15 “Revenue from Contracts with Customers”

The core principle of the new Standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new Standard will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively and improve guidance for multiple-element arrangements. The amendment is effective for annual periods beginning on or after January 1, 2017.

K. Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)

Because bearer plants’ operation is similar to that of manufacturing, the IASB decided that bearer plants shall be accounted for in the same way as property, plant and equipment in IAS 16 “Property, Plant and Equipment”. Consequently, the amendments include them within the scope of IAS 16 and the produce growing on bearer plants will remain within the scope of IAS 41. The amendment is effective for annual periods beginning on or after January 1, 2016.

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L. IFRS 9 “Financial Instruments”

The IASB has issued the final version of IFRS 9, which combines classification and measurement, impairment and hedge accounting. The standard will replace IAS 39 “Financial Instruments: Recognition and Measurement” and all previous versions of IFRS 9 “Financial Instruments” (which include standards issued on classification and measurement of financial assets and liabilities and hedge accounting).

Classification and measurement: Financial assets are measured at amortized cost, fair value through profit or loss, or fair value through other comprehensive income, based on both the entity’s business model for managing the financial assets and the financial asset’s contractual cash flow characteristics. Financial liabilities are measured at amortized cost or fair value through profit or loss. Furthermore, there is requirement that “own credit risk” adjustments are not recognized in profit or loss.

Impairment: Expected credit loss model is used to evaluate impairment. Entities are required to recognize either 12-month or lifetime expected credit loss, depending on whether there has been a significant increase in credit risk since initial recognition.

Hedge accounting: Hedge accounting is more closely aligned with risk management activities and hedge effectiveness is measured based on the hedge ratio.

The standard is effective for annual periods beginning on or after January 1, 2018.

M. Equity Method in Separate Financial Statements (Amendment to IAS 27)

The amendment reinstates the option to use the equity method under IAS 28 for an entity to account for investments in subsidiaries and associates in the entity’s separate financial statements. The option had been removed during the 2003 revision of IAS 27. This amendment removes the only difference between the separate financial statements prepared in accordance with IFRS and those prepared in accordance with the local regulations in certain jurisdictions. The standard is effective for annual periods beginning on or after January 1, 2016.

N. Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” – Sale or Contribution of Assets between an Investor and its Associates or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures”, in dealing with the loss of control of a subsidiary that is contributed to an

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associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 is amended so that the gains and losses resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

IFRS 10 is also amended so that the gains and losses resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture. The amendments are effective for annual periods beginning on or after January 1, 2016.

O. Improvements to International Financial Reporting Standards (2012-2014 cycle)

IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”

IFRS 7 “Financial Instruments: Disclosures”

The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset and therefore the disclosures for any continuing involvement in a transferred asset that is derecognized in its entirety under IFRS 7 “Financial Instruments: Disclosures” is required. The amendment also clarifies that whether the IFRS 7 disclosure related to the offsetting of financial assets and financial liabilities are required to be included in the condensed interim financial report would depend on the requirements under IAS 34 “Interim Financial Reporting”. The amendment is effective for annual periods beginning on or after January 1, 2016.

IAS 19 “Employee Benefits”

The amendment clarifies the requirement under Paragraph 83 of IAS 19. On the determination of the discount rate for post-employment benefits obligations, market depth of high quality corporate bonds is assessed based on the currency in which the obligation is

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denominated, rather than the country where the obligation is located. The amendment is effective for annual periods beginning on or after January 1, 2016.

IAS 34 “Interim Financial Reporting”

The amendment clarifies what is meant by “elsewhere in the interim financial report” under IAS 34. The amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference from the interim financial statements to some other statements. The “some other statements” must be available to users of the interim financial statements on the same terms as the interim financial statements and at the same time. The amendment is effective for annual periods beginning on or after January 1, 2016.

P. Disclosure Initiative (Amendment to IAS 1 “Presentation of Financial Statements”

The amendments contain (a) clarifying that an entity must not reduce the understandability of its financial statements by obscuring material information with immaterial information or by aggregating material items that have different natures or functions. The amendment reemphasize that, when a standard requires a specific disclosure, the information must be assessed to determine whether it is material and consequently, whether presentation or disclosure of that information is warranted, (b) clarifying that specific line items in the statements of comprehensive income and balance sheets may be disaggregated, and how an entity shall present additional subtotals, (c) clarifying that entities have flexibility as to the order in which they present the notes to financial statements, but also emphasize that understandability and comparability shall be considered by an entity when deciding on that order, (d) removing the examples of income tax and exchange gain (loss) in significant accounting policies, as these were considered unhelpful in illustrating what significant accounting policies could be, and (e) clarifying that the share of OCI of associates and joint ventures accounted for using the equity method must be presented in aggregate as a single line item, classified based on whether those items will be reclassified to profit or loss subsequently. The amendment is effective for annual periods beginning on or after January 1, 2016.

Q. Investment Entities: Applying the Consolidation Exception (Amendment to IFRS 10, IFRS 12 and IAS 28)

The amendments contain (a) clarifying that the exemption from presenting consolidated financial statements set out in paragraph 4 of IFRS 10 applies to a parent entity that is a subsidiary of an investment entity which measures all of its subsidiaries at fair value, (b) clarifying that only a subsidiary that does not qualify as an investment entity itself and provides support services that relate to the parent company’s investment activities is

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consolidated pursuant to paragraph 32 of IFRS 10 in the parent company’s consolidated financial statements, and (c) allowing the investor, when the equity method under IAS 28 is applicable, to retain the fair value measurement applied by the investment entity’s associate or joint venture to its interests in subsidiaries. The amendment is effective for annual periods beginning on or after January 1, 2016.

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date of issuance of the Group’s financial statements. The effective dates are to be determined by FSC. As the Group is currently determining the potential impact of the standards and interpretations A, E, F and O, their impact on the Group cannot be reasonably estimated at this point in time. The remaining issued, revised or amended standards or interpretations do not have any significant impact on the Group.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1)Statement of compliance

The consolidated financial statements for the years ended December 31, 2014 and 2013 have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRS, IAS, and Interpretations developed by IFRIC or the former SIC endorsed by the FSC of the Republic of China.

(2)Basis of preparation

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are presented in thousands of New Taiwan Dollars (“NT$”) unless otherwise specified.

(3)Basis of consolidation

Preparation principle of consolidated financial statements

Subsidiaries are fully consolidated from the acquisition date, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.

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A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the NCIs even if this results in a deficit balance of the NCIs.

If the Group loses control of a subsidiary, it:

A. derecognizes the assets (including goodwill) and liabilities of the subsidiary;
B. derecognizes the carrying amount of any NCI;
C. recognizes the fair value of the consideration received;
D. recognizes the fair value of any investment retained;
E. recognizes any surplus or deficit in profit or loss; and
F. reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss.

The consolidated entities are listed as follows:

Investor	Subsidiary	Main businesses	Percentage of Ownership (%)	Percentage of Ownership (%)
			December 31, 2014	December 31, 2013 100.00% 100.00% 100.00% 100.00% 51.00% (Continued)
The Company The Company The Company KINSUS HOLDING (SAMOA) LIMITED KINSUS HOLDING (SAMOA) LIMITED	KINSUS CORP. (USA) KINSUS HOLDING (SAMOA) LIMITED Kinsus Investment Co., Ltd. KINSUS HOLDING (CAYMAN) LIMITED PIOTEK HOLDINGS LTD. (CAYMAN)	Designing substrates, formulating marketing strategy analysis, developing new customers, researching and development new product technology Investing activities Investing activities Investing activities Investing activities	100.00% 100.00% 100.00% 100.00% 51.00%

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Investor	Subsidiary	Main businesses	Percentage of Ownership (%)	Percentage of Ownership (%)
			December 31, 2014	December 31, 2013 41.28% (Note) 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% (Concluded)
Kinsus Investment Co., Ltd. KINSUS HOLDING (CAYMAN) LIMITED KINSUS HOLDING (CAYMAN) LIMITED PIOTEK HOLDINGS LTD. (CAYMAN) PIOTEK HOLDING LIMITED PIOTEK HOLDING LIMITED Pegavision Corporation PEGAVISION HOLDINGS CORPORATION	Pegavision Corporation Kinsus Interconnect Technology Suzhou Corp. Xiang-Shuo (Suzhou) Trading Limited PIOTEK HOLDING LIMITED Piotek Computer (Suzhou) Co., Ltd. PIOTEK (H.K.) TRADING LIMITED PEGAVISION HOLDINGS CORPORATION Pegavision Contact Lenses (Shanghai) Corporation	Manufacture of medical equipment Manufacturing and selling printed circuit board (PCB) (not high-density fine-line) Trading of PCB related products and materials (not high-density fine-line) Investing activities Researching, developing, producing and selling electronic components, PCBs and related products and providing after-sale services Trading activities Investing activities Selling medical equipment	36.81% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Note: Even though the Group only held 36.81% and 41.28% of Pegavision Corporation as of December 31, 2014 and 2013, respectively, the management deemed the Group has control over the company. Thus, it was consolidated in the financial statements.

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(4)Foreign currency transactions

The Group’s consolidated financial statements are presented in New Taiwan Dollar, which is the parent company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction. At the reporting date, monetary items denominated in foreign currencies are retranslated at the prevailing functional currency closing rate of exchange; non-monetary items measured at fair value in a foreign currency are retranslated using the exchange rates at the date when the fair value is determined; and non-monetary items measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising from the settlement or translation of monetary items are taken to profit or loss in the period in which they arise, except for the following:

A. Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
B. Foreign currency items within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are accounted for based on the accounting policy for financial instruments.
C. Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(5)Foreign currency transactions and translation of financial statements in foreign currency

The assets and liabilities of foreign operations are translated into New Taiwan dollar at the closing rate of exchange prevailing at the balance sheet date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income under exchange differences on translation of foreign operations. On disposal of the foreign operation, cumulative amount of the exchange differences recognized in other comprehensive income under separate

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component of equity is reclassified from equity to profit or loss when recognizing the disposal gain/loss.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the NCIs in that foreign operation, instead of recognized in profit or loss. In partial disposal of an associate or jointly controlled entity that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(6)Current and non-current distinction for assets and liabilities

An asset is classified as current when:

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

All other assets are classified as non-current.

A liability is classified as current when:

A. The Group expects to settle the liability in its normal operating cycle
B. The Group holds the liability primarily for the purpose of trading
C. The liability is due to be settled within twelve months after the reporting period
D. The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

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(7)Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value (including fixed-term deposits that have maturities equal to or less than three months from the date of acquisition).

(8)Financial instruments

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

Financial assets and financial liabilities within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are recognized initially at fair value plus or minus, in the case of financial assets and financial liabilities not at fair value through profit or loss, directly attributable transaction costs.

A. Financial assets

The Group accounts for regular way purchase or sales of financial assets on the settlement date basis.

Financial assets of the Group are classified as financial assets at fair value through profit or loss, available-for-sale financial assets, and loans and receivables. The Group determines the classification of its financial assets at initial recognition based on their natures and purposes.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss.

A financial asset is classified as held for trading if:

(a) it is acquired principally for the purpose of selling in short term;
(b) on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
(c) it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

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If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial asset at fair value through profit or loss; or a financial asset may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

(a) it eliminates or significantly reduces measurement or recognition inconsistency; or
(b) a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.

Financial assets at fair value through profit or loss are measured at fair value with changes in fair value recognized in profit or loss. Dividends or interests on financial assets at fair value through profit or loss are recognized in profit or loss (including those received during the period of initial investment).

If financial assets do not have quoted prices in an active market and their far value cannot be reliably measured, then they are classified as financial assets measured at cost on balance sheet and carried at cost net of accumulated impairment losses, if any, as at the reporting date.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or those not classified as financial assets at fair value through profit or loss, held-to-maturity investments, or loans and receivables.

Foreign exchange gains and losses and interest calculated using the effective interest method relating to monetary available-for-sale financial assets, or dividends on an available-for-sale equity instrument, are recognized in profit or loss. Subsequent measurement of available-for-sale financial assets at fair value is recognized in equity until the investment is derecognized, at which time the cumulative gain or loss is 。 reclassified to profit or loss.

If equity instrument investments do not have quoted prices in an active market and their far value cannot be reliably measured, then they are classified as financial assets measured at cost on balance sheet and carried at cost net of accumulated impairment losses, if any, as at the reporting date.

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Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than those that the Group classifies as at fair value through profit or loss, upon initial recognition designates as available-for-sale, or those for which the holder may not recover substantially all of its initial investment due to credit worsening.

Loans and receivables are separately presented on the balance sheet as receivables or bond investments with no active market. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or transaction costs. The effective interest method amortization is recognized in profit or loss.

Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset other than the financial assets at fair value through profit or loss is impaired. A financial asset is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more loss events that has occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset. The carrying amount of the financial asset is reduced through the use of an allowance account and the amount of the loss is recognized in profit or loss.

A significant or prolonged decline in the fair value of an available-for-sale equity instrument below its cost is considered a loss event.

Other loss events include:

(a) significant financial difficulty of the issuer or obligor; or
(b) breach of contract, such as a default or delinquency in interest or principal payments;
or
(c) it becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
(d) the disappearance of an active market for that financial asset due to financial difficulties of the issuer.

