KINSUS - Annual Report 2015 | FinancialReports.eu

Stock Code: 3189

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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 and Chinese versions, the Chinese version shall prevail.

Printed on March 31, 2016 Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw Annual Report is available at: http://www.kinsus.com.tw

English Translation of The Annual Report Originally Issued in Chinese

The inside cover of annual report

The name, title, telephone number, and e-mail address of the spokesman or acting spokesman

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

(2) The Acting Spokesperson Name: Liu, Su Zhen Title: Senior Director of Finance Department Telephone number: 886-(03) 487-1919 EXT 5005 E-mail: [email protected]

The address and telephone number of the Company's headquarters, branch offices, and factories
Headquarter (Shilei Factory): No.1245, Zhonghua Rd., Xinwu Dist., Taoyuan City 327, Taiwan, R.O.C.

Telephone number: 886-(03) 487-1919 Qinghua Factory: No.810, Zhonghua Rd., Xinwu Dist., Taoyuan City 327, Taiwan, R.O.C. Telephone number: 886 (03) 487-1988 Xinfeng Factory: No.526, Sec. 2, Jianxing Rd., Xinfeng Township, Hsinchu County 304, Taiwan, R.O.C. Telephone number: 886-(03) 557-1799

The name, address, e-mail address, and telephone number of the agency handling shares transfer

Name: Shareholder Services Department, KGI Securities Address: 5th Fl., No. 2, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei City 100, Taiwan, R.O.C.

Website: https://www.kgieworld.com.tw Telephone number: 886-2-2389-2999

The name of the certified public accountant who duly audited the annual financial report for the most recent fiscal year, and the name, address and telephone number of said person's accounting firm Names of certified public accountant: Huang, Yi Hui and Zhang, Zhi Ming Name of accounting firm: Ernst & Young Address: 9th Fl., No. 333, Sec. 1, Keelung Rd., Songshan Dist., Taipei City 105, Taiwan, R.O.C. Website: http://www.ey.com.tw Telephone number: 886-2-2757-8888
The name of any exchanges where the company's securities are traded offshore, and the method by which to access information on said offshore securities NA
The address of the Company's website http://www.kinsus.com.tw

English Translation of The Annual Report Originally Issued in Chinese

The contents of annual report

The contents of annual report	The contents of annual report
Page
1.A report to the shareholders···········································	1
2. A Company profile
(1) Date of Incorporation ·········································································	4
(2) A brief history of the Company ······························································	4
3. A corporate governance report
(1) Organizational system ········································································	6
(2) Information on the company's directors, supervisors, general manager, assistant
general managers, deputy assistant general managers, and the supervisors of all
the company's divisions and branch units ·················································	8
(3) The state of the Company's implementation of corporate governance··················	22
(4) Information on CPA professional fees ······················································	42
(5) Information on replacement of certified public accountant ·····························	42
(6) Where the Company's chairperson, general manager, or any managerial officer in
charge of finance or accounting matters has in the most recent year held a position
at the accounting firm of its certified public accountant or at an affiliated
enterprise of such accounting firm, the name and position of the person, and the
period during which the position was held ················································	42
(7) Any transfer of equity interests and/or pledge of or change in equity interests
(during the most recent fiscal year or during the current fiscal year up to the date
of printing of the annual report) by a director, supervisor, managerial officer, or
shareholder with a stake of more than 10 percent during the most recent fiscal
year or during the current fiscal year up to the date of printing of the annual report·	42
(8) Relationship information, if among the Company's 10 largest shareholders any one
is a related party or a relative within the second degree of kinship of another········	44
(9) The total number of shares and total equity stake held in any single enterprise by
the company, its directors and supervisors, managers, and any companies
controlled either directly or indirectly by the Company ·································	45
4. Information on capital raising activities
(1) Capital and shares ···········································································	49
(2) Issuance of corporate bonds ·································································	55
(3) Issuance of preferred shares ·································································	55
(4) Issuance of global depository receipts ······················································	55
(5) Issuance of employee share subscription warrants ········································	56
(6) New restricted employee Shares ····························································	56
(7) Mergers, acquisitions, and issuance of new shares due to acquisition of shares of
other companies ··············································································	56
(8) Implementation of the Company's capital allocation plans ······························	56

English Translation of The Annual Report Originally Issued in Chinese

5. An overview of operations (1) A description of the business ······························································ (2) An analysis of the market as well as the production and marketing situation········· (3) The number of employees employed for the 2 most recent fiscal years, and during the current fiscal year up to the date of printing of the annual report, their average years of service, average age, and education levels (including the percentage of employees at each level) ··································································· (4) Disbursements for environmental protection ············································· (5) Labor relations ··············································································· (6) Important contracts ·········································································· 6. An overview of the Company's financial status (1) Condensed balance sheets and statements of comprehensive income for the past 5 fiscal years ··················································································· (2) Financial analyses for the past 5 fiscal years ············································· (3) Supervisors' or audit committee's report for the most recent year's financial statement ····················································································· (4) Financial statement for the most recent fiscal year······································· (5) A parent company only financial statement for the most recent fiscal year, certified by a CPA ····················································································· (6) If the Company or its affiliates have experienced financial difficulties in the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, the annual report shall explain how said difficulties will affect the company's financial situation ······························································ 7. A review and analysis of the Company's financial position and financial performance, and a listing of risks (1) Financial position ············································································ (2) Financial performance ······································································· (3) Cash flow ····················································································· (4) The effect upon financial operations of any major capital expenditures during the most recent fiscal year ···································································· (5) The Company's reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year ··············· (6) The matters that the risks section shall analyze and assess during the most recent fiscal year and as they stood on the date of printing of the annual report ············ (7) Other important matters ····································································· 8. Other items deserving special mention (1) Information related to the Company's affiliates ··········································	Page
	· 57 · 67 · 74 · 75 · 75 · 76 · 77 · 82 · 88 · 88 · 88 · 88 · 89 · 90 · 91 · 91 · 91 · 92 · 95 · 96

5. An overview of operations
(1) A description of the business ······························································
(2) An analysis of the market as well as the production and marketing situation·········
(3) The number of employees employed for the 2 most recent fiscal years, and during
the current fiscal year up to the date of printing of the annual report, their average
years of service, average age, and education levels (including the percentage of
employees at each level) ···································································
(4) Disbursements for environmental protection ·············································
(5) Labor relations ···············································································
(6) Important contracts ··········································································
6. An overview of the Company's financial status
(1) Condensed balance sheets and statements of comprehensive income for the past 5
fiscal years ···················································································
(2) Financial analyses for the past 5 fiscal years ·············································
(3) Supervisors' or audit committee's report for the most recent year's financial
statement ·····················································································
(4) Financial statement for the most recent fiscal year·······································
(5) A parent company only financial statement for the most recent fiscal year, certified
by a CPA ·····················································································
(6) If the Company or its affiliates have experienced financial difficulties in the most
recent fiscal year or during the current fiscal year up to the date of printing of the
annual report, the annual report shall explain how said difficulties will affect the
company's financial situation ······························································
7. A review and analysis of the Company's financial position and
financial performance, and a listing of risks
(1) Financial position ············································································
(2) Financial performance ·······································································
(3) Cash flow ·····················································································
(4) The effect upon financial operations of any major capital expenditures during the
most recent fiscal year ····································································
(5) The Company's reinvestment policy for the most recent fiscal year, the main
reasons for the profits/losses generated thereby, the plan for improving
re-investment profitability, and investment plans for the coming year ···············
(6) The matters that the risks section shall analyze and assess during the most recent
fiscal year and as they stood on the date of printing of the annual report ············
(7) Other important matters ·····································································
8. Other items deserving special mention
(1) Information related to the Company's affiliates ··········································

Page

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English Translation of The Annual Report Originally Issued in Chinese

Page

(2)	The status of the Company carrying out a private placement of securities during
	the most recent fiscal year or during the current fiscal year up to the date of
	printing of the annual report ································································	99
(3)	Holding or disposal of shares in the Company by the company's subsidiaries
	during the most recent fiscal year or during the current fiscal year up to the date
	of printing of the annual report ·····························································	99
(4)	Other matters that require additional description ··········································	99
(5)	Any of the situations listed in Article 36, paragraph 3, subparagraph 2 of the
	Securities and Exchange Act, which might materially affect shareholders' equity
	or the price of the Company's securities, occuring during the most recent fiscal
	year or during the current fiscal year up to the date of printing of the annual report·	99

English Translation of The Annual Report Originally Issued in Chinese

1. A report to the shareholders

Dear Shareholders,

(1)Operating results for 2015

In 2015, the global economy kept in a very low atmosphere. The price of international oil and gas continuously drop significantly. The currucies of most countries except for USA were depreciated dramatically. The semiconductor market therefore was down impacted. Acceding to the statistics published by international research and consulting institution Gartner, 2015 global semiconductor revenues, including giant companies such as Intel, Qualcomm, Micon, drop by 1.9% from 2014.

In overviewing the development of global semiconductor industry, the growth in China market got lower in 2015. Also FED increased the interest rate starting from the fourth quarter 2015. In turn, the strong US Dollar raised the cost of computer or other electronic devices in Western Europe as well as in Japan. The consumers delay the need of upgrading their devices or turned to buy the ones with a lower price in the hope of saving their expenditures and costs. The shipment volumes of personal computer, tablet and smartphone were decreased significantly. And the global semiconductor was decreased slightly to US$333.7 billion with the negative effect of computer system system and slower-growth momentum for smartphone.

The parent-company-only revenues in 2015 were NT$17,827,251 thousand, reduced by 7.58% from 2014’s revenues of NT$19,290,237 thousand. The parent company only net incomes in 2015 were NT$2,903,952 thousand, reduced by 19.72% from 2014’s net incomes of NT$3,617,327 thousand. On the other hand, the Company’s consolidated revenues in 2015 were NT$23,061,311 thousand, reduced by 7.55% from 2014’s consolidated revenues of NT$24,943,834 thousand. The Company’s consolidated net incomes in 2015 were NT$2,729,526 thousand, reduced by 21.80% from 2014’s net incomes of NT$3,490,233 thousand. Fortunately, the parent company only revenues in 2015 fourth quarter have been recovered to above NT$5 billion, near to the historical record highest point. We expect that the Company’s performance can be back to the trend of growth.

(2)Summary of the business plan for FY2016

(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.

English Translation of The Annual Report Originally Issued in Chinese

(B)Sales volume forecast and the basis

IoT, Automative and Cloud applications will continue to develop in 2016. The business opportunity for semiconductor can be expected to be prospective as a result. In addition, the promotion of mobile smart devices specification will continuously drive the demand for high-end processing of Wafer Foundry and Packaging & Testing. It is expected that the annual growth rate of production value for the national semiconductor industry in 2016 can be kept at a positive trend.

The developing applications in electronic /semiconductor industry include Autonomous Driving Assistant System, VR, Cloud computing IoT, etc. Although these technologies are not mature, the related market is a furutre star with huge size. According to the estimation made by Gartner, IoT devices will create a market size of 6.4 billion units in 2016 and furthermore will grow with an annual compound rate of 30%. The market opportunity is unlimited. Kinsus’ products, including SiP substrate, FCCSP substrate, High-density embedded substrate are exactly well-prepared for meeting the industrial developing trend.

However, we have to carefully watch that the ASP (average selling prices) of various mobile devices and IoT devices were decreased year by year, i.e. 3% drop in 2015 and estimated to be at least 5% in 2016. Unfortunately, the sale growth might be slowered down due to the negative trend of “high-end but low-price” even though the revenues of mobilephone semiconductor are stable attributed to the market rapidly being transferred to smartphone and 4G LTE.

(C)Other important production and sales policies

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.

(3)The Company's future development strategy

In 2016, portable, wearable device components of a micro-scale trend will continue. Accordingly the demand for related SiP substrate, FCCSP substrate, high-density embedded substrateis still

English Translation of The Annual Report Originally Issued in Chinese

very strong. These are the substrate products needed to be applied in transferring the existing products to the end devices for VR, iCloud and IoT. The Company, in the future, will do its best to control the key opportunities in market. Also Kinsus will continue to adjust its market strategy in response to the market changes and to win business cases in order to share the performance results with its shareholders.

Sincerely Yours,

The Chairman and CEO Guo, Ming-Dong

English Translation of The Annual Report Originally Issued in Chinese

2. A Company Profile

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

(2)A brief history of the Company

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 4thfloor
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 inQinghua: 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 manufacturing companies by Commonwealth Magazine
2005/07	Surplus capital increased by issuing new shares of NT$378 million with NT$2.598 billionpaid-upcapita after increase in total
2005/08	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.)
2006/05	Cash capital increased by issuing new shares of NT$500 million with NT$3.398 billion paid-up capita after increase in total
2006/05	Ranked 19th as Taiwan's most profitable companies by Commonwealth Magazine

English Translation of The Annual Report Originally Issued in Chinese

2006/07	Ranked 89th as Taiwan's most profitable companies by Digital Time Business among top 100 Taiwan Technology
2006/08	Surplus capital increased by issuing new shares of NT$492 million with NT$3.89 billion paid-up capita after increase in total
2006/11	Ranked 131stamong Asia’s top 150 with 14 Taiwan Enterprises listed by Business Week Asia
2007/03	Be certified to ISO 14001 - Environmental management and OHSAS 18001
2007/05	Ranked No. 212 on business revenue by Commonwealth Magazine
2007/08	Surplus capital increased by issuing new shares of NT$464 million with NT$4.354 billion paid-up capita after increase in total
2008/05	Ranked 52ndon return on assets, 146thon equity ratio, 22ndon profitability, and 595thon business revenue among top 1000 manufacturing companies by Commonwealth Magazine
2008/08	Surplus capital increased by issuing new shares of NT$106 million with NT$4.46 billion paid-up capita after increase in total
2009/05	Ranked 35thon profitability and 229thon business revenue among top 1000 manufacturing companies by Commonwealth Magazine
2010/05	Ranked 48thon profitability and 234thon business revenue among top 1000 manufacturing companies by Commonwealth Magazine
2010/08	InvestedPIOTEK COMPUTER (SUZHOU) CO., LTD.
2011/05	Ranked 115thon profitability and 192ndon business revenue among top 1000 manufacturing companies by Commonwealth Magazine
2012/05	Ranked 108thon profitability and 162ndon business revenue among top 1000 manufacturing companies by Commonwealth Magazine
2013/03	Bought plant at Xinfeng: No.526, Sec. 2, Jianxing Rd., Xinfeng Township, Hsinchu County 304, Taiwan
2013/04	Being selected as 2012 Deloitte Asia Pacific top 500 high tech, high growth enterprises
2013/05	Ranked 116thon profitability and 158thon business revenue among top 1000 manufacturing companies by Commonwealth Magazine
2014/05	Ranked 720thon market capitalization among top 1000 entrprises in China, Taiwan, Hongkong, and Macau by Business Today.
2015/05	Ranked 139thon profitability and 56th on net profit by Commonwealth Magazine

English Translation of The Annual Report Originally Issued in Chinese

3. A Corporate Governance Report

(1)Organizational system
(A)The Company's structure

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Shareholders’
Meeting
Audit Committee
Board of
Compensation Directors
Committee Internal Audit
Office
Chairman
Chairman Office
CEO
Assistant CEO
R&D Division
General Manager
Sales
Substrate FPC Quality
Administration Financial R&D &
Business Business Control
Dept. Dept. Division. Marketing
Dept. Dept. Dept.
Dept.
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English Translation of The Annual Report Originally Issued in Chinese

(B)The tasks of its principal divisions

Dept.	Job Description
Chief Executive Officer (CEO)	1. Business planning and strategic planning 2. Company long-term development policy planning 3. Business monitoring, promoting and implementation
Assistant CEO	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 Center	Advanced product and technology research and development, equipment automation,and buildingnewplants.
General Manager	Responsible for business plan development, besiness 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 Dept.	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.

English Translation of The Annual Report Originally Issued in Chinese

(2)Information on the company's directors, supervisors, general manager, assistant general managers, deputy assistant general managers, and the supervisors of all the company's divisions and branch units.

(A)Directors as of March 29, 2016

Title	Nationality/Cou ntry 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
Chairman	R.O.C	Guo, Ming-Dong	2015.6.11	3	2000.9.1	1,179,795	0.26%	1,169,795	0.26%	－	－	－	－	National Taipei Institute of Technology President/UNICAP ELECTRONICS	Note 1	－	－	－
Director	R.O.C	Tong,Zi-Xian	2015.6.11	3	2000.9.1	200,000	0.04%	200,000	0.04%	－	－	－	－	Computer and Communication Engineering /Taipei Tech Chairman/PEGATRON Corp.	Note 2	－	－	－
Director	R.O.C	Lu, Jing	2015.6.11	3	2003.9.1	1,151,607	0.26%	1,141,607	0.26%	－	－	－	－	Master of Industrial Engineering/Univ. of Iowa Chungshan Institute of Science and Technology Vice President/UNICAP ELECTRONICS	Note 3	－	－	－
Director	R.O.C	Hua Xu Investment Corp. Rep. : Su, Yan-Xue	2015.6.11	3	2000.9.1	58,233,091	13.06%	58,233,091	13.06%	－	－	－	－	Master of Industrial Engineering/Carnegie MellonUniv. Chief Investment Officer/ASUSTEK ComputerIncorp. Chief Investment Officer/PEGATRON Corp.	Note 4	－	－	－
Director	R.O.C	Su,Yan-Xue	2015.6.11	3	2009.6.16	－	－	－	－	－	－	－	－	as above	as above	－	－	－
Director	R.O.C	Hua Xu Investment Rep : Wu, Xiang-Xiang	2015.6.11	3	2000.9.1	55,556,221	12.46%	55,556,221	12.46%	－	－	－	－	International Trade/Providence Univ. M.B.A./Univ. of St.Thomas Vice President/kun jian Consulting Co., Chief Investment Officer/PEGATRON Corp.	Note 5	－	－	－
Director	R.O.C	Wu,Xiang-Xiang	2015.6.11	3	2003.9.1	－	－	－	－	－	－	－	－	as above	as above	－	－	－
Director	R.O.C	Zbeng,Zhong-Ren	2015.6.11	3	2003.9.1	－	－	－	－	－	－	－	－	School of Law/Soochow Univ. PhD./Stanford University Dean&Professor/Law School of Shih Hsin Univ.	Note 6	－	－	－
Independent Director	R.O.C	Chen, Jin-Cai	2015.6.11	3	2003.9.1	－	－	－	－	－	－	－	－	Graduate School/Tamkang Univ. M.P.A/Univ. of San Francisco President/Namchow Group	Note 7	－	－	－
Independent Director	R.O.C	Huang, Chun-Bao	2015.6.11	3	2003.9.1	－	－	－	－	－	－	－	－	Electrical Engineering/National Taipei Institute of President& GM/HAVIX ELECTRONICS CO.,LTD.	Note 8	－	－	－
Independent Director	R.O.C	Wu, Hui-Huang	2015.6.11	3	2010.6.18	－	－	－	－	－	－	－	－	Board Director& President/UNIVERSAL SCIENTIFIC INDUSTRIAL CO., LTD Director/Taiwan Electrical and Electronic Director/Taiwan Federation of Industry Director/Taiwan Province IndustryAsso.	Note 9	－	－	－

English Translation of The Annual Report Originally Issued in Chinese

Note 1	CEO	Director: 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.
Note 2	Chairman	Pegatron Corp.(also the Executive CEO), Lumens Digital Optics Inc, Hua Wei Investment, Hua Xu Investment, Pegavision Investment, Pegavision Corp., Casetek Holdings Limited,eslite Foundation for Culture and Arts,and Ri-Kuan Metal Corporation.
	Director	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, Grand Upright Technology Limited, Alliance Culture Foundation, Hanguang Education Foundation, Public Television Service, Ministry of Culture National Performing Arts Center, CTS (China Television Service), Koo Medical Foundation, Lung Yingtai Cultural Foundation, ASLINK PRECISION CO.,LTD.
	Chairman	Taipei Computer Association
Note 3	Assistant CEO	Director of Piotek(HK)TradingLimited
Note 4	Chairman	WYSE Research Inc.
	Director	Guang Dian Cinema,KHL IV Venture Capital Corporation,eslite Foundation for Culture and Arts.
Note 5	Director	OFCO Industrial Corp.,Pegavision Investment.
Note 6	Professor	Graduate Institute of Patent/National Taiwan Universityof Science and Technology
	Director	LOTES Co. Ltd.,Wistron Corporation.
	Independent Director	Wistron Corporation,eChem solutions Corp.
	Supervisor	ASUSTeK Computer Inc., Apacer TechnologyInc.
Note 7	Chairman	Win Semiconductors Corp.
	Assistant Chairman	Hiwin Technologies Corp.
	Director	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.

English Translation of The Annual Report Originally Issued in Chinese

	Supervisor	Dian Shui Lou Restaurant,INFOTEL Inc.,TAIPEI 101
	Member of compensation committee	PlexBio Co., Ltd.
Note 8	Chairman & G/M	HAVIX Electronics Co.,Ltd.
Note 9	Director	Taiwan Read Foundation
	Member of compensation committee	Merry Corp.

Major shareholders of the institutional shareholders

Name of the Company’s institutional shareholder	Major Shareholders of the Company’s institutional shareholder
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 institutional shareholders

Name of major institutional shareholders of the Company’s institutional shareholder	Major Shareholders, if institutional, of major institutional shareholders of the Company’s institutional shareholder
PegatronCorp.	AsustekComputer Incorporation(17.23%)

English Translation of The Annual Report Originally Issued in Chinese

Professional qualifications and independence analysis of directors

Qualification 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
Guo, Ming-Dong	-	-	YES				V	V	V	V	V	V	V	2
Tong, Zi-Xian	-	-	YES			V	V		V	V	V	V	V	-
Lu, Jing	-	-	YES				V	V	V	V	V	V	V	-
Su, Yan-Xue	-	-	YES	V	V	V	V	V	V	V	V	V		-
Wu, Xiang-Xiang	-	-	YES			V	V		V	V	V	V		-
Zheng, Zhong-Ren	YES	-	YES	V	V	V	V	V	V	V	V	V	V	1
Chen, Jin-Cai	YES	-	YES	V	V	V	V	V	V	V	V	V	V	1
Huang, Chun-Bao	-	-	YES	V	V	V	V	V	V	V	V	V	V	-
Wu, Hui-Huang	-	-	YES	V	V	V	V	V	V	V	V	V	V	-

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.
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.

English Translation of The Annual Report Originally Issued in Chinese

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.

English Translation of The Annual Report Originally Issued in Chinese

(B)The general manager, assistant general managers, deputy assistant general managers, and the chiefs of all the Company's divisions and branch units

units	units	units	units
				As of March 29, 2016
Title	Nationality/ Country of Origin	Name	Date Effective	Shareholding		Spouse & Minor Shareholding		Shareholding by Title Nominee		Experience(Education)	Other Position	Managers who are Spouses or Within Two Degrees
				Shares	%	Shares	%	Shares	%			Title	Name	Relation
CSO	R.O.C	Tong, Zi-Xian	2014.11.01	200,000	0.04%	－	－	－	－	Computer and Communication Engineering /Taipei Tech Chairman/PEGTRON Corp.	Page 8/Note 2	－	－	－
CEO	R.O.C	Guo, Ming-Dong	2000.09.11	1,169,795	0.26%	－	－	－	－	National Taipei Institute of Technology President/UNICAP ELECTRONICS	Page 8/Note 1	－	－	－
Assistant CEO	R.O.C	Lu, Jing	2000.09.11	1,141,607	0.26%	－	－	－	－	Master of Industrial Engineering/Univ. of Iowa Vice President/UNICAP Electronics	Page 8/Note 3	－	－	－
CTO	R.O.C	Zhang, Qian-Wei	2000.09.11	391,614	0.09%	－	－	－	－	Mechanics/National Central Univ. PCB Manager/MANZ Electronics	N/A	－	－	－
General Manager	R.O.C	Chen, He-Xu	2000.09.11	361,002	0.08%	－	－	－	－	Physics/Qinghua Univ Production Manger/Motorola	N/A	－	－	－
Senior Assistant GM	R.O.C	Huang, Geng-Fang	2005.08.01	314,875	0.07%	－	－	－	－	Ta Hwa Univ. of Science&Technology Senior Manager/MITAC Int'l Corp.	N/A	－	－	－
Senior Assistant GM	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	－	－	－
Assistant GM	R.O.C	Lin, Zhi-Wei	2001.03.01	55,909	0.01%	－	－	－	－	Material Science & Enginnering/Qinghua Univ. QC Manager/AU Optronics Corp	N/A	－	－	－
Assistant GM	R.O.C	Huang, Sheng-Chuan	2015.02.01	－	－	－	－	－	－	Mechanical Engineering/Univ. of Cambridge Senior Manager/UNICAP Electronics	N/A	－	－	－
Finance Supervisor	R.O.C	Liu, Su-Zhen	2010.08.01	19,400	0.00%	－	－	－	－	M.B.A/National Central Univ. Junior Manager/EY AccountingFirm	N/A	－	－	－

English Translation of The Annual Report Originally Issued in Chinese

(C)Remuneration paid during 2015 to directors, the general manager, and assistant general manager

Unit: NT$’000

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 Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors 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)(Rmk.3)		Allowances(D)(Rmk.4)				Salary, Bonuses, and Allowances (E) (Rmk5)		Severance Pay (F) Profit		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 Compan y	Companies in the consolidated financial statements (Rmk8)	The Compan y	Companies in the consolidated financial statements (Rmk8)	The Compan y	Companies in the consolidated financial statements (Rmk8)	The Company		Companies in the consolidated financial statements (Rmk8)		The Comp any	Companies in the consolidated financial statements (Rmk8)	The Compa ny	Companies in the consolidated financial statements (Rmk8)	The Compan y	Companies in the consolidated financial statements (Rmk8)
																Cash	Stock	Cash	Stock
Chairman	Guo,Ming-Dong	-	-	-	-	26,026	26,026	240	240	0.91%	0.91%	13,932	13,932	171	171	22,974	-	22,974	-	-	-	-	-	2.18%	2.18%	N/A
Director	Tong, Zi-Xian
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

Note:

1.Compensation to directors for 2015 had been approved in Board meeting on 2016/02/01 will be reported in shareolders’ meeting. As of now, details of the proportion as propsed above hadn’t been decided yet while it is estimated by the actual distribution rate in prior year. 2.The Severance Pay listed above is appropriated only. While, the actual payment was zero.