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For held-to-maturity financial assets and loans and receivables measured at amortized cost, the Group first assesses individually whether objective evidence of impairment exists individually for financial asset that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exits for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows. The present value of the estimated future cash flows is discounted at the financial assets original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. Interest income is accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

Receivables together with the associated allowance are written off when there is no realistic prospect of future recovery. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to profit or loss.

In the case of equity investments classified as available-for-sale, where there is evidence of impairment, the amount recorded for impairment is the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss. The impairment amount is reclassified from equity to profit or loss. Impairment losses on equity investments are not reversed through profit or loss. Increases in their fair value after impairment are recognized directly in equity.

In the case of debt instruments classified as available-for-sale, the amount recorded for impairment is the cumulative loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss. Future interest income is based on the reduced carrying amount of assets and calculated using the effective interest rate which is the discount rate for measuring impairment loss. Interest income is recognized in profit or loss. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through profit or loss.

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Derecognition of financial assets

A financial asset is derecognized when:

(a) The rights to receive cash flows from the asset have expired
(b) The Group has transferred the asset and substantially all the risks and rewards of the asset have been transferred
(c) The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

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

B. Financial liabilities and equity instruments

Classification between liabilities or equity

The Group classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract of the Group that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

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A financial liability is classified as held for trading if:

(a) it is acquired principally for the purpose of selling it in short term;
(b) on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
(c) it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated upon initial recognition as at fair value through profit or loss when doing so results in more relevant information, because either:

(a) it eliminates or significantly reduces measurement or recognition inconsistency; or
(b) a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss, including interest paid, are recognized in profit or loss.

If the financial liabilities at fair value through profit or loss do not have quoted prices in an active market and their far value cannot be reliably measured, then they are classified as financial liabilities measured at cost on balance sheet and carried at cost as at the reporting date.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include payables and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Relevant gains or losses and amortization amounts are recognized in profit or loss when the liabilities are derecognized and amortized through the effective interest rate method.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

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Derecognition of financial liabilities

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

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

C. Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices, without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation models.

(9)Inventories

Inventories are valued at lower of cost or net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials - At actual purchase cost, using weighted average method Finished goods and work in progress - Including cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity, using weighted average method.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

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(10) Property, plant and equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 “Property, plant and equipment”. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings	10 to 25 years
Machinery and equipment	5 to 10 years
Transportation equipment	2 to 6 years
Office equipment	3 to 6 years
Other equipment	3 to 25 years

An item of property, plant and equipment or any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The property, plant and equipment’s residual values, useful lives and methods of depreciation are reviewed at each financial year. If the expected values differ from the estimates, the differences are recorded as a change in accounting estimate.

(11) Leasing

Group as a lessee

Finance leases which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the commencement of the lease at the fair value of the leased item or, if lower, at the present value of the minimum lease payments.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

Group as a lessor

Leases in which the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Rental income under operating lease are recognized on a straight-line basis over the lease term. Contingent rents are recognized as revenue in the period in which they are earned.

(12) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, not meeting the recognition criteria, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit (CGU) level. The assessment of

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are recognized in profit or loss.

The Group’s accounting policies for intangible assets are as follows:

Useful economic life Amortization method Internally generated or acquired externally	Cost of Computer Software
	1 to 5 years Straight-line method during the contract term Acquired externally

(13) Impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 “Impairment of Assets” may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group would conduct impairment tests at individual or CGU level. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired. An asset’s recoverable amount is the higher of an asset’s net fair value or its value in use.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the recoverable amount of the asset or CGU. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed the carrying amount that would have been determined, net of depreciation or amortization, had no impairment loss been recognized for the asset in prior years.

Impairment loss or reversals of continuing operations are recognized in profit or loss.

(14) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Provisions for sales returns and allowances

The Group estimates provisions for sales returns and allowances based on past experience and other known factors.

(15) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. Conditions and methods for the recognition of various types of revenue are listed below:

Sale of goods

Revenue from the sale of goods is recognized when all the following conditions have been satisfied: significant risks and rewards of ownership of the goods have passed to the buyer; neither continuing managerial involvement nor effective control over the goods sold have been retained; the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the entity; and the costs incurred in respect of the transaction can be measured reliably.

Customer Loyalty Programmes

When the fair value of award credits is measured based on the value of the awards for which they could be redeemed, the amount of discounts or incentives otherwise granted to customers not participating in the award credit scheme is to be taken into account.

Interest income

Interest incomes from financial assets at amortized costs (including loans and receivables and held-to-maturity financial assets) and available-for-sale financial assets are estimated using the effective interest method and recognized in profit or loss.

Dividend income

Dividend incomes are recognized only when the Group has the right to receive the dividends.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(16) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(17) Post-employment benefits

All regular employees of the Company and its domestic subsidiaries are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company and its domestic subsidiaries. Therefore, fund assets are not included in the Group’s consolidated financial statements. Pension benefits for employees of the overseas subsidiaries and the branches are provided in accordance with the respective local regulations.

For the defined contribution plan, the Company and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries and branches make contribution to the plan based on the requirements of local regulations and the contribution is expensed as incurred.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. The Group recognizes all actuarial gains and losses in the period in which they occur in other comprehensive income. Actuarial gains and losses recognized in other comprehensive income are recognized immediately in retained earnings.

(18) Income tax

Income tax expense (benefit) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The 10% income tax for undistributed earnings of the Company and its subsidiaries is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.

Deferred income tax

Deferred income tax is a temporary difference between the tax bases of assets and liabilities and their carrying amounts in balance sheet at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

A. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit (loss);
B. In respect of taxable temporary differences associated with investments in subsidiaries, and associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, any unused tax losses and carry forward of unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

A. Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
B. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will be reversed in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed and recognized at each reporting date.

Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

5. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that would have a significant risk for a material adjustment to the carrying amounts of assets and liabilities within the next fiscal year are discussed below.

(1)Fair value of financial instruments

Where the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including income approach (for example, the discounted cash flows model) or the market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

(2)Post-employment benefits

The cost of post-employment benefit pension plan and the present value of the defined benefit obligation are determined using actuarial valuations. An actuarial valuation involves making

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

various assumptions, including the determination of the discount rate, future salary increases, mortality rates and future pension increases. The assumptions used for measuring pension cost and defined benefit obligation are disclosed in Note 6.

(3)Revenue recognition - customer loyalty programmes

The Group uses statistical techniques to estimate the fair value of award credits under customer loyalty programmes. Parameters used in the estimation include: assumptions on the expected exchange rate, commodity portfolio available for future exchange and customer preference. Before the points issued under the programme expire, the estimates have material uncertainty. Please refer to Note 6 for more details.

(4)Revenue recognition – sale returns and allowances

The Group estimates sales returns and allowances based on past experience and other known factors as reductions of sales revenue upon sales. Please refer to Note 6 for more details.

(5)Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax benefit and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provision is based on various factors, such as past experience in tax audit and different interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective company’s domicile.

Deferred tax assets are recognized for all carryforward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies. Please refer to Note 6 for more details on unrecognized deferred tax assets as of December 31, 2014.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1)Cash and cash equivalents

Cash and petty cash Checking and saving Time deposits Total	December 31,2014 $4,574 2,661,078 8,875,963 $11,541,615	December 31,2013
		$8,677 2,196,877 7,582,273
		$9,787,827

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

Held for trading: Money market fund Valuation adjustments of financial assets held for trading Total	December 31,2014 $5,033,763 101,671 $5,135,434	December 31,2013
		$5,060,352 74,776
		$5,135,128

No financial asset at fair value through profit or loss was pledged by the Group as collateral.

(3)Available-for-sale financial assets

Stocks Valuation adjustments of available-for-sale financial assets Total	December 31,2014 $15,675 24,694 $40,369	December 31,2013
		$42,604 15,111
		$57,715

No available-for-sale financial asset was pledged by the Group as collateral.

(4)Bond investments with no active market

Time deposits Current Non-current	December 31,2014 $463,827 $463,827 $-	December 31,2013 $507,428 $507,379
		$49

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Please refer to Note 8 for bond investments with no active market pledged by the Group as collaterals.

(5)Financial assets carried at cost

Stocks Non-current	December 31,2014 $50,000 $50,000	December 31,2013
		$-
		$-

A. The range of reasonable estimates of the fair value of unlisted stocks held by the Group is significant and the probabilities of each estimate cannot be reasonably evaluated. These stocks cannot be measured in fair value while they are carried at cost.
B. No financial assets carried at cost were pledged by the Group as collateral.

(6)Notes receivable

Notes receivable – from operations Less: allowance for doubtful accounts Total	December 31,2014 $6,252 - $6,252	December 31,2013
		$69,383 -
		$69,383

No notes receivable was pledged by the Group as collateral.

(7)Accounts receivable and accounts receivable - related parties, net
A. Accounts receivable, net:

December 31,2014 Accounts receivable, gross $3,108,413 Less: allowance for doubtful accounts (67,946) Less: provision for sales return and allowance (124) Subtotal 3,040,343 Accounts receivable - related parties, gross 436,406 Less: allowance for doubtful accounts - Subtotal 436,406 Total $3,476,749	December 31,2013 $3,075,550 (61,910) - 3,013,640
	560,469 - 560,469 $3,574,109

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

B. The Group estimates sales returns and allowances based on past experience and other known factors as reductions of sales revenue upon sales.
C. The Company entered into factoring agreements with banks. Accounts receivables from selected customers are transferred to banks without recourse. Details of the agreed credit limits and accounts receivables transferred as of December 31, 2014 and 2013 were as follows:

December 31, 2014 December 31, 2013	FactoringInstitution	Amount Removed from Accounts Receivable	Advanced Amount	Collateral	Credit Limit
	Mega International Commercial Bank - LanYa Branch Mega International Commercial Bank - LanYa Branch	$ 509,292 375,933	$153,968 300	None None	Note Note

Note: The credit limits are US$ 30,000 thousand as of both December 31, 2014 and 2013.

D. The term of accounts receivables are generally on 60 to 120 day after monthly closing. The movements in the provision for impairment of accounts receivables and accounts receivable - related parties, and the ageing analysis are as follows (please refer to Note 12 for credit risk disclosure):

January 1, 2014 Charge (reversal) for the period Effect of exchange rate changes December 31, 2014 January 1, 2013 Charge (reversal) for the period Effect of exchange rate changes December 31, 2013	Impairment Loss- Individually $- - - $- $- - - $-	Impairment Loss – Collectively $61,910 5,876 160 $67,946 $89,146 (27,767) 531 $61,910	Total
			$61,910 5,876 160
			$67,946
			$89,146 (27,767) 531
			$61,910

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Ageing analysis for the net accounts receivable and accounts receivable - related parties is as follows:

December 31, 2014 December 31, 2013	Neither past due nor impaired	Accounts receivable –	Accounts receivable –	past due, but not impaired	past due, but not impaired	Total
		≤60 days $330,265 376,796	61 to 90 days	91 to 120 days	≥121 days
	$3,143,727 3,192,476		$2,358 3,558	$- 375	$399 904	$3,476,749 3,574,109

(8)Inventories
A. Inventories, net:

Raw materials Supplies Work in process Finished goods Merchandise Total Less: allowance for inventory valuation losses Net	December 31,2014 $721,063 38,638 724,021 1,153,748 39,320 2,676,790 (513,821) $2,162,969	December 31,2013
		$645,307 35,222 734,785 855,987 6,764
		2,278,065 (272,568)
		$2,005,497

B. For the years ended December 31, 2014 and 2013, the Group recognized NT$17,996,954 thousand and NT$16,898,393 thousand as costs of sale, respectively. The following captions were also included in cost:

Item	Year 2014	Year 2013
Loss from (Gains on recovery of) inventory valuation Loss (gain) on physical Loss in inventory write-off Unallocated fixed manufacturing overhead Total	$234,517 38,239 170,029 -	$(14,940) (4,392) 196,091 1,947
	$442,785	$178,706

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The Group recognized gains on recovery of inventory value in the year ended December 31, 2013 as some of the inventories previously evaluated for allowance for inventory valuation loss or obsolescence were disposed.

C. Abovementioned inventories were not pledged by the Group as collateral.

(9) Property, plant and equipment

Land	Machinery and Equipment	Office Equipment	Transportation Equipment Other Equipment	Transportation Equipment Other Equipment	Construction in progress and equipment awaiting inspection (including prepaid equipment)	Total
$1,237,179 $5,462,460 $15,077,543 $90,558 $12,370 8,939 20,165 54,596 7,851 830 - (52,159) (78,757) (492) - - 174,048 364,245 3,780 595 120,308 9,708 1,784,658 17,249 905				$3,766,802 $1,402,631 $27,049,543 68,416 3,756,295 3,917,092 (89,826) - (221,234) 86,648 7,924 637,240 126,377 (2,059,205) -
$1,366,426 $5,614,222	$17,202,285	$118,946	$14,700	$3,958,417	$3,107,645	$31,382,641
$552,539 $4,679,123 $15,512,709 $79,784 $10,282 - 64,572 (1,865) 7,259 1,525 - (62,014) (2,418,456) (4,009) - - 165,659 329,841 3,441 563 684,640 615,120 1,655,314 4,083 -				$3,714,470 $933,924 $25,482,831 42,069 3,599,217 3,712,777 (252,268) - (2,736,747) 81,489 9,689 590,682 181,042 (3,140,199) -

(Continued)

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Land	Machinery and Equipment	Office Equipment	Transportation Equipment	Other Equipment	Constructi on in progress and equipment awaiting inspection (including prepaid equipment)
			$5,727 2,563 - - 389 -	$1,922,338 481,522 - (88,256) 48,846 (80)	$- $11,082,458 - 3,018,003 - - - (212,397) - 316,142 - -
$- $1,521,919	$10,235,466	$73,772	$8,679	$2,364,370	$- $14,204,206
$- $1,027,474 $7,927,391 $35,078 - 266,091 2,168,476 18,995 - - - - - (61,891) (2,406,864) (3,828) - 31,427 158,268 1,884 - - (8,121) 13			$3,282 2,230 - - 215 -	$1,673,891 459,362 - (251,379) 32,356 8,108	$- $10,667,116 - 2,915,154 - - - (2,723,962) - 224,150 - -
$- $1,263,101	$7,839,150	$52,142	$5,727	$1,922,338	$- $11,082,458
$1,366,426 $4,092,303 $1,237,179 $4,199,359	$6,966,819 $7,238,393	$45,174 $38,416	$6,021 $6,643	$1,594,047 $1,844,464	$3,107,645 $17,178,435 $1,402,631 $15,967,085 (Concluded)

A. Buildings of the Group primarily comprised plant buildings and accessories, which are depreciated based on their respective useful economic life of 20 to 25 years and 3 to 20 years.
B. Details of the property, plant and equipment and prepaid equipment are as follows:

Property, plant and equipment Prepaid equipment Total	December 31,2014 $15,429,778 1,748,657 $17,178,435	December 31,2013
		$14,756,743 1,210,342
		$15,967,085

C. Please refer to Note 8 for details on property, plant and equipment pledged by the Group as collaterals.
D. The Company purchased 31 parcels of land with a total area of 28,019.24 square meters. Lands are located at following address: No. 965, 1113, 1114, 1438 to 1443 at ShiLeiZi

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Sub-section, ShiLeiZi Section; No. 1047 to 1049 at QingHua Section; and No. 0001, 697 to 700 and 712 to 726 at RongHua Section, XinFeng Village. Due to regulatory restrictions, land cannot be registered under the Company’s name. It is temporarily registered under the Chairman’s name. To secure the Company’s right to the land, mortgage registration is completed with the Company being the obligee.

(10) Intangible assets

Cost of Computer Software

) Intangible assets	Cost of Computer Software
Cost: January 1, 2014 Additions – acquired separately Derecognized when due Effect of exchange rate changes December 31, 2014 January 1, 2013 Additions – acquired separately Derecognized when due Effect of exchange rate changes December 31, 2013 Amortization and Impairment: January 1, 2014 Amortization Derecognized when due Effect of exchange rate changes December 31, 2014 January 1, 2013 Amortization Derecognized when due Effect of exchange rate changes December 31, 2013 Carrying amount, net: December 31, 2014 December 31, 2013	$43,568 32,271 (36,644) 906
	$40,101
	$34,584 21,302 (13,088) 770
	$43,568
	$29,409 26,567 (36,644) 787
	$20,119
	(Continued) Cost of Computer Software
	$26,486 15,563 (13,088) 448
	$29,409
	$19,982
	$14,159

(Concluded)

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Amounts of amortization recognized for intangible assets are as follows:

Operating cost Operating expense	Year 2014	Year 2013
	$292	$233
	$26,275	$15,330

(11) Other non-current assets

Refundable deposits Long-term prepaid rent Total	December 31,2014 $44,743 286,970 $331,713	December 31,2013
		$41,082 277,775
		$318,857

As of December 31, 2014 and 2013, land use rights within the long-term prepaid rents amounted to NT$ 286,970 thousand and NT$ 277,775 thousand, respectively.

(12) Short-term loans

Interest Rate Range(%)	December 31, 2014	December 31, 2013
Unsecured bank loans 0.88%~1.52%	$1,806,896	$1,581,454

As of December 31, 2014 and 2013, unused short-term loan credit for the Group amounted to NT$ 3,826,804 thousand and NT$ 2,829,686 thousand, respectively.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(13) Other payables

Accrued expenses Equipment payable Accrued interest Total	December 31,2014	December 31,2013
	$2,589,592 1,236,524 2,636	$2,177,726 668,223 3,211
	$3,828,752	$2,849,160

(14) Provisions

Sales January 1, 2014 Additions Debits Reversal Adjustment on discount rate and increase in discounted amount due to the passage of time December 31, 2014 December 31,2014 Current $302 Non-current - Total $302	Sales January 1, 2014 Additions Debits Reversal Adjustment on discount rate and increase in discounted amount due to the passage of time December 31, 2014 December 31,2014 Current $302 Non-current - Total $302	Sales	Returns and Allowances
			$- 302 - - -
			$302
			December 31,2013 $- - $-
	$302 - $302

Sales returns and allowances

The Group incurred sales returns and allowances based on past experience and other known factors as reductions against sales revenue upon sale, recording it under the caption of provisions.

(15) Other current liabilities

A. Other current liabilities Unearned sales revenue Deferred revenue - Customer Loyalty Programmes Current portion of long-term loans	December 31,2014	December 31,2013
	$75,708 32,853 781 1,433,589	$78,186 11,996 - 1,488,439

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

	December 31,2014	December 31,2013
	$1,542,931	$1,578,621
	Year 2014
	$- 781 -
	$781
December 31,2014
$781 -
$781

(16) Long-term loans

Details of long-term loans as of December 31, 2014 and 2013 were as follows:

Debtor	Type of Loan	Due Date	Loan Amount	Method of Repayment
			December 31, 2014
Mega International Commercial Bank - LanYa Branch Mega International Commercial Bank - LanYa Branch The Shanghai Commercial & Savings Bank - ZhongLi Branch The Shanghai Commercial & Savings Bank - ZhongLi Branch Land Bank of Taiwan - ZhongLi Branch Taipei Fubon Commercial Bank – BeiTou Branch Total Less: current portion Non-current portion	Secured bank loan Credit loan Secured bank loan Credit loan Credit loan Credit loan	2015.10.27- 2016.12.15 2015.10.27- 2018.08.12 2015.07.15- 2019.01.15 2014.12.24- 2017.04.15 2015.12.23- 2016.11.27 2017.12.15	$186,159 754,324 224,040 109,125 415,913 474,750	Notes 1, 2 and 8 Notes 1, 3 and 10 Notes 2, 6, 7 and 10 Notes 2, 6 and 10 Notes 2, 5 and 9 Note 12
			2,164,311 (1,433,589)
			$730,722

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

(Continued)

Debtor	Type of Loan	Due Date	Loan Amount	Method of Repayment
			December 31, 2013
Mega International Commercial Bank - LanYa Branch Mega International Commercial Bank - LanYa Branch The Shanghai Commercial & Savings Bank - ZhongLi Branch The Shanghai Commercial & Savings Bank - ZhongLi Branch Land Bank of Taiwan - ZhongLi Branch Other banks Total Less: current portion Non-current portion	Secured bank loan Credit loan Secured bank loan Credit loan Credit loan Credit loan	2014.04.07- 2016.12.15 2015.10.27- 2018.08.12 2014.06.23- 2018.09.09 2014.12.24- 2017.04.15 2014.03.13- 2016.12.23 2015.12.20	$274,499 1,223,995 288,356 366,638 717,729 6,743	Notes 1, 2 and 8 Notes 1, 3 and 10 Notes 2, 6, 7 and 10 Notes 2, 6 and 10 Notes 2, 5 and 9 Note 11
			2,877,960 (1,488,439)
			$1,389,521

(Concluded)

Note 1: A term is defined as every 3 months starting from the initial draw-down date. Grace period is 2 years (8 terms). The rest is repayable in installments of equal amount for 20 terms.
Note 2: Interest shall be paid for the first 12 months from the initial draw-down date. Starting from the 13th month, interest shall be paid monthly with principal repaid every 3 months.
Note 3: A term is defined as every 3 months starting from the initial draw-down date. The loan is repayable in installments of equal amount for 20 terms.
Note 4: A term is defined as every 3 months starting from the initial draw-down date. The loan is repayable in installments of equal amount for 12 terms.
Note 5: A term is defined as every 1 months starting from the initial draw-down date. The principal and interest are repayable in installments of equal amount.
Note 6: A term is defined as every 3 months starting from the initial draw-down date. Grace period is 2 years (8 terms). The rest is repayable in installments of equal amount for 12 terms.
Note 7: Starting from the 25[th] month, a term is defined as every 3 months. The loan is

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

repayable in installments of equal amount for 11 terms.

Note 8: A term is defined as every 3 months starting from the initial draw-down date. Grace period is 1 years (4 terms). The rest is repayable in installments of equal amount for 8 terms.
Note 9: Interest shall be paid monthly starting from the initial draw-down date. Principal is repaid in one lump sum when due.
Note 10: A term is defined as every 3 months starting from the initial draw-down date. Grace period is 1 years (4 terms). The rest is repayable in installments of equal amount for 16 terms.
Note 11: Monthly payment is calculated using the annuity method. The principal and interest are repayable in installments of equal amount for 36 terms.
Note 12: One year after the initial draw-down date is considered term one and the following terms are defined as every 6 months since then. The principal and interest are repayable in installments of equal amount for 5 terms.
A. A portion of property, plant and equipment are pledged to Mega International Commercial Bank and The Shanghai Commercial & Savings Bank (the first-priority mortgagors) as collaterals for secured bank loans. Please refer to Note 8 for more details.
B. As of December 31, 2014 and 2013, the interest rate intervals for long-term loans were 0.72% ~ 1.60% and 0.74% ~ 2.25%, respectively.
(17) Other non-current liabilities

Accrued pension costs Deposits received Total	December 31,2014 $29,668 80,952 $110,620	December 31,2013
		$49,351 114,630
		$163,981

(18) Post-employment benefits

Defined contribution plan

The Company and its domestic subsidiaries adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Pursuant to the Act, the Company and its domestic subsidiaries shall contribute at least 6% of each individual employee’s salaries or wages to employees’ pension accounts. The Company and its domestic subsidiaries have made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts at the Bureau of Labor Insurance.

Pursuant to local government regulations, subsidiaries located in the People’s Republic of

243

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

China would contribute social welfare benefits based on a certain percentage of employees’ salaries or wages to the employees’ individual pension accounts.

The Group’s other overseas subsidiaries or branches make contributions to employee’s pension accounts according to local laws and regulations.

Expenses under the defined contribution plan for the years ended December 31, 2014 and 2013 are NT$ 103,867 thousand and NT$ 89,772 thousand, respectively.

Defined benefits plan

The Company and its domestic subsidiaries adopt a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average monthly salaries when retirement is approved. During the continuous years of service, two units would be granted for each full year of service, provided that year of service exceeding fifteen years shall be entitled to only one unit for each full year of service. The maximum number of units is forty-five. Under the Labor Standards Act, the Company and its domestic subsidiaries contribute an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee.

The costs under the defined benefits plan recognized in profit or loss is as follows:

Current service cost Interest cost Expected return on plan assets Past service cost Total	Year 2014	Year 2013
	$232 2,645 (1,658) -	$288 2,154 (1,342) -
	$1,219	$1,100

The benefit expense under the defined benefits plan recognized is as follows:

Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses Total	Year 2014	Year 2013
	$968 45 114 92	$870 37 127 66
	$1,219	$1,100

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Accumulated amounts of actuarial gain or loss recognized under other comprehensive income are as follows:

Beginning balance Actuarial gain or loss Ending balance	Year 2014	Year 2013
	$23,952 (15,710)	$37,347 (13,395)
	$8,242	$23,952

Reconciliation of defined benefit obligation at present value and plan asset at fair value is as follows:

Defined benefit obligation Plan assets at fair value Funded status Unrecognized past service cost Accrued pension cost	December 31,2014 $116,697 (87,029) 29,668 - $29,668	December 31,2013
		$132,275 (82,924)
		49,351 -
		$49,351

Changes in present value of the defined benefit obligation are as follows:

Defined benefit obligation as of January 1 Current service cost Interest cost Benefit paid Actuarial loss (gain) Effect of exchange rate changes Defined benefit obligation as of December 31	Year 2014	Year 2013
	$132,275 232 2,645 (2,993) (15,462) -	$143,622 288 2,154 - (13,789) -
	$116,697	$132,275

Changes in fair value of plan assets are as follows:

Fair value of plan assets as of January 1 Expected return on plan assets Contributions by employer Benefit paid Actuarial loss Effect of exchange rate changes Fair value of plan assets as of December 31	Year 2014	Year 2013
	$82,924 1,658 5,192 (2,993) 248 -	$76,692 1,342 5,284 - (394) -
	$87,029	$82,924

245

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The Company expects to contribute NT$ 5,192 thousand to its defined benefit plan in the following 12 months after December 31, 2014.