English Translation of The Annual Report Originally Issued in Chinese

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	Zheng, Zhong-Ren Chen, Jin-Cai Huang, Chun-Bao Wu, Hui-Huang	Zheng, Zhong Ren Chen, Jin-Cai Huang, Chun Bao Wu, Hui-Huang	Zheng, Zhong Ren Chen, Jin-Cai Huang, Chun Bao Wu, Hui-Huang	Zheng, Zhong Ren Chen, Jin-Cai Huang, Chun Bao Wu, Hui-Huang
NT$2,000,000 ~ NT$5,000,000	Hua Xu Investment Rep.: Su, Yan-Xue Hua Yu Investment Rep.: Wu, Xiang-Xiang	Hua Xu Investment Rep.: Su, Yan-Xue Hua Yu Investment Rep.: Wu, Xiang-Xiang	Hua Xu Investment Rep.: Su, Yan-Xue Hua Yu Investment Rep.: Wu, Xiang-Xiang	Hua Xu Investment Rep.: Su, Yan-Xue Hua Yu Investment Rep.: Wu, Xiang-Xiang
NT$5,000,000 ~ NT$10,000,000	Guo, Ming-Dong Tong, Zi-Xian Lu, Jing	Guo, Ming-Dong Tong, Zi-Xian Lu, Jing	－	－
NT$10,000,000 ~ NT$15,000,000	－	－	Guo, Ming-Dong Tong, Zi-Xian Lu,Jing	Guo, Ming-Dong Tong, Zi-Xian Lu,Jing
NT$15,000,000 ~ NT$30,000,000	－	－	－	－
NT$30,000,000~ NT$50,000,000	－	－	－	－
NT$50,000,000 ~ NT$100,000,000	－	－	－	－
Over NT$100,000,000	－	－	－	－
Total	9	9	9	9

English Translation of The Annual Report Originally Issued in Chinese

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 GM should fill in the following Form (3-1) or (3-2).
2.Refers to the latest pay which includes basic base compensatio, professional allowance, severance pay, and the other bonuses.
3.Bonus to Directors had approved in board meeting before shareholder meeting.
4.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.
5.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.
6.Refers to the consolidated remuneration received by directors who are also employees (GM, assistant GM, 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
7.Refers to the directors who are also employees (GM, assistant GM, and the other managers) who had exercised employee stock option certificate (enexercised excluded) up to date should fill in this form and Form 15.
8.Disposed the consolidated payment of our company and all the other companies in this report.
9.The payment to all the board directors by our company would be disclosed.in the form of range of remuneration.
10.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.
12.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 (GM, assistant GM, and the other managers) who had exercised restricted employee stock option should fill in Form15-1 and this form.

English Translation of The Annual Report Originally Issued in Chinese

Remuneration of the general manager and assistant general managers

Unit: NT$’000

												Ratio of Total	Ratio of Total
		Base Compensation (A) (Rmk.2)		Severan	ce Pay (B)	Bonus an Allowanc	d Special e (Rmk.3)	Disposition of Net Earning(D) （Rmk.4）				Remuneration (A+B+C+D) to Net		Employee stock option exercised （Rmk.5）		Restricted Employee stock option (Rmk11)		Compensatio n Paid to Suervisors
Title	Name											Income	%)(Rmk9)					p 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
CSO	Tong, Zi-Xian	29,750	29,750	819	819	20,458	20,458	49,859	-	49,859	-	3.47%	3.47%	-	-	-	-	N/A
CEO	Guo, Ming-Dong
Assistant CEO	Lu, Jing
CTO	Zhang, Qian-Wei
General Manager	Chen, He-Xu
Senior Assistant GM	Huang, Geng-Fang
Senior Assistant GM	Yang, De-Sheng
Assistant GM	Lin, Zhi-Wei
Assistant GM	Huang,Sheng-Chuan

*It is required to be disclosed for a position equivalent to the General Manager, Assistant General Manager (example: President, CEO, Exective supervior, etc.)

Note:

1.The erning distribution in 2015 had been agreed in Board meeting held on Feb. 1, 2016 and will be proposed to stochholder meeting for final approval. As of the date, details of the remuneration proportion as propsed above had not been decided yet.

2.The retirement pay listed above is based on an accrual only while the actual payment was zero.

English Translation of The Annual Report Originally Issued in Chinese

Range of Remuneration

Range of Remuneration	Name of the general manager and assistant general managers	Name of the general manager and assistant general managers
	The company (Rmk 7)	Companies in the consolidated financial statements(Rmk8)
Under NT$2,000,000	-	-
NT$2,000,000 ~ NT$5,000,000	-	-
NT$5,000,000 ~ NT$10,000,000	Tong, Zi-Xian Huang, Geng-Fang Yang, De-Sheng Lin, Zhi-Wei Huang, Sheng-Chuan	Tong, Zi-Xian Huang, Geng-Fang Yang, De-Sheng Lin, Zhi-Wei Huang, Sheng-Chuan
NT$10,000,000 ~ NT$15,000,000	Guo, Ming-Dong Lu, Jing Zhang, Qian-Wei Chen,He-Xu	Guo, Ming-Dong Lu, Jing Zhang, Qian-Wei Chen,He-Xu
NT$15,000,000~NT$30,000,000	-	-
NT$30,000,000 ~ NT$50,000,000	-	-
NT$50,000,000 ~ NT$100,000,000	-	-
Over NT$100,000,000	-	-
Total	9	9

Remark:

1.GM, assistant GM should be disclosed separately, and the payment should be displayed in a consolidation. The board directors who also act as Chairman or GM should fill in this form and the following Form (1-1) or (1-2).
2.Refers to the latest pay of the GM, assistant GM which include basic base compensatio, professional allowance, and severance pay.
3.Refers to the consolidated allowances of the GM, assistant GM 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.
4.Refers to the consolidated remuneration received by the GM, assistant GM 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.

English Translation of The Annual Report Originally Issued in Chinese

5.Refers to the the GM, assistant GM who had exercised employee stock option should fill in this form and Form15-1.
6.Disposed the consolidated payment of our company and all the other companies in this report.
7.The payment to all the GM, assistant GM by our company would be disclosed.in the form of range of remuneration.
8.The payment to all the GM, assistant GM by our company and the other companies should be disclosed.in the form of range of remuneration.
9.The after-tax net profit refers to the one happened in personal or individual finacial statement in the latest year.
10.a. This column should dispose the remuneration to the GM, assistant GM from our affliates and the other investments.
b. The remuneration to the GM, assistant GM from our affliates and the other investments should be included in column and defined as other investment.
c. The remuneration received by GM, assistant GM 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.
11.Refers to the directors who are also employees (GM, assistant GM, 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.

English Translation of The Annual Report Originally Issued in Chinese

The name of each individual and the corresponding remuneration amount

Unit: NT$’000

						Unit: NT$’000
	Title	Name	Stock Bonus	Cash Bonus	Total	% of Net income (%)
Managers	CSO	Tong,Zi-Xian	-	49,859	49,859	1.72%
	CEO	Guo,Ming-Dong
	Assistant CEO	Lu,Jing
	CTO	Zhang, Qian-Wei
	General Manager	Chen,He-Xu
	Senior Assistant GM	Huang,Geng-Fang
	Senior Assistant GM	Yang,De-Sheng
	Assistant GM	Lin,Zhi-Wei
	Assistant GM	Huang,Sheng-Chuan

Note:Compensation to employees for 2015 had been approved in Board meeting on 2016/02/01 and will be reported in shareolders’ meeting. As of now, details of the proportion as propsed above hadn’t been decided yet while it is estimated by the actual distribution rate in prior year.

Remark:

1.Names and titles should be disclosed individually and the erning distribution may be disclosed in consolidation.
2.The erning distribution for the managers 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, GM and assistant GM who receive employee bonuses (including stock dividends and cash bonus) should fill in this form and Form1-2.

English Translation of The Annual Report Originally Issued in Chinese

(D)Separately compare and describe total remuneration, as a percentage of net income stated in the parent company only financial reports or individual financial reports, as paid by this company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, supervisors, general managers, and assistant general managers, and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure
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$’000
Year Title	2015			2014
	Total remuneration	Total remuneration to net income(%)	Total remuneration	Total remuneration to net income(%)
Director	26,266	0.90%	32,796	0.91%
GM and Assistant GM	100,886	3.47%	91,246	2.52%

Note:Compensation to employees for 2015 had been approved in Board meeting on 2016/02/01 and will be reported in shareolders’ meeting. As of now, details of the proportion as propsed above hadn’t been decided yet while it is estimated by the actual distribution rate in prior year.
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 2014 and 2015. The policy, standards, and portfolios for the payment of remuneration have been complied with the Company’s Article of Incorporation. The compensation to management employees is measured based on the employees’ personal achievements, contribution made to the business operation, and the market averages. The compensations to directors and management employees have been reviewed by the Company’s Compensation Committee, proposed to the Board of Directors and to be approved in annual stockholders’ meeting.

English Translation of The Annual Report Originally Issued in Chinese

(3)The state of the Company's implementation of corporate governance
(A)The state of operations of the board of directors

A total of 6 (A) meetings of the Board of Directors were held in 2015. The attendance of directors was as follows:

Title	Name (Remark 1)	Attendance in Person(B)	By Proxy	Attendance Rate (%) 【Ｂ/Ａ】(Remark 2)
Chairman	Guo, Ming-Dong	6	0	100%
Director	Tong, Zi-Xian	6	0	100%
Director	Lu, Jing	5	1	83%
Director	Hua Xu Investment Rep.:Su, Yan-Xue	5	1	83%
Director	Hua Yu Investment Rep.:Wu,Xiang-Xiang	6	0	100%
Director	Zhang,Qian-Wei	6	0	100%
Independent director	Chen, Jin-Cai	6	0	100%
Independent director	Huang, Chun-Bao	5	1	83%
Independent director	Wu, Hui-Huang	6	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 or supervisor, who is an institutional shareholder and its representative, should be revealed of the names.
2.(1)Supervisors resigning prior to the end of the year should be indicated in the notes column the date of resign. The actual attendance rate (%) is calculated based on the accumulation of attendance in Board meeting divided by the times of board meeting before his/her resigning.
(2)For any re-election of director/supervior, 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 divided by the times of board meeting after his/her election.

English Translation of The Annual Report Originally Issued in Chinese

(B)The state of operations of the 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, Jin-Cai	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: NA 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.) The independent directorsperiodicallyobtained reports from the chief internal auditors and CPAs.

Remark:

1.Independent Director resigning before the end of the year should be indicated in the notes column date of release. The actual attendance rate (%) is calculated based on the accumulation of attendance in board meeting divided by the times of board meeting before his/her resigning.
2.For any re-election of independent director, 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 divided by the times of board meeting after his/her election.

English Translation of The Annual Report Originally Issued in Chinese

(C)The state of the company's implementation of corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such departure

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

English Translation of The Annual Report Originally Issued in Chinese

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 Yes	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 on 2015.12.31.	(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 shareholder affairs?	Yes		Companies entrust KGI stock agency to handle the relevant Affairs of the Department.	No obvious deviation

English Translation of The Annual Report Originally Issued in Chinese

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
6.Information Disclosure (1) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? (2)Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system,webcastinginvestor conferences)?	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 relations policies, and purchasing insurance for directors and supervisors)?	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 policy have been stipulated and put inot practice. (5)Companydirectors have been appropriated	No obvious deviation

English Translation of The Annual Report Originally Issued in Chinese

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
			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.

English Translation of The Annual Report Originally Issued in Chinese

(D)If the company has a compensation committee in place, the composition, duties, and operation of the compensation committee shall be disclosed

a.Professional Qualifications and Independence Analysis of Remuneration Committee Members

Title (Remark 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)	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	Note (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, Jin-Cai	Yes	-	Yes	V	V	V	V	V	V	V	V	0	N/A
Independent Director	Huang, Chun-Bao	-	-	Yes	V	V	V	V	V	V	V	V	0	N/A
Independent Director	Wu, Hui-Huang	-	-	Yes	V	V	V	V	V	V	V	V	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.

English Translation of The Annual Report Originally Issued in Chinese

(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.
3.If the title is director, please state if it meets Securities dealer business premises on the provisions of article 6-5

English Translation of The Annual Report Originally Issued in Chinese

b.Attendance of Members at Remuneration Committee Meetings

(a)There are 3 members in the Remuneration Committee.

(b)Current member tenure: 2015/06/11-2018/06/10. 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, Jin-Cai	3	0	100%
Committee Member	Huang, Chun-Bao	2	1	67%
CommitteeMember	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:

1.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.
2.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.

English Translation of The Annual Report Originally Issued in Chinese

(E)The state of the Company's performance of corporate social responsibilities

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

English Translation of The Annual Report Originally Issued in Chinese

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
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. Expanding the water resource recycle system to enhance recycle rate to 30%.	(1)No obvious deviation (2)No obvious deviation (3)No obvious deviation
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?	Yes Yes		(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.	(1)No obvious deviation (2)No obvious deviation

English Translation of The Annual Report Originally Issued in Chinese

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)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?	Yes Yes Yes Yes Yes Yes		(3)In compliance with ISO14001 and OHSAS18001 international standards. 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)Yes. (8)Adopting EICC Enterprise Scial Responsibility System and implementing Green thinking through purchase capacity. Prohibiting polluted materials expanding purchase environment to protect products, prohibiting use of materials from conflictingregions. Requestingthe	(3)No obvious deviation (4)No obvious deviation (5)No obvious deviation (6)No obvious deviation (7)No obvious deviation (8)No obvious deviation

English Translation of The Annual Report Originally Issued in Chinese

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
(9)Do the contracts between the company and its major suppliers include termination clauses which come into force once the suppliers breach the corporate social responsibility policy and cause appreciable impact on the environment and society?	Yes		suppliers to furnishing RoHS testing reports and the garranty for products not to contain REACH SVHC. The Company includes conflict-free-minerals in supplier management system to exclude the materials production nations and respects EICC ethic standards and accepting the audit from its delegated parties. Complete evaluations are completely appropriated before collaborating with suppliers. (9)Contracts are not stipulated to terminate or cancel at any time	(9)It’s not stipulated that the contract can be suspended or terminated at ny time.
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:No obvious deviation
6. Other important information to facilitate better understandingof 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

English Translation of The Annual Report Originally Issued in Chinese

(F)The state of the company’s performance in the area of good faith management and the adoption of related measures

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	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 companyestablish an exclusively (or	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	(1)No obvious deviation (2)No obvious deviation

English Translation of The Annual Report Originally Issued in Chinese

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
concurrently) dedicated unit supervised by the Board to be in charge of corporate integrity? (3)Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it? (4)Has the company established effective systems for both accounting and internal control to facilitate ethical corporate management, and are they audited by either internal auditors or CPAs on a regular basis? (5)Does the company regularly hold internal and external educational trainings on operational integrity?	Yes Yes Yes		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 business partners (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, including for businee ethical business courses.	(3)No obvious deviation (4)No obvious deviation (5)No obvious deviation
3.Operation of the integrity channel (1)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? (2)Does the company establish standard operating procedures for confidential reporting on investigating accusation cases?	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.	(1)No obvious deviation (2)No obvious deviation

English Translation of The Annual Report Originally Issued in Chinese

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(3)Does the company provide proper whistleblower protection?	Yes		(3)“Employee reporting and complaint handling procedures” render protection to the petitioner from any possible revenge.	(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 understandingof the company’s ethical corporate managementpolicies: None

English Translation of The Annual Report Originally Issued in Chinese

(G)If the company has adopted corporate governance best-practice principles or related bylaws, disclose how these are to be searched.

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

(H)Other significant information that will provide a better understanding of the state of the company's implementation of corporate governance:None
(I)The state of implementation of the company's internal control system
a.For a Statement on Internal Control: Please refer to page 47 of the Statement of internal control.
b.A CPA has been hired to carry out a special audit of the internal control system: None
(J)For the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, disclose any sanctions imposed in accordance with the law upon the company or its internal personnel, any sanctions imposed by the company upon its internal personnel for violations of internal control system provisions, principal deficiencies, and the state of any efforts to make improvements: None
(K)Material resolutions of a shareholders meeting or a board of directors meeting during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report.

a.Material resolutions of 2015 shareholders meeting (at June 11, 2015)

Item	Date	Major resolutions
Shareholders’ meeting	June 11, 2015	A. Approval of the 2014 business report and financial statements: Attending votes: 314,635,846 Favorable votes: 276,074,327 Unfavorable votes: 0 Abstention votes: 38,561,519 B. Approval of the distribution of 2014 retained earnings: (see Table 1 below) Attending votes: 314,635,846 Favorable votes: 276,545,327 Unfavorable votes: 0 Abstention votes: 38,090,519 Election of directors.(See Table 2 below.)

English Translation of The Annual Report Originally Issued in Chinese

C. Release new directors from prohibition of certain competitive oprations. Attending votes: 314,635,846 Favorable votes: 221,133,409 Unfavorable votes: 53,685,492 Ineffective votes: 0 Abstention votes: 39,816,945

Table 1

Kinsus Interconnect Technology Corporation 2014 Eranings Distribution Table

2014 Eranings Distribution Table
Item Beginning retained earnings Add: Other comprehensive income and loss - the impact of the actuarial gains and losses of benefits Add: Net profit after tax Distritable earnings Less: 10% Legal reserve Shareholder cash dividend (NT$4/share) Subtotal: Ending unappropriated retained earnings Employee compensation Compensation to directors	Unit: NT$ Total
	$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
	$545,679,473
	$32,555,940

Table 2

New Directors Elected

Title	Shareholder number	Name	Favorable Votes
Director	86726	Tung, Tzu-Hsien	248,798,745
Director	9	Guo, Ming-Dong	247,713,051
Director	11	Lu, Jing	247,589,856
Director	3	Hua Xu Investment Co., Ltd. (Representative: Su, Yan-Xue)	194,959,048
Director	1	Hua Yu Investment Co., Ltd. (Representative: Wu, Xiang-Xiang)	194,835,853
Director	J10051****	Cheng, Chung-Jen	193,750,159
Independent Director	F10100****	Chen, Jin-Cai	189,502,500
Independent	K12110****	Huang, Chun-Bao	188,800,500

English Translation of The Annual Report Originally Issued in Chinese

Director
Independent Director	P10001****	Wu, Hui-Huang	188,800,500

Note: The term of new directors is from June 11, 2015 to June 10, 2018.

b.Material resolutions of a board of directors meeting

Date of board meeting	Major resolutions
2015/02/09	1. 2014 Business report, financial report, and concoilidated financial report 2. 2014 Earning Distribution 3. Delegation of new manager 4. 2014 representation letter for effectiveness on internal control structure 5. Election for all directors 6. Nomination of independent director candidates 7. Release directors to be from prohibition in competing operations 8. The 2015 annual shareholders’ meetingconvened and related matters
2015/04/27	1. Review the qualification of independent directors 2. Amend “Code of Conduct” 3. Amend“Integrity on Business Practice” 4. Amend“Practical Guidance for Corporate Governance” 5. Amend“Practical Guidance for Enterprise Social Responsibility” 6. Amend“Application and Guidance for DoingBusiness with Integrity”
2015/06/11	1. Election of chairman 2. Delegation of Compensation Committee
2015/07/27	1. Determine the measurement date for 2014 distribution of dividend 2. Distribution of 2014 compensation to directors 3. Propose the 2015 adjustment on managers’compensations 4. Determine the amounts of employee compensation for managers 5. Resolve the addition and continuance of bank facility 6. Approve the endorsement for KINSUS INTERCONNECT TECHNOLOGY (SUZHOU) CORP. 7. Acquisition of real estate 8. Approval for the second re-purchase of treasury stock for transferring to emloyees
2015/10/26	1. Admission for acquiring real estate 2. Approve the acquisition of real estate 3. Approve the endorsement for KINSUS INTERCONNECT TECHNOLOGY (SUZHOU) CORP. 4. Amend the rule to re-purchase treasurystock for transfer to employees for

English Translation of The Annual Report Originally Issued in Chinese

	the second round 5. Approve the 2016 internal auditplan
2015/12/28	1. Amend the Article of Incorporation 2. Approve the 2016 business plan and budget 3. Assess auditors’ independency, approve the engagement of auditors and the audit fee 4. Enact the Company’s “Application Rule for suspending and recovery of stock transctions” 5. Amend the Internal control structure 6. Determine the amounts and distribution of 2015 managers’ year-end bonus 7. Approve the self-assessment of “The capacity to Independently prepare the Company’s financial statements” 8. Authorizingto re-organize the Company’s investees
2016/02/01	1. Approve 2015 compemsation to employee and directors 2. 2015 Business report, financial report, and concoilidated financial report 3. 2015 earnings distribution 4. 2015 representation letter for effectiveness on internal control structure 5. The 2016 annual shareholders’ meetingconvened and related matters

the second round
5. Approve the 2016 internal auditplan

2015/12/28

1. Amend the Article of Incorporation
2. Approve the 2016 business plan and budget
3. Assess auditors’ independency, approve the engagement of auditors and the
audit fee
4. Enact the Company’s “Application Rule for suspending and recovery of
stock transctions”
5. Amend the Internal control structure
6. Determine the amounts and distribution of 2015 managers’ year-end bonus
7. Approve the self-assessment of “The capacity to Independently prepare the
Company’s financial statements”
8. Authorizingto re-organize the Company’s investees

2016/02/01

1. Approve 2015 compemsation to employee and directors
2. 2015 Business report, financial report, and concoilidated financial report
3. 2015 earnings distribution
4. 2015 representation letter for effectiveness on internal control structure
5. The 2016 annual shareholders’ meetingconvened and related matters

(L)Where, during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, a director or supervisor has expressed a dissenting opinion with respect to a material resolution passed by the board of directors, and said dissenting opinion has been recorded or prepared as a written declaration, disclose the principal content thereof: None
(M)A summary of resignations and dismissals, during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, of the company's chairman, general manager, principal accounting officer, principal financial officer, chief internal auditor, and principal research and development officer: None

English Translation of The Annual Report Originally Issued in Chinese

(4)Information on CPA professional fees

Name of AccountingFirm	Name ofCPA	Audit Period	Note
Ernst & Young	Huang,Yi-Hui	2015
	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
3	$4,000 thousand (inclusive) - $6,000 thousand	V		V
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 certified public accountant: None
(6)Where the Company's chairperson, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its certified public accountant or at an affiliated enterprise of such accounting firm, the name and position of the person, and the period during which the position was held: None
(7)Any transfer of equity interests and/or pledge of or change in equity interests (during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report) by a director, supervisor, managerial officer, or shareholder with a stake of more than 10 percent during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report.

English Translation of The Annual Report Originally Issued in Chinese

(A)Changes in equity due to transfer and pledge by directors, supervisors, officers, and greater-than-10-percent shareholders

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

					Unit:Shares	Unit:Shares
Title	Name	2015			As of March 29, 2016
		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 & CEO	Guo, Ming-Dong	-10,000		─	─	─
Director & CSO	Tung, Tzu-Hsien	─		─	─	─
Director & Assistant CEO	Lu, Jing	-10,000		─	─	─
Director (major shareholder)	Hua Xu Investment Co., Ltd. Corporate, rep: Su, Yan-Xue	─		─	─	─
	Su, Yan-Xue	─		─	─	─
Director (major shareholder)	Hua Yu Investment Co., Ltd. Corporate, rep.: 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	─		─	─	─
General manager	Chen, He-Xu	─		─	─	─
Senior assistant GM	Huang, Geng-Fang	─		─	─	─
Senior assistant GM	Yang, De-Sheng	─		─	─	─
Assistant GM	Lin, Zhi-Wei	-10,000		─	─	─
Assistant GM	Huang, Sheng-Chuan	Promoted in 2015			─	─
Chief FIN/ACC manager	Liu, Su-Zhen	─	─		─	─

English Translation of The Annual Report Originally Issued in Chinese

(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 10 largest shareholders any one is a related party 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		Note
	# 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
Hua Xu Investment Co., Ltd. (Representative:Su, Yan-Xue)	58,233,091	13.06%	-	-	-	-	Investment Co., Ltd., Hua Yu Investment Co., Ltd.	All are 100% owned by Pegatron Corp.	-
Su, Yan-Xue	-	-	-	-	-	-	-	-	-
							Hua Wei
Hua Yu Investment Co., Ltd. (Representative:Wu, Xiang-Xiang)	55,556,221	12.46%	-	-	-	-	Investment Co., Ltd., Hua Xu Investment Co., Ltd.	All are 100% owned by Pegatron Corp.	-
Wu, Xiang-Xiang	-	-	-	-	-	-	-	-	-
Nan Shan Life Insurance Company Ltd.	15,670,000	3.51%	-	-	-	-	-	-	-

English Translation of The Annual Report Originally Issued in Chinese

Cathay Life Insurance Co., Ltd.	5,436,000	1.22%	-	-	-	-	-	-	-
Fubon Life Assurance Co., Ltd.	8,395,000	1.88%	-	-	-	-	-	-	-
Chunghwa Post	5,333,000	1.20%	-	-	-	-	-	-	-
Investment account at the central bank of Saudi Arabia entrusted to JPMorgan Chase	5,580,000	1.25%	-	-	-	-	-	-	-
Investment account at the Mistubishi UFJ Maorgan Stanley security entrusted to HSBC	5,421,000	1.22%	-	-	-	-	-	-	-
Labor Pension Fund (New Scheme)	5,315,000	1.19%	-	-	-	-	-	-	-

(9)The total number of shares and total equity stake held in any single enterprise by the company, its directors and supervisors, managers, and any companies controlled either directly or indirectly by the Company

Consolidated Shareholding Percentage

Measurement date: Dec. 31, 2015; Unit: Shares; %

Invested Enterprise	Investment by the Company	Investment by the Company	Investment by Directors, Supervisors, Officers, and Directly or Indirectly Controlled Companies	Investment by Directors, Supervisors, Officers, and Directly or Indirectly Controlled Companies	Consolidated Investment	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%
PEGAVISION 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%

English Translation of The Annual Report Originally Issued in Chinese

PIOTEK (H.K.) TRADING LIMITED.	－	－	200,000	100%	200,000	100%
PIOTEK COMPUTER (SUZHOU) CO. LTD.	－	－	－	100%	－	100%
PEGAVISION HOLDINGS CORPORATION	－	－	2,130,000	100%	2,130,000	100%
PEGAVISION (SHANGHAI) LIMITED	－	－	－	100%	－	100%
XIANG SHUO TRADING (SUZHOU) LIMITED	－	－	－	100%	－	100%
PEGAVISION JAPAN INC.		－	198	100%	198	100%

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

of April 16, 2016, the base date of share transfer suspension before the meeting of the company’s shareholders.

English Translation of The Annual Report Originally Issued in Chinese

Kinsus Interconnect Technology Corp. Statement on Internal Control Systems

Date: February 1[st] , 2016

Based on the results of self-inspection of the Company’s internal control system in 2015, 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, 2015, 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.

English Translation of The Annual Report Originally Issued in Chinese

(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 1, 2016. None of the nine attending directors objected to this statement as all of them approved the content of this statement. Thus, a pronouncement is made herein.

Kinsus Interconnect Technology Corp.

The Chairman: Guo, Ming-Dong

The General Manager: Chen, He-Xu

English Translation of The Annual Report Originally Issued in Chinese

4. Information on Capital Raising Activities

(1) Capital and Shares

(A)Sources of Capital Stock

a. Types of Shares

	As of March 29,	As of March 29,	As of March 29,	2016;Unit: Shares
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

As of March 29, 2016

Month & Year	Issue Price ($)	Authorized Capital Stock	Authorized Capital Stock	Paid-Up Capital Stock	Paid-Up Capital Stock		Note
		# 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

English Translation of The Annual Report Originally Issued in Chinese

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

English Translation of The Annual Report Originally Issued in Chinese

(B)Shareholder Structure

As of March 29,2016;Unit: Shares	As of March 29,2016;Unit: Shares	As of March 29,2016;Unit: Shares	As of March 29,2016;Unit: Shares	As of March 29,2016;Unit: Shares	As of March 29,2016;Unit: Shares	As of March 29,2016;Unit: Shares
Shareholder Structure Quantity	Government Agencies	Financial Institutions	Other Corporations	Individuals	Foreign Institutions & Foreigners	Total
# of Persons	0	10	123	22,533	291	22,957
# of Shares Held	0	36,843,000	199,987,409	88,951,046	120,218,545	446,000,000
Shareholding Percentage	0.00%	8.26%	44.84%	19.94%	26.96%	100%
Note: No shares are held by investors in Mainland China.

(C)Diffusion of Ownership

Par at NT$10 per share; As of March 29, 2016

Scale of Shareholding	# of Shareholders	# of Shares Held	Shareholding Percentage
1 to 999	4,021	483,951	0.11%
1,000 to5,000	15,299	30,299,799	6.79%
5,001 to 10,000	1,917	15,064,920	3.38%
10,001 to 15,000	541	6,978,267	1.57%
15,001 to 20,000	358	6,622,699	1.48%
20,001 to30,000	281	7,266,692	1.63%
30,001 to 50,000	182	7,439,397	1.67%
50,001 to 100,000	132	9,280,571	2.08%
100,001 to 200,000	84	12,058,594	2.70%
200,001 to 400,000	42	12,578,120	2.82%
400,001 to 600,000	28	13,464,897	3.02%
600,001 to 800,000	17	11,938,064	2.68%
800,001 to 1,000,000	9	7,859,201	1.76%
1,000,001 to 1,000,000,000	46	304,664,828	68.31%
Total	22,957	446,000,000	100.00%

English Translation of The Annual Report Originally Issued in Chinese

(D)List of principal 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.

As of March 29,2016;Unit: Shares	As of March 29,2016;Unit: Shares	As of March 29,2016;Unit: Shares
Shares Name of Major Shareholders	# of Shares Held	Shareholding Percentage
HuaWei InvestmentCo.,Ltd.	60,128,417	13.48%
Hua Xu InvestmentCo.,Ltd.	58,233,091	13.06%
Hua Yu Investment Co.,Ltd.	55,556,221	12.46%
NanShan Life InsuranceCompany,Ltd.	15,670,000	3.51%
Fubon Life Assurance Co.,Ltd.	8,395,000	1.88%
Investment account at the central bank of Saudi Arabia entrusted to JPMorgan Chase	5,580,000	1.25%
CathayLifeInsurance Co.,Ltd.	5,436,000	1.22%
Investment account at the Mistubishi UFJ Maorgan Stanleysecurityentrusted to HSBC	5,421,000	1.22%
Chunghwa Post	5,333,000	1.20%
Labor Pension Fund(New Scheme)	5,315,000	1.19%

(E)Share prices for the past 2 fiscal years, together with the company's net worth per share, earnings per share, dividends per share, and related information

Unit: NT$

					Unit: NT$
Item	Year			2014	2015
Market Price per Share	Highest			139.50	106.50
	Lowest			96.70	49.90
	Average			116.81	76.63
Net Worth per Share	Before Distribution			61.43	63.66
	After Distribution			57.43	(Note)
Earnings per Share	Weighted Average # of Shares			446,000,000	446,000,000
	Earnings per Share	Before Adjustment		8.11	6.51
		After Adjustment		8.11	(Note)
Dividends per Share	Cash Dividends			4	(Note)
	Stock Dividends		Stock Dividends from Retained Earnings	－	( Note )
			Stock Dividends from Capital Reserves	－	( Note )
	Accumulated Unpaid Dividends			－	－

English Translation of The Annual Report Originally Issued in Chinese

Analysis of Return on Investment	Price/Earnings Ratio	14.40	11.77
	Price/Dividend Ratio	29.2	(Note)
	Cash Dividend Yield	3.42	( Note )

Note: The distribution of earnings in 2015 has been approved by the board of directors, but has not been resolved at the shareholders’ meeting.

(F)The Company's dividend policy and 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.

English Translation of The Annual Report Originally Issued in Chinese

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

In 2015, the Company had a distributable earning of NT$14,780,094,506 after taxes, and set aside 10% of the amount, that is NT$290,395,224, as legal reserve. The following distribution is proposed in accordance with the Articles of Incorporation:

(a)Shareholder dividends: NT$1,559,075,000, all distributed in the form of cash
(b)Unappropriated retained earnings at the end of the period: NT$12,930,624,282

Kinsus Interconnect Technology Corp. Earnings Distribution Schedule 2015

Kinsus Interconnect Technology Corp. Earnings Distribution Schedule 2015
Item	Unit: NTD Amount
Unappropriated retained earnings (at beginning of period) Less:Other comprehensive income in 2015 - actuarial gains of defined benefit plans Add: Net income in 2015 Distributable earnings Less: 10% legal reserve Shareholder bonuses ($4 per share in cash) Subtotal Unappropriated retained earnings (at end of period)	$11,884,863,961 (8,721,698) 2,903,952,243
	14,780,094,506 (290,395,224) (1,559,075,000)
	(1,849,470,224)
	$12,930,624,282

c. Explanation of Expected Material Changes in the Dividend Policy: None

(G)Effect upon business performance and earnings per share of any stock dividend distribution proposed or adopted at the most recent shareholders' meeting

Regarding the distribution of earnings of the Company for 2015, the board of directors approved the proposal on February 1, 2016 to distribute shareholder bonuses totaling $1,559,075 thousand in the form of cash only. Thus, it is not applicable.

(H)Compensation of employees, directors, and supervisors

a.The percentages or ranges with respect to employee, director, and supervisor compensation, as set forth in the company's articles of incorporation: Please refer to the explanation in (1)-(F)-a on p.53.
b.The basis for estimating the amount of employee, director, and supervisor compensation, for calculating the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period: None

English Translation of The Annual Report Originally Issued in Chinese

c. Information on any approval by the board of directors of distribution of compensation:
(a)Regarding the compensation to employee and directors of the Company for 2015, the board of directors approved the proposal on February 1, 2016 to distribute NT$442,444 thousand and NT$26,026 thousand for employee and director compensation respectively.
(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
d.The actual distribution of employee, director, and supervisor compensation for the previous fiscal year (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized employee, director, or supervisor compensation, additionally the discrepancy, cause, and how it is treated

The actual distribution of employee bonuses and director/supervisor compensation by the Company for 2014 is as follows:

Item	Earnings Distribution for 2014	Earnings Distribution for 2014	Discrepancy	Cause and Explanation of Discrepancy
	Adopted at Shareholders’ Meeting on June 11, 2015	Actual Distribution
Director/Supervisor Compensation Employee Cash Bonuses	$32,556 thousand $545,679 thousand	$32,556 thousand $545,679 thousand	- -	- -

(I)Share repurchases: The Company repurchased its own shares as below.

Repurchase term	Second time
Purpose	Transfer to employee
Duration	7/28/2015~9/27/2015
Price interval	NT$50~100
Shares andquanity	Common share
Amount	NT$32,884,993
Shares eliminated ortransferred	0
Sharequanityaccumulated	550,000 shares
Sharequanityaccumulated to total shares outstanding	0.12%

(2)Issuance of corporate bonds: None

(3)Issuance of preferred shares: None

(4)Issuance of global depository receipts: None

English Translation of The Annual Report Originally Issued in Chinese

(5)Issuance of employee share subscription warrants: None

(6)New restricted employee Shares: None

(7)Mergers, acquisitions, and issuance of new shares due to acquisition of shares of other companies
(A)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
(B)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 Company's 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

English Translation of The Annual Report Originally Issued in Chinese

5. An Overview of Operations

(1)A description of the business
(A)Scope of Business
- a.Primary Business Areas
  - (a)CC01080 Manufacturing of electronic components.
  - (b)CC01990 Manufacturing of other electrical and electronic mechanical equipment.
  - (c)CB01990 Manufacturing of other machinery.
  - (d)CQ01010 Manufacturing of dies.
  - (e)F401010 International trade.
- b.Sales Percentages of Primary Products

Sales Percentages of Primary Products	Sales Percentages of Primary Products	Sales Percentages of Primary Products
Unit: NT$’000
Percentage Primary product	2015
	Sales	Percentage
Division of substrates	17,820,429	77.27%
Division of PCBs	5,240,882	22.73%
Total	23,061,311	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

English Translation of The Annual Report Originally Issued in Chinese

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.
(c)Development of High Layer Count Core-less substrate manufacturing 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

The 2015 global GDP grew by 2.6% and got slightly slowered than 2014’s 2.7%. Among all industries, the growth rate of semiconductor industry was -1.9%, which reduced significantly from 2014’s 7.9%. Main reason for the negative trend was the lackness of creation from smartphone products. Most manufacturing companies of cell phone are unable to produce creative products to impress the consumers while they still made their efforts on the strategy of reducing selling prices for price-competition and inspiring the consumers’ willingness to buy. As a result of the lower-price strategy, the total revenues of overall semiconductor industry decreased significantly instead. Furthermore, the sale shipment of conventional PC and Notebook computer, which also decreased by -12% and -8.7%, was unable to compensate the weakness of cell phone sales.

Device	2014	2015	Growth rate
Tranditional PC	277	244	-12.00%
Note book computer	263	240	-8.70%
Mobilephone	1,879	1,917	2.00%

English Translation of The Annual Report Originally Issued in Chinese

In overviewing global development trend for electronic products, the most potential areas still include automobile related electronics, cell phone, BS (Base Station) and Server. The development in these end product applications indeed is to meet the demand from cloud computing and IoT. As the time of IoT is coming, all kinds of application devices are also continuously displayed in the marketplace.

Chart: Growth trend of all kind of end semiconductor electronic devices

==> picture [412 x 113] intentionally omitted <==

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

The development and business opportunity from IoT products includes several aspects as shown at the Chart below. Except the Internet and Software application program which are not related to Kinsus’ core business, we need to seize the business opportunity aggressively, including Microprocessor, Wi-Fi access elements, Portable device elements, Wearable device elements, etc. Among these, the specific semiconductor element products, such as Application core processor, Modem, Power Amplifier, WiFi/Bluetooth elements, Power management instrument, Sensor Module, etc., will be the most blooming products.

Chart: The technology aspects for IoT deveopment

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English Translation of The Annual Report Originally Issued in Chinese

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.

==> picture [443 x 119] intentionally omitted <==

==> picture [443 x 120] intentionally omitted <==

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

English Translation of The Annual Report Originally Issued in Chinese

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 substrates
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 TechnologyCorporation

應用產品:
Application
products

資訊: Information；通訊: Communication；光電: Photoelectric；民生: Daily
necessities；消費性: Consumer products；精密儀器: Precision instruments；汽車:
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 substrates.

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 substrates. 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%

English Translation of The Annual Report Originally Issued in Chinese

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

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.

English Translation of The Annual Report Originally Issued in Chinese

The semiconductor manufacturing and packaging companies enhance the “InFO WLP” Process Technology in recent years. This development seems speedily threatening partial high-end packagingand substrate market. However, there exist certain limitations on the InFO application. As the limitation can not be conquered in short term, the conventional substrate and packaging technologies will be still dominating the market demand.

In response to the keen competitions for products and technology, Kinsus are to adopt the strategies as below.

1.We will continuously control the development trend of new product, particularly focus on the rapid demand of SiP Module Substrate due to portable device modulizing design.
2.We will speed up to develop the process of core-less substrate in order to meet the demand of ultra-fine line in 10 nm and/or 7 nm Wafer process.

We believe, by implementing these actions, Kinsus will be able to stabilize the growth of sale revenues and to maintain most profitable product mixture. Furthermore, by obtaining sufficient time and resources, Kinsus will successfully respond to the rapid changes and competitions in the marketplace.

Estimated units of global semiconductor IC packaging

(Unit: Million)

Item	2014	2015	2016	2017	2018	2019	CAGR (2014-2019)
Plastic DIP	6,362	5,751	5,037	4,908	5,196	5,326	-3.50%
QFP	14,768	13,215	12,441	12,327	13,086	13,706	-1.50%
Ceramic ChipCarrier	536	461	459	461	471	471	-2.60%
Total SOIC	44,649	40,466	37,296	34,218	30,557	23,446	-12.10%
Ceramic BGA	34	34	33	34	34	34	-0.20%
Plastic BGA	8,052	7,425	7,023	7,206	7,476	7,567	-1.20%
Bare Chip	38,349	42,111	47,092	52,676	59,129	66,011	11.50%
Leadless-Leadframe	53,328	55,446	59,555	64,070	70,204	75,504	7.20%
FBGA	42,153	45,671	52,317	58,601	66,815	77,093	12.80%
Others	4,554	4,645	4,933	5,373	5,802	6,356	6.90%
Total	212,785	215,225	226,185	239,873	258,771	275,512	5.30%
YoY Growth	9.90%	1.10%	5.10%	6.10%	7.90%	6.50%

Source: Gartner (Feb 2016)

English Translation of The Annual Report Originally Issued in Chinese

d.Product Competitions

As shown in the table below, PCB products, especially IC substrates, 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	$7,945	$9,231	2.1%

Source: Prismark 2015

English Translation of The Annual Report Originally Issued in Chinese

(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: NT$’000;%	Unit: NT$’000;%	Unit: NT$’000;%
Item Year	2015	As of March 31, 2016
R&D expenses	1,484,620	349,940
Net income	23,061,311	5,370,156
Percentage of R&D expenses(%)	6.44%
		6.52%

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

English Translation of The Annual Report Originally Issued in Chinese

�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.

English Translation of The Annual Report Originally Issued in Chinese

�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)An analysis of the market as well as the production and marketing situation

(A)Analysis of the Market

a.Sales (available) areas of primary products (services)

Unit: NT$’000

		Unit: NT$’000
Sales area	2015 Sales Value	Percentage
Taiwan	9,184,614	39.83%
Mainland China	10,175,327	44.12%

English Translation of The Annual Report Originally Issued in Chinese

United States	3,385,613	14.68%
Japan	189	0.00%
Europe	200,008	0.87%
Others	115,560	0.50%
Total	23,061,311	100.00%

Our company's primary product is the spherical array (BGA) substrates 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 substrates 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 substrates 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 substrates and packaging. Through technology authorization, along with their own process control technology, integrated industry environment & peripheral resources, etc., our IC substrates industry made our nation to become the second largest producer; second only to Japan, Currently, the industry has moved the production of substrates 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 substrates 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 substrates 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

English Translation of The Annual Report Originally Issued in Chinese

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 substrates 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 substrates 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,

English Translation of The Annual Report Originally Issued in Chinese

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 substrates 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 substrates needed, and at the same time extend patented technologies that we currently own in order to compete for market opportunities.

English Translation of The Annual Report Originally Issued in Chinese

�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.)

(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	Embedded substrates can shorten spacing between components, in order to improveproducts' electricalproperties.

English Translation of The Annual Report Originally Issued in Chinese

(b) Manufacturing Process of the Primary Products

==> picture [411 x 367] intentionally omitted <==

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

Multi-layer
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
----- End of picture text -----

(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

PrimaryRaw aterial	SupplyArea	Supplier
Substrates	Japan	Mitsubishi、Hitachi、Ajinomoto fine
Goldpotassium	Taiwan	Hon Hai
Copper sheets	Japan	OFUNA
Films	Japan	Mitsubishi、Hitachi

English Translation of The Annual Report Originally Issued in Chinese

(D)Major Suppliers in the Last Two Calendar Years

a.Major Clients in the Last Two Calendar Years

Unit: NT$’000

		2014	2014			2015	2015
Item	Client name	Amount	% to annual net sale〔%〕	Relation with issuer	Client name	Amount	% to annual net sale〔%〕	Relation with issuer
1	B	2,258,344	9.05	None	A	1,449,489	6.29	Parent company
2	D	1,898,187	7.61	None	B	1,435,632	6.22	None
3	A	1,834,048	7.35	Parent company	C	1,417,507	6.15	None
	Others	18,953,255	75.99		Others	18,758,683	81.34
	Nt l	24943834	100		Nt l	23061311	100
	e sae	,,			e sae	,,

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.

b.Major Suppliers in the Last Two Calendar Years

Unit: NT$’000

		2014	2014			2015	2015
Item	Supplier name	Amount	% to annual purchase 〔%〕	Relation with issuer	Supplier name	Amount	% to annual purchase 〔%〕	Relation with issuer
1	C	1,321,111	14.32	None	A	941,428	11.50	None
2	A	1,287,890	13.96	None	B	919,129	11.23	None
3	B	890,304	9.65	None	C	861,591	10.52	None
	Others	5,728,309	62.07		Others	5,465,589	66.75
	Net	9227614	100		Net	8187737	100
	purchase	,,			purchase	,,

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 2014 and 2015.

English Translation of The Annual Report Originally Issued in Chinese

(E)Production in the Last Two Years

Unit: NT$’000

Year Output Major Products (or bydepartment)		2015			2014
	Capacity	Quantity	Amount	Capacity	Quantity	Amount
Support plate	5,890,357	5,407,999	19,808,056	6,545,348	6,009,353	21,433,597

(F)Sales in the Last Two Years

	Unit: NT$’000	Unit: NT$’000	Unit: NT$’000	Unit: NT$’000	Unit: NT$’000	Unit: NT$’000	Unit: NT$’000	Unit: NT$’000
Year Shipments & Sales Major Products (or bydepartments)	2015				2014
	Local		Export		Local		Export
	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
Support plate	1,119,524	4,712,384	4,309,806	13,114,867	1,305,259	6,500,076	4,595,669	12,790,161
Others	-	4,472,230	-	761,830	-	4,423,995	-	1,229,602
Total	-	9,184,614	-	13,876,697	-	10,924,071	-	14,019,763

(3)The number of employees employed for the 2 most recent fiscal years, and during the current

fiscal year up to the date of printing of the annual report, their average years of service, average age, and education levels (including the percentage of employees at each level)

	Year	2014	2015	Data as of in 2016/03/31
Number of Employees	Management	226	250	251
	R&D/Technician	555	603	613
	operating personnel	2,899	2,964	2,897
	Total	3,680	3,817	3,761
Average Age		31.9		32.8
			32.5
Average Years of Service		4.2		4.8
			4.7
Education	Ph.D.	0.11%		0.11%
			0.11%
	Masters	8.37%		9.55%
			9.51%
	Bachelor’s Degree	48.48%		50.76%
			50.14%
	Senior High School	39.78%		36.61%
			37.28%
	Below Senior High School	3.26%		2.98%
			2.96%

English Translation of The Annual Report Originally Issued in Chinese

(4)Disbursements for environmental protection

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 15 years old company. As of the date of annual report published, there is no pollution disputes found.

(5)Labor relations

(A)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
- a.Employee Stock Bonus
- b.Group Insurance
- c.Festival Prizes: the Dragon Boat Festival, Mid-Autumn Festival bonus

d.Year-End Bonus

e.SSA benefits: marriages, births, deaths, serious injuries, disasters, major accidents

f.On-the-JobTraining

g.Employee benefits Committee provides:
i.Travelling
ii.Club

iii.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.

(c)Situation of Retirement System and Its Implementation

English Translation of The Annual Report Originally Issued in Chinese

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.

a.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.

b.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.

(B)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

English Translation of The Annual Report Originally Issued in Chinese

6. An Overview of the Company's Financial Status

(1)Condensed balance sheets and statements of comprehensive income for the past 5 fiscal years

(A)Brief Balance Sheet and Statements of Comprehensive Income

a. Brief Consolidated Balance Sheet- Adopting IFRSs

Unit: NT$’000

					Unit: NT$’000
Year Item		2012	2013	2014	2015
Current Assets		21,018,448	21,812,172	23,471,268	23,471,368
Property, Plant and Equipment		14,136,096	14,756,743	15,429,778	16,150,904
Intangible Assets		8,098	14,159	19,982	30,280
Other Assets		1,027,392	1,529,268	2,130,646	2,986,180
Total Assets		36,190,034	38,112,342	41,051,674	42,638,732
Current liabilities	Before Appropriation	8,167,617	9,003,298	10,103,181	10,318,448
	After Appropriation	9,505,617	10,341,298	11,887,181	(Note2)
Non-Current Liabilities		2,689,899	1,579,904	895,719	1,492,483
Total liabilities	Before Appropriation	10,857,516	10,583,202	10,998,900	11,810,931
	After Appropriation	12,195,516	11,921,202	12,782,900	(Note2)
Equity Attributable to Shareholders of the Parent
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
Retained earnings	Before Appropriation	12,746,962	14,646,450	16,718,487	17,829,718
	After Appropriation	11,408,962	13,308,450	14,934,487	(Note2)
Other Components of Equity		(74,424)	108,879	279,703	194,484
Treasury Stock		-	-	-	(32,885)
Non-controlling Interests		2,346,307	2,450,199	2,654,765	2,436,665
Total Equity	Before Appropriation	25,332,518	27,529,140	30,052,774	30,827,801
	Aafter appropriation	23,994,518	26,191,140	28,268,774	(Note2)

Note 1: Adopting IFRSs since year 2013.

Note 2: Earning appropriation of 2015 has not received approved by the board of shareholders

English Translation of The Annual Report Originally Issued in Chinese

b. Brief Parent-Company-Only Balance Sheet –Adopting IFRSs

Unit: NT$’000

					Unit: NT$’000
Year Item		2012	2013	2014	2015
Current Assets		16,954,391	17,879,353	19,880,887	19,685,035
Property, Plant and Equipment		7,370,315	7,970,375	8,914,836	10,309,220
Intangible Assets		2,298	7,408	11,927	9,869
Other Assets		4,253,720	5,114,118	5,453,133	6,075,014
Total Assets		28,580,724	30,971,254	34,260,783	36,079,138
Current Assets	Before Appropriation	4,999,895	5,391,312	6,311,775	7,325,160
	After Appropriation	6,337,895	6,729,312	8,095,775	(Note2)
Non-Current Liabilities		594,618	501,001	550,999	362,842
Total Liabilities	Before Appropriation	5,594,513	5,892,313	6,862,774	7,688,002
	After Appropriation	6,932,513	7,230,313	8,646,774	(Note2)
Equity Attributable to Shareholders of the Parent
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
Retained Earning	Before Appropriation	12,746,962	14,646,450	16,718,487	17,829,718
	After Appropriation	11,408,962	13,308,450	14,934,487	(Note2)
Other Components of Equity		(74,424)	108,879	279,703	194,484
Treasury Stock		-	-	-	(32,885)
Non-controlling Interests		-	-	-	-
Total Equity	Before Appropriation	22,986,211	25,078,941	27,398,009	28,391,136
	After Appropriation	21,648,211	23,740,941	25,614,009	(Note2)

Note 1: Adopting IFRSs since year 2013.

Note 2: Earning appropriation of 2015 has not received approved by the board of shareholders

English Translation of The Annual Report Originally Issued in Chinese

c. Brief Consolidated Statements of Comprehensive Income -Adopting IFRSs

Unit: NT$’000

				Unit: NT$’000
Year Item	2012	2013	2014	2015
Operating Revenues	22,034,283	23,102,827	24,943,834	23,061,311
Gross Profit	5,224,055	6,204,434	6,946,880	5,961,602
Operating Income	2,801,424	3,435,401	4,009,159	3,063,724
Non-Operating Income and Expense	70,552	227,947	141,913	141,524
Income Before Income Tax	2,871,976	3,663,348	4,151,072	3,205,248
Net Income of Continuing Operation Unit	2,375,672	3,116,254	3,490,233	2,729,526
Income (Loss) from Discontinued Operation	-	-	-	-
Net income	2,375,672	3,116,254	3,490,233	2,729,526
Other Comprehensive Income	(266,968)	317,234	301,864	(137,614)
Total Comprehensive Income	2,108,704	3,433,488	3,792,097	2,591,912
Net income (loss) Attributable to Shareholders of the Parent	2,790,562	3,224,093	3,617,327	2,903,952
Net income (loss) Attributable to Non-ControllingInterests	(414,890)	(107,839)	(127,094)	(174,426)
Comprehensive Income Attributable to Shareholders of the Parent	2,619,178	3,420,791	3,803,861	2,810,012
Comprehensive Income Attributable to Non-ControllingInterests	(510,474)	12,697	(11,764)	(218,100)
Earnings Per Share (in NT$)	6.26	7.23	8.11	6.51

Note: Adopting IFRSs since year 2013.

d. Brief Parent-Company-Only Statements of Comprehensive Income -Adopting IFRSs

Unit: NT$’000

				Unit: NT$’000
Year Item	2012	2013	2014	2015
Operating Revenues	17,651,784	18,026,999	19,290,237	17,827,251
Gross profit	5,767,213	6,038,599	6,273,087	5,313,503
Operating Income	4,029,648	4,100,235	4,300,134	3,509,636
Non-Operating Income and Expense	(744,794)	(331,174)	(150,430)	(162,134)
Profit (loss) from continuing operations before tax	3,284,854	3,769,061	4,149,704	3,347,502
Net Income of Continuing Operation Unit	2,790,562	3,224,093	3,617,327	2,903,952
Income (Loss) from Discontinued Operation	-	-	-	-
Net income	2,790,562	3,224,093	3,617,327	2,903,952
Other Comprehensive Income	(171,384)	196,698	186,534	(93,940)
Total Comprehensive Income	2,619,178	3,420,791	3,803,861	2,810,012
Earnings per share(in NT$)	6.26	7.23	8.11	6.51

Note: Adopting IFRSs since year 2013.