The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:

Cash	Pension	plan(%)
	December 31,2014 100.00%	December 31,2013
		100.00%

For the years ended December 31, 2014 and 2013, the Group’s actual return on plan assets were NT$ 1,087 thousand and NT$ 948 thousand, respectively.

The employees’ pension funds are deposited at the trust department of Bank of Taiwan. The expected rate of return on plan assets is determined based on historical trend and analyst’s expectation on the asset’s return in its market over the obligation period. Furthermore, the utilization of the fund by the labor pension fund supervisory committee and the fact that the minimum earnings are guaranteed to be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks are also taken into consideration in determining the expected rate of return on plan assets.

The principal assumptions used in determining the Group’s defined benefit plan are shown below:

Discount rate Expected rate of return on plan assets Expected rate of salary increases	December 31,2014 2.25% 2.25% 3.00%	December 31,2013
		2.00% 2.00% 3.00%

A 0.5% change in discount rate would result in the following:

Effect on the defined benefit obligation	Year	2014	Year	2013
	0.5% increase	0.5% decrease	0.5% increase	0.5% decrease
	$(11,487)	$13,023	$(13,526)	$15,424

246

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Amounts associated with defined benefit plan for the year ended December 31, 2014 and 2013 were as follows:

Defined benefit obligation at present value, ending balance Plan assets at fair value, ending balance Surplus/deficit in plan, ending balance Experience adjustments on plan liabilities Experience adjustments on plan assets	Year 2014	Year 2013
	$116,697 (87,029)	$132,275 (82,924)
	29,668 (15,462) (248)	49,351 (13,789) 394

(19) Equity

A. Common shares

B. Capital surplus

Additional paid-in capital Differences betweenequity purchase price and carrying amount arising from actual acquisition or disposal of subsidiaries All changes in interests in subsidiaries Total	December 31,2014 $5,850,000 50,925 38,894 $5,939,819	December 31,2013
		$5,850,000 13,612 -
		$5,863,612

According to the Company Act, the capital surplus shall not be used except for making good the deficit of the company. When a company incurs no loss, it may distribute the capital surplus related to the income derived from the issuance of new shares at a premium or income from endowments received by the company up to a certain percentage of paid-in capital. The said capital surplus could be distributed in cash to its shareholders in proportion to the number of shares being held by each of them. Capital surplus related to long-term equity investments cannot be used for any purpose.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

C. Appropriation of earnings and dividend policies

(a) Earning distribution

a. 1% as remuneration to directors
b. Bonues to employees cannot be less than 1% of the total bonus to employees and shareholders. Bonus to employees can be distributed in cash or stocks. The parties receiving the stock dividends shall include employees in affiliated companies who met certain conditions stipulated by the Board of Directors.
c. The Board of Directors would propose an earning distribution plan based on the remaining balance combined with the undistributed earnings accumulated during previous years to be resolved at the shareholders’ meeting.

(b) Dividend policies

(c) Legal reserve

(d) Special reserve

Pursuant to existing laws and regulations, the Company shall set aside a special reserve equivalent to the net debit balance of the other components of shareholders’ equity when distributing earnings for 2013 and 2012. For any subsequent reversal of net deductions from the other components of shareholders’ equity, the amount reversed may be distributed as earnings.

248

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(e) The Company estimated the amounts of the employee bonuses and remuneration to directors and supervisors to be NT$ 545,679 thousand and NT$ 32,099 thousand, respectively, for the years ended December 31, 2014; and the estimated amounts of the employee bonuses and remuneration to directors and supervisors to be NT$ 492,104 thousand and NT$ 28,947 thousand, respectively, for the years ended December 31, 2013. The amounts are estimated based on the net income for the period and the percentage stated in the Article of Incorporation, after taking into account factors such as legal reserves. The estimated employee bonuses and remuneration to directors and supervisors are recognized as operating costs or operating expense for the period. If the board modified the estimates significantly in the subsequent periods, the Company will recognize the change as an adjustment to current income. The difference between the estimates and the resolution of shareholders’ meeting will be recognized in profit or loss of the subsequent year. If the shareholders’ meeting resolves to pay the employee bonus in the form of stocks, the number of shares distributed is determined by dividing the amount of bonuses by the closing price (after considering the effect of dividends) of shares on the day preceding the shareholders’ meeting.

The appropriations of earnings for 2014 and 2013 were approved through the Board of Directors’ meeting and shareholders’ meeting held on February 9, 2015 and June 9, 2014, respectively. The details of the distributions are as follows:

249

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Appropriation of earnings	Appropriation of earnings	Dividendper share(NT$)	Dividendper share(NT$)
2014 $361,733 1,784,000 32,556 545,679 $2,723,968	2013	2014	2013
	$322,409 1,561,000 29,761 492,104	4.00	3.50
	$2,405,274

250

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

D. Non-controlling interests

Non-controlling interests
Beginning balance Net loss attributable to NCIs Other comprehensive income attributable to NCIs: Exchange differences arising on translation of foreign operations New shares from capital increase of subsidiaries Differencesbetween equity purchase price and carrying amount arising from actual or disposal of subsidiaries Ending balance	Year 2014	Year 2013 $2,346,307 (107,839) 120,536 91,195 - $2,450,199
	$2,450,199 (127,094) 115,330 200,966 15,364
	$2,654,765

(20) Net revenue

Sale of goods Less: sales returns and allowances Services rendered Other operating revenue Total	Year 2014	Year 2013 $22,913,688 (326,205) 165,081 350,263 $23,102,827
	$24,750,695 (345,496) 186,656 351,979
	$24,943,834

(21) Operating lease

A. Group as a lessee

The commercial leasing agreements that the Group engaged in for buildings and plants have an average term of one year. There are no restrictive covenants for the Group in the contracts.

As of December 31, 2014 and 2013, the total future minimum lease payments due to irrevocable leasing contracts were as follows:

Minimum lease payment Expenses under operating lease were as follows:	December 31,2014	December 31,2013
	$40,146	$18,282

Minimum lease payment	Year 2014 $136,263	Year 2013
		$110,229

251

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

B. Group as a lessor

The leasing agreements that the Group engaged in for plants have an average term of one year.

As of December 31, 2014 and 2013, the total future minimum lease payments from leases due to irrevocable leasing contracts amounted to zero.

For the years ended December 31, 2014 and 2013, rent incomes of the Group amounted to NT$20,407 thousand and NT$7,773 thousand, respectively.

(22) Summary statement of employee benefits, depreciation and amortization expenses by function is as follows:

Function Nature	Year 2014	Year 2014	Year 2014	Year 2013	Year 2013	Year 2013
	Cost of goods sold	Operating expenses	Total	Cost of goods sold	Operating expenses	Total
Employee benefits expense
Salaries	$2,853,463	$703,859	$3,557,322	$2,523,941	$675,478	$3,199,419
Labor and health insurance	169,967	58,018	227,985	137,450	47,913	185,363
Pension	76,253	28,833	105,086	67,225	23,647	90,872
Other employee benefits expense	172,313	54,112	226,425	160,560	34,587	195,147
Depreciation	2,785,951	232,052	3,018,003	2,700,418	214,736	2,915,154
Amortization	292	26,275	26,567	233	15,330	15,563

Note: As of December 31, 2014 and 2013, the Group had 7,207 and 6,952 employees, respectively.

(23) Non-operating income and expenses
A. Other income

Other income
Interest income Dividend income Government subsidies Other incomes - others Total	Year 2014 $96,170 1,531 - 36,260 $133,961	Year 2013
		$87,324 2,226 6,765 82,602
		$178,917

The abovementioned government subsidies refers to the subsidies received by the Group in accordance with project contracts and progress made for carrying out the Aspherical High DK Disposable Soft Contact Len Project of Ministry of Economic Affairs (MOEA).

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

B. Other gains and losses

Other gains and losses
Gain (loss) on disposal or property, plant and equipment Foreign exchange gains, net Valuation gain of financial assets at fair value through profit or loss Gain on disposal of investment Other expenses Total Finance costs Interests on bank loans	Year 2014	Year 2013
	$(724) 32,414 26,895 26,135 (20,286)	$5,074 73,568 22,949 10,732 (7,704)
	$64,434	$104,619
	Year 2014	Year 2013
	$56,482	$55,589

C. Finance costs

(24) Components of other comprehensive income (OCI)

For the year ended December 31, 2014:

Exchange differences arising on translation of foreign operations Unrealized valuation gain (loss) on available-for-sale financial assets Actuarial gain for defined benefit plan Total OCI	Arising during the period	Reclassification adjustments duringtheperiod $- (24,891) - $(24,891)	Subtotal	Income tax benefit (expense) $(33,026) - - $(33,026)	OCI, net of tax
	$309,597 34,474 15,710		$309,597 9,583 15,710		$276,571 9,583 15,710
	$359,781		$334,890		$301,864

253

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

For the year ended December 31, 2013:

Exchange differences arising on translation of foreign operations Unrealized valuation gain (loss) on available-for-sale financial assets Actuarial gain for defined benefit plan Total OCI	Arising during the period	Reclassification adjustments duringtheperiod $- (5,054) - $(5,054)	Subtotal	Income tax benefit (expense) $(19,205) - - $(19,205)	OCI, net of tax
	$323,579 4,519 13,395		$323,579 (535) 13,395		$304,374 (535) 13,395
	$341,493		$336,439		$317,234

(25) Income tax
A. The major components of income tax expense (benefit) for the years ended December 31, 2014 and 2013 were as follows:

Income tax expense (benefit) recognized in profit or loss

Current income tax expense (benefit): Current income tax expense Adjustments in respect of current income tax of prior periods Deferred tax expense (benefit): Deferred tax expense (benefit) relating to origination and reversal of temporary differences Total income tax expense B. Income tax recognized in other comprehensive income Deferred tax expense (benefit): Exchange differences arising on translation of foreign operations	Year 2014	Year 2013 $553,917 (14,000) 7,177 $547,094 Year 2013 $19,205
	$540,877 125,269 (5,307)
	$660,839
	Year 2014
	$33,026

254

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

C. The reconciliation of income tax expense and income tax based on pre-tax net income at the statutory tax rate is as follows:

Income before tax of continuing operations Income tax expense at the statutory rate Additional 10% income tax on unappropriated earnings Tax effects of tax-exempt income Tax effects of non-deductible expenses for tax purposes Tax effects of deferred income tax assets/liabilities Income tax adjustments on prior years Income tax expense recognized in profit or loss	Year 2014	Year 2013
	$4,151,072	$3,663,348
	$645,428 141,511 (316,790) (5,368) 70,789 125,269	$521,685 117,993 (85,460) (28,818) 21,694 -
	$660,839	$547,094

D. Balance of deferred tax assets (liabilities) related to the following items:

Year 2014

Year 2014
Temporary differences Inventory valuation loss and obsolescence Exchange (gain) loss Cumulative translation adjustments Deferred tax (expense)/ benefit Deferred tax assets (liabilities), net Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	Beginning balance	Recognized in profit or loss	Recognized in OCI	Direct recognition in equity	From combination	Exchange difference	Ending balance
	$20 (7,197) (19,205)	$256 5,051 -	$- - (33,026)	$- - -	$- - -	$- - -	$276 (2,146) (52,231)
	$(26,382)	$5,307	$(33,026)	$-	$-	$-	$(54,101)

	$20						$276
	$(26,402)						$(54,377)

255

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Beginning balance	Recognized in profit or loss	Recognized in OCI	Direct recognition in equity	From combination	Exchange difference	Ending balance
$13,396 (13,396) -	$(13,376) 6,199 -	$- - (19,205)	$- - -	$- - -	$- - -	$20 (7,197) (19,205)
$-	$(7,177)	$(19,205)	$-	$-	$-	$(26,382)

$13,396						$20
$(13,396)						$(26,402)

E. Unrecognized deferred tax assets

As of December 31, 2014 and 2013, deferred tax assets that have not been recognized as they may not be used to offset taxable profits amounted to NT$1,016,063 thousand and NT$976,027 thousand, respectively.

F. The investment and expansion by the Company and subsidiary, Pegavision Corporation, meet the requirements stipulated in “Regulations for Encouraging Manufacturing Enterprises and Technical Service Enterprises in the Newly Emerging, Important and Strategic Industries” and “Regulations Governing Five-Year Profit-seeking Enterprise Business Income Tax Exemption for Encouraging Added Investments from Manufacturing Enterprises and Associated Technical Service Enterprises”. Thus, they are exempted from Profit-seeking Enterprise Business Income Tax for 5 years. Details are as follows:

Item	Approval Agency	Document No. for Approval	Exemption Period
	Industrial Development	Gong-Zhong-Zi	January 1, 2013 to
1	Bureau, MOEA	No 10005112010 on August 25,	December 31, 2017
		2011
	Industrial Development	Gong-Zhong-Zi	January 1, 2014 to
2	Bureau, MOEA	No 10005116950 on December	December 31, 2018
		27, 2011

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

G. Unused tax credits (loss carry-forwards) of the Group are as follows:

Year of Occurrence	Loss	Unused Amount	Unused Amount	Year of Expiry
		December 31, 2014	December 31, 2013 $35,363 95,522 127,596 $258,481
2010 2011 2012 Total	69,135 95,522 135,158	$- 27,445 126,986		2020 2021 2022
		$154,431

H. Unused tax credits (loss carry-forwards) of entities within the Group are as follows:

Legal Basis Statute for Upgrading Industries Statute for Upgrading Industries	Items Eligible for Investment Tax Credit Machinery and equipment Machinery and equipment	Unused Amount	Unused Amount	Year of Expiry
		December 31, 2014 $- - $-	December 31, 2013 $43,488 23,195 $66,683
				2014 2015

I. Imputation credit information

Balances of imputation credit amounts	December 31,2014 $1,434,884	December 31,2013
		$940,384

The actual creditable ratio for 2013 and 2012 were 11.62% and 10.23%, respectively.