English Translation of The Annual Report Originally Issued in Chinese

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

Unit: NT$’000

		Unit: NT$’000	Unit: NT$’000
Year Item		Partial financial data from last five years (Note)
		2011	2012
Current Assets		14,461,721	16,978,716
Mutual Fund and Investment		4,655,632	3,671,070
Fixed Assets		8,171,834	7,906,248
Intangible Assets		22,977	2,298
Other Assets		35,605	35,349
Total Assets		27,347,769	28,593,681
Current Liabilities	Before Appropriation	4,709,926	4,962,645
	After Appropriation	6,047,926	6,300,645
Long Term Liabilities		839,822	514,292
Other Liabilities		10,607	－
Total Liabilities	Before Appropriation	5,560,355	5,476,937
	After Appropriation	6,898,355	6,814,937
Capital		4,460,000	4,460,000
Capital Surplus		5,850,000	5,853,673
Retained Earnings	Before Appropriation	11,417,801	12,877,495
	After Appropriation	10,079,801	11,539,495
Unrealized Gain or Loss on Financial Instrument		7,826	15,646
Cumulative Translation Adjustment		51,787	(90,070)
Net Loss Not Recognized as Pension Cost		－	－
Shareholder’s Equity	Before Appropriation	21,787,414	23,116,744
Total Amount	After Appropriation	20,449,414	21,778,744

Note: Annual reports for 2011~2012 were certified by Account and adopting IFRSs since year 2013.

English Translation of The Annual Report Originally Issued in Chinese

b. Brief Income Statement- Adopting ROC GAAP

Unit: NT$’000

	Unit: NT$’000	Unit: NT$’000
	Partial financial data from last five year (Note1)
	2011	2012
OperatingGross	16,870,553	17,651,784
Grossprofit	5,461,101	5,772,776
OperatingIncome	3,651,032	4,037,328
Non-operatingIncome	87,393	114,600
Non-operatingExpense.	(550,173)	(859,942)
Continuing Operating Income Before Tax	3,188,252	3,291,986
ContinuingOperatingIncome	2,798,653	2,797,694
Discontinued Operation Income(Loss)	－	－
ExtraordinaryGain(Loss)	－	－
Cumulative Effect of Changes in AccountingPrinciples	－	－
Net Income(Loss)	2,798,653	2,797,694
Earnings Per Share (in NT$) (Note 2)	6.28	6.27

Note1: Annual Reports for 2011~2012 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.

Year	Name of Accountant	Firm	Opinion	Reason for Changing
2011	Hong, Mao Yi Guo, Shao Bin	Ernst & Young	Unmodified	Internal rotation
2012	Guo, Shao Bin Xu,Xin Min	Ernst & Young	Unmodified	Internal rotation
2013	Huang, Yi Hui Zhang,Zhi Ming	Ernst & Young	Unmodified	Internal rotation
2014	Huang, Yi Hui Zhang,Zhi Ming	Ernst & Young	Unmodified	None
2015	Huang, Yi Hui Zhang,Zhi Ming	Ernst & Young	Unmodified	None

English Translation of The Annual Report Originally Issued in Chinese

(2) Financial analyses for the past 5 fiscal years

(A)Adopting IFRSs-Consolidated

In NT$’000

Year( Note 1) Analysis Items(Note 2)	Year( Note 1) Analysis Items(Note 2)	Year( Note 1) Analysis Items(Note 2)	2012	2013	2014	2015
Capital Structure Analysis (%)	Debt Ratio		30.00	27.77	26.79	27.70
	Long Term Funds to Fixed Assets		189.14	182.31	180.16	172.30
Liquidity Analysis (%)	Current Ratio		257.34	242.27	232.32	227.47
	Quick Ratio		232.08	218.74	209.93	203.78
	Interest Coverage		41.10	66.90	74.49	57.26
Operation Performance Analysis	Average Collection Turnover (times)		5.81	6.19	6.89	6.20
	Average Collection Days		63	59	53	59
	InventoryTurnover (times)		6.86	7.46	7.26	6.38
	Average Payable Turnover (times)		8.77	8.71	9.10	8.38
	Average InventoryTurnover Days		53	49	50	57
	Fixed Assets Turnover (times)		1.45	1.50	1.56	1.28
	Total Assets Turnover (times)		0.62	0.62	0.63	0.55
Return On Investment Analysis	Return on Total Assets (%)		6.82	8.51	8.92	6.63
	Return on equity(%)		9.55	11.79	12.12	8.97
	Income to Capital (%)	OperatingIncome	62.81	77.03	89.89	68.69
		Pre-Tax Income	64.39	82.14	93.07	71.87
	Net Income to Sales		10.78	13.49	13.99	11.84
	EarningPer Share (NT$)		6.26	7.23	8.11	6.51
Cash Flow	Cash Flow Ratio (%)		66.59	67.50	68.17	67.24
	Cash Flow AdequacyRatio (%)		95.09	94.87	107.97	108.92
	Cash Flow Re-investment Ratio		10.61	11.80	11.81	11.03
Leverage	Operation Leverage		2.47	2.29	2.17	2.84
	Financial Leverage		1.03	1.02	1.01	1.02
Please explain why financial ratio has changed up to 20 % for the most recent two years: The over 20% changes in Interest coverage, Return on assets, Return on equity, the ratio of operating profits to paid-in capital, the ratio of IBIT to paid-in capital and operation leverage are mainly attributed to decreases in sale revenues andprofitability.

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

English Translation of The Annual Report Originally Issued in Chinese

(B)Adopting IFRSs-Parent-Company-Only

Year (Note1) Item(Note 2)	Year (Note1) Item(Note 2)	Year (Note1) Item(Note 2)	2012	2013	2014	2015
Capital Structure Analysis (%)	Debt Ratio		19.57	19.03	20.03	21.31
	Long Term Funds to Fixed Assets		297.10	283.55	269.96	225.32
Liquidity Analysis (%)	Current Ratio		339.09	331.63	314.98	268.73
	Quick Ratio		311.75	308.32	292.83	249.17
	Interest Coverage		164.11	222.16	211.52	157.72
Operation Performance Analysis	Average Collection Turnover (times)		6.72	6.75	7.60	6.52
	Average Collection Days		54	54	48	56
	InventoryTurnover (times)		7.22	8.48	8.56	7.73
	Average Payable Turnover (times)		12.17	12.58	11.79	9.13
	Average InventoryTurnover Days		51	43	43	47
	Fixed Assets Turnover (times)		2.19	2.13	1.99	1.54
	Total Assets Turnover (times)		0.63	0.61	0.59	0.51
Return On Investment Analysis	Return on Total Assets (%)		10.04	10.88	11.14	8.31
	Return on Equity(%)		12.49	13.42	13.79	10.41
	Income to Capital (%)	OperatingIncome	90.35	91.93	96.42	78.69
		Pre-Tax Income	73.65	84.51	93.04	75.06
	Net Income to	Sales (%)	15.81	17.88	18.75	16.29
	EarningPer Share (NT$)		6.26	7.23	8.11	6.51
Cash Flow	Cash Flow Ratio (%)		100.45	110.42	96.28	83.58
	Cash Flow AdequacyRatio (%)		138.54	139.63	146.63	126.83
	Cash Flow Re-investment Ratio		12.03	14.47	12.52	11.84
Leverage	Operation Leverage		1.50	1.49	1.50	1.64
	Financial Leverage		1.01	1.00	1.00	1.01
Please explain why financial ratio has changed up to 20 % for the most recent two years: The over 20% changes in Interest coverage, Turnover of AP, turnover of property, plants and equipment, return on assets, return on equity are mainly attributed to decreases in sale revenues and profitability.

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

English Translation of The Annual Report Originally Issued in Chinese

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 Coverage=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)

English Translation of The Annual Report Originally Issued in Chinese

(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
			2011	2012
Capital Structure Analysis (%)	Debt Ratio		30.55	29.66
	Long Term Funds to Fixed Assets		182.21	189.21
Liquidity Analysis (%)	Current Ratio		280.28	258.75
	Quick Ratio		244.24	232.98
	Interest Coverage		68.41	41.2
Operation Performance Analysis	Average Collection Turnover (times)
			5.89	5.81
	Average Collection Days
			62	63
	Inventory Turnover (times)
			7.48	7.75
	Average Payable Turnover (times)
			8.23	8.76
	Average Inventory Turnover Days
			49	47
	Fixed Assets Turnover (times)
			1.59	1.45
	Total Assets Turnover (times)
			0.69	0.62
Return On Investment Analysis	Return on Total Assets
			7.66	6.82
	Return on equity
			10.51	9.54
	Income to Capital (%)	Operating Income
			61.04	62.97
		Pre-Tax Income
			64.35	64.55
	Net Income to Sales (%)
			10.92	10.81
	Earnings Per Share (NT$)
			6.28	6.27
Cash Flow	Cash Flow Ratio (%)
			53.05	66.79
	Cash Flow AdequacyRatio (%)
			99.8	97.06
	Cash Flow Re-investment Ratio (%)		6.12	10.64
Leverage	Operation Leverage		2.31	2.46
	Financial Leverage		1.01	1.03

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

English Translation of The Annual Report Originally Issued in Chinese

(D)Adopting ROC GAAP- Parent-Company-Only

Item (Note 2)	Year (Note1)	Year (Note1)	Last Five Years Financial Analysis	Last Five Years Financial Analysis
			2011	2012
Capital Structure Analysis(%)	Debt Ratio		20.33	19.16
	Long Term Funds to Fixed Assets		276.89	298.89
Liquidity Analysis (%)	Current Ratio		307.05	342.13
	Quick Ratio		271.25	314.09
	Interest Coverage		175.08	164.46
Operation Performance Analysis	Average Collection Turnover (times)
			7.35	6.72
	Average Collection Days
			50	54
	InventoryTurnover (times)
			6.96	8.21
	Average Payable Turnover (times)
			11.16	12.17
	Average InventoryTurnover Days
			52	44
	Fixed Assets Turnover (times)
			2.14	2.2
	Total Assets Turnover (times)
			0.65	0.63
Return On Investment Analysis	Return on Total Assets
			10.89	10.06
	Return on Equity
			13.41	12.46
	Income to Capital (%)	OperatingIncome
			81.86	90.52
		Pre-Tax Income
			71.49	73.81
	Net Income to Sales (%)
			16.59	15.85
	Net Income to Sales (%)
			6.28	6.27
Cash Flow	Earnings Per Share (NT$)
			83.7	101.21
	Cash Flow Ratio (%)
			143.25	141.38
	Cash Flow AdequacyRatio (%)		6.53	12
Leverage (%)	Cash Flow Re-investment Ratio (%)		1.46	1.5
	Operation Leverage		1.01	1.01

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

English Translation of The Annual Report Originally Issued in Chinese

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 Coverage=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)

English Translation of The Annual Report Originally Issued in Chinese

(3) Supervisors' or audit committee's report for the most recent year's financial statement

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] 2015. 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 financial statement for the most recent fiscal year please refers to page 188 to 286.
(5) For a parent-company-only financial statement for the most recent fiscal year, certified by a CPA please refer to page 100 to 187.
(6) If the Company or its affiliates have experienced financial difficulties in the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, the annual report shall explain how said difficulties will affect the company's financial situation: None.

English Translation of The Annual Report Originally Issued in Chinese

7. A Review and Analysis of the Company's Financial Position and Financial Performance and a Listing of Risks

(1) Financial position

Financial Status Review and Analysis Chart

Unit: NT$’000

Year Item	2015	2014	Differences	Differences	Note
			Amount	%
Current Assets Property, Plant and Equipment 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	23,471,368 16,150,904 2,607,515 408,945 42,638,732 10,318,448 1,492,483 11,810,931 4,460,000 5,939,819 17,829,718 2,598,264 30,827,801	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	$100 $721,126 $858,858 $6,974 $1,587,058 $215,267 $596,764 $812,031 $0 $0 $1,111,231 ($336,204) $775,027	0.00 4.67 49.12 1.73 3.87 2.13 66.62 7.38 0.00 0.00 6.65 (11.46) 2.58	Note 1 Note 2
Note 1: Due to business operation expansion. Note 2: Due to increase in long-term loans.

English Translation of The Annual Report Originally Issued in Chinese

(2) Financial performance

Financial Performance Comparison Analysis

Unit: NT$’000

	2015	2014	plus(minus) Amount	plus (minus) Variation ratio (%)	Note
Operating Revenues Cost Of Goods Sold Gross Profit Operating Expenses Operating Income Other Non-Operate Inc. and exp. Pre-Tax Income Income Tax Expense Net Incime Other comprehensive income (loss) Total comprehensive income	23,061,311 17,099,709 5,961,602 2,897,878 3,063,724 141,524 3,205,248 475,722 2,729,526 (137,614) 2,591,912	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	(1,882,523) (897,245) (985,278) (39,843) (945,435) (389) (945,824) (185,117) (760,707) (439,478) (1,200,185)	(7.55) (4.99) (14.18) (1.36) (23.58) (0.27) (22.79) (28.01) (21.80) (145.59) (31.65)	Note 1 Note 2 Note 3 Note 4 Note 5 Note 6
Analysis on ration changes:
Note 1, 2, 3, 4 and 6: Mainly because of decrease in sale revenue, profitability and income tax. Note 5: Due to the translation adjustments from currency exchange differences of foreign operational institutes/investees. The reason for changes in the Company’s core business: None.

Note 1, 2, 3, 4 and 6: Mainly because of decrease in sale revenue, profitability and income tax. Note 5: Due to the translation adjustments from currency exchange differences of foreign operational institutes/investees.

The reason for changes in the Company’s core business: None.

English Translation of The Annual Report Originally Issued in Chinese

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

Unit: NT$’000

				Unit: NT$’000	Unit: NT$’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
$12,746,307	$19,346,617	$(17,244,487)	$14,848,437	-	-
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$14,848,437 thousands. b. Estimate cash insufficient remedies and liquidityanalysis: no cash liquidityconcerns.

(4)The effect upon financial operations of any major capital expenditures during the most recent fiscal year:

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)The Company's reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year:

The company's main investments are all of long-term strategic investments. In year 2015, the parent’s company annual investment loss was NT$325,786 thousand, near to NT$319,590 thousand in 2014. The scale economy of investments was not yet reached and the short-term profitibility needs to be improved. The Company’s board has authority to refine the inestment organization in order to sustain the long-term investment strategy and to continuously generate the value for the Company to a maximum extent.

English Translation of The Annual Report Originally Issued in Chinese

(6)The matters that the risks section shall analyze and assess during the most recent fiscal year and as they stood on the date of printing of the annual report
(A)Impacts on Company’s Income and Future Counter Measures for Interest rate, Exchange rate

Fluctuation and Inflation. Our company’s 2015 interest rate and exchange gain or loss is list as below:

ow:	ow:
Unit: NT$1,000
Year Item	2015
Net Exchange Gain(loss)	(14,925)
Net Sales	23,061,311
Income before Tax	3,205,248
Net Exchange Gain(loss)	(0.06%)
Net Exhange Gain (Loss) to Net Pre-Tax Profit Ratio	(0.47%)
Interest Revenue	86,116
Interest Revenue to Net Sales Income	0.37%
Interest Income to Pre-Tax Net Profit Ratio	2.69%
Interest Expense	56,968
Interest Expense to Net Sales Interest Ratio	0.25%
Interest Expense to Net Pre-Tax Profit Ratio	1.78%
Interest Income (Expense) to Net Pre-Tax Profit Ratio	0.91%

Sources: financial reports certified by CPA.

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 0.91% 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 Dollar (NTD) vs. US. Dollars (USD) is minimal to our company. In year 2015, annual foreign exchange gain (loss) only account for (0.06%) of net sales.

English Translation of The Annual Report Originally Issued in Chinese

(b)Counter-Measures for Exchange Rate Fluctuation
- i.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.
- ii.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 2015 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 180 and 277. 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.

(C)Future R&D plans and Fund Estimated to Invest

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 about NT$1,181,273 thousands in R&D related field in 2016.

(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

English Translation of The Annual Report Originally Issued in Chinese

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 “7” point (4).
(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 owning more than 10% of company’s share do not engage bulk share transfer.

English Translation of The Annual Report Originally Issued in Chinese

(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) Other important matters: None

English Translation of The Annual Report Originally Issued in Chinese

8. Other Items Deserving Special Mention

(1) Information related to the Company's affiliates
(A)Associates Consolidated Business Operation Report:
- a. As of December 31, 2015, our company organization chart as shown below:

==> picture [536 x 596] intentionally omitted <==

----- 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 PEGAVISION LIMTED LIMITED
JAPAN
Share
Share Holding
Holding 100%
100%
PEGAVISION HOLDINGS
CORPORATION
Share Holding
100%
PAGAVISION (SHANG HAI)
LIMTED
----- End of picture text -----

English Translation of The Annual Report Originally Issued in Chinese

b.The consolidated entities are listed as follows:

b.The consolidated entities are listed as follows:
Investor Subsidiary Main businesses The Company KINSUS CORP. (USA) Designing substrates, formulating marketing strategy analysis, developing new customers, researching and development new product technology The Company KINSUS HOLDING (SAMOA) LIMITED Investing activities The Company KINSUS INVESTMENT CO., LTD. Investing activities KINSUS HOLDING (SAMOA) LIMITED KINSUS HOLDING (CAYMAN) LIMITED Investing activities KINSUS HOLDING (SAMOA) LIMITED PIOTEK HOLDINGS LTD. (CAYMAN) Investing activities KINSUS INVESTMENT CO., LTD. PEGAVISION CORPORATION Manufacture of medical equipment KINSUS HOLDING (CAYMAN) LIMITED KINSUS INTERCONNECT TECHNOLOGY SUZHOU CORP. Manufacturing and selling printed circuit board (PCB) (not high-density fine-line)	Percentage of Ownership (%) As of December 31,
	2015 100.00% 100.00% 100.00% 100.00% 51.00% 36.81% 100.00%	2014
		100.00% 100.00% 100.00% 100.00% 51.00% 36.81% 100.00%

English Translation of The Annual Report Originally Issued in Chinese

KINSUS HOLDING	XIANG-SHOU	Trading of PCB	100.00%	100.00%
(CAYMAN)	(SUZHOU)	related products
LIMITED	TRADING	and materials (not
	LIMITED	high-density
		fine-line)
PIOTEK	PIOTEK HOLDING	Investing activities	100.00%	100.00%
HOLDINGS LTD.	LIMITED
(CAYMAN)
PIOTEK HOLDING	PIOTEK	Researching,	100.00%	100.00%
LIMITED	COMPUTER	developing,
	(SUZHOU) CO.,	producing and
	LTD.	selling electronic
		components, PCBs
		and related
		products and
		providing
		after-sale services
PIOTEK HOLDING	PIOTEK (H.K.)	Trading activities	100.00%	100.00%
LIMITED	TRADING
	LIMITED
PEGAVISION	PEGAVISION	Investing activities	100.00%	100.00%
CORPORATION	HOLDINGS
	CORPORATION
PEGAVISION	PEGAVISION	Selling medical	100.00%	-%
CORPORATION	JAPAN INC.	equipment	(Note1)	(Note1)
PEGAVISION	PEGAVISION	Selling medical	100.00%	100.00%
HOLDINGS	CONTACT	equipment
CORPORATION	LENSES
	(SHANGHAI)
	CORPORATION

English Translation of The Annual Report Originally Issued in Chinese

  - c.Associates Operating Status in year 2015: please refer to page 174 and 271-Mainland China investment information and Page 184 and 281-invested companies’ information.

(B)Associates Consolidated Financial Report: please refer to page 188 to 286.
(C)Associates Report：Not applicable.
(2)The status of the Company carrying out a private placement of securities during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report. None.
(3)Holding or disposal of shares in the Company by the company's subsidiaries during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report: None.
(4)Other matters that require additional description: None.
(5)Any of the situations listed in Article 36, paragraph 3, subparagraph 2 of the Securities and Exchange Act, which might materially affect shareholders' equity or the price of the Company's securities, occuring during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report: None.

English Translation of an Audit Report Originally Issued in Chinese REPORT OF INDEPENDENT AUDITORS

To: the Board of Directors and Shareholders of Kinsus Interconnect Technology Corp.

We have audited the accompanying parent-company-only balance sheets of Kinsus Interconnect Technology Corp. as of December 31, 2015 and 2014, the related statements of comprehensive incomes, changes in equity, and cash flows for the years then ended. These parent-company-only financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these parent-company-only financial statements based on our audits.

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

In our opinion, based on our audits, the parent-company-only financial statements referred to above present fairly, in all material respects, the financial position of Kinsus Interconnect Technology Corp. as of December 31, 2015 and 2014 and the results of its operations and cash flows for the years then ended in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Ernst & Young February 1, 2016 Taipei, Taiwan, Republic of China

Notice to Readers

The accompanying parent-company-only financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China on Taiwan and not those of any other jurisdictions. The standards, procedures and practice to audit such financial statements are those generally accepted and applied in the Republic of China on Taiwan.

100

- - English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp.

PARENT-COMPANY-ONLY BALANCE SHEETS

As of December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars)

Assets	Assets	Assets		As of December 31,2015	As of December 31,2015	As of December 31,2015		As of December	As of December	31,2014
Code	Accounts	Notes		Amount		%		Amount		%
1100 1110 1125 1147 1150 1170 1180 1200 1210 1310 1410 1470 11XX 1550 1600 1780 1840 1915 1995 15XX 1XXX	Current assets Cash and cash equivalents Financial assets at fair value through profit or loss Available-for-sale financial assets Bond investments with no active market Notes receivable, net Accounts receivable, net Accounts receivable - related parties, net Other receivables Other receivables - related parties Inventories, net Prepayments Other current assets Total current assets Non-current assets Investment accounted for under equity method Property, plant and equipment, net Intangible assets, net Deferred tax assets Prepayment for equipment Other non-current assets Total non-current assets Total Assets	4, 6(1) 4, 6(2) 4, 6(3) 4, 6(4) 4, 6(5) 4, 6(6) 4, 6(6), 7 7 4, 6(7) 4, 6(8) 4, 6(9), 8, 9 4, 6(10) 4, 6(23) 4, 6(9), 9 6(11), 8		$10,998,903 3,524,742 - 423,057 1,835 2,920,639 21,759 281,480 7,489 1,317,749 115,144 72,238 19,685,035 3,610,796 10,309,220 9,869 9,593 2,452,423 2,202 16,394,103 $36,079,138		30 10 - 1 - 8 - 1 - 4 - - 54 10 29 - - 7 - 46 100		$10,082,304 5,081,578 40,369 420,000 4,358 2,403,669 1,008 392,702 9,197 1,321,824 76,320 47,558 19,880,887 4,009,504 8,914,836 11,927 - 1,438,282 5,347 14,379,896 $34,260,783		30 15 - 1 - 7 - 1 - 4 - - 58 12 26 - - 4 - 42 100

(The accompanying notes are an integral part of the parent-company-only financial statements.)

101

- - English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp.

PARENT-COMPANY-ONLY BALANCE SHEETS-(Continued) As of December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars)

Liabilities and Equity	Liabilities and Equity	Liabilities and Equity		As of December 31,2015	As of December 31,2015	As of December 31,2015		As of December	As of December	31,2014
Code	Accounts	Notes		Amount		%		Amount		%
2100 2150 2170 2180 2200 2230 2300 21XX 2540 2570 2600 25XX 2XXX 3100 3110 3200 3300 3310 3350 3400 3500 3XXX	Current liabilities Short-term loans Notes payable Accounts payable Accounts payable - related parties Other payables Current income tax liabilities Other current liabilities Total current liabilities Non-current liabilities Long-term loans Deferred tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities Capital Common stock Capital surplus Retained earnings Legal capital reserve Unappropriated earnings Other components of equity Treasury Stock Total equity Total liabilities and equity	6(12) 7 6(13), 7 4, 6(23) 6(14) 6(15), 8 4, 6(23) 4, 6(16), 6(17) 6(18) 6(18) 6(18) 6(18)		$1,831,266 49,834 1,049,302 428,877 3,094,451 541,841 329,589 7,325,160 288,860 39,834 34,148 362,842 7,688,002 4,460,000 5,939,819 3,049,623 14,780,095 194,484 (32,885) 28,391,136 $36,079,138		5 - 3 1 9 2 1 21 1 - - 1 22 12 16 8 41 1 - 78 100		$730,798 39,864 927,069 247,315 2,981,520 893,791 491,418 6,311,775 467,335 53,996 29,668 550,999 6,862,774 4,460,000 5,939,819 2,687,890 14,030,597 279,703 - 27,398,009 $34,260,783		2 - 3 1 9 3 1 19 1 - - 1 20 13 17 8 41 1 - 80 100

(The accompanying notes are an integral part of the parent-company-only financial statements.)

102

- - English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp.

PARENT-COMPANY-ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

Code	Accounts	Notes	2015		2014
			Amount	%	Amount	%
4000 5000 5900 6000 6100 6200 6300 6900 7000 7010 7020 7050	Operating revenues Operating costs Gross profit Operating expenses Selling General and administrative Research and development Operating expenses total Operating income Non-operating income and expenses Other income Other gains and losses Finance costs Share of profit or loss of subsidiaries, associates and joint ventures Non-operating income and expense total Income expense from continuing operations before income tax Income tax Net income Other comprehensive income (loss) Item that may not be reclassified to profit or loss Actuarial gain (loss) on defined benefit plains Items that may be reclassified subsequently to profit or loss Unrealized gain (loss) on available-for-sale security Share of other comprehensive income (loss) of subsidiaries, associates and joint ventures Income tax related to items that may be reclassified subsequently to profit or loss Total other comprehensive income, net of tax Total comprehensive income Earnings per share - basic (in NT$) Earnings per share - diluted (in NT$)	4, 6(19), 7 7 7 6(21), 7 6(21), 7 6(21) 4, 6(23) 6(22) 6(24) 6(24)	$17,827,251 (12,513,748) 5,313,503 (170,374) (620,887) (1,012,606) (1,803,867) 3,509,636 118,580 66,432 (21,360) (325,786) (162,134) 3,347,502 (443,550) 2,903,952 (8,721) (24,694) (72,922) 12,397 (93,940) $2,810,012 $6.51 $6.38	100 (70) 30 (1) (3) (6) (10) 20 1 - - (2) (1) 19 (3) 16 - - - - - 16	$19,290,237 (13,017,150) 6,273,087 (376,656) (624,714) (971,583) (1,972,953) 4,300,134 113,102 75,770 (19,712) (319,590) (150,430) 4,149,704 (532,377) 3,617,327 15,710 9,583 194,267 (33,026) 186,534 $3,803,861 $8.11 $7.98	100 (68) 32 (2) (3) (5) (10) 22 1 - - (2) (1) 21 (2) 19 - - 1 - 1 20
7070
7900 7950 8200 8300 8310 8311 8360 8362 8370 8399 8500 9750 9850

(The accompanying notes are an integral part of the parent-company-only financial statements.)

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Kinsus Interconnect Technology Corp.

PARENT-COMPANY-ONLY STATEMENTS OF CHANGES IN EQUITY

For the Years Ended December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars)

	Items	Notes	Capital	Capital Surplus		Retained Earnings	Retained Earnings	Other Components of equity	Other Components of equity	Treasury Stock
					Legal Reserve	Special Reserve	Unappropriated Earnings	Exchange differences arising on translation of foreign operations	Unrealized valuation gain (loss) on available-for-sale financial assets
Code			3100	3200	3310	3320	3350	3410	3425	3500	3XXX
A1 B1 B5 B17 D1 D3 D5 M5 M7 A1 B1 B5 D1 D3 D5 L1 Z1	Balance as of January 1, 2014 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 Balance as of December 31, 2014 Appropriation and distribution of 2014 earnings: Legal reserve Cash dividends - common shares Net income (loss) for 2015 Other comprehensive income (loss) for 2015 Total comprehensive income Treasury stock repurchase Balance as of December 31, 2015	6(18) 6(22) 6(18) 6(22)	$4,460,000 - 4,460,000 - $4,460,000	$5,863,612 - 50,925 25,282 5,939,819 - $5,939,819	$2,365,481 322,409 - 2,687,890 361,733 - $3,049,623	$74,424 (74,424) - - - $-	$12,206,545 (322,409) (1,561,000) 74,424 3,617,327 15,710 3,633,037 14,030,597 (361,733) (1,784,000) 2,903,952 (8,721) 2,895,231 $14,780,095	$93,768 161,241 161,241 255,009 (60,525) (60,525) $194,484	$15,111 9,583 9,583 24,694 (24,694) (24,694) $-	$- - - - (32,885) $(32,885)	$25,078,941 - (1,561,000) - 3,617,327 186,534 3,803,861 50,925 25,282 27,398,009 - (1,784,000) 2,903,952 (93,940) 2,810,012 (32,885) $28,391,136

(The accompanying notes are an integral part of the parent-company-only financial statements.)

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Kinsus Interconnect Technology Corp.

PARENT-COMPANY-ONLY STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars)

Code	Items	2015	2014	Code	Items	2015	2014
AAAA A10000 A20000 A20010 A20100 A20200 A20300 A20400 A20900 A21200 A22300 A22500 A22500 A23100 A30000 A31110 A31130 A31150 A31160 A31180 A31190 A31200 A31230 A31240 A32130 A32150 A32160 A32180 A32210 A32230 A32240 A33000 A33100 A33300 A33500 AAAA	Cash flows from operating activities: Net income before tax Adjustments: Profit or loss not effecting cash flows: 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 Share of profit or loss of subsidiaries, associates and joint ventures Gain on disposal of property, plant and equipment Loss on disposal of property, plant and equipment Gain on disposal of investment Changes in operating assets and liabilities: Financial Assets at fair value through profit or loss Notes receivable Accounts receivable Accounts receivable - related parties Other receivable Other receivable - related parties Inventories Prepayment Other current assets Notes payable Accounts payable Accounts payable - related parties Other payable Advance receipts Other current liabilities Net pension liability under defined benefit plan Cash generated from operations Interest received Interest paid Income tax paid Net cash provided by (used in) operating activities	$3,347,502 1,953,230 26,086 (17,179) (24,447) 21,360 (76,970) 325,786 (5) 725 (30,845) 1,581,283 2,523 (499,791) (20,751) 110,843 1,708 4,075 (38,824) (24,680) 9,970 122,233 181,562 (77,360) (1,126) 254 (4,241)	$4,149,704 1,911,643 20,712 5,418 (27,787) 19,712 (71,135) 319,590 (602) 1,231 (24,691) - 65,025 38,216 28,369 2,968 3,305 (141,939) 845 (8,323) 270 156,275 64,213 284,537 (4,638) (52,241) (3,973)	BBBB B00400 B00600 B02700 B02800 B03800 B04500 BBBB CCCC C00100 C01600 C01700 C04500 C04900 CCCC EEEE E00100 E00200	Cash flows from investing activities: Disposal of available-for-sale financial assets Acquisition of bond investments for which no active market exists Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment 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 Treasury stock purchased Net cash provided by (used in) financing activities Net Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	46,520 (3,057) (4,172,476) 5 3,145 (24,028)	51,620 - (2,636,178) 6,635 (845) (25,231) (2,603,999) (135,335) 474,750 (267,000) (1,561,000) - (1,488,585) 1,984,469 8,097,835 $10,082,304
						(4,149,891)
						1,100,468 - (339,432) (1,784,000) (32,885)
						(1,055,849)
						916,599 10,082,304
						$10,998,903

		6,872,921	6,736,704
		77,349 (21,073) (806,858)	70,627 (19,435) (710,843)
		6,122,339	6,077,053

(The accompanying notes are an integral part of the parent-company-only financial statements.)

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

1. HISTORY AND ORGANIZATION

Kinsus Interconnect Technology Corp. (referred to “the Company”) was established on September 11, 2000. Its main business activities include the manufacture of electronic products, the whole-sale and retail-sale of electronic materials, and the consultation services of business operation and management. The Company’s stocks have been governmentally approved on May 20th, 2004 to be listed and traded in Taiwan Stock Exchange starting November 1st, 2004.The registered business premise and main operation address is at 1245, Chung Hua Rd., Hsinwu District, Taoyuan City, Taiwan 32747.

2. DATE AND PROCEDURE OF AUTHORIZATION FOR FINANCIAL STATEMENTS ISSUANCE

The financial statements of the Company were authorized to be issued in accordance with a resolution of the Board of Directors’meeting held on February 1, 2016.

3. NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

(1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Group applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2015. The nature and the impact of each new standard and amendment that has a material effect on the Group is described below:

IAS 19 Employee Benefits

The revised IAS 19 brought about the following changes to defined benefit plans which are summarized as below:

(a) The interest cost and expected return on plan assets used in the previous version of IAS 19 are replaced with a net-interest amount under the revised IAS 19, which is calculated by applying the discount rate to the net defined benefit liability or asset at the start of each annual reporting period.
(b) In the previous version of IAS 19, past service cost is recognized as an expense immediately to the extent that the benefits are already vested, or on a straight-line basis over the average period until the benefits become vested. Under the revised IAS 19, all

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past service costs are recognized at the earlier of when the amendment/curtailment occurs or when the related restructuring or termination costs are recognized. Therefore unvested past service cost is no longer deferred over future vesting periods.

IFRS 13 Fair Value Measurements

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS. The Group re-assessed its policies for measuring fair values. Application of IFRS 13 has not materially impacted the fair value measurements of the Group.

Additional disclosures where required under IFRS 13, are provided in the individual notes relating to the assets and liabilities whose fair values were determined. Fair value hierarchy is provided in Note 12. According to the transitional provisions of IFRS 13, IFRS 13 is applied prospectively as of 1 January 2015; the disclosure requirements of IFRS 13 need not be applied in comparative information before 1 January 2015.

IAS 1 Presentation of Financial Statements – Presentation of items of other comprehensive income

Beginning 1 January 2014, the Group presented its items of other comprehensive income that will be reclassified to profit or loss separately from items that will not be reclassified in accordance with the amendments to IAS 1. The amendments affect presentation of statement of comprehensive income only and have no impact on the Group’s financial position or performance.

IAS 1 Presentation of Financial Statements – Clarification of the requirement for comparative information

Beginning 1 January 2014, according to the amendments to IAS 1, when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in it financial statements, or when it reclassifies items in its financial statements, the opening statement of financial position does not have to be accompanied by comparative information in the related notes. The amendments affect notes accompanying the financial statements only and have no impact on the Group’s financial position or performance.

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(2) The Company has not applied the following IFRSs issued by the International Accounting Standards Board (“IASB”) but not endorsed by the FSC. As of the date that the consolidated financial statements were authorized for issue, the initial adoption to the following standards and interpretations is still subject to the effective date to be published by the FSC.
(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 the timing and amount of the levy is certain). The interpretation is effective 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 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 1 July 2014.

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(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 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.

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 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 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 IFRS 13 Fair Value Measurement, the IASB did not intend to change the measurement requirements for short-term receivables and payables.

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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):

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 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.

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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”

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 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.

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

The amendment clarified that the use of revenue-based methods to calculate depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset, such as selling activities and change in sales volumes or prices. The amendment also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances. The amendment is effective for annual periods beginning on or after 1 January 2016.

(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 promised 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. An entity recognises revenue in accordance with that core principle by applying the following steps:

Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

The new Standard includes a cohesive set of disclosure requirements that would result in an entity providing users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts with customers. The Standard is effective for annual periods beginning on or after 1 January 2018.

(k) IAS 16 “Property, Plant and Equipment and IAS 41 “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 their operation is similar to that of manufacturing. 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 period beginning on or after 1 January 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, the expected credit loss impairment model 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 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 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

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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 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 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: 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 1 January 2016.

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IAS 19 “Employee Benefits”

The amendment clarifies 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 statement(s) 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, 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 January 1, 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

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The amendments contain (1) clarifying that the exemption from presenting consolidated financial statements applies 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 the 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 recognized by FSC at the date of issuance of the Group’s financial statements, the local effective dates are to be determined by FSC. As the Group is still currently determining the potential impact of the standards and interpretations listed under (10) and (12), it is not practicable to estimate their impact on the Group at this point in time. All other standards and interpretations have no material impact on the Group.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1)Statement of compliance

The parent-company-only financial statements of the Company for the years ended December 31, 2015 and 2014 were prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”).

(2)Basis of preparation

The Company prepared parent-company-only financial statements in accordance with Article 21 of the Regulations, which provided that the profit or loss and other comprehensive income for the period presented in the parent-company-only financial statements shall be the same as the profit or loss and other comprehensive income attributable to stockholders of the parent presented in the consolidated financial statements for the period, and the total equity presented in the parent-company-only financial statements shall be the same as the equity attributable to the parent company presented in the consolidated financial statements. Therefore, the Company accounted for its investments in subsidiaries using equity method and, accordingly, made necessary adjustments.

The parent-company-only 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 expressed in thousands of New Taiwan Dollars (“NT$”) unless

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otherwise stated.

(3)Foreign currency transactions

The Company’s parent-company-only financial statements are presented in its functional currency, New Taiwan Dollars (NTD). Items included in the parent-company-only financial statements are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Company at functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are 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 on the settlement of monetary items or on translating 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.

(4)Translation of financial statements in foreign currency

The assets and liabilities of foreign operations are translated into NTD at the closing rate of exchange prevailing at the reporting date and the income and expenses are translated at an average exchange rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On disposal of a foreign operation, the

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cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following are accounted for as disposals even if an interest in the foreign operation is retained by the Company: the loss of control over a foreign operation, the loss of significant influence over a foreign operation, or the loss of joint control over a foreign operation.

On 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 non-controlling interests in that foreign operation. 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 any 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.

(5)Current and non-current distinction

An asset is classified as current when:

(a) The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle
(b) The Company holds the asset primarily for the purpose of trading
(c) The Company 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 Company expects to settle the liability in its normal operating cycle
(b) The Company 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 Company 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.

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All other liabilities are classified as non-current.

(6)Cash and cash equivalents

Cash and cash equivalents comprises 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 (include fixed-term deposits that have matures of 3 months from the date of acquisition).

(7)Financial instruments

Financial assets and financial liabilities are recognized when the Company 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 investments not at fair value through profit or loss, directly attributable transaction costs.

A.Financial assets

The Company accounts for regular way purchase or sales of financial assets on the trade date.

Financial assets of the Company are classified as financial assets at fair value through profit or loss, available-for-sale financial assets and loans and receivables. The Compcny determines the classification of its financial assets at initial recognition.

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:

i. it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
ii. 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
iii. it is a derivative (except for a derivative that is a financial guarantee contract or a

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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 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:

i. it eliminates or significantly reduces a measurement or recognition inconsistency; or
ii. 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 upon initial recognition designates as available for sale, classified as at fair value through profit or loss, or those for which the holder may not recover substantially all of its initial investment.

Loans and receivables are separately presented on the balance sheet as receivables or bond investments for which no active market exists. 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 Company 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.

For held-to-maturity financial assets and loans and receivables measured at amortized cost, the Company 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 Company determines that no objective

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evidence of impairment exits for an individually assessed financial asset, whether significant or not, it includes the asset in a Company 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 Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred
(c) The Company 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 Company 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 Company that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company 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 interests, are recognized in profit or loss.

If 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, they are classified as financial liabilities measured at cost on balance sheet and carried at cost as of 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.

Derecognition of financial liabilities

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

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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.

(8)Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

(a) In the principal market for the asset or liability, or
(b) In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(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:

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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.

(10)Investments accounted for using the equity method

The Company accounted for its investments in subsidiaries using equity method and made necessary adjustments in accordance with Article 21 of the Regulations. Such adjustments were made after the Company considered the different accounting treatments to account for its investments in subsidiaries in the consolidated financial statements under IAS 27 “Consolidated and Separate Financial Statements” and the different IFRSs adopted from different reporting entity’s perspectives, and the Company recorded such adjustments by crediting or debiting to investments accounted for under the equity method, share of profit or loss of subsidiaries, associates and joint ventures and share of other comprehensive income of subsidiaries, associates and joint ventures.

The Company’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Company has significant influence.

Under the equity method, the investment in the associate or joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company’s share of net assets of the associate. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. Unrealized gains and losses resulting from transactions between the Company and the associate or joint venture are eliminated to the extent of the Company’s related interest in the associate.

When changes in the net assets of an associate or joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Company’s percentage of ownership interests in the associate or joint venture, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate on a prorate basis.

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When the associate or joint venture issues new stocks, and the Company’s interest in an associate is reduced or increased as the Company fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate is recognized in Additional Paid in Capital and Investment in associate. When the interest in the associate is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Company disposes the associate.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate or joint venture is impaired in accordance with IAS 39 Financial Instruments: Recognition and Measurement . If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate or joint venture’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets . In determining the value in use of the investment, the Company estimates:

(a) Its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows form the operations of the associate or joint venture and the proceeds on the ultimate disposal of the investment; or
(b) The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate or joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets .

Upon loss of significant influence over the associate or jointly controlled entity of joint venture, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence or jointly controlled entity and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss.

(11)Property, plant and equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation and

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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	1 to 5 years
Transportation	5 years
Office equipment	3 to 5 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.

(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.

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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 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 Company’s accounting policies for intangible assets are as follows:

Cost of Computer Software Useful economic life 1 to 5 years Amortization method Straight-line method during the contract term Internally generated or acquired externally Acquired externally

(13)Impairment of non-financial assets

The Company 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 Company 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 Company 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

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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)Treasury Stock

The Company’s own equity instruments repurchased (treasury shares) are recognized atrepurchase cost and deducted from equity. Any difference between the carrying amountand the consideration is recognized in equity.

(15)Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company 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.

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Dividend income

Dividend incomes are recognized only when the Group has the right to receive the dividends.

(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 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. 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 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.

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.Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

(a) the date of the plan amendment or curtailment, and
(b) the date that the Group recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution

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and benefit payment.

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted and disclosed for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events

(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 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 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.

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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.

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 Company’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.

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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)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 various assumptions, including the change in the discount rate and expected salary level. The assumptions used for measuring pension cost and defined benefit obligation are disclosed in Note 6.

(2)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 Company 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. As of December 31, 2015, the un-recognized portion of the Company’s defferred tax assets was disclosed in Note 6.

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6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1)Cash and cash equivalents

Cash and petty cash Checkings and savings Time deposit Total	As of December 31,	As of December 31,
	2015 (NT$’000)	2014 (NT$’000)
	200 2,373,292 8,625,411	200 2,066,693 8,015,411
	10,998,903	10,082,304

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

Held for trading: Money market fund Valuation adjustments Total	As of December 31,	As of December 31,
	2015 (NT$’000) 3,442,558 82,184 3,524,742	2014 (NT$’000)
		4,980,352 101,226
		5,081,578

No financial asset at fair value through profit or loss was pledged as collateral.

(3)Available-for-sale financial assets

Stocks Valuation adjustments Total	As of December 31,	As of December 31,
	2015 (NT$’000) - - -	2014 (NT$’000)
		15,675 24,694
		40,369

No available-for-sale financial asset was pledged as collateral.

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(4)Bond investments with no active market

Time deposits Current	As of December 31,	As of December 31,
	2015 (NT$’000) 423,057 423,057	2014 (NT$’000)
		420,000
		420,000

There was no bond investments with no active market pledged as collateral.

(5)Notes receivable

Notes receivable – from operations Less: allowance for doubtful accounts Net	As of December 31,	As of December 31,
	2015 (NT$’000) 1,835 - 1,835	2014 (NT$’000)
		4,358 -
		4,358

No notes receivable was pledged by the Company as collateral.

(6)Accounts receivable and accounts receivable - related parties, net

A. Accounts receivable, net

Accounts receivable, gross Less: allowance for doubtful accounts Net of allowances Accounts receivable - related parties, gross Less: allowance for doubtful accounts Net of allowances Total accounts receivable, net	As of December 31, 2015 (NT$’000) 2014 (NT$’000) 2,968,030 2,468,239 (47,391) (64,570) 2,920,639 2,403,669 21,759 1,008 - - 21,759 1,008 2,942,398 2,404,677	As of December 31, 2015 (NT$’000) 2014 (NT$’000) 2,968,030 2,468,239 (47,391) (64,570) 2,920,639 2,403,669 21,759 1,008 - - 21,759 1,008 2,942,398 2,404,677
	2015 (NT$’000) 2,968,030 (47,391) 2,920,639 21,759 - 21,759 2,942,398
		1,008 - 1,008 2,404,677

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B. 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, 2015 and 2014 were as follows:

12/31/2015 12/31/2014	Financial Institution Mega International Commercial Bank - LanYa Branch Mega International Commercial Bank - LanYa Branch	Accounts receivable de-recognized (NT$’000)	Advance received (NT$’000)	Collateral	Credit Limit
		251,600 509,292	- 153,968	None None	Note Note

Note: The credit limits were US$ 30,000 thousand as of December 31, 2015 and 2014.

C. The collection term of accounts receivables are generally on 60 to 120 day after monthly closing. The movement schedule of the impairment provision for accounts receivable, including related parties, was presented as below. (Please also refer to Note 12 for credit risk disclosure)

As of January 1, 2015 Provision (reversal) Effect of exchange rate changes As of December 31, 2015 As of January 1, 2014 Provision (reversal) Effect of exchange rate changes As of December 31, 2014	Impaired Individually (NT$’000) - - - - - - - -	Impaired Collectively (NT$’000) 64,570 (17,179) - 47,391 59,152 5,418 - 64,570	Total (NT$’000)
			64,570 (17,179) -
			47,391
			59,152 5,418 -
			64,570

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Aging analysis for the net accounts receivable, including related parties, were as follows.

Accounts receivable – past due, but not impaired

12/31/2015 12/31/2014	Neither past due nor impaired (NT$’000)	Less than 61 days (NT$’000)	61 to 90 days (NT$’000)	91 to 120 days (NT$’000)	Longer than 120 days (NT$’000)	Total (NT$’000)
	2,776,357 2,337,761	166,041 66,916	- -	- -	- -	2,942,398 2,404,677

(7)Inventory

A. Details of inventory:

Raw material Supplies Work in process Finished goods Merchandises Total	As of December 31,	As of December 31,
	2015 (NT$’000) 349,620 40,460 563,882 336,273 27,514 1,317,749	2014 (NT$’000)
		367,966 34,564 502,706 391,549 25,039
		1,321,824

B. For the years ended December 31, 2015 and 2014, the Company recognized NT$12,513,748 thousand and NT$13,017,150 thousand under the caption of costs of sale, respectively. The following items were also included in cost.

Item	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
Loss from (Gains on recovery of) inventory market decline Loss (gain) from physical Loss in inventory written-off and obselencense Total	(136,990) (1,853) 1,191,343	194,115 34,935 864,542
	1,052,500	1,093,592

The Company recognized gains on recovery of inventory market decline because some of the inventories previously provided with market loss or obsolescence were disposed.

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C. The inventories were not pledged.

(8)Investments Accounted For Under the Equity Method

	As of December 31,	As of December 31,	As of December 31,	As of December 31,
	2015		2014
Investee companies		Percentage		Percentage
	Amount	of	Amount	of
	(NT$’000)	Ownership	(NT$’000)	Ownership
Investments in subsidiaries:
KINSUS CORP. (USA)	32,462	100.00%	29,528	100.00%
KINSUS HOLDING (SAMOA) LIMITED	3,011,949	100.00%	3,458,036	100.00%
KINSUS INVESTMENT CO.,LTD.	566,385	100.00%	521,940	100.00%
Total	3,610,796		4,009,504

A. Investments in subsidiaries

Investments in subsidiaries were present in the parent-company-only financial statements under the caption of investments accounted for under equity method. Valuation adjustment is made if deemed necessary.

B. The Company’s investments accounted for under the equity method were not pledged.

(9)Property, plant and equipment

Land (NT$’000)	Machinery (NT$’000)	Office Equipment (NT$’000)	Transportation (NT$’000)	Other Equipment (NT$’000)	Construction in progress and equipment awaiting inspection (including prepaid equipment) (NT$’000)	Total (NT$’000)
1,366,426 2,472,080 - - - - - - 191,374 74,655	9,676,936 441 (2,049,861) - 1,520,319	23,626 6,121 - - 7,309	2,735 1,355 - - -	2,194,275 58,051 (150,529) - 202,770	2,761,524 4,296,512 - - (1,996,427)	18,497,602 4,362,480 (2,200,390) - -
1,557,800 2,546,735	9,147,835	37,056	4,090	2,304,567	5,061,609	20,659,692
1,237,179 2,464,872 8,939 - - (2,500)	8,284,351 55,093 (78,591)	8,630 6,196 -	1,525 830 -	2,098,092 44,526 (9,897)	1,243,287 3,135,070 -	15,337,936 3,250,654 (90,988)

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Effect of EXrate - Reclassification 120,308 As of 12/31/2014 1,366,426 Depreciation and impairment: As of 1/1/2015 - Depreciation - Impairment loss - Disposal - Effect of EXrate - Reclassification - As of 12/31/2015 - As of 1/1/2014 - Depreciation - Impairme loss - Disposal - Effect of EXrate - Reclassification - As of 12/31/2014 - Net carrying amount: As of 12/31/2015 1,557,800 As of 12/31/2014 1,366,426	- 120,308	- 9,708	- 1,416,083	- 8,800	- 380	- 61,554 2,194,275 1,444,107 260,006 - (150,164) - (8,737)	- (1,616,833)	- -
	1,366,426	2,472,080	9,676,936	23,626	2,735		2,761,524	18,497,602
		766,015 125,981 - - - -	5,925,647 1,557,893 - (2,049,501) - 8,737	7,992 8,611 - - - -	723 739 - - - -		- - - - - -	8,144,484 1,953,230 - (2,199,665) - -
As of 1/1/2015 Depreciation Impairment loss Disposal Effect of EXrate Reclassification As of 12/31/2015 As of 1/1/2014 Depreciation Impairme loss Disposal Effect of EXrate Reclassification As of 12/31/2014 Net carrying amou
	-	891,996	5,442,776	16,603	1,462	1,545,212	-	7,898,049
	- - - - - -	644,443 122,841 - (1,269) - -	4,468,329 1,529,876 - (72,558) - -	3,000 4,992 - - - -	237 486 - - - -	1,200,556 253,448 - (9,897) - -	- - - - - -	6,316,565 1,911,643 - (83,724) - -
	-	766,015	5,925,647	7,992	723	1,444,107	-	8,144,484
	nt: 1,557,800	1,654,739	3,705,059	20,453	2,628	759,355	5,061,609	12,761,643
As of 12/31/2015 As of 12/31/2014
	1,366,426	1,706,065	3,751,289	15,634	2,012	750,168	2,761,524	10,353,118

A. “ Significant components ” of buildings primarily comprised the main buildings and the facilities, which are depreciated based on their respective useful economic life of 20 to 25 years and 10 to 20 years.

B.Details of property, plant & equipment and prepayment for machinery is as follows:

Property, plant and equipment Prepaid equipment Total	As of December 31,	As of December 31,
	2015 (NT$’000) 10,309,220 2,452,423 12,761,643	2014 (NT$’000)
		8,914,836 1,438,282
		10,353,118

C.Please refer to Note 8 for details on property, plant and equipment pledged as collaterals.

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D. The Company purchased 40 parcels of land with a total area of 36,287.15 square meters. Lands are located at the addresses of No. 1113, 1114, 1438 to 1443,1479,1486 to 1487 at ShiLeiZi Sub-section, ShiLeiZi Section, No. 1044, 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 while it has been temporarily registered under the general manager’s name and, to secure the Company’s right to the land, mortgage registration has been set aside with the Company being the obligee.

(9)

(10)Intangible assets

Cost: As of January 1, 2015 Additions – acquired separately Derecognized upon retirement Effect of exchange rate changes As of December 31, 2015 As of January 1, 2014 Additions – acquired separately Derecognized upon retirement Effect of exchange rate changes As of December 31, 2014 Amortization and Impairment: As of January 1, 2015 Amortization Derecognized upon retirement Effect of exchange rate changes As of December 31, 2015 As of January 1, 2014 Amortization Derecognized upon retirement Effect of exchange rate changes As of December 31, 201	Computer software (NT$’000)
	23,080 24,028 (23,080) -
	24,028
	26,401 25,231 (28,552) -
	23,080
	11,153 26,086 (23,080) -
	14,159
	18,993 20,712 (28,552) -
	11,153

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Carrying amount, net: As of December 31, 2015 As of December 31, 2014	9,869
	11,927

Amounts of amortization recognized for intangible assets are as follows:

Operating expense	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000) 20,712
	26,086

(11)Other non-current assets

Refundable deposits	As of December 31,	As of December 31,
	2015 (NT$’000)	2014 (NT$’000) 5,347
	2,202

(12)Short-term loans

	As of December 31,	As of December 31,
Interest interval (%)	2015	2014 (NT$’000)
	(NT$’000)
Unsecured bank loans 0.88~1.15	1,831,266	730,798

As of December 31, 2015 and 2014, the line of unused short-term loan credit for the Company amounted to NT$2,907,734 thousand and NT$2,687,402 thousand, respectively.