The Company does not have unappropriated earnings resulted in year 1997 and before.

J. The assessment of income tax return

As of December 31, 2014, the assessment of the income tax returns of the Company and subsidiaries were as follows:

The Company Subsidiary - Pegavision Corporation Subsidiary - Kinsus Investment Co., Ltd.	The assessment of income tax returns
	Assessed and approved up to 2011 Assessed and approved up to 2011 Assessed and approved up to 2012

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(26) Earnings per share

Basic earnings per share is calculated by dividing net profit for the year attributable to the common shareholders of the parent entity by the weighted average number of common shares outstanding during the year.

Diluted earnings per share is calculated by dividing the net profit attributable to common shareholders of the Company (after adjusting for interests on the convertible corporate bonds) by the weighted average number of common shares outstanding during the year plus the weighted average number of common shares that would be issued on conversion of all the dilutive potential common shares into common shares.

A. Basic earnings per share

Net income available to common shareholders of the parent (in thousands of NT$) Weighted average number of common shares outstanding (in thousands of shares) Basic earnings per share (in NT$) Diluted earnings per share Net income available to common shareholders of the parent (in thousands of NT$) Net income available to common shareholders of the parent after dilution (in thousands of NT$) Weighted average number of common shares outstanding (in thousands of shares) Effect of dilution: Employee bonus – stocks (in thousands of shares) Weighted average number of common shares outstanding after dilution (in thousands of shares) Diluted earnings per share (in NT$)	Year 2014	Year 2013
	$3,617,327	$3,224,093
	446,000	446,000
	$8.11	$7.23
	Year 2014	Year 2013
	$3,617,327	$3,224,093
	$3,617,327	$3,224,093
	446,000 7,305	446,000 6,775
	453,305	452,775
	$7.98	$7.12

B. Diluted earnings per share

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(27) Changes in parent’s ownership interests in subsidiaries

Subscription of new shares issued by subsidiaries not at existing ownership percentage

The Board of Directors of Pegavision Corporation resolved to increase capital of NT$120,000 thousand by cash offering on October 28, 2013. Shares was to be issued at a par value of NT$ 15 and the record date was set on December 27, 2013. The Group did not subscribe to new shares at existing ownership percentage and merely invested NT$18,866 thousand. Thus, the Group’s ownership dropped from 46.14% to 41.28%. Cash received from the capital increase amounted to NT$101,134 thousand and the NCIs increased by NT$91,195 thousand. The difference of NT$9,939 thousand between those two amounts was recognized under equity.

The Board of Directors of Pegavision Corporation resolved to increase capital of NT$300,000 thousand by cash offering on July 28, 2014. Shares was issued at the price of NT$30 and the record date was set on August 27, 2014. The Group did not subscribe to new shares at existing ownership percentage and merely invested NT$73,752 thousand. Thus, the Group’s ownership dropped from 41.28% to 38.49%. Cash received from the capital increase amounted to NT$226,248 thousand and the NCIs increased by NT$200,966 thousand. The difference of NT$25,282 thousand between those two amounts was recognized under equity.

Sale of subsidiaries without losing control

Kinsus Investment Co., Ltd. sold 1,007,389 shares of its holding in Pegavision Corporation on December 25, 2014. Net proceeds received by Kinsus Investment Co., Ltd. upon disposal of NCIs amounted to NT$66,289 thousand. The difference between proceeds and NCIs of NT$50,925 thousand was recognized under equity.

7. RELATED PARTY TRANSACTIONS

(1) Significant transactions with related parties

A. Sales Parent Entities having joint control or significant influence over the Group Other related parties Total	Year 2014	Year 2013
	$1,834,138 - 59,169	$1,621,639 312 523,852
	$1,893,307	$2,145,803

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Selling prices and collection terms to related parties are similar to that of non-related party in 2014 and 2013. The collection terms are 30 to 60 days from the end of delivery month by telegraphic transfer.

B. For the years ended December 31, 2014 and 2013, the Group recognized travelling expenses of NT$498 thousand and NT$1,101 thousand, respectively, for commissioning other related parties to handle travelling logistics.
C. For the years ended December 31, 2014 and 2013, the Group recognized rent expenses of NT$27,109 thousand and NT$16,237 thousand, respectively, for plants leased from the Parent.

Moreover, for the years ended December 31, 2014 and 2013, the Group recognized rent expenses of NT$19,338 thousand and NT$19,356 thousand, respectively, for plants leased from other related parties.

In addition, for the years ended December 31, 2014 and 2013, the Group recognized rent expenses of NT$2,537 thousand and NT$2,757 thousand (tax inclusive), respectively, for various facilities leased from the Parent.

D. For the years ended December 31, 2014 and 2013, the Group recognized operating expenses of NT$6,486 thousand and NT$2,974 thousand, respectively, for services provided by other related parties.

Moreover, for the years ended December 31, 2014 and 2013, the Group recognized operating expenses of NT$753 thousand and NT$485 thousand (tax inclusive), respectively, for services provided by the Parent.

In addition, for the years ended December 31, 2014 and 2013, the Group operating expenses of NT$57,945 thousand and NT$32,311 thousand (tax inclusive), respectively, for utility bills paid by the Parent on the Group’s behalf.

E. For the years ended December 31, 2014 and 2013, the Group recognized rent income of NT$5,150 thousand and NT$6,088 thousand, respectively, for plants leased to other related parties.

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

F. Accounts receivable - related parties

Parent Other related parties Total Less: allowance for doubtful accounts Net	December 31,2014 $435,398 1,008 436,406 - $436,406	December 31,2013
		$529,704 30,765
		560,469 -
		$560,469

G. Salaries and rewards to key management of the Group

Short-term employee benefits Post-employee benefits Total	Year 2014	Year 2013
	$88,704 838	$92,358 864
	$89,542	$93,222

H. Other receivables

I. Refundable deposits L. Accounts payable M. Accrued expenses Other related parties Parent Other related parties Parent Other related parties Total	December 31,2014 $1,307 December 31,2014 $5,700		December 31,2013 $1,929 December 31,2013 $3,500 December 31,2013 $163 December 31,2013
	December 31,2014
	$-
	December 31,2014 $15,855 5,719 $21,574
			$3,938 4,126 $8,064

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

8. PLEDGED ASSETS

The following assets of the Group are pledged as collaterals:

Item	CarryingAmount	CarryingAmount	Loan Details
	December 31, 2014	December 31, 2013 $9,258 371,274 20,457 3,057 $404,046
Bond investments with no active market Property, plant and equipment - machinery and equipment (carrying amount) Property, plant and equipment - other equipment (carrying amount) Refundable deposits Total	$- 285,931 16,401 3,057		Letter of credit Long-term secured loans Long-term secured loans Bonded factory
	$305,389

9. SIGNIFICANT CONTINGENCIES AND UNRECOGNIZED CONTRACT COMMITMENTS

(1) The Group’s amounts available under unused letters of credit (LC) as of December 31, 2014 were as follows: (in thousands of foreign currencies)

Currency JPY USD Euro	LC Amount JPY 2,592,379 thousand USD 4,452 thousand EUR 415 thousand	Guarantee Paid
		$- - -

(2) Details of significant constructions in progress and outstanding contracts of property, plant and equipment as of December 31, 2014 were as follows:

Nature of Contract Machinery and equipment and contraction contract	Contract Amount $3,461,084	Amount Paid $1,640,086	Outstanding Balance
			$1,820,998

10. SIGNIFICANT DISASTER LOSS

None.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

11. SIGNIFICANT SUBSEQUENT EVENT

None.

12. OTHERS

(1) Categories of financial instruments

Financial assets

December 31,2014 Financial assets at fair value through profit or loss: Held for trading $5,135,434 Available-for-sale financial assets 40,369 Loans and receivables: Cash and cash equivalents (exclude cash on hand) 11,510,041 Bond investments with no active market 463,827 Notes receivable 6,252 Accounts receivable 3,040,343 Accounts receivable - related parties 436,406 Other receivables 452,265 Other receivables - related parties 1,307 Total $21,086,244 Financial liabilities December 31,2014 Financial liabilities at amortized cost: Short-term loans $1,806,896 Payables 5,856,512 Long-term loans (including current portion) 2,164,311 Total $9,827,719	December 31,2013
	$5,135,128 57,715 9,779,150 507,428 69,383 3,013,640 560,469 494,726 1,929
	$19,619,568
	December 31,2013
	$1,581,454 4,774,944 2,877,960
	$9,234,358

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(2) Objectives and policies of financial risk management

The Group’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activates. The Group identifies, measures, and manages the aforementioned risks based on its policy and risk preferences.

The Group has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Group complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market risk comprises currency risk, interest rate risk and other price risk (e.g. equity instruments).

In practice, it is rarely the case that a single risk variable will change independently from other risk variables. There are usually interdependencies between risk variables. However, the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

Foreign currency risk

The Group’s exposure to foreign currency risk relates primarily to the Group’s operating activities (when revenue or expense are denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign operations.

The Group has certain foreign currency receivables denominated in the same foreign currency as certain foreign currency payables, therefore natural hedge is achieved. Thus, hedge accounting is not adopted.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Group’s profit (loss) and equity is performed on significant monetary items denominated in foreign currencies as of the end of the reporting period. The Group’s foreign currency risk is mainly related to the volatility in the exchange rates of US dollars. The sensitivity analysis is as follows:

If NT dollars appreciates/depreciates against US dollars by 1%, the net income (loss) for the

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

years ended December 31, 2014 and 2013 would increase/decrease by NT$13,613 thousand and NT$22,662 thousand, respectively.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk relates primarily to the Group’s investments with variable interest rates and loans with fixed and variable interest rates, which are all categorized as loans and receivables.

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as of the end of the reporting period and presumed to be held for one accounting year, including investments and loans with variable interest rates. If interest rate increases/decreases by 0.1%, the net income (loss) for the years ended December 31, 2014 and 2013 would decrease/increase by NT$1,320 thousand and decrease/increase by NT$2,271 thousand, respectively.

Equity price risk

The Group’s domestic listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The listed equity securities held by the Group is classified as available-for-sale. The Group manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on equity portfolio are submitted to the Group’s senior management on a regular basis. The Group’s Board of Directors reviews and approves all equity investment decisions.

For available-for-sale listed equity securities, 1% decrease in their prices would impact on the Group’s equity by NT$404 thousand and NT$577 thousand for the years ended December 31, 2014 and 2013, respectively; and 1% increase in their prices would merely impact on the Group’s equity.

(4) Credit risk management

Credit risk is the risk that counterparty will not meet its obligations under a contract and result in a financial loss. The Group is exposed to credit risk from operating activities (primarily for accounts and notes receivable) and financing activities (primarily for bank deposits and other financial instruments).

Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to customer credit risk management. Credit risk of

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

all customers are assessed based on a comprehensive review of the customers’ financial status, credit ratings from credit institutions, past transactions, current economic conditions and the Group’s internal credit ratings. The Group also employs some credit enhancement instruments (e.g. prepayment or insurance) to reduce certain customers’ credit risk.

As of December 31, 2014 and 2013, receivables from the top ten customers accounted for 45.65% and 58.80% of the Group’s total accounts receivable, respectively. The concentration of credit risk is relatively insignificant for the remaining receivables.

Credit risk from balances with banks, fixed-income securities and other financial instruments is managed by the Group’s finance division in accordance with the Group’s policy. The counterparties that the Group transacts with are determined by internal control procedures. They are banks with fine credit ratings and financial institutions, corporate and government agencies with investment-grade credit ratings. Thus, no significant default risk and consequently no significant credit risk is expected.

(5) Liquidity risk management

The Group maintains financial flexibility through the use of cash and cash equivalents, highly-liquid marketable securities, bank loans, etc. The table below summarizes the maturity profile of the Group’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted interest payment relating to borrowings with variable interest rates is extrapolated based on the estimated yield curve as of the end of the reporting period.

Non-derivative financial instruments

December 31, 2014 Loans Payables December 31, 2013 Loans Payables	Less than 1 year	2 to 3years	3 to 4years	4 to 5years	Total
	$3,290,131 5,856,512 3,125,979 4,774,944	$694,452 - 1,307,281 -	$63,266 - 78,967 -	$5,495 - 52,834 -	$4,053,344 5,856,512 4,565,061 4,774,944

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(6) Fair values of financial instruments
A. The evaluation methods and assumptions applied in determining the fair value

Fair value is the price that would be received to sell a financial asset or paid to transfer a financial liability in an orderly transaction between willing market participants (not under coercion or liquidation). The following methods and assumptions are used by the Group in estimating the fair values of financial assets and liabilities:

(a) The carrying amount of cash and cash equivalents, receivables, payables and other current liabilities approximate their fair value due to short maturity terms.
(b) For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (e.g. listed stocks and bonds).
(c) Fair value of equity instruments without active markets (including stocks of public companies not traded in an active market and unlisted stocks) is estimated using the market approach. Factors such are recent financing activities, ratings of companies similar in type and size, development of the company’s technology, market conditions and other economic indicators.
(d) The fair values of other financial assets and liabilities are determined based on the discounted cash flows model. The assumptions of interest rates and discount rates mainly derived from data of similar tools and applicable yield curve during the contract term.
B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Group’s financial assets and liabilities measure at amortized cost approximates their fair value.