(13)Other payable

Accrued expense Equipment payable Accrued interest Total	As of December 31,	As of December 31,
	2015 (NT$’000)	2014 (NT$’000)
	2,007,409 1,085,936 1,106	2,084,769 895,932 819
	3,094,451	2,981,520

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(14)Other current liabilities

Other current liabilities Unearned sales revenue Current portion of long-term loans Total	As of December 31,	As of December 31,
	2015 (NT$’000)	2014 (NT$’000)
	28,405 3,133 298,051	28,151 4,259 459,008
	329,589	491,418

(15)Long-term loans

Debtor	Type of Loan	Maturity	Loan Balance	Repayment
			As of 12/31/2015 (NT$’000)
Mega International Commercial Bank - LanYa Branch Mega International Commercial Bank - LanYa Branch Taipei Fubon Commercial Bank - BeiTou Branch Total Less: current portion Non-current portion Debtor	Secured bank loan Credit loan Credit loan Type of Loan	2015.10.27- 2016.12.15 2015.10.27- 2018.08.12 2017.12.15 Maturity	48,581 144,430 393,900	Notes 1 Notes 2 Note 5 Repayment
			586,911 (298,051)
			288,860
			Loan Balance
			As of 12/31/2014 (NT$’000)
Mega International Commercial Bank - LanYa Branch Mega International Commercial Bank - LanYa Branch The Shanghai Commercial & Savings Bank -	Secured bank loan Credit loan Secured bank loan	2015.10.27- 2016.12.15 2015.10.27- 2018.08.12 2015.07.15	141,159 279,575 30,859	Notes 1and 2 Notes 1and 3 Note 4

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ZhongLi Branch Taipei Fubon Commercial Bank - BeiTou Branch Credit loan 2017.12.15 Total Less: current portion Non-current portion	474,750 Note 5 926,343 (459,008) 467,335

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. Grace period is 1 years (4 terms). The rest is repayable in installments of equal amount for 16 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 20 terms.
Note 5: 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 portion of property, plant and equipment were pledged to Mega International Commercial Bank and Shanghai Commercial & Savings Bank (the first-priority mortgagors) as collaterals for secured bank loans. Please refer to Note 8 for more details.

As of December 31, 2015 and 2014, the interest rate intervals for long-term loans were 1.02%~1.3214% and 0.72%~1.597%, respectively.

(16)Other non-current liabilities

Accrued pension costs	As of December 31,	As of December 31,
	2015 (NT$’000) 34,148	2014 (NT$’000)
		29,668

(17)Post-employment benefits

Defined contribution plan

The Company adopted a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension

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accounts. The Company has made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

Expenses under the defined contribution plan for the years ended December 31, 2015 and 2014 are NT$93,793 thousand and NT$88,653 thousand, respectively.

Defined benefits plan

The Company adopts 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 salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contributes 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 fund is operated in a potofolio basis by Goernance Committee on Labor Retirement Fund in accordance with the Rule for Custody and Operating the Labor Retirement Fund. The investment of the Fund may be executed either by the Committee itself or by outsourced other profession institutions with its investment stategy, including both active and passive management, targeting in a medium or longer term. In considering the risks of market, credit and liquidity, the Committee establishes the ceiling of fund investment and control plan, in one hand, to reduce investment risk to an affordable extent and, in the other hand, to achieve the targeted return flexibly. As of December 31, 2015, the Company plans to contribute NT$5,061 thousand to the funds under its defined benefit scheme during the following fiscal year.

As of December 31, 2015 and 2014, the maturities of the Company’s defined benefit plan were expected in 2036 and 2037 and the detail information is listed as below.

Matured in Less than one year More than one year but less than five years More than five years Total	As of December 31,	As of December 31,
	2015 (NT$’000) 14,162 3,038 22,213 39,413	2014 (NT$’000)
		8,440 8,142 16,321
		32,903

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Pension costs recognized in profit or loss are as follows:

Current service costs Net interest of defined benefit liability (asset) Past service cost Settlement Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	152 668 - -	232 987 - -
	820	1,219

Reconciliation of liability (asset) of the defined benefit plan is as follows:

	As of
Dec. 31, 2015 (NT$’000) 127,707 (93,559) 34,148	Dec. 31, 2014 (NT$’000) 116,697 (87,029) 29,668	Jan. 1, 2014 (NT$’000)
		132,275 (82,924)
		49,351

Reconciliation of liability (asset) of the defined benefit liability is as follows:

Present value of defined benefit obligation (NT$’000)	Fair value of plan assets (NT$’000)	Net defined benefit liability(asset) (NT$’000)
132,275 232 2,645 -	(82,924) - (1,658) -	49,351 232 987 -
2,877	(1,658)	1,219
519 (6,277) (9,704)	- - (248)	519 (6,277) (9,952)

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-	-	-
(15,462)	(248)	(15,710)
(2,993) - -	2,993 (5,192) -	- (5,192) -
116,697 152 2,626 -	(87,029) - (1,958) -	29,668 152 668 -
2,778 2,453 6,154 474 -	(1,958) - - (360) -	820 2,453 6,154 114 -
9,081	(360)	8,721
(849) - -	849 (5,061) -	- (5,061) -
127,707	(93,559)	34,148

The % of major categories of total plan assets at fair value was as follows:

Cash	Pension plan (%) as of December 31,	Pension plan (%) as of December 31,
	2015 100.00%	2014
		100.00%

The actuarial assumptions used for the Company’s defined benefit plan are shown below:

Discount rate Expected rate of salary increases	As of December 31,	As of December 31,
	2015 2.00% 3.00%	2014
		2.25% 3.00%

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Sensitivity analysis :

For theyear ended December 31,	For theyear ended December 31,	For theyear ended December 31,	For theyear ended December 31,
2015 (NT$’000)		2014 (NT$’000)
Increase in defined benefit obligation	Decrease in defined benefit obligation	Increase in defined benefit obligation	Decrease in defined benefit obligation
- 13,746 13,534 -	(12,150) - - (12,095)	- 13,023 12,855 -	(11,487) - - (11,461)

For the purpose of sensitivity analysis above, the Company calculated the impact on defined benefit obligation due to a reasonable and feasible change of one singal assumption (i.e. discount rate or expected salary level) with other assumptions remaining equal. Please note that the sensitivity analysis has its limitation due to the co-relation between different actuarial assumptions and the rarity that only one assumption changes at a time. The method used in the analysis is consistent for both current and prior years.

(18)Equity

A.Common shares

As of December 31, 2015 and 2014, the Company’s authorized capital and paid-in capital were NT$5,500,000 thousand and NT$4,460,000 thousand, respectively, each share at par value of NT$10, divided into 446,000 thousand shares. Each share represents a voting right and a right to receive dividends.

Treasury stocks brought back by the Company for the purpose of transfer to employee during the period from August 18, 2015 to September 25, 2015 totaled to 550 thousand shares. Please refer to Note 6(18)-C to the financial statements for more details.

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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	As of December 31,	As of December 31,
	2015 (NT$’000) 5,850,000 50,925 38,894 5,939,819	2014 (NT$’000)
		5,850,000 50,925 38,894
		5,939,819

According to the Taiwan 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.

C. Treasury stock

As of December 31, 2014, no treasury stock was held by the Group while treasury stock amounted to NT$32,885 thousand, divided into 550 thousand shares, as of December 31, 2015.

As of December 31, 2014, no treasury stock moved.The movement schedule of treasury stock for December 31, 2015 was as below (in thousand shares).

Purpose of repurchase To be transfered to employees	Beginningbalance -	Addition 550	Decrease -	Endingbalance
				550

According to the Securities and Exchange Law of the R.O.C., the total shares of treasury stock shall not exceed 10% of the Company’s issued stock, and the total purchase amount shall not exceed the sum of the retained earnings, additional paid-in capital-premiums and realized additional paid-in capital. As such, the ceiling number of shares of treasury stock that the Company could hold as of December 31, 2015 were 44,600 thousand shares, with the maximum payments of NT$23,679,718 thousand.

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In compliance with Securities and Exchange Law of the R.O.C., treasury stock should not be pledged, nor should it be entitled to voting rights or receiving dividends.

D.Appropriation of earnings and dividend policies

(a)Earning distribution

The rule enacted in the Company’s original Article of Incorporation before an amendment was proposed by the borad of directors on December 28, 2015 is as follows.

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:

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.

The Company’s borad of directors proposed to amend the Article of Incporation in a meeting held on December 28, 2015. The articles to be amended regarding employee and directors’ compension as well as eraning distribution are as follows.

The Company, if making profits in current year, shall provide employee and directors’ compensation in accordance with the following rules, provided that all accumulated deficits, if any, are fully offset:

1. Employee Compensation:

The ratio of employee compensation to “income before tax and the employee and directors’ compensation to be provided” shall not be less than 10% and the amount of employee compensation can be paid by cash or shares. Qualified employee may include the employee from the Company’s subsidiaries who meets certain qualifications set forth by the Company’s Board of Directors.

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2. Directors’ compensation:

The ratio of directors’ compensation to “income before tax and the employee and directors’ compensation to be provided” shall not be more than 1%.

Based on Article 235-1 of Company Act amended on May 20, 2015, the Company shall incur a portion of current year’s profit as employees’ compensation after offsetting the cumulative losses, if any. The aforementioned employees’ compensation distributed in the form of shares or in cash shall be approved by a majority vote at a meeting of board of directors attended by two-thirds of the total number of directors and reported at annual stockholders’ meeting. Qualification requirements of employees, including the employees of the Company’s subsidiaries, entitled to receive the employees’ compensation may be specified in the Articles of Incorporation.

The Company plans to revise the Company’s Article in responding to the amendment to the Company Act as mentioned in above paragraph at annual shareholders’ meeting to be held on 2016. As to the details of estimation regarding employee’s and directors’ compensation, please refer to Note 6(20) to the financial statements.

(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

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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 Company did not incur any special reserve upon the first-time adoption of Taiwan IFRS.

(e)The appropriations of earnings for 2015 were proposed through the Board of Directors’ meetings held on February 1, 2016, while 2014’s approved in shareholders’ meetings on June 11, 2015. The details of the distributions are as follows:

Appropriation of earnings	Appropriation of earnings	Dividend per share (in NT$)	Dividend per share (in NT$)
2015 (NT$’000) 290,395 1,559,075 (Note) (Note) 1,849,470	2014 (NT$’000)	2015	2014
	361,733 1,784,000 32,556 545,679	3.50	4.00
	2,723,968

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 2013 earning distribution comprised the employees’ bonuses of NT$492,104 thousand and the remuneration to directors and supervisors of NT$29,761 thousand. The difference of NT$814 thousand between the actual payment and the accrual of NT$429,104 thousand for employees’ bonuses and NT$28,947 thousand for remuneration to directors and supervisors for the year ended December 31, 2013 was recorded in the profit or loss for the year ended December 31, 2014.

The actual payment of 2014 earning distribution comprised the employees’ bonuses of

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NT$545,679 thousand and the remuneration to directors and supervisors of NT$32,556 thousand. The difference of NT$457 thousand between the actual payment and the accrual of NT$545,679 thousand for employees’ bonuses and NT$32,099 thousand for remuneration to directors and supervisors for the year ended December 31, 2014 was recorded in the profit or loss for the year ended December 31, 2015.

For 2015 employee and directors’ compensation under the new Article to be amended, please refer to Note 6(20) for more details.

(19)Sale

Sale of goods Less: sales returns and allowances Services rendered Other operating revenue Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	17,812,750 (344,226) 190,589 168,138	19,141,507 (318,035) 186,656 280,109
	17,827,251	19,290,237

(20)Summary statement of employee benefits, depreciation and amortization by function is as follows:

Function Nature	2015 (NT$’000)	2015 (NT$’000)	2015 (NT$’000)	2014 (NT$’000)	2014 (NT$’000)	2014 (NT$’000)
	Cost of goods sold	Operating expense	Total	Cost of goods sold	Operating expense	Total
Employee benefit
Salaries & wages	2,173,729	589,420	2,763,149	2,286,727	533,035	2,819,762
Labor and health insurance	171,635	44,402	216,037	156,840	40,937	197,777
Pension	73,253	21,360	94,613	70,324	19,548	89,872
Other employee benefit	93,204	22,096	115,300	89,993	16,548	106,541
Depreciation	1,851,526	101,704	1,953,230	1,804,313	107,330	1,911,643
Amortization	-	26,086	26,086	-	20,712	20,712

Note: The headcounts of the Company amounted to 3,801 and 3,661 respectively on December 31, 2015 and 2014.

The Company estimated the amounts of the employee and directors’ compensation based on the profit on December 31, 2015 in accordance to the new Article to be amended. If the board subsequently modifies the estimates significantly, the Company will recognize the variance as

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an adjustment in the profit or loss retroactively. On December 31, 2015, the provided amounts of employee and directors’ compensation were NT$442,444 thousand and NT$26,026 thousand, respectively.

On December 31, 2014, the Company estimated the amounts of the employee bonuses and the remuneration to directors 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 were 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 variance as an adjustment to current income retroactively. 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. On December 31, 2014, the amounts of the employee bonus and remuneration to directors were NT$545,679 thousand and NT$32,099 thousand, respectively.

(21)Non-operating incomes and expenses

A.Other incomes

Interest income Dividend income Gain on reversal of bad debts Other income－others Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000) 76,970 - 17,179 24,431 118,580	2014 (NT$’000)
		71,135 1,531 - 40,436
		113,102

B. Other gains and losses

Gain (loss) from disposal of property, plant and equipment Foreign exchange gains, net Financial assets at fair value through profit	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	(720) 14,237 24,447	(629) 23,921 27,787

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Gain from disposal of investment Other expenses Total	30,845 (2,377)	24,691 -
	66,432	75,770

C. Finance costs

Interests due to bank loans	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	$21,360	$19,712

(22)Components of other comprehensive income (OCI)

For the year ended December 31, 2015

Not reclassified to profit or loss: Actuarial gains or losses on defined benefits plan To be reclassified to profit or loss in subsequent period: Exchange differences arising on translation of foreign operations Unrealized valuation gain (loss) on available-for-sale financial assets Total OCI	Arising during the period (NT$’000)	Reclassification during the period (NT$’000) - - (30,845) (30,845)	Subtotal (NT$’000)	Income tax benefit (expense) (NT$’000) - 12,397 - 12,397	OCI, Net of tax (NT$’000)
	(8,721) (72,922) 6,151		(8,721) (72,922) (24,694)		(8,721) (60,525) (24,694)
	(75,492)		(106,337)		(93,940)

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For the year ended December 31, 2014

Not reclassified to profit or loss: Actuarial gains or losses on defined benefits plan To be reclassified to profit or loss in subsequent period: Exchange differences arising on translation of foreign operations Unrealized valuation gain (loss) on available-for-sale financial assets Total OCI	Arising during the period (NT$’000)	Reclassification during the period (NT$’000) - - (24,891) (24,891)	Subtotal (NT$’000)	Income tax benefit (expense) (NT$’000) - (33,026) - (33,026)	OCI, Net of tax (NT$’000)
	15,710 194,267 34,474		15,710 194,267 9,583		15,710 161,241 9,583
	244,451		219,560		186,534

(23)Income tax

A. The major components of income tax expense (income) are as follows:

Income tax expense (benefit) recognized in profit or loss

Current income tax expense (benefit): Current income tax expense Reversal of uncertain tax position upon finalization Deferred tax expense (benefit): Deferred tax expense (benefit) relating to origination and reversal of temporary differences Total income tax expense	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	658,713 (213,398) (1,765)	756,413 (218,624) (5,412)
	443,550	532,377

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B. Income tax recognized in other comprehensive income

Deferred tax expense (benefit): Exchange differences arising on translation of foreign operations	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	(12,397)	33,026

C. A reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates is as follows:

Accounting profit (loss) before tax from continuing operations Tax payable at the enacted tax rates 10% surtax on Undistributed earnings Tax effect of income tax-exempted Reversal of uncertain tax position upon finalization Tax effect of expenses not deductible for tax purposes Tax effect of deferred tax assets/liabilities Total income tax recognized in profit or loss	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	3,347,502	4,149,704
	569,075 148,730 (101,893) (213,398) 404 40,632	705,450 141,511 (112,215) (218,624) 13,486 2,769
	443,550	532,377

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D. Deferred tax assets (liabilities) relate to the following:

For the year ended December 31, 2015

Beginning balance as of January 1, 2015 (NT$’000)	Deferred tax income (expense) recognized in other comprehen sive income (NT$’000)	Deferred tax income (expense) recognized in equity (NT$’000)	Increase from business acquisition (NT$’000)	Exchange adjustments (NT$’000)	Ending balance as of December 31, 2015 (NT$’000)
- (1,765) (52,231)	- - 12,397	- - -	- - -	- - -	9,593 - (39,834)
(53,996)	12,397	-	-	-	(30,241)

-					9,593
(53,996)					(39,834)

For the year ended December 31, 2014

Beginning balance as of January 1, 2014 (NT$’000)	Deferred tax income (expense) recognized in profit or loss (NT$’000)	Deferred tax income (expense) recognized in other comprehensiv e income (NT$’000)	Deferred tax income (expense) recognized in equity (NT$’000)	Increase from business acquisition (NT$’000)	Exchange adjustments (NT$’000)	Ending balance as of December 31, 2014 (NT$’000)
(7,177) (19,205)	5,412 -	- (33,026)	- -	- -	- -	(1,765) (52,231)
(26,382)	5,412	(33,026)	-	-	-	(53,996)

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

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E. Unrecognized deferred tax assets

As of December 31, 2015 and 2014, deferred tax assets that have not been recognized as they may not be used to offset future taxable income amounted to NT$447,381 thousand and NT$436,749 thousand, respectively.

F. The Company’s investments and capital additions are qualified as the investment on manufacture or technology service industry during the period from July 1, 2008 to December 31, 2009 and, therefore, entitled to a 5-year tax-exmpted holiday. The details of tax holiday enjoyed by the Company are listed as below.

Item 1	Approval authority Ministry of Economic Affairs	Approval document No. 10005112010 issued at Aug. 25, 2011	Exemptionperiod
			2013.01.01~2017.12.31

G.Imputation credit information

Balances of imputation credit	As of December 31,	As of December 31,
	2015 (NT$’000) 1,942,384	2014 (NT$’000)
		1,431,359

The Company’s expected/actual creditable ratio for 2015 and 2014 were 15.18% and 13.34%. However, effective January 1, 2015, the creditable ratio for the individual shareholders residing in the Republic of China will be half of the original creditable ratio according to the revised Article 66-6 of the Income Tax Law.

As of December 31, 2015, the Company did not have unappropriated earnings resulted in the years of 1997 and before.

I. The status of assessment of income tax return

The assessment of income tax returns The Company Assessed and approved up to 2013

(24)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.

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Diluted earnings per share are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity (after adjusting any influences) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

A.Basic earnings per share

Net income available to common shareholders of the parent (NT$’000) Weighted average number of common shares outstanding (in thousand shares) Basic earnings per share (in NT$) B.Diluted earnings per share Net income available to common shareholders of the parent (NT$’000) Net income available to common shareholders of the parent after dilution (NT$’000) Weighted average number of common shares outstanding (in thousand shares) Effect of dilution: Employee bonus (compensation) – stock (in thousand shares) Weighted average number of common shares outstanding after dilution (in thousand shares) Diluted earnings per share (in NT$)	For theyear ended December 31,	For theyear ended December 31,
	2015	2014
	2,903,952	3,617,327
	445,822	446,000
	6.51	8.11
	2015	2014
	2,903,952	3,617,327
	2,903,952	3,617,327
	445,822 9,611	446,000 7,305
	455,433	453,305
	6.38	7.98

No other transactions that would significantly change the outstanding common shares or potential common shares incurred during the period subsequent to reporting date and up to the approval date of financial statements.

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7. RELATED PARTY TRANSACTIONS

(1)Significant transactions with related parties

A.Sales to

Parent company Other related parties Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	6,822 62,426	4,903 58,775
	69,248	63,678

Selling prices and collection terms to related parties are similar to those to third party customers for the years ended December 31, 2015 and 2014. The collection terms are 30 to 60 days from the end of delivery month by telegraphic transfer

B.Purchases

Subsidiaries	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	1,845,144	1,526,521

The product specification of goods purchased from related parties in the year ended December 31, 2015 and 2014, differed from those 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 30 days from the end of delivery month by telegraphic transfer.

C.Accounts receivable - related parties

Other related parties Less: allowance for doubtful accounts Net	As of December 31,	As of December 31,
	2015 (NT$’000) 21,759 - 21,759	2014 (NT$’000)
		1,008 -
		1,008

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D.Account payable

Subsidiaries	As of December 31,	As of December 31,
	2015 (NT$’000) 428,877	2014 (NT$’000)
		247,315

E. The Company recognized commission expenses amounting NT$40,798 thousand and NT$36,895 thousand, respectively, for the years ended December 31, 2015 and 2014 due to delegating its subsidiaries for marketing.
F. For the years ended December 31, 2015 and 2014, the Company recognized travelling of NT$64 thousand and NT$47 thousand, respectively, for commissioning subsidiaries to handle travelling logistics.

For the years ended December 31, 2015 and 2014, the Company recognized travelling of NT$185 thousand and NT$341 thousand, respectively, for commissioning other related parties to handle travelling logistics.

G.The Company’s subcontracting fees to its subsidiaries amounted to NT$15,350 thousand and NT$51,319 thousand, respectively, for the years ended December 31, 2015 and 2014.
H. The Company charged its subsidiaries for providing technology support in amount of NT$3,253 thousand and NT$3,845 thousand, recorded under the caption of other non-operating incomes, for the years ended December 31, 2015 and 2014, respectively.
I. For the years ended December 31, 2015 and 2014, the Company recognized operating expenses of NT$2,968 thousand and NT$693 thousand, respectively, for services provided by other related parties.

Moreover, the years ended December 31, 2015 and 2014,, the Company recognized operating expenses of NT$188 thousand and NT$27 thousand, respectively, for services provided by the Parent.

J. The Company recognized other incomes in amount of NT$16,096 thousand and NT$2,145 thousand for the years ended December 31, 2015 and 2014, respectively, due to selling tools and spare parts to its subsidiaries.

L. The Company provided bank loan garranty in total of NT$4,122,820 thousand for its subsidiaries as of December 31, 2015. The garranty amount is of contingency and not recognized at the balance sheets and the statements of comprehensive incomes yet.

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M.Salaries and rewards to key management of the Company

Short-term employee benefits Post-employee benefits Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	86,728 819	82,908 838
	87,547	83,746

N.Other receivables

Subsidiaries	As of December 31,	As of December 31,
	2015 (NT$’000) 7,489	2014 (NT$’000) 9,197

O.Accrued expenses

Parent company Subsidiaries Other related parties Total	As of December 31,	As of December 31,
	2015 (NT$’000) 69 4,431 42 4,542	2014 (NT$’000)
		- 12,704 14
		12,718

P. Transaction of asset

The Company did not conduct any transactions related to property, plant and equipment with related parties during the year ended December 31, 2015. For 2014, it is shown at the following table.

	Type of Assets 2014 Machinery	Related Parties Subsidiary	Book Value (NT$’000) 6,032	Selling price (NT$’000) 6,511	Gain (NT$’000) 479	Price reference
						Negotiated

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8. PLEDGED ASSETS

The following assets of the Company are pledged as collaterals:

Item	Carrying Amount As of December 31,	Carrying Amount As of December 31,	Purpose
	2015 (NT$’000)	2014 (NT$’000) 112,720 3,057 115,777
Property, plant and equipment - machinery (carrying amount) Refundable deposits Total	- -		Long-term secured loans Bonded factory
	-

SIGNIFICANT CONTINGENCIES AND UNRECOGNIZED CONTRACT COMMITMENTS

(1) The Group’s unused letters of credit (LC) as of December 31, 2015 were as follows:

Currency JPY USD EURO	LC Amount(in thousand) JPY 3,138,776 USD 7,148 EUR 41	Security (in thousand)
		- - -

(2) Detail of significant constructions in progress and outstanding contracts of property, plant and equipment as of December 31, 2015 was as follow:

Nature of Contract Machinery and contruction contracts	Contract Amount (NT$’000) 4,780,400	Amount Paid (NT$’000) 3,270,081	Outstanding Balance (NT$’000)
			1,510,319

(3) The Company provided bank loan garranty in total of NT$4,122,820 thousand for its subsidiariesas as of December 31, 2015. The garranty amount is of contingency and not recognized at the balance sheets and the statements of comprehensive incomes yet.

10. SIGNIFICANT DISASTER LOSS

None.

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11. SIGNIFICANT SUBSEQUENT EVENT

None.

12. OTHERS

(1) 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 receivable Cash and cash equivalents (excluding cash on hand) Bond investments with no active market Notes receivable Accounts receivable Accounts receivable - related parties Other receivable Other receivable - related parties Total Financial liabilities Financial liabilities measured at amortized cost: Short-term loans Payables		As of December 31, 2015 (NT$’000) 2014 (NT$’000) 3,524,742 5,081,578 - 40,369 10,998,703 10,082,104 423,057 420,000 1,835 4,358 2,920,639 2,403,669 21,759 1,008 281,480 392,702 7,489 9,197 18,179,704 18,434,985 As of December 31,	As of December 31, 2015 (NT$’000) 2014 (NT$’000) 3,524,742 5,081,578 - 40,369 10,998,703 10,082,104 423,057 420,000 1,835 4,358 2,920,639 2,403,669 21,759 1,008 281,480 392,702 7,489 9,197 18,179,704 18,434,985 As of December 31,



		2015 (NT$’000) 1,831,266 4,622,464	2014 (NT$’000)
			730,798 4,195,768

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Long-term loans (including current portion) Total	586,911 7,040,641	926,343
		5,852,909

(1)

(2) Objectives and policies of financial risk management

The Company’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activates. The Company identifies, measures, and manages the aforementioned risks based on its policy and risk preferences.

The Company 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 Company 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 Company’s exposure to foreign currency risk relates primarily to the Company’s operating activities (when revenue or expense are denominated in a different currency from the Company’s functional currency) and the Company’s net investments in foreign operations.

The Company 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 Company’s profit (loss) and equity is performed on significant monetary items denominated in foreign currencies as of the end of the reporting period. The Company’s

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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 years ended December 31, 2015 and 2014 would increase/decrease by NT$37 thousand and NT$1,926 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 Company’s exposure to interest rate risk relates primarily to the Company’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, 2015 and 2014 would decrease/increase by NT$45 thousand and decrease/increase by NT$410 thousand, respectively.

Equity price risk

The Company’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 Company is classified as available-for-sale. The Company manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on equity portfolio are submitted to the Company’s senior management on a regular basis. The Company’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 Company’s equity by NT$0 thousand and NT$404 thousand for the years ended December 31, 2015 and 2014, respectively; and 1% increase in their prices would merely impact on the Company’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 Company is exposed to credit risk from operating activities

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(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 Company’s established policy, procedures and control relating to customer credit risk management. Credit risk of 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 Company’s internal credit ratings. The Company also employs some credit enhancement instruments (e.g. prepayment or insurance) to reduce certain customers’ credit risk.

As of December 31, 2015 and 2014, receivables from the top ten customers were accounted for 52.06% and 47.90% of the Company’s total accounts receivable, respectively. The concentration of credit risk is relatively not significant for the remaining receivables.

Credit risk from balances with banks, fixed-income securities and other financial instruments is managed by the Company’s finance division in accordance with the Company’s policy. The counterparties that the Company 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, there is no significant default risk. Conclusively, no significant credit risk is expected by the Company.