C. Fair value on balance sheet

The following table provides an analysis of financial instruments that are measure subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

Level 1 fair value measurements are those derived from quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. induced from price)

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

December 31, 2014 Financial assets: Financial assets at fair value through profit or loss Funds Available-for-sale financial assets Stocks Financial liabilities: None December 31, 2013 Financial assets: Financial assets at fair value through profit or loss Funds Available-for-sale financial assets Stocks Financial liabilities: None	Level 1	Level 2	Level 3	Total
	$5,135,434 40,369 Level 1	$- - Level 2	$- - Level 3	$5,135,434 40,369 Total
	$5,135,128 57,715	$- -	$- -	$5,135,128 57,715

For the years ended December 31, 2014 and 2013, there were no transfers between Level 1 and Level 2 fair value hierarchy.

(7) Significant financial assets and liabilities denominated in foreign currencies

Information regarding the Group’s significant financial assets and liabilities denominated in foreign currencies was listed below:

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Financial assets Monetary items: USD CNY Financial liabilities Monetary items: USD CNY	December 31,2014	December 31,2014	December 31,2014	(In Thousands) December 31,2013 Foreign Currencies Exchange Rate NTD $123,933 29.81 $3,693,698 $139,082 4.89 $679,801 $186,654 29.81 $5,563,206 $142,356 4.89 $695,915	(In Thousands) December 31,2013 Foreign Currencies Exchange Rate NTD $123,933 29.81 $3,693,698 $139,082 4.89 $679,801 $186,654 29.81 $5,563,206 $142,356 4.89 $695,915
	Foreign Currencies $128,682 $104,450 $162,457 $144,860	Exchange Rate 31.65 5.17 31.65 5.17	NTD	Foreign Currencies	Exchange Rate 29.81 4.89 29.81 4.89
			$4,072,131 $540,089 $5,141,564 749,274	$123,933 $139,082 $186,654 $142,356

(8) Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Group manages and adjusts its capital structure in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

13. ADDITIONAL DISCLOSURES

(1) Information on significant transactions

A. Financing provided to others: None.
B. Endorsement/Guarantee provided to others: Please refer to Table 1.
C. Marketable securities held as of December 31, 2014 (excluding investments in subsidiaries, associates and joint ventures): Please refer to Table 2.
D. Individual securities acquired or disposed of with accumulated amount of at least NT$ 300 million or 20 percent of the paid-in capital for the year ended December 31, 2014: None.
E. Acquisition of individual real estate with amount of at least NT$300 million or 20 percent of the paid-in capital for the year ended December 31, 2014: Please refer to Table 3.
F. Disposal of individual real estate with amount of at least NT$300 million or 20 percent of

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

the paid-in capital for the year ended December 31, 2014: None.

G. Related party transactions with purchase or sales amount of at least NT$100 million or 20 percent of the paid-in capital for the year ended December 31, 2014: Please refer to Table 4.
H. Receivables from related parties of at least NT$100 million or 20 percent of the paid-in capital as of December 31, 2014: None.
I. Derivative instrument transactions: None.
J. Intercompany relationships and significant intercompany transactions for the year ended December 31, 2014: Please refer to Table 9.

(2) Information on investees

A. Investees over which the Company exercise significant influence or control (excluding investees in Mainland China): Please refer to Table 5.
B. Investees over which the Company exercise control shall be disclosed of information under Note 13(1):
(a) Financing provided to others: None.
(b) Endorsement/Guarantee provided to others: None.
(c) Marketable securities held as of December 31, 2014 (excluding investments in subsidiaries, associates and joint ventures): Please refer to Table 6
(d) Individual securities acquired or disposed of with accumulated amount of at least NT$300 million or 20 percent of the paid-in capital for the year ended December 31, 2014: None.
(e) Acquisition of individual real estate with amount of at least NT$300 million or 20 percent of the paid-in capital for the year ended December 31, 2014: None.
(f) Disposal of individual real estate with amount of at least NT$300 million or 20 percent of the paid-in capital for the year ended December 31, 2014: None.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

(g) Related party transactions with purchase or sales amount of at least NT$100 million or 20 percent of the paid-in capital for the year ended December 31, 2014: Please refer to Table 7.
(h) Receivables from related parties of at least NT$100 million or 20 percent of the paid-in capital as of December 31, 2014: Please refer to Table 8.
(i) Derivative instrument transactions: None.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

(3) Information on investments in Mainland China:

A. Name of investee in China, main business, paid-in capital, method of investment, investment flows, percentage of ownership, investment gain or loss, carrying amount at the end of reporting period, inward remittance of earning or loss and the upper limit on investment in China:

(In Thousands of New Taiwan Dollars)

Name of Investee in China	Main Business	Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2014	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2014	Profit/ Loss of Investee	Percentage of Ownership (Direct or Indirect Investment)	Share of Profit/Loss	Carrying Amount as of December 31, 2014	Accumulated Inward Remittance of Earnings as of December 31, 2014	Accumulated Outflow of Investment from Taiwan to Mainland China as of December 31, 2014	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment in China by Investment Commission, MOEA
					Outflow	Inflow
Kinsus Interconnect Technology Suzhou Corp.	Manufacturing and selling PCB (not high-density fine-line)	$2,215,500 (Note 2)	(Note 1)	$2,215,500 (Note 2)	$-	$-	$2,215,500 (Note 2)	$(187,969) (Notes 2 and 3)	100%	$(187,969) (Notes 2, 3 and 6)	$1,229,223 (Notes 2, 3 and 6)	$-	$2,215,500 (Note 2)	$2,215,500 (Note 2)	No upper limit (Note 4)
Piotek Computer (Suzhou) Co., Ltd.	Researching, developing, producing and selling electronic components, PCBs and related products and providing after-sale services	$5,276,055 (Note 2)	(Note 1)	$2,983,139 (Note 2)	$-	$-	$2,983,139 (Note 2)	$(365,558) (Notes 2 and 3)	51%	$(186,435) (Notes 2, 3 and 6)	$2,134,810 (Notes 2, 3 and 6)	$-	$2,983,139 (Note 2)	$2,983,139 (Note 2)

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Name of Investee in China	Main Business	Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2014	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2014	Profit/ Loss of Investee	Percentage of Ownership (Direct or Indirect Investment)	Share of Profit/Loss	Carrying Amount as of December 31, 2014	Accumulated Inward Remittance of Earnings as of December 31, 2014	Accumulated Outflow of Investment from Taiwan to Mainland China as of December 31, 2014	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment in China by Investment Commission, MOEA
					Outflow	Inflow
Xiang-Shuo (Suzhou) Trading Limited	Trading of PCB (not high-density fine-line) and material for related products	$63,300 (Note 2)	(Note 1)	$63,300 (Note 2)	$-	$-	$63,300 (Note 2)	$4,273 (Notes 2 and 3)	100%	$4,273 (Notes 2, 3 and 6)	$67,731 (Notes 2, 3 and 6)	$-	$63,300 (Note 2)	$63,300 (Note 2)	No upper limit (Note 4)
Pegavision Contact Lenses (Shanghai) Corporation	Selling medical equipment	$10,598 (Note 2)	(Note 1)	$2,981 (Note 2)	$7,617	$-	$10,598 (Note 2)	$(4,819) (Notes 2 and 3)	100%	$(4,819) (Notes 2, 3 and 6)	$1,601 (Notes 2, 3 and 6)	$-	$10,598 (Note 2)	$10,598 (Note 2)	$549,257 (Note 5)

Note 1: Investment in Mainland China through companies in the third area.
Note 2: Amounts in foreign currencies are translated into New Taiwan dollars using the exchange rates on the balance sheet date.
Note 3: Gain/loss on investment is recognized based on the audited financial statements of the parent company in Taiwan.
Note 4: The Company meets the conditions of corporate operation headquarter in the Principle of Evaluation for Investment and Technical Cooperation in Mainland China. Thus, there is no upper limit on investment amount.

Note 5: The upper limit on investment for Pegavision Contact Lenses (Shanghai) Corporation is calculated as 60% of Pegavision Corporation’s net equity. Note 6: Transactions are eliminated upon preparation of consolidated financial statements.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

B. Significant transactions with investees in China:
(a) Purchase, ending balance of related accounts payable and their weightings:

Purchase of the Company from Kinsus Interconnect Technology Suzhou	Purchases Amount % to Net Purchase $1,526,521 21.35%	Accounts Payable	Accounts Payable
	Amount	Amount $247,315	% to Account Balance
	$1,526,521		21.06%

The product spec of goods purchased by the Company from Kinsus Interconnect Technology Suzhou Corp. in 2014 differed from goods purchased from other vendors. Thus, transaction prices are not comparable. Payment term for related parties is 60 days from the end of delivery month. The payment terms for non-related parties are 60 to 90 days from the end of delivery month by telegraphic transfer.

(b) Sales, the ending balance of related accounts receivable and their weightings:

Sales Amount % to Net Sales USD30,268 19.60% USD19,059 12.34% RMB24,544 16.66% RMB 4,439 3.01% $1,484 -% $3,419 -%	Accounts receivable	Accounts receivable
Amount	Amount USD6,770 USD1,491 RMB 3,889 RMB 649 $- $-	% to Account Balance
USD30,268		21.06%
USD19,059		4.64%
RMB24,544		27.65%
RMB 4,439		4.61%
$1,484		-%
$3,419		-%

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The product spec of goods sold between subsidiaries in 2014 differed from goods sold to other customers. Thus, transaction prices cannot be reasonably compared. Sales of the Company to Kinsus Interconnect Technology Suzhou Corp. and Xiang-Shuo (Suzhou) Trading Limited have the same product prices as sales to non-related parties. Collection terms are also equivalent to the ones for non-related parties, which is 30 to 60 days from delivery by telegraphic transfer.

(c) Property transaction amounts and resulting gain or loss:
a. Details of property transactions between Kinsus Interconnect Technology Suzhou Corp. and related parties are as follows:

Asset Type	Related Party	Carrying Amount	Selling Price RMB286	Gain (Loss) on Disposal	Price Reference
Machinery and equipment	Piotek Computer (Suzhou) Co., Ltd.	RMB304		RMB18	By negotiation

b. Details of property transactions between the Company and related parties are as follows:

follows:
Asset Type	Related Party	Carrying Amount	Selling Price	Gain (Loss) on Disposal $479	Price Reference
Machinery and equipment	Piotek Computer (Suzhou) Co., Ltd.	$6,032	$6,511		By negotiation

(d) Ending balance of endorsements/guarantees or collateral provided and the purposes: Please refer to Table 1.
(e) Maximum balance, ending balance, interest rate range and total interest for current period from financing provided to others: None.
(f) Transactions that have significant impact on profit or loss of current period or the financial position, such as services provided or rendered:
a. The Company commissioned Kinsus Interconnect Technology (Suzhou) Corp. for processing and testing and recognized processing expense and testing fee of NT$51,319 thousand and NT$152 thousand, respectively, for the year ended December 31, 2014. Payable amounted to NT$9,318 thousand as of December 31, 2014.

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Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

b. The Company sold fixtures and spare parts to Piotek Computer (Suzhou) Co., Ltd., Kinsus Interconnect Technology Suzhou Corp. and Xiang-Shuo (Suzhou) Trading Limited and recognized other income of NT$2,145 thousand for the year ended December 31, 2014.
c. As of December 31, 2014, the balance of other receivables amounted to NT$8,210 thousand and NT$987 thousand, respectively, from the Company’s sale of property, plant and equipment and fixtures to Piotek Computer (Suzhou) Co., Ltd. and Kinsus Interconnect Technology Suzhou Corp.
d. As of December 31, 2014, other receivables from Xiang-Shuo (Suzhou) Trading Limited’ payment and collection on behalf of Piotek Computer (Suzhou) Co., Ltd. amounted to RMB24 thousand.
(g) Above transactions are eliminated upon preparation of consolidated financial statements. Please refer to Table 9 for details.

14. SEGMENT INFORMATION

For management purposes, the Group is organized into operating segments based on different products and services and has two reportable operating segments as follows:

IC Substrate: This segment produces and manufactures BGA substrates and sells the products to manufacturers of electronic products.

Printed Circuit Board (PCB): This segment produces and manufactures PCBs and sells the products to manufacturers of electronic products.

No operating segments have been aggregated to form the above reportable operating segments.

The Group’s operating segments adopts the same accounting policies as the ones in Note 4. Management monitors the operating results of its business units separately for the purpose of decision-making on resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and measured consistently with methods applied to operating profit or loss in the consolidated financial statements.

276

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Segment income (loss), assets and liabilities

IC Substrate	PCB	Adjustment and Elimination	Consolidated
$19,285,334 -	$5,658,500 -	$- -	$24,943,834 -
$19,285,334	$5,658,500	$-	$24,943,834
$3,778,380	$(288,147)	$-	$3,490,233
IC Substrate	PCB	Adjustment and Elimination	Consolidated
$18,024,851 -	$5,077,976 -	$- -	$23,102,827 -
$18,024,851	$5,077,976	$-	$23,102,827
$3,341,062	$(224,808)	$-	$3,116,254

Details of assets under the Group’s operating segments as of December 31, 2014 and 2013 are as follows:

follows:
December 31, 2014 Segment assets December 31, 2013 Segment assets	IC Substrate	PCB	Adjustment and Elimination	Consolidated
	$33,202,296	$7,849,378	$-	$41,051,674
	$30,065,631	$8,046,711	$-	$38,112,342

(2) Geographic information

Revenue from external customers:

Taiwan Others Total	Year 2014	Year 2013
	$10,924,071 14,019,763	$9,298,569 13,804,258
	$24,943,834	$23,102,827

277

Kinsus Interconnect Technology Corp. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Revenue is categorized based on the customer’s location.

Non-current assets:

Taiwan USA China Total	December 31,2014	December 31,2013
	$11,246,007 251 6,334,148	$9,639,202 254 6,660,714
	$17,580,406	$16,300,170

(3) Major customers

Customer A from IC Substrate Customer B from IC Substrate Total	Year 2014 $1,898,187 2,258,344 $4,156,531	Year 2013
		$1,946,782 2,166,516
		$4,113,298

278

Kinsus Interconnect Technology Corp. and Subsidiaries

Endorsement/Guarantee Provided to Others For the Year Ended December 31, 2014

Table 1

(In Thousands of Foreign Currency / New Taiwan Dollars)

Endorsement/ Guarantee Provider	Endorsement/ Guarantee Provider	Guaranteed Party	Guaranteed Party	Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party	Maximum Balance for the Period	EndingBalance	Amount ActuallyDrawn	Amount of Endorsement /Guarantee secured by Properties	Ratio of Accumulated Endorsement/ Guarantee to Net Worth per Latest Financial Statements	Maximum Endorsement/ Guarantee Amount Allowed	Endorsement provided by parent company to subsidiaries	Endorsement provided by subsidiaries to parent company	Endorsement provided to entities in China
No. (Note 1)	Name	Name	Nature of Relationship
0 0	Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Suzhou Corp. Piotek Computer (Suzhou) Co., Ltd.	Investee accounted for using equity method indirectly Investee accounted for using equity method indirectly	The overall amount of guarantees/ endorsements provided to a subsidiary in which the Company holds directly over 50% (inclusive) of common equity interest shall not exceed 20% of the net worth in the current financial statements. $5,479,602 The overall amount of guarantees/ endorsements provided to a subsidiary in which the Company holds directly over 50% (inclusive) of common equity interest shall not exceed 20% of the net worth in the current financial statements. $5,479,602	$4,431,000 (USD 140,000) (Note 2) $3,066,895 (USD 96,900) (Note 2)	$4,431,000 (USD 140,000) (Note 2) $2,663,348 (USD 84,150) (Note 2)	$1,494,613 $281,151	$- $-	16.17% 9.72%	$13,699,005 $13,699,005 Shall not exceed 50% of the net worth in the current financial statements. Shall not exceed 50% of the net worth in the current financial statements.	Y Y	N N	Y Y

Note 1: Kinsus Interconnect Technology Corp. is coded "0".

Note 2: Amounts in foreign currencies are converted to New Taiwan Dollars using the exchange rates as of the balance sheet date.

279

Kinsus Interconnect Technology Corp. and Subsidiaries

Marketable Securities Held as of December 31, 2014

Table 2

(In Thousands of New Taiwan Dollars)

Name of Held Company	Type and Name of Marketable Securities	Relationship with the Issuer	Financial Statement Account	December 31,2014	December 31,2014	December 31,2014		Note
				Shares / Units	Carrying Amount	Shareholding%	Fair Value (Note)
Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp.	Money market funds: Capital Money Market Fund Yuanta De-Bao Money Market Fund Yuanta Wan Tai Money Market Fund Fuh Hwa Yu Li Money Market Fund Fuh Hwa Money Market Fund Hua Nan Phoenix Money Market Fund Taishin Ta Chong Money Market Fund Taishin 1699 Money Market Fund FSITC Money Market Fund Mega Diamond Money Market Fund Jih Sun Money Market Union Money Market Fund UPAMC James Bond Fund Subtotal Add: Valuation adjustments of financial assets held for trading Total Stocks: Listed stocks - Pegatron Corporation Add: Valuation adjustments of available-for -sale financial assets Total	- - - - - - - - - - - - - Investing company which accounts for the Company using equity method indirectly	Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Available-for-sale financial assets - current	32,783,435 30,422,974 48,495,532 20,789,636 21,596,707 9,633,540 33,095,605 30,522,218 1,168,258 41,465,474 31,315,952 35,032,705 15,322,946 553,000	$510,667 353,891 700,000 265,794 300,000 150,000 450,000 400,000 200,000 500,000 450,000 450,000 250,000 4,980,352 101,226 $5,081,578 $15,675 24,694 $40,369	-% -% -% -% -% -% -% -% -% -% -% -% -% 0.02%	$519,614 359,323 722,050 275,637 306,950 154,154 461,727 405,500 204,698 510,286 455,328 454,682 251,629 $5,081,578 $40,369

Note: Companies without quotes in the open markets are valued at net equities.

280

Kinsus Interconnect Technology Corp. and Subsidiaries

Acquisition of Individual Real Estate with Amount of at Least NT$ 300 million or 20% of the Paid-in Capital

For the Year Ended December 31, 2014

Table 3

(In Thousands of New Taiwan Dollars)

Acquiring Company	Name of Property	Transaction Date	Transaction Amount	Payment Status	Counter- party	Relationship	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Price Reference	Purpose and Use of Acquisition	Other Terms
							Owner	Relationship with the Company	Transfer Date	Amount
Kinsus Interconnect Technology Corp.	Houses and buildings Construction of XinFeng Plant	2014.02.13	$1,781,850	NT$ 712,740 thousand was paid as of December 31, 2014	Guo-Gong Construction Co., Ltd.	None	None	None	None	None	Bidding	Production expansion and operation planning	None

281

Kinsus Interconnect Technology Corp. and Subsidiaries

Related Party Transactions with Purchase or Sales Amount of At least NT$ 100 Million or 20% of the Paid-in Capital

For the Year Ended December 31, 2014

			Table 4 (In Thousands of New Taiwan Dollars)	Table 4 (In Thousands of New Taiwan Dollars)	Table 4 (In Thousands of New Taiwan Dollars)	Table 4 (In Thousands of New Taiwan Dollars)	Table 4 (In Thousands of New Taiwan Dollars)	Table 4 (In Thousands of New Taiwan Dollars)	Table 4 (In Thousands of New Taiwan Dollars)	Table 4 (In Thousands of New Taiwan Dollars)	Table 4 (In Thousands of New Taiwan Dollars)
CompanyName	Related Party	Nature of Relationship	Transaction Details				Abnormal Transaction		Notes/ Accounts Payable or Receivable		Note
			Purchase/ Sale	Amount	% to Total	Payment/ Collection Term	Unit Price	Payment/ Collection Term	EndingBalance	% to Total
Kinsus Interconnect Technology Corp.	Kinsus Interconnect Technology Suzhou Corp.	Investee accounted for using equity method indirectly	Purchase	$1,526,521	21.35%	Payment within 60 days from the end of delivery month	Specs of goods purchased are different from others. Cannot be reasonablely compared.	Other vendors also enjoy payment within 60 days from the end of delivery month	Accounts payable $(247,315)	(21.06)%	Note

Note: Transactions are eliminated when preparing the consolidated financial statements.

282

Kinsus Interconnect Technology Corp. and Subsidiaries

Investees over Which the Company Exercise Significant Influence or Control Directly or Indirectly (Excluding Investees in Mainland China)

As of December 31, 2014

Table 5

(In Thousands of Foreign Currency / New Taiwan Dollars)

Investor	Investee	Business Location	Main Business and Product	Original Investment Amount	Original Investment Amount	Balance as of December 31,2014	Balance as of December 31,2014	Balance as of December 31,2014	$2,713 $(350,943) $28,640 $68,962 USD(5,804) USD(11,335) USD(11,335) USD 221 $(4,810) Net Income (Loss) of the Investee	Share of Income (Loss) of the Investee	Note
				December 31,2013	December 31,2014	Shares	%	CarryingValue
Kinsus Investment Co., Ltd. KINSUS HOLDING (SAMOA) LIMITED KINSUS HOLDING (SAMOA) LIMITED PIOTEK HOLDINGS LTD. (CAYMAN) PIOTEK HOLDING LIMITED Pegavision Corporation Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp.	KINSUS CORP. (USA) KINSUS HOLDING (SAMOA) LIMITED Kinsus Investment Co., Ltd. Pegavision Corporation KINSUS HOLDING (CAYMAN) LIMITED PIOTEK HOLDINGS LTD. (CAYMAN) PIOTEK HOLDING LIMITED PIOTEK (H.K.) TRADING LIMITED PEGAVISION HOLDINGS CORPORATION	CA. U.S.A. Samoa Taoyuan City Taoyuan City Cayman Islands Cayman Islands British Virgin Islands Hong Kong Samoa	Investing activities Investing activities Manufacturing medical equipment Investing activities Investing activities Investing activities Trading activities Investing activities Designing substrates, formulating marketing strategy analysis, developing new customers, researching and development new product technology	USD500 USD500 USD166,309 USD166,309 $398,000 $398,000 (Note1) (Note1) $212,666 $286,418 USD72,000 USD72,000 USD94,309 USD94,309 USD139,841 USD139,841 USD26 USD26 USD120 USD380		500,000 shares 66,308,720 shares 39,800,000 shares 22,088,736 shares 72,000,000 shares 95,755,000 shares 39,840,790 shares 200,000 shares 380,000 shares	100.00% 100.00% 100.00% 36.81% 100.00% 51.00% 100.00% 100.00% 100.00%	$29,528 $3,458,036 $521,940 $337,011 USD 40,978 USD 68,281 USD 133,893 USD 1,597 $2,320		$2,713 $(350,943) $28,640 $27,802 USD(5,804) USD(5,781) USD(11,335) USD 221 $(4,810)	Note Note Note Note Note Note Note Note Note

Note: Transactions are eliminated when preparing the consolidated financial statements.

Note 1: The Company's original investment in Kinsus Investment Co., Ltd. was NT$ 500,000 thousand. Kinsus Investment Co., Ltd. reduced capital by NT$ 102,000 thousand to offset deficits in 2013. After the reduction, investment amount reduced to NT$ 398,000 thousand.

283

Kinsus Interconnect Technology Corp. and Subsidiaries

Marketable Securities Held as of December 31, 2014 (Excluding Investments in Subsidiaries, Associates and Jointly Controlled Entities)

As of December 31, 2014

Table 6

							Table 6	Table 6	Table 6	Table 6
							(In Thousands of New Taiwan Dollars)
Name of Held Company	Type and Name of Marketable Securities	Relationship with the Issuer	Financial Statement Account		December 31,2014			Guarantee, Pledge or Other Restricted Conditions
				Shares(Unit)	Carrying Amount	%	Fair Value (Net Equity)	Shares	Carrying Amount	Note
Kinsus Investment Co., Ltd. Kinsus Investment Co., Ltd. Pegavision Corporation	Money market funds: Taishin Ta Chong Money Market Fund Valuation adjustments of financial assets held for trading Total Stocks: Yi-Shuo Creative Co., Ltd. Money market funds: Yuanta Wan Tai Money Market Fund Yuanta RMB Money Market Fund Valuation adjustments of financial assets held for trading Total	- - - -	Financial assets carried at cost Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss	829,070 5,000,000 2,554,934 81,086	$11,314 251 $11,565 $50,000 $38,000 4,097 194 $42,291	-% 7.49% -%	$11,565 $- (Note) $42,291	- - -	$- $- $-

Note: No quotes in active markets and fair values cannot be measured reliably.

284

Kinsus Interconnect Technology Corp. and Subsidiaries

Related Party Transactions with Purchase or Sales Amount of At least NT$ 100 Million or 20% of the Paid-in Capital

For the Year Ended December 31, 2014

Table 7

			(In Thousands of US Dollars)	(In Thousands of US Dollars)	(In Thousands of US Dollars)	(In Thousands of US Dollars)	(In Thousands of US Dollars)	(In Thousands of US Dollars)	(In Thousands of US Dollars)	(In Thousands of US Dollars)	(In Thousands of US Dollars)
CompanyName	Related Party	Nature of Relationship	Transaction Details				Abnormal Transaction		Notes/Accounts Payable or Receivable		Note
			Purchase/ Sale	Amount	% to Total	Payment/ Collection Term	Unit Price	Payment/ Collection Term	EndingBalance	% to Total
Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. Xiang-Shuo (Suzhou) Trading Limited Piotek Computer (Suzhou) Co., Ltd. Piotek (H.K.) Trading Limited Kinsus Interconnect Technology Suzhou Corp.	Pegatron Corporation Xiang-Shuo (Suzhou) Trading Limited Piotek Computer (Suzhou) Co., Ltd. Piotek (H.K.) Trading Limited Piotek Computer (Suzhou) Co., Ltd. Kinsus Interconnect Technology Corp.	Parent company Parent company Also a subsidiary under the Company's control Also a subsidiary under the Company's control Also a subsidiary under the Company's control Also a subsidiary under the Company's control	Sales Sales Purchase Sales Purchase Sales	USD 60,545 USD 19,059 USD 19,059 USD 30,268 USD 30,268 USD 52,217	39.20% 12.34% 80.48% 19.60% 100.00% 100.00%	Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month	Specs of goods sold are different from others. Cannot be reasonably compared. Specs of goods sold are different from others. Cannot be reasonably compared. Specs of goods sold are different from others. Cannot be reasonably compared. Specs of goods sold are different from others. Cannot be reasonably compared. Specs of goods sold are different from others. Cannot be reasonably compared. Specs of goods sold are different from others. Cannot be reasonably compared.	No non-related parties to be compared with. No non-related parties to be compared with. No non-related parties to be compared with. No non-related parties to be compared with. No non-related parties to be compared with. No non-related parties to be compared with.	Accounts receivable USD 13,757 Accounts receivable USD 1,491 Accounts payable USD (1,491) Accounts receivable USD 6,770 Accounts payable USD (6,770) Accounts receivable USD 8,108	42.79% 4.64% (45.96)% 21.06% (100.00)% 100.00%	Note Note Note Note Note

Note: Transactions are eliminated when preparing the consolidated financial statements.

285

Kinsus Interconnect Technology Corp. and Subsidiaries

Receivables from Related Parties of at Least NT$ 100 Million or 20% of the Paid-in Capital

As of December 31, 2014

Table 8

(In Thousands of US Dollars)

CompanyName	Related Party	Nature of Relationship	EndingBalance	Turnover Ratio	Overdue	Overdue	Amount Received in Subsequent Periods	Allowance for Doubtful Debts
					Amount	Action Taken
Piotek Computer (Suzhou) Co., Ltd. Kinsus Interconnect Technology Suzhou Corp. Piotek Computer (Suzhou) Co., Ltd.	Pegatron Corporation Kinsus Interconnect Technology Corp. Piotek (H.K.) Trading Limited	Parent company Parent company Also a subsidiary under the Company's control	USD 13,757 (Note) USD 6,770 (Note and Note 1) USD 8,108 (Note and Note 1)	3.84 4.85 7.10	$- $- $-	- - -	$- $- $-	$- $- $-

Note: Accounts receivable

Note 1: Transactions are eliminated when preparing the consolidated financial statements.

286

Kinsus Interconnect Technology Corp. and Subsidiaries

Table 9

Intercompany Relationships and Significant Intercompany Transactions for the Year Ended December 31, 2014

(In Thousands of Foreign Currency / New Taiwan Dollars)

				(In Thousands of Foreign Currency/ New Taiwan Dollars)	(In Thousands of Foreign Currency/ New Taiwan Dollars)	(In Thousands of Foreign Currency/ New Taiwan Dollars)	(In Thousands of Foreign Currency/ New Taiwan Dollars)
No. (Note 1)	CompanyName	Counter-Party	Nature of Relationship (Note 2)	IntercompanyTransaction
				Financial Statement Account	Amount	Terms	Percentage to Consolidated Net Revenue or Total Assets (Note 3)
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 2 2 2 2 2 3 3 4	Year 2014 Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. Xiang-Shuo (Suzhou) Trading Limited Xiang-Shuo (Suzhou) Trading Limited Xiang-Shuo (Suzhou) Trading Limited Xiang-Shuo (Suzhou) Trading Limited Xiang-Shuo (Suzhou) Trading Limited Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. PIOTEK (H.K.) TRADING LIMITED	KINSUS CORP. (USA) Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. Xiang-Shuo (Suzhou) Trading Limited Piotek Computer (Suzhou) Co., Ltd. Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. KINSUS CORP. (USA) KINSUS CORP. (USA) Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. Piotek Computer (Suzhou) Co., Ltd. Xiang-Shuo (Suzhou) Trading Limited PIOTEK (H.K.) TRADING LIMITED PIOTEK (H.K.) TRADING LIMITED PIOTEK (H.K.) TRADING LIMITED Xiang-Shuo (Suzhou) Trading Limited Xiang-Shuo (Suzhou) Trading Limited Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. KINSUS CORP. (USA)	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 3 3 3 3 3 3 3	Accrued expense Accrued expense Accounts payable Sales revenue Other receivables Other receivables Purchase Commission expense Travel expense Manufacturing - processing R&D - testing Sales revenue Other income Other income Other income Other income Sales revenue Accounts receivable Accounts receivable Sales revenue Accounts receivable Other receivables Sales revenue Sales revenue Accounts receivable Accounts receivable Other income Commission expense	$3,387 $9,318 $247,315 $1,484 $8,210 $987 $1,526,521 $36,895 $47 $51,319 $152 $3,419 $490 $1,610 $45 $3,845 USD30,268 USD6,770 USD1,491 USD19,059 RMB3,889 RMB24 RMB24,544 RMB4,439 RMB649 RMB2 RMB16 USD88	Payment within 30 days from the end of delivery month by TT Payment within 30 days from the end of delivery month by TT Payment within 60 days from the end of delivery month by TT Payment within 30~60 days from the end of delivery month - - Payment within 60 days from the end of delivery month by TT Payment within 60 days from the end of delivery month by TT - Payment within 60 days from the end of delivery month by TT Payment within 60 days from the end of delivery month by TT Payment within 60 days from the end of delivery month by TT - - - - Payment within 60~90 days from the end of delivery month Payment within 60~90 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month	0.01% 0.02% 0.60% 0.01% 0.02% 0.00% 6.12% 0.15% -% 0.21% -% 0.01% -% -% -% 0.02% 3.84% 0.52% 0.11% 2.42% 0.05% -% 0.51% 0.09% 0.01% -% -% 0.01%

Note 1: Transaction information between Parent company and its subsidiaries should be disclosed by codes below:

(1) Parent company is coded "0".
(2) The subsidiaries are coded from "1" in the order presented in the table above.
Note 2: Relationship are divided into the following three types and the types are required to be indicated:
(1) From the parent company to a subsidiary.
(2) From a subsidiary to the parent company.
(3) Between subsidiaries.
Note 3: Regarding the percentage of transaction amount to consolidated operating revenues or total assets, it is computed based on the ending balance to consolidated total assets for balance sheet items; and based on interim accumulated amount to consolidated net revenue for income statement items.

287

Table 9-1

Kinsus Interconnect Technology Corp. and Subsidiaries

Intercompany Relationships and Significant Intercompany Transactions for the Year Ended December 31, 2014

				Table 9-1	Table 9-1	Table 9-1	Table 9-1
				(In Thousands of Foreign Currency/ New Taiwan Dollars)
No. (Note 1)	CompanyName	Counter-Party	Nature of Relationship (Note 2)	IntercompanyTransaction
				Financial Statement Account	Amount	Terms	Percentage to Consolidated Net Revenue or Total Assets(Note 3)
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 2 2	Year 2013 Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. Piotek Computer (Suzhou) Co., Ltd. Kinsus Interconnect Technology Suzhou Kinsus Interconnect Technology Suzhou	KINSUS CORP. (USA) Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. Xiang-Shuo (Suzhou) Trading Limited Piotek Computer (Suzhou) Co., Ltd. Kinsus Interconnect Technology Suzhou Corp. Xiang-Shuo (Suzhou) Trading Limited Kinsus Interconnect Technology Suzhou Corp. KINSUS CORP. (USA) KINSUS CORP. (USA) Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. Piotek Computer (Suzhou) Co., Ltd. Xiang-Shuo (Suzhou) Trading Limited PIOTEK (H.K.) TRADING LIMITED PIOTEK (H.K.) TRADING LIMITED PIOTEK (H.K.) TRADING LIMITED Kinsus Interconnect Technology Suzhou Corp. Xiang-Shuo (Suzhou) Trading Limited Xiang-Shuo (Suzhou) Trading Limited Xiang-Shuo (Suzhou) Trading Limited Xiang-Shuo (Suzhou) Trading Limited Xiang-Shuo (Suzhou) Trading Limited Xiang-Shuo (Suzhou) Trading Limited	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 3 3 3 3	Accrued expense Accrued expense Accounts payable Sales revenue Sales revenue Other receivables Other receivables Other receivables Purchase Commission expense Travel expense Manufacturing - processing Other income Other income Other income Other income Sales revenue Accounts receivable Other receivables Accounts receivable Accounts payable Sales revenue Purchase Purchase Accounts payable	$2,055 $10,224 $183,102 $471 $1,685 $317 $10,043 $2,142 $948,296 $26,363 $76 $48,431 $4,304 $2,761 $1,613 $6,089 USD39,162 USD5,721 RMB 515 RMB7,786 RMB611 RMB13,635 RMB1,087 RMB208 RMB227	Payment within 30 days from the end of delivery month by TT Payment within 30 days from the end of delivery month by TT Payment within 60 days from the end of delivery month by TT Payment within 30~60 days from the end of delivery month Payment within 30~60 days from the end of delivery month - - - Payment within 60 days from the end of delivery month by TT Payment within 60 days from the end of delivery month by TT - Payment within 60 days from the end of delivery month by TT - - - - Payment within 60~90 days from the end of delivery month Payment within 60~90 days from the end of delivery month - Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month Payment within 60 days from the end of delivery month	0.01% 0.03% 0.48% -% 0.01% -% 0.03% 0.01% 4.10% 0.11% -% 0.21% 0.02% 0.01% 0.01% 0.03% 5.05% 0.45% 0.01% 0.10% 0.01% 0.29% 0.02% -% -%

Note 1: Transaction information between Parent company and its subsidiaries should be disclosed by codes below:

(1) Parent company is coded "0".
(2) The subsidiaries are coded from "1" in the order presented in the table above.

Note 2: Relationship are divided into the following three types and the types are required to be indicated:

(1) From the parent company to a subsidiary.
(2) From a subsidiary to the parent company.
(3) Between subsidiaries.
Note 3: Regarding the percentage of transaction amount to consolidated operating revenues or total assets, it is computed based on the ending balance to consolidated total assets for balance sheet items; and based on interim accumulated amount to consolidated net revenue for income statement items.

288

AI assistant

KINSUS — Annual Report 2014

52304_rns_2015-06-17_fee9a123-54b5-4707-b8ae-1dd4ef89a91b.pdf

Kinsus Interconnect Technology Corp.

2014 Annual Report

Notice to readers

Printed on MAY, 2015

Spokesperson

Deputy Spokesperson

Headquarter, Branches and Plant

Stock Transfer Agent

Auditors

Overseas Securities Exchange (N/A)

Corporate Website

Contents

7. Financial Status and Performance Review Analysis and Risk Items

1. Letter to Shareholders

(1) Dear Shareholders,

(2). Operating Performance in 2014

(A). Business Policy

(B). Expected Sales and Its Bases

(C). Important Production and Marketing Policy

(3). Company development strategy

(4). Overall impact of business environment

2. Company Profile

(1) Date of Incorporation: 9/11/ 2000

(2) Company History

3. Corporate Governance Report

(2) Major Corporate Functions

2. Directors, Supervisors and Management Team

Major shareholders of the institutional shareholders

Major shareholders of the Company’s major institutional shareholders

Professional qualifications and independence analysis of directors and supervisors

(2) Management Team

(3) Remuneration of Directors, Supervisors, President, and Vice President

Remark:

Range of Remuneration

Remark

Remuneration of President and Vice President

Remark:

Range of Remuneration

Remark

Remuneration of Supervisors

Remark:

(4) Comparison of Remuneration for Directors, Supervisors, Presidents and Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents

Remark:

3. Implementation of Corporate Governance

Remark:

(2) Audit Committee

Remark:

4. Composition, Responsibilities and Operations of the Remuneration Committee

(1) Professional Qualifications and Independence Analysis of Remuneration Committee Members

(2) Attendance of Members at Remuneration Committee Meetings

A. There are 3 members in the Remuneration Committee.

Remark:

5. Corporate Social Responsibility

6. Ethical Corporate Management

7. Corporate Governance Guidelines and Regulations

8. Other Important Information Regarding Corporate Governance

9 Internal Control Systems

10. The punishments and improvements to the personnel who violate the statement of

internal control shall be revealed in the latest annual report uptodate: None

11. Major Resolutions of Shareholders’ Meeting and Board Meetings

(2) Major Issues of Record or Written Statements Made by Any Director

a. Changes in Equity of Directors, Officers, and Major Shareholders

Consolidated Shareholding Percentage

4. Capital Raising

(1) Capital and Shares

(B) Shareholder Structure

(C) Diffusion of Ownership

(D) List of Major Shareholders

Kinsus Interconnect Technology Corp. Earnings Distribution Schedule

2014

(6) Award of New Restricted Shares: None

5. Overview of the Operations

c. Various Product Development Trends

d. Product Competitions

b. Market Share

d. Competitive Niche

(a) Favorable factors

KINSUS Annual Report 2014