(5) Liquidity risk management

The Company 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 Company’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

Less than 1 year (NT$’000) As of December 31, 2015 Loans 2,152,079 Payables 4,622,464 As of December 31, 2014 Loans 1,203,240	Less than 1 year (NT$’000)	2 to 3 years (NT$’000)	3 to 4 years (NT$’000)	4 to 5 years (NT$’000)	Total (NT$’000)
		253,258 - 303,647	39,898 - 151,499	- - 30,471	2,445,235 4,622,464 1,688,857

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- - Payables 4,195,768 4,195,768

(2)

(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 their 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 listed companies’ shares from private placement, stocks of public companies not traded in an active market and unlisted stocks) are estimated using the market approach. Under the approach, factors, such as the trading prices of comparable equity instruments in an active market, and other relevant informations (i.e. discount due to lack of liquidity, stock price-to-earning ratio (PER) and price-to-book ratio (PBR) of similar companies) are input into the pricing model for its fair value..
B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Company’s financial assets and liabilities measure at amortized cost approximates their fair value.

C. Fair value measurement hierarchy for financial instruments

Please refer to Note 12(7) for fair value measurement hierarchy for financial instruments of the Group.

(7) Fair value measurement hierarchy
A. Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financial

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statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 – Unobservable inputs for the asset or liability

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

B. Fair value measurement hierarchy of the Group’s assets and liabilities

The Group does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Group’s assets and liabilities measured at fair value on a recurring basis is as follows:

As of December 31, 2015

Financial assets: Financial assets at fair value through profit or loss Funds Financial liabilities: None As of December 31, 2014 Financial assets: Financial assets at fair value through profit or loss Funds	Level 1 (NT$’000)	Level 2 (NT$’000)	Level 3 (NT$’000)	Total (NT$’000)
	3,524,742 Level 1 (NT$’000)	- Level 2 (NT$’000)	- Level 3 (NT$’000)	3,524,742 Total (NT$’000)
	5,081,578 -		-	5,081,578

As of December 31, 2014

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Available-for-sale financial assets Stocks Financial liabilities: None	Level 1 (NT$’000)	Level 2 (NT$’000)	Level 3 (NT$’000)	Total (NT$’000)
	40,369	-	-	40,369

Transfers between Level 1 and Level 2 during the period

For December 31, 2015 and 2014, there were no transfers between Level 1 and Level 2 fair value hierarchy.

(8) Significant financial assets and liabilities denominated in foreign currencies

Information regarding the Company’s significant financial assets and liabilities denominated in foreign currencies was listed below: (In Thousands)

As of December 31,

Foreign Currencies ($’000) Financial assets Monetary items: USD 85,167 Non-monetary item: USD 92,747 Financial liabilities Monetary items: USD 85,281		2015			2014
		Exchange Rate 32.825 32.825 32.825	NTD (NT$’000)	Foreign Currencies ($’000)	Exchange Rate 31.65 31.65 31.65	NTD (NT$’000)
			2,795,604 3,044,411 2,799,338	74,866 110,192 81,011		2,369,519 3,487,564 2,564,008

The above information is disclosed based on the carrying amount of foreign currency (after being converted to functional currency).

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Foreign exchange gains or losses on monetary financial assets and financial liabilities are shown as below.

Foreign currency resulting in exchange gain or loss USD Other	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000) 9,393 4,845	2014 (NT$’000)
		8,636 15,284

(9) Capital management

The primary objective of the Company’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 Company manages and adjusts its capital structure in light of changes in economic conditions. To maintain or adjust the capital structure, the Company 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 attachment 1.
C. Marketable securities held as of December 31, 2015 (excluding investments in subsidiaries, associates and joint ventures): Please refer to attachment 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, 2015: 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, 2015: Please refer to attachment 3.
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, 2015: 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, 2015: Please refer to attachment 4.

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H. Receivables from related parties of at least NT$100 million or 20 percent of the paid-in capital as of Decemer 31, 2015: None.
I. Derivative instrument transactions: None.
(2) Information on investees
A. Investees over whom the Company exercises significant influence or control (excluding investees in Mainland China): Please refer to attachment 5.
B. Investees over which the Company exercises 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, 2015 (excluding investments in subsidiaries, associates and joint ventures): Please refer to attachment 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, 2015: 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, 2015: 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, 2015: 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, 2015: Please refer to attachment 7.
- (h)Receivables from related parties of at least NT$100 million or 20 percent of the paid-in capital as of December 31, 2015: Please refer to attachment 8.
- (i) Derivative instrument transactions: None.

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(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 (NT$’000)	Paid-in Capital (NT$’000)	Method of Investment (NT$’000)	Accumulated Outflow of Investment from Taiwan as of January 1, 2015 (NT$’000)	Investment Flows	Investment Flows	Accumulate d Outflow of Investment from Taiwan as of December 31, 2015 (NT$’000)	Profit/ Loss of Investee (NT$’000)	Percentage of Ownership (Direct or Indirect Investment) (NT$’000)	Share of Profit/Loss (NT$’000)	Carrying Amount as of December 31, 2015 (NT$’000)	Accumulated Inward Remittance of Earnings as of December 31, 2015 (NT$’000)	Accumulated Outflow of Investment from Taiwan to Mainland China as of December 31, 2015 (NT$’000)	Investment Amounts Authorized by Investment Commission, MOEA (NT$’000)	Upper Limit on Investment in China by Investment Commission, MOEA (NT$’000)
					Outflow (NT$’000)	Inflow (NT$’000)
Kinsus Interconnect Technology Suzhou Corp.	Manufacturing and selling PCB (not high-density fine-line)	2,297,750 (Note 2)	(Note 1)	2,297,750 (Note 2)	-	-	2,297,750 (Note 2)	(113,792) (Note 2 and Note 4)	100%	(113,792) (Note 2 and Note 4)	1,092,219 (Note 2 and Note 4)	-	2,297,750 (Note 2)	2,297,750 (Note 2)	No upper limit (Note 5)

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Piotek Computer (Suzhou) Co., Ltd.	Researching, developing, producing and selling electronic components, PCBs and related products and providing after-sale services	5,471,928 (Note 2)	(Note 1)	3,093,888 (Note 2)	-	-	3,093,888 (Note 2)	(544,556) (Note 2 and Note 4)	51%	(277,724) (Note 2 and Note 4)	1,820,119 (Note 2 and Note 4)	-	3,093,888 (Note 2)	3,093,888 (Note 2)	No upper limit (Note 5)
Xiang-Shuo (Suzhou) Trading Limited	Trading of PCB (not high-density fine-line) and material for related products	65,650 (Note 2)	(Note 1)	65,650 (Note 2)	-	-	65,650 (Note 2)	3,219 (Note 2 and Note 4)	100%	3,219 (Note 2 and Note 4)	69,621 (Note 2 and Note 4)	-	65,650 (Note 2)	65,650 (Note 2)	No upper limit (Note 5)
Pegavision Contact Lenses (Shanghai) Corporation	Selling medical equipment	65,062 (Note 2)	(Note 1)	10,598	54,464	-	65,062	(16,263) (Note 2 and Note 4)	100%	(16,263) (Note 2 and Note 4)	44,250 (Note 2 and Note 4)	-	65,062	65,062	625,574 (Note 6)

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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: The paid-in capital is USD2,100 thousand, equivalent to NT$65,062thousand. Note 4: Gain/loss on investment is recognized based on the audited financial statements of the parent company in Taiwan.
Note 5: 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 6: The upper limit on investment for Pegavision Contact Lenses (Shanghai) Corporation is calculated as 60% of Pegavision Corporation’s net equity.

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B. Significant transactions with investees in China:

(a) Purchase and balances of related accounts payable as of December 31, 2015:

Purchases Amount (NT$’000) % to Net Purchase 1,795,044 27.06% 50,100 0.76%	Accounts Payable	Accounts Payable
Amount (NT$’000)	Amount (NT$’000) 413,130 15,747	% to Account Balance
1,795,044		27.95%
50,100		1.07%

The product specification of goods purchased by the Company from Kinsus Interconnect Technology Suzhou Corp. and Piotek Computer (Suzhou) Co., Ltd. in the year ended December 31, 2015 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 USD22,666 18.26% USD13,064 10.53% RMB27,693 24.66%	Accounts receivable	Accounts receivable
Amount	Amount USD4,277 USD1,176 RMB5,407	% to Account Balance
USD22,666		17.09%
USD13,064		4.70%
RMB27,693		37.83%

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Sale of Xiang-Shuo (Suzhou) Trading to Kinsus Interconnect Technology Suzhou ($’000) Sale of the Company to Xiang-Shuo (Suzhou) Trading(NT$’000) Sale of the Company to Kinsus Interconnect Technology Suzhou(NT$’000)	RMB3,076	2.74% -% 0.03%	RMB675 - -	4.72%
	827			-%
	5,995			-%

The product specification of goods sold between subsidiaries in the year ended December 31, 2015 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.

a. Details of property transaction between Piotek Computer (Suzhou) Co., Ltd. and related partiesas follow:

Type of Assets	Related Parties	Book value	Selling price RMB 329	Gain	Price reference
Other Equipment	Kinsus Interconnect Technology Suzhou	RMB 318		RMB 11	Negotiated

(d)Ending balance of endorsements/guarantees or collateral provided and the purposes: Please refer to attachment 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 of NT$15,350 thousand, for the year ended December 31, 2015. Payable amounted to NT$1,034 thousand as of December 31, 2015.

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b. The Company sold fixtures and spare parts to Piotek Computer (Suzhou) Co., Ltd., Kinsus Interconnect Technology Suzhou Corp. Trading Limited and Xiang-Shuo (Suzhou) Trading and recognized other income of NT$16,096 thousand for the year ended December 31, 2015.
c. As of December 31, 2015, the balance of other receivables amounted to NT$2,191 thousand,NT$4,481 thousand and NT$817 thousand, respectively.The other receivable were resulted from the Company’s sale of fixtures to Piotek Computer (Suzhou) Co., Ltd. ,Kinsus Interconnect Technology Suzhou Corp and Xiang-Shuo (Suzhou) Trading Limited.
d. As of December 31, 2015, other receivables of Xiang-Shuo (Suzhou) Trading Limited due to payment and collection on behalf of Piotek Computer (Suzhou) Co., Ltd. amounted to RMB56 thousand.

14. OPERATING SEGMENT INFORMATION

The Company has provided the operating segment disclosure in the consolidated financial statements.

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Endorsement/Guarantee Provided to Others

For the Year Ended December 31, 2015

Attachment 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.	Piotek Computer (Suzhou) Co., Ltd. Kinsus Interconnect Technology Suzhou Corp.	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. $5,678,227 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. $5,678,227	$4,595,500 (USD 140,000) (Note 2) $2,762,224 (USD 84,150) (Note 2)	$3,118,375 (USD 95,000) (Note 2) $1,004,445 (USD 30,600) (Note 2)	$1,359,586 $502,223	$- $-	10.98% 3.54%	$14,195,568 $14,195,568 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.

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Kinsus Interconnect Technology Corp.

Marketable Securities

As of December 31, 2015

Kinsus Interconnect Technology Corp. Marketable Securities As of December 31, 2015	Kinsus Interconnect Technology Corp. Marketable Securities As of December 31, 2015	Kinsus Interconnect Technology Corp. Marketable Securities As of December 31, 2015	Kinsus Interconnect Technology Corp. Marketable Securities As of December 31, 2015
					Attachment 2 (In Thousands of New Taiwan Dollars)
Name of Held Company	Type and Name of Marketable Securities	Relationship with the Issuer	Financial Statement Account		As of December 31,2015			Note
				Shares / Units	Carrying Amount	Shareholding %	Fair Value (Note)
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 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	- - - - - - - - - - -	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	32,783,435 13,551,601 31,765,626 4,066,994 18,812,748 30,522,218 1,168,258 41,465,474 31,315,952 15,838,553 15,322,946	$510,667 157,637 458,515 56,495 255,796 400,000 200,000 500,000 450,000 203,448 250,000 3,442,558 82,184 $3,524,742	-% -% -% -% -% -% -% -% -% -% -%	$522,365 160,894 475,420 58,088 263,858 407,673 205,771 513,214 457,886 206,617 252,956 $3,524,742

Note: Companies without quotes in the open markets are valued at net equities.

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Kinsus Interconnect Technology Corp.

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, 2015

Attachment 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	2015.03.24	$486,186	NT$ 405,860 thousand was paid as of December 31, 2015	Guo-Gong Construction Co., Ltd.	None	None	None	None	None	Bidding	Production expansion and operation planning	None

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Kinsus Interconnect Technology Corp.

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, 2015

Attachment 4

(In Thousands of New Taiwan Dollars)

CompanyName	Related Party	Nature of Relationship	Transaction Details	Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/ Accounts Payable or Receivable	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	$1,795,044	27.06%	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 $(413,130)	(27.95)%

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Kinsus Interconnect Technology Corp.

Investees over Which the Company Exercise Significant Influence or Control Directly or Indirectly (Excluding Investees in Mainland China)

As of December 31, 2015

Attachment 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 31,2015	Balance as of December 31,2015	Balance as of December 31,2015	$1,776 $(371,975) $44,413 $127,110 USD(3,369) Net Income (Loss) of the Investee	Share of Income (Loss) of the Investee
				As of December 31,2014	As of December 31,2015	Shares	%	CarryingValue
Kinsus Investment Co., Ltd. KINSUS HOLDING (SAMOA) LIMITED KINSUS HOLDING (SAMOA) LIMITED PIOTEK HOLDINGS LTD. (CAYMAN) PIOTEK HOLDING LIMITED Pegavision Corporation 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 PEGAVISION JAPAN INC.	CA. U.S.A. Samoa Taoyuan City Taoyuan City Cayman Islands Cayman Islands British Virgin Islands Hong Kong Samoa JAPAN	Investing activities Investing activities Manufacturing medical equipment Investing activities Investing activities Investing activities Trading activities Investing activities Selling medical equipment Designing substrates, formulating marketing strategy analysis, developing new customers, researching and development new product technology	USD500 USD166,309 $398,000 (Note1) $286,418 USD72,000 USD94,309 USD139,841 USD26 USD380 JPY-	USD500 USD166,309 $398,000 (Note1) $286,418 USD72,000 USD94,309 USD139,841 USD26 USD2,130 JPY 9,900	500,000 shares 166,308,720 shares 39,800,000 shares 22,088,736 shares 72,000,000 shares 95,755,000 shares 139,840,790 shares 200,000 shares 2,130,000 shares 198 shares	100.00% 100.00% 100.00% 36.81% 100.00% 51.00% 100.00% 100.00% 100.00% 100.00%	$32,462 $3,011,949 $566,385 $383,837 USD 35,385 USD 56,373 USD 110,535 USD 1,777 $37,229 $2,744		$1,776 $(371,975) $44,413 $46,795 USD(3,369) USD(8,360) USD(16,401) USD 196 $(16,293) $42
									USD(16,392)
									USD(16,401)
									USD 196 $(16,293) $42

Note1 : 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.

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Kinsus Interconnect Technology Corp.

Marketable Securities (Excluding Investments in Subsidiaries, Associates and Jointly Controlled Entities)

As of December 31, 2015

					Attachment 6 (In Thousands of New Taiwan Dollars)	Attachment 6 (In Thousands of New Taiwan Dollars)	Attachment 6 (In Thousands of New Taiwan Dollars)	Attachment 6 (In Thousands of New Taiwan Dollars)	Attachment 6 (In Thousands of New Taiwan Dollars)	Attachment 6 (In Thousands of New Taiwan Dollars)
Name of Held Company	Type and Name of Marketable Securities	Relationship with the Issuer	Financial Statement Account		As of December 31,2015			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.	Money market funds: Taishin Ta Chong Money Market Fund Valuation adjustments of financial assets held for trading Total Stocks: Yi-Shuo Creative Co., Ltd.	- -	Financial assets carried at cost Financial assets at fair value through profit or loss	829,070 5,000,000	$11,315 313 $11,628 $50,000	-% 7.49%	$11,628 $- (Note)	- -	$-
									$-

Note: No quotes in active markets and fair values cannot be measured reliably.

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Kinsus Interconnect Technology Corp.

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, 2015

Attachment 7

(In Thousands of US Dollars)

CompanyName	Related Party	Nature of Relationship	Transaction Details	Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Payable or Receivable	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 Xiang-Shuo (Suzhou) Trading Limited Piotek Computer (Suzhou) Co., Ltd. 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. Piotek Computer (Suzhou) Co., Ltd. Xiang-Shuo (Suzhou) Trading Limited 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 Also a subsidiary under the Company's control Also a subsidiary under the Company's control	Sales Sales Purchase Sales Purchase Sales Purchase Sales	USD 45,802 USD 13,064 USD 13,064 USD 22,666 USD 22,666 RMB 27,693 RMB 27,693 USD 57,138	36.90% 10.53% 73.26% 18.26% 100.00% 24.66% 5.73% 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 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 Specs of goods sold are different from others. Cannot be reasonably compared. Specs of goods sold are different from others. Cannot be reasonably 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. No non-related parties to be compared with. No non-related parties to be compared with.	Accounts receivable USD 6,920 Accounts receivable USD 1,176 Accounts payable USD (1,176) Accounts receivable USD 4,277 Accounts payable USD (4,277) Accounts receivable RMB 5,407 Accounts payable RMB (5,407) Accounts receivable USD 12,695	27.65% 4.70% (36.80)% 17.09% (100.00)% 37.83% (3.81)% 100.00%

186

- - English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp.

Receivables from Related Parties of at Least NT$ 100 Million or 20% of the Paid-in Capital

As of December 31, 2015

Attachment 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. Piotek Computer (Suzhou) Co., Ltd. Kinsus Interconnect Technology Suzhou Corp.	Pegatron Corporation Piotek (H.K.) Trading Limited Kinsus Interconnect Technology Corp.	Parent company Parent company Also a subsidiary under the Company's control	USD 6,920 (Note) USD 4,277 (Note) USD 12,695 (Note)	4.43 4.10 5.49	$- $- $-	- - -	$- $- $-	$- $- $-

Note: Accounts receivable

187

English Translation of Financial Statements and a Report Originally Issued in Chinese

MANAGEMENT REPRESENTATION LETTER

The entities that are required to be included in the combined financial statements of Kinsus Interconnect Technology Corp. as of December 31, 2015 and for the year then ended 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 Standard No. 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. and Subsidiaries do not prepare a separate set of combined financial statements.

Very truly yours,

Kinsus Interconnect Technology Corp.

Guo, Ming-Dong Chairman February 1, 2016

188

English Translation of an Audit Report Originally Issued in Chinese REPORT OF INDEPENDENT AUDITORS

To: the Board of Directors and Shareholders of Kinsus Interconnect Technology Corp.

We have audited the accompanying consolidated balance sheets of Kinsus Interconnect Technology Corp. and Subsidiaries as of December 31, 2015 and 2014, the related consolidated statements of comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

In our opinion, based on our audits, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Kinsus Interconnect Technology Corp. and Subsidiaries as of December 31, 2015 and 2014, and the consolidated results of their operations and their cash flows for the years then ended in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee which are endorsed by Financial Supervisory Commission of the Republic of China.

We have audited and expressed an unqualified opinion on the parent-company-only financial statements of Kinsus Interconnect Technology Corp. as of December 31, 2015 and 2014 and for the years then ended.

Ernst & Young February 1, 2016 Taipei, Taiwan, Republic of China

Notice to Readers

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

189

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Balance Sheets

As of December 31, 2015 and 2014

(In Thousands of New Taiwan Dollars)

Assets	Assets	Assets		2015	2015			2014	2014
Code	Accounts	Notes		Amount		%		Amount		%
1100 1110 1125 1147 1150 1170 1180 1200 1210 1310 1410 1470 11XX 1544 1600 1780 1840 1915 1995 15XX 1XXX	Current assets Cash and cash equivalents Financial assets at fair value through profit or loss 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 Property, plant and equipment, net 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(9), 8 4, 6(10) 4, 6(25) 4, 6(9), 9 6(11), 7, 8		$12,746,307 3,536,370 - 428,112 1,835 3,590,193 248,909 336,543 2,081 2,285,436 159,205 136,377 23,471,368 50,000 16,150,904 30,280 9,880 2,607,515 318,785 19,167,364 $42,638,732		30 8 - 1 - 8 1 1 - 5 1 - 55 - 38 - - 6 1 45 100		$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

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

190

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Balance Sheets-(Continued)

As of December 31, 2015 and 2014

(In Thousands of New Taiwan Dollars)

Liabilities and Equity	Liabilities and Equity	Liabilities and Equity		2015	2015			2014	2014
Code	Accounts	Notes		Amount		%		Amount		%
2100 2150 2170 2200 2230 2250 2300 21XX 2540 2570 2600 25XX 2XXX 31XX 3100 3110 3200 3300 3310 3350 3400 3500 36XX 3XXX	Current liabilities Short-term loans Notes payable Accounts payable 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 reserve Unappropriated earnings Other components of equity Treasury Stock Non-controlling interests Total equity Total liabilities and equity	6(12) 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) 6(19)		$3,095,030 55,484 1,996,799 3,932,762 569,378 294 668,701 10,318,448 1,366,299 40,190 85,994 1,492,483 11,810,931 4,460,000 5,939,819 3,049,623 14,780,095 194,484 (32,885) 2,436,665 30,827,801 $42,638,732		7 - 5 9 1 - 2 24 4 - - 4 28 10 14 7 35 - 6 72 100		$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

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

191

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Statements of Comprehensive Income

For the Years Ended December 31, 2015 and 2014

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Code	Accounts	Notes	2015		2014
			Amount	%	Amount	%
4000 5000 5900 6000 6100 6200 6300 6900 7000 7010 7020 7050 7900 7950 8200 8300 8310 8311 8360 8361 8362 8399 8500 8600 8610 8620 8700 8710 8720 9750 9850	Net revenue Cost of sale Gross profit Operating expenses Sales and marketing General and administrative Research and development Total operating expenses Operating income Non-operating incomes and expenses Other incomes Other gains and losses Finance costs Total non-operating incomes and expenses Income before income tax Income tax expense Net income Other comprehensive income (loss) Item that may not be reclassified to profit or loss Actuarial gain (loss) from defined benefit plans Items that may be reclassified subsequently to profit or loss Exchange differences arising on translation of foreign operations Unrealized valuation gain (loss) on available-for-sale financial assets Income tax related to items that may be reclassified subsequently to P/L 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 (In NT$) Earnings per share - diluted (In NT$)	4, 6(20), 7 7 6(23), 7 6(23), 7 6(23) 4, 6(25) 6(24) 6(26) 6(26)	$23,061,311 (17,099,709) 5,961,602 (437,849) (975,409) (1,484,620) (2,897,878) 3,063,724 309,476 (110,984) (56,968) 141,524 3,205,248 (475,722) 2,729,526 (8,721) (116,596) (24,694) 12,397 (137,614) $2,591,912 $2,903,952 (174,426) $2,729,526 $2,810,012 (218,100) $2,591,912 $6.51 $6.38	100 (74) 26 (2) (4) (7) (13) 13 1 - - 1 14 (2) 12 - (1) - - (1) 11 13 (1) 12 12 (1) 11	$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 15,710 309,597 9,583 (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

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

192

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Statements of Changes in Equity

For the Years Ended December 31, 2015 and 2014

(In Thousands of New Taiwan Dollars)

Code	Items	Notes				Equity Attributable to Sh	Equity Attributable to Sh	areholders of the Parent				Non- controlling Interests	Total Equity
			Capital	Capital Surplus		Retained Earnings		Othe	rs	Treasury Stock	Total
					Legal Reserve	Special Reserve	Unappropriated Earnings	Exchange differences arising on translation of foreign operations	Unrealized valuation gain (loss) on available-for-sale financial assets
			3100	3200	3310	3320	3350	3410	3425	3500 $- - - (32,885) $(32,885)	31XX	36XX	3XXX
A1 B1 B5 B17 D1 D3 D5 M5 M7 O1 A1 B1 B5 D1 D3 D5 L1 Z1	Balance as of January 1, 2014 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 Appropriation and distribution of 2014 earnings: Legal reserve Cash dividends - common shares Net income (loss) for 2015 Other comprehensive income (loss) for 2015 Total comprehensive income Treasury stock repurchased Balance as of December 31, 2015	6(19) 6(24) 6(19) 6(24)	$4,460,000 - 4,460,000 - $4,460,000	$5,863,612 - 50,925 25,282 5,939,819 - $5,939,819	$2,365,481 322,409 - 2,687,890 361,733 - $3,049,623	$74,424 (74,424) - - - $-	$12,206,545 (322,409) (1,561,000) 74,424 3,617,327 15,710 3,633,037 14,030,597 (361,733) (1,784,000) 2,903,952 (8,721) 2,895,231 $14,780,095	$93,768 161,241 161,241 255,009 (60,525) (60,525) $194,484	$15,111 9,583 9,583 24,694 (24,694) (24,694) $-		$25,078,941 - (1,561,000) - 3,617,327 186,534 3,803,861 50,925 25,282 27,398,009 - (1,784,000) 2,903,952 (93,940) 2,810,012 (32,885) $28,391,136	$2,450,199 (127,094) 115,330 (11,764) (50,925) (25,282) 292,537 2,654,765 (174,426) (43,674) (218,100) $2,436,665	$27,529,140 - (1,561,000) - 3,490,233 301,864 3,792,097 - - 292,537 30,052,774 - (1,784,000) 2,729,526 (137,614) 2,591,912 (32,885) $30,827,801

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

193

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2015 and 2014

(In Thousands of New Taiwan Dollars)

Code	Items	2015	2014	Code	Items	2015	2014
AAAA A10000 A20000 A20010 A20100 A20200 A20300 A20400 A20900 A21200 A22500 A23100 A23700 A30000 A31110 A31130 A31150 A31160 A31180 A31190 A31200 A31230 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 Impairment loss on non-financial assets Changes in operating assets and liabilities: Financial assets at fair value through profit or loss Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Other receivables - related parties Inventories Prepayments Other current assets Long-term prepaid rents Notes payable Accounts payable Accounts payable - related parties Other payables Provisions Unearned sales revenue Other current liabilities Accrued pension liabilities Cash generated from (used in) operations Interest received Interest paid Income tax paid Net cash provided by (used in) operating activities	$3,205,248 3,196,903 34,432 (19,603) (24,586) 56,968 (86,116) 108,807 (30,845) 14,211 1,623,650 4,417 (529,703) 187,497 111,215 (774) (122,467) (60,704) (44,397) 13,291 14,473 10,050 - 73,374 (8) (11,246) (2,035) (4,241)	$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)	BBBB B00400 B00700 B01200 B02700 B02800 B03800 B04500 BBBB CCCC C00100 C01600 C01700 C04500 C03000 C04900 C05800 CCCC DDDD EEEE E00100 E00200	Cash flows from investing activities: Disposal of available-for-sale financial assets Disposal of bond investments with no active market Acquisition of financial assets carried at cost Acquisition of property, plant and equipment Disposal of property, plant and equipment 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 Treasury stock purchased 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	46,520 35,715 - (5,000,206) 1,680 (363) (44,806)	51,620 43,601 (50,000) (3,348,791) 8,113 (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
						(4,961,460)
						1,288,134 1,084,751 (1,310,123) (1,784,000) (29,106) (32,885) -
						(783,229)
						10,806
						1,204,692 11,541,615
						$12,746,307

		7,717,811	7,688,412
		90,561 (55,519) (814,278)	93,723 (57,162) (837,885)
		6,938,575	6,887,088

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

194

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese ~~English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese~~ Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Notes to the Consolidated Financial StatementsNotes to Consolidated Financial Statements (Continued)

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

1. HISTORY AND ORGANIZATION

2. DATE AND PROCEDURE OF AUTHORIZATION FOR FINANCIAL STATEMENTS ISSUANCE

The consolidated financial statements of the Company and its subsidiaries (“the Group”) were authorized to be issued in accordance with a resolution of the Board of Directors’meeting held on February 1, 2016.

NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS
(1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

IAS 19 Employee Benefits

The revised IAS 19 brought about the following changes to defined benefit plans which are summarized as below:

(a) The interest cost and expected return on plan assets used in the previous version of IAS 19 are replaced with a net-interest amount under the revised IAS 19, which is calculated by applying the discount rate to the net defined benefit liability or asset at the start of each annual reporting period.

195

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

(b) In the previous version of IAS 19, past service cost is recognized as an expense immediately to the extent that the benefits are already vested, or on a straight-line basis over the average period until the benefits become vested. Under the revised IAS 19, all past service costs are recognized at the earlier of when the amendment/curtailment occurs or when the related restructuring or termination costs are recognized. Therefore unvested past service cost is no longer deferred over future vesting periods.
(c) The revised IAS 19 required more disclosure. Please refer to Note 6.

IFRS 13 Fair Value Measurements

IAS 1 Presentation of Financial Statements – Presentation of items of other comprehensive income

IAS 1 Presentation of Financial Statements – Clarification of the requirement for comparative information

196

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

(2) The Company has not applied the following IFRSs issued by the International Accounting Standards Board (“IASB”) but not endorsed by the FSC. As of the date that the consolidated financial statements were authorized for issue, the initial adoption to the following standards and interpretations is still subject to the effective date to be published by the FSC.
(a) IAS 36 “Impairment of Assets” (Amendment)

(b) IFRIC 21 “Levies”

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

197

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

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

IFRS 2 “Share-based Payment”

IFRS 3 “Business Combinations”

IFRS 8 “Operating Segments”

IFRS 13 “Fair Value Measurement”

198

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

IAS 16 “Property, Plant and Equipment”

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”

IFRS 3 “Business Combinations”

199

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

IFRS 13 “Fair Value Measurement”

IAS 40 “Investment Property”

(g) IFRS 14 “Regulatory Deferral Accounts”

(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 con flict 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.

200

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

(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”

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

201

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

(l) IFRS 9 “Financial Instruments”

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 amendment is effective for annual periods beginning on or after 1 January 2016.

202

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

(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 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”

IFRS 7 “Financial Instruments: Disclosures”

203

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

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”

IAS 34 “Interim Financial Reporting”

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

204

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

(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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1)Statement of compliance

The consolidated financial statements for the year ended December 31, 2015 and 2014 have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting,” 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.

205

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

(3)Basis of consolidation

Preparation principle of consolidated financial statements

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

(a) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
(b) exposure, or rights, to variable returns from its involvement with the investee, and
(c) the ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) the contractual arrangement with the other vote holders of the investee
(b) rights arising from other contractual arrangements
(c) the Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

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.

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 non-controlling interest;

206

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

(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 The Company KINSUS CORP. (USA) Designing substrates, formulating marketing strategy analysis, developing new customers, researching and development new product technology The Company KINSUS HOLDING (SAMOA) LIMITED Investing activities The Company KINSUS INVESTMENT CO., LTD. Investing activities KINSUS HOLDING (SAMOA) LIMITED KINSUS HOLDING (CAYMAN) LIMITED Investing activities KINSUS HOLDING (SAMOA) LIMITED PIOTEK HOLDINGS LTD. (CAYMAN) Investing activities KINSUS INVESTMENT CO., LTD. PEGAVISION CORPORATION Manufacture of medical equipment	Percentage of Ownership (%) As of December 31,	Percentage of Ownership (%) As of December 31,
	2015 100.00% 100.00% 100.00% 100.00% 51.00% 36.81% (Note)	2014
		100.00% 100.00% 100.00% 100.00% 51.00% 36.81% (Note)

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KINSUS HOLDING	KINSUS	Manufacturing and	100.00%	100.00%
(CAYMAN)	INTERCONNECT	selling printed
LIMITED	TECHNOLOGY	circuit board (PCB)
	SUZHOU CORP.	(not high-density
		fine-line)
KINSUS HOLDING	XIANG-SHOU	Trading of PCB	100.00%	100.00%
(CAYMAN)	(SUZHOU)	related products
LIMITED	TRADING	and materials (not
	LIMITED	high-density
		fine-line)
PIOTEK	PIOTEK HOLDING	Investing activities	100.00%	100.00%
HOLDINGS LTD.	LIMITED
(CAYMAN)
PIOTEK HOLDING	PIOTEK	Researching,	100.00%	100.00%
LIMITED	COMPUTER	developing,
	(SUZHOU) CO.,	producing and
	LTD.	selling electronic
		components, PCBs
		and related
		products and
		providing
		after-sale services
PIOTEK HOLDING	PIOTEK (H.K.)	Trading activities	100.00%	100.00%
LIMITED	TRADING
	LIMITED
PEGAVISION	PEGAVISION	Investing activities	100.00%	100.00%
CORPORATION	HOLDINGS
	CORPORATION
PEGAVISION	PEGAVISION	Selling medical	100.00%	-%
CORPORATION	JAPAN INC.	equipment	(Note1)	(Note1)
PEGAVISION	PEGAVISION	Selling medical	100.00%	100.00%
HOLDINGS	CONTACT	equipment
CORPORATION	LENSES
	(SHANGHAI)
	CORPORATION

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Note:The Group owned 36.81% of ownership of Pegavision Corporation as of December 31, 2015 and 2014. The management decide to include Pegavision Corporation as a consolidated entity because the Group, in substance, possess the control over this entity.

Note1: Pegavision Corporation has increased its investment in PEGAVISION JAPAN INC. in amount of JP$9,900 thousand on April 28, 2015.

(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.

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(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 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

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(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.

(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.

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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).

(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.

Available-for-sale financial assets

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until the investment is derecognized, at which time the cumulative gain or loss is reclassified to profit or loss.

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;

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(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.

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.

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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.

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.

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

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Financial liabilities at fair value through profit or loss

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).

(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 from subsequent measurement on liabilities at fair value through profit or loss, including interests, 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

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Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

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

(9)Fair value measurement

(a)In the principal market for the asset or liability, or

(b)In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

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(10)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 conditions 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.

(11)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	5 to 10 years
Transportation	2 to 6 years
Office equipment	3 to 6 years
Other equipment	3 to 25 years

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(12)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. 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 incomes 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.

(13)Intangible assets

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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.

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:

Cost of Computer Software Useful economic life 1 to 5 years Amortization method Straight-line method during the contract term Internally generated or acquired externally Acquired externally

(14)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.

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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.

(15)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 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.

(16)Treasury Stock

The Company’s own equity instruments repurchased (treasury shares) are recognized at repurchase cost and deducted from equity. Any difference between the carrying amountand the consideration is recognized in equity.

(17)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;

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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 Program

Interest income

Dividend income

Dividend incomes are recognized only when the Group has the right to receive the dividends.

(18)Borrowing costs

(19)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

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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. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

(a) the date of the plan amendment or curtailment, and
(b) the date that the Group recognizes restructuring-related costs

(20)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

The 10% income tax for undistributed earnings of the Company and its subsidiaries is

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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.

(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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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.

Interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period.

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

(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

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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.

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6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1)Cash and cash equivalents

Cash and petty cash Checking and saving Time deposit Total	As of December 31,	As of December 31,
	2015 (NT$’000)	2014 (NT$’000)
	6,234 3,379,804 9,360,269	4,574 2,661,078 8,875,963
	12,746,307	11,541,615

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

Held for trading: Money market fund Valuation adjustment Total	As of December 31,	As of December 31,
	2015 (NT$’000) 3,453,872 82,498 3,536,370	2014 (NT$’000)
		5,033,763 101,671
		5,135,434

No financial asset at fair value through profit or loss was pledged as collateral.

(3)Available-for-sale financial assets

Stocks Valuation adjustment Total	As of December 31,	As of December 31,
	2015 (NT$’000) - - -	2014 (NT$’000)
		15,675 24,694
		40,369

No available-for-sale financial asset was pledged as collateral.

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(4)Bond investments with no active market

Time deposits Current Non-current	As of December 31,	As of December 31,
	2015 (NT$’000) 428,112 428,112 -	2014 (NT$’000)
		463,827
		463,827
		-

There was no bond investments with no active market pledged as collateral. Please refer to Note 8 for more details.

(5)Financial assets carried at cost

Stocks Non-current	As of December 31,	As of December 31,
	2015 (NT$’000) 50,000 50,000	2014 (NT$’000)
		50,000
		50,000

A. Because the interval of reasonable estimates of the fair value of unlisted stocks held by the Group is significantly variable and the probabilities of each estimate cannot be reasonably evaluated, these stocks cannot be measured in fair value. Thus they are carried at cost.

B. No financial assets carried at cost were pledged as collateral.

(6)Notes receivable

Notes receivable – from operations Less: allowance for doubtful accounts Net	As of December 31,	As of December 31,
	2015 (NT$’000) 1,835 - 1,835	2014 (NT$’000)
		6,252 -
		6,252

No notes receivable was pledged by the Group as collateral.

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(7)Accounts receivable and accounts receivable - related parties, net
A. Accounts receivable, net

Accounts receivable, gross Less: allowance for doubtful accounts Less: allowance for return & discount Net of allowances Accounts receivable - related parties, gross Less: allowance for doubtful accounts Net of allowances Total accounts receivable, net	As of December 31,	As of December 31,
	2015 (NT$’000) 3,642,703 (47,799) (4,711) 3,590,193 248,909 - 248,909 3,839,102	2014 (NT$’000)
		3,108,413 (67,946) (124)
		3,040,343
		436,406 -
		436,406
		3,476,749

B. The Group evaluated sales return and discount based on experiences and other known factors and recorded it as a reduction against sales at the time of recognizing revenue.
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 were as follows:

12/31/2015 12/31/2014	Financial Institution Mega International Commercial Bank - LanYa Branch Mega International Commercial Bank - LanYa Branch	Accounts receivable de-recognized (NT$’000)	Advance received (NT$’000)	Collateral	Credit Limit
		251,600 509,292	- 153,968	None None	Note Note

Note: The credit limits were US$30,000 thousand as of December 31, 2015 and 2014.

D.The collection term of accounts receivables are generally on 60 to 120 day after monthly closing. The movement schedule of the impairment provision for accounts receivable, including related parties, was presented as below. (Please also refer to Note 12 for credit risk disclosure)

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As of January 1, 2015 Provision (reversal) Effect of exchange rate changes As of December 31, 2015 As of January 1, 2014 Provision (reversal) Effect of exchange rate changes As of December 31, 2014	Impaired Individually (NT$’000) - - - - - - - -	Impaired Collectively (NT$’000) 67,946 (19,603) (544) 47,799 61,910 5,876 160 67,946	Total (NT$’000)
			67,946 (19,603) (544)
			47,799
			61,910 5,876 160
			67,946

Aging analysis for the net accounts receivable, including related parties, were as follows.

12/31/2015 12/31/2014	Neither past due nor impaired (NT$’000)	Accounts receivable	Accounts receivable	–past due, but not impaired	–past due, but not impaired	Total (NT$’000)
		Less than 61 days (NT$’000)	61 to 90 days (NT$’000)	91 to 120 days (NT$’000)	Longer than 120 days (NT$’000)
	3,639,724 3,143,727	199,378 330,265	- 2,358	- -	- 399	3,839,102 3,476,749

(8)Inventory

A. Details of inventory:

Raw material Supplies Work in process Finished goods Merchandises Total	As of December 31,	As of December 31,
	2015 (NT$’000) 638,897 41,027 815,704 759,271 30,537 2,285,436	2014 (NT$’000)
		675,961 33,609 691,073 725,697 36,629
		2,162,969

B. For the year ended December 31, 2015 and 2014, the Group recognized NT$17,099,709 thousand and NT$17,996,954 thousand under the caption of costs of sale, respectively. The following items were also included in cost.

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Item	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
Loss from (Gains on recovery of) inventory market decline Loss (gain) from physical Loss in inventory write-off obselencense Total	(104,357) (2,118) 1,319,081	234,517 38,239 988,930
	1,212,606	1,261,686

The Group recognized gains on recovery of inventory market decline because some of the inventories previously provided with market loss or obsolescence were disposed.

C. The inventories were not pledged.

(9)

(9) Property, plant and equipment

Land (NT$’000)	Buildings (NT$’000)	Machinery (NT$’000)	Office Equipment (NT$’000)	Transportat ion (NT$’000)	Other Equipment (NT$’000)	Construction in progress and equipment awaiting inspection (including prepaid equipment) (NT$’000)	Total (NT$’000)
1,366,426 - - - 191,374	5,614,222 10,654 (71,944) (70,843) 74,654	17,202,285 58,908 (2,442,452) (154,054) 2,116,389	118,946 11,408 (17,968) (1,428) 20,618	14,700 1,355 - (246) -	3,958,417 86,105 (342,406) (33,606) 324,398	3,107,645 4,861,010 - (2,755) (2,727,433)	31,382,641 5,029,440 (2,874,770) (262,932) -
1,557,800	5,556,743	16,781,076	131,576	15,809	3,992,908	5,238,467	33,274,379
1,237,179 8,939 - - 120,308	5,462,460 20,165 (52,159) 174,048 9,708	15,077,543 54,596 (78,757) 364,245 1,784,658	90,558 7,851 (492) 3,780 17,249	12,370 830 - 595 905	3,766,802 68,416 (89,826) 86,648 126,377	1,402,631 3,756,295 - 7,924 (2,059,205)	27,049,543 3,917,092 (221,234) 637,240 -
1,366,426	5,614,222	17,202,285	118,946	14,700	3,958,417	3,107,645	31,382,641
	1,521,919 266,238 - (26,551)	10,235,466 2,390,247 13,425 (2,402,650)	73,772 24,444 391 (16,642)	8,679 3,055 - -	2,364,370 512,919 395 (318,440)	- - - -	14,204,206 3,196,903 14,211 (2,764,283)

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- -	(18,060) -	(96,305) 8,737	(1,126) -	(182) -	(19,404) (8,737)	- -	(135,077) -
-	1,743,546	10,148,920	80,839	11,552	2,531,103	-	14,515,960
- - - - - -	1,263,101 266,758 - (50,929) 42,989 -	7,839,150 2,248,030 - (72,720) 220,926 80	52,142 19,130 - (492) 2,992 -	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
1,557,800	3,813,197	6,632,156	50,737	4,257	1,461,8055	5,238,467

A. On the December 31, 2015, the Group evaluated the recoverable amount of certain idle property, plant and equipment to be zero and, therefore, recognized an impairment loss of NT$14,211 thousand in the statement of comprehensive income.
B. “ Significant components ” of buildings primarily comprised the main buildings and the facilities, which are depreciated based on their respective useful economic life of 20 to 25 years and 3 to 20 years.
C. Details of property, plant & equipment and prepayment for machinery is as follows:

Property, plant and equipment Prepaid equipment Total	As of December 31,	As of December 31,
	2015 (NT$’000) 16,150,904 2,607,515 18,758,419	2014 (NT$’000)
		15,429,778 1,748,657
		17,178,435

D. Please refer to Note 8 for details on property, plant and equipment pledged as collaterals.
E. The Company purchased 40 parcels of land with a total area of 36,287.15 square meters. Lands are located at the addresses of No. 1113, 1114, 1438 to 1443,1479,1486 to 1487 at ShiLeiZi Sub-section, ShiLeiZi Section, No. 1044, 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 while it has

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been temporarily registered under the general manager’s name and, to secure the Company’s right to the land, mortgage registration has been set aside with the Company being the obligee.

(10)Intangible assets

Cost: As of January 1, 2015 Additions – acquired separately Derecognized upon retirement Effect of exchange rate changes As of December 31, 2015 As of January 1, 2014 Additions – acquired separately Derecognized upon retirement Effect of exchange rate changes As of December 31, 2014 Amortization and Impairment: As of January 1, 2015 Amortization Derecognized upon retirement Effect of exchange rate changes As of December 31, 2015 As of January 1, 2014 Amortization Derecognized upon retirement Effect of exchange rate changes As of December 31, 2014 Carrying amount, net: As of December 31, 2015 As of December 31, 2014	Computer software (NT$’000)
	40,101 44,806 (29,007) (278)
	55,622
	43,568 32,271 (36,644) 906
	40,101
	20,119 34,432 (29,007) (202)
	25,342
	29,409 26,567 (36,644) 787
	20,119
	30,280
	19,982

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Amounts of amortization recognized for intangible assets are as follows:

Operating expense Sales and marketing General and administrative Research and development Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	- 1,107 31,257 2,068	292 543 23,248 2,484
	34,432	26,567

(11)Other non-current assets

Refundable deposits Long-term prepaid rent Total	As of December 31,	As of December 31,
	2015 (NT$’000) 45,106 273,679 318,785	2014 (NT$’000)
		44,743 286,970
		331,713

As of December 31, 2015 and 2014, the line of unused short-term loan credit for the Group amounted to NT$273,679 thousand and NT$286,970 thousand, respectively.

(12)Short-term loans

	As of December 31,	As of December 31,
Interest interval (%)	2015 (NT$’000)	2014 (NT$’000)
Unsecured bank loans 0.8~1.5331	3,095,030	1,806,896

As of December 31, 2015 and 2014, the line of unused short-term loan credit for the Group amounted to NT$3,156,970 thousand and NT$3,286,804 thousand, respectively.

(13)Other payable

Accrued expense Equipment payable	As of December 31,	As of December 31,
	2015 (NT$’000)	2014 (NT$’000)
	2,662,966 1,265,758	2,589,592 1,236,524

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Accrued interest 4,038 2,636 Total 3,932,762 3,828,752 (14)Provisions Sales Returns and Allowances (NT$’000) As of January 1, 2015 302 Additions - Used - Reversal (8) Adjustment to present value due to discount rate change and passage of time - As of December 31, 2015 294 As of December 31, 2015 (NT$’000) 2014 (NT$’000) Current 294 302 Non-current - - Total 294 302	4,038		2,636
	3,932,762		3,828,752
			Sales Returns and Allowances (NT$’000)
			302 - - (8) -
			294
	2015 (NT$’000) 294 - 294		2014 (NT$’000) 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.

A.
Other current liabilities Unearned sales revenue Deferred revenue - Customer Loyalty Programmes Current portion of long-term loans Total	As of December 31,
	2015 (NT$’000)	2014 (NT$’000)
	73,152 21,607 1,302 572,640	75,708 32,853 781 1,433,589
	668,701	1,542,931

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B. Customer loyalty programs

Balance, beginning Deferred during the period Recognized in profit or loss Balance, ending Current Non-current Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	781 637 (116)	- 781 -
	1,302	781
	2015 (NT$’000)	2014 (NT$’000)
	1,302 -	781 -
	1,302	781

(16)Long-term loans

Details of long-term loans were as follows:

Debtor	Type of Loan Secured bank loan Credit loan Secured bank loan Credit loan	Maturity	Loan Balance	Repayment
			As of Dec. 31, 2015 (NT$’000)
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		2015.10.27- 2016.12.15 2016.01.17- 2010.12.04 2016.07.15- 2019.01.15 2016.01.24- 2017.04.15	123,081 1,162,006 181,953 15,000	Notes 1, 2 and 11 Notes 2, 3 and 4 Notes 6, 7 and 10 Notes 6 and 10

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Land Bank of Taiwan - ZhongLi Branch Taipei Fubon Commercial Bank – BeiTou Branch Total Less: current portion Non-current portion Debtor	Credit loan Credit loan Type of Loan	2016.04.27 2017.12.14 Maturity	62,999 393,900	Notes 2 and 5 Note 12 Repayment
			1,938,939 (572,640)
			1,366,299
			Loan Balance
			As of Dec. 31, 2014 (NT$’000)
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 6 and 10 Notes 2 and 5 Note 12
			2,164,311 (1,433,589)
			730,722

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

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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 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 were pledged to Mega International Commercial Bank and 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, 2015 and 2014, the interest rate intervals for long-term loans were 1.02%~2.1923% and 0.72%~1.60%, respectively.

(17)

(17)Other non-current liabilities

Accrued pension costs Deposits received Total	As of December 31,	As of December 31,
	2015 (NT$’000) 34,148 51,846 85,994	2014 (NT$’000)
		29,668 80,952
		110,620

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(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. Under the Labor Pension Act, the Company and its domestic subsidiaries will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual 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.

Subsidiaries located in the People’s Republic of China will contribute social welfare benefits based on a certain percentage of employees’ salaries or wages to the employees’ individual pension accounts.

Pension benefits for employees of overseas subsidiaries and branches are provided in accordance with the local regulations.

Expenses under the defined contribution plan for the years ended December 31, 2015 and 2014 were NT$112,096 thousand and NT$103,867 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 salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company and its domestic subsidiaries 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 fund is operated in a potofolio basis by Governance Committee on Labor Retirement Fund in accordance with the Rule for Custody and Operating the Labor Retirement Fund. The investment of the Fund may be executed either by the Committee itself or by outsourced other profession institutions with its investment stategy, including both active and passive management, targeting in a medium or longer term. In considering the risks of market, credit and liquidity, the Committee establishes the ceiling of fund investment and control plan, in one hand, to reduce investment risk to an affordable extent and, in the other hand, to achieve the targeted return flexibly. As of December 31, 2015, the Company plans to contribute

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NT$5,061 thousand to the funds under its defined benefit scheme during the following fiscal year.

As of December 31, 2015 and 2014, the maturities of the Company’s defined benefit plan were expected in 2036 and 2037 and the detail information is listed as below.

Less than one year More than one year but less than five years More than five years Total	As of December 31,	As of December 31,
	2015 (NT$’000) 14,162 3,038 22,213 39,413	2014 (NT$’000)
		8,440 8,142 16,321
		32,903

Pension costs recognized in profit or loss were as follows:

Current period service costs Net interest of defined benefit liability (asset) Previous period service costs Settlement Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	152 668 - -	232 987 - -
	820	1,219

Reconciliation of liability (asset) of the defined benefit plan is as follows:

	As of
Dec. 31, 2015 (NT$’000) 127,707 (93,559) 34,148	Dec. 31, 2014 (NT$’000) 116,697 (87,029) 29,668	Jan. 1, 2014 (NT$’000)
		132,275 (82,924)
		49,351

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Reconciliation of liability (asset) of the defined benefit liability is as follows:

Present value of defined benefit obligation (NT$’000)	Fair value of plan assets (NT$’000)	Net defined benefit liability (asset) (NT$’000)
132,275 232 2,645 -	(82,924) - (1,658) -	49,351 232 987 -
2,877 519 (6,277) (9,704) -	(1,658) - - (248) -	1,219 519 (6,277) (9,952) -
(15,462)	(248)	(15,710)
(2,993) - -	2,993 (5,192) -	- (5,192) -
116,697 152 2,626 -	(87,029) - (1,958) -	29,668 152 668 -
2,778 2,453 6,154 474 -	(1,958) - - (360) -	820 2,453 6,154 114 -
9,081	(360)	8,721
(849) - -	849 (5,061) -	- (5,061) -
127,707	(93,559)	34,148

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

Cash	Pensionplan(%)as of December 31,	Pensionplan(%)as of December 31,
	2015 100.00%	2014
		100.00%

The actuarial assumptions used for the Group’s defined benefit plan are shown below:

	As of December 31, 2015 2014 2.00% 2.25% 3.00% 3.00% For theyear ended December 31,	As of December 31, 2015 2014 2.00% 2.25% 3.00% 3.00% For theyear ended December 31,	As of December 31, 2015 2014 2.00% 2.25% 3.00% 3.00% For theyear ended December 31,	As of December 31, 2015 2014 2.00% 2.25% 3.00% 3.00% For theyear ended December 31,
	2015 (NT$’000)		2014 (NT$’000) Increase in defined benefit obligation Decrease in defined benefit obligation - (11,487) 13,023 - 12,855 - - (11,461)
Increase in defined benefit obligation		Decrease in defined benefit obligation		Decrease in defined benefit obligation
- 13,746 13,534 -		(12,150) - - (12,095)		(11,487) - - (11,461)

Sensitivity analysis :

(19)Equity

A. Common shares

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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	As of December 31,	As of December 31,
	2015 (NT$’000) 5,850,000 50,925 38,894 5,939,819	2014 (NT$’000)
		5,850,000 50,925 38,894
		5,939,819

C. Treasury stock

As of December 31, 2014, no treasury stock was held by the Group while treasury stock amounted to NT$32,895 thousand, divided into 550 thousand shares, as of September 30, 2015.

As of December 31, 2014, no treasury stock moved. The movement schedule of treasury stock on December 31, 2015 was as below (in thousand shares).

Purpose of repurchase To be transfered to employees	Beginning balance -	Addition 550	Decrease -	Ending balance
				550

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In compliance with Securities and Exchange Law of the R.O.C., treasury stock should not be pledged, nor should it be entitled to voting rights or receiving dividends.

D. Appropriation of earnings and dividend policies

(a)Earning distribution

The rule enacted in the Company’s original Article of Incorporation before an amendment was proposed by the borad of directors on December 28, 2015 is as follows.

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.

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1. Employee Compensation:

2. Directors’ compensation:

The ratio of directors’ compensation to “income before tax and the employee and directors’ compensation to be provided” shall not be more than 1%.

(b)Dividend policies

(c)Legal reserve

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(d)Special reserve

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 Company did not incur any special reserve upon the first-time adoption of Taiwan IFRS.

(e)The appropriations of earnings for the Year 2015 and 2014 were approved through the Board of Directors’ meetings and shareholders’ meetings held on February 1, 2016 and June 11, 2015, respectively. The details of the distributions are as follows:

Appropriation of earnings	Appropriation of earnings	Dividend per share (in NT$)	Dividend per share (in NT$)
2015 (NT$’000) 290,395 1,559,075 (Note) (Note) 1,849,470	2014 (NT$’000)	2015 3.50	2014
	361,733 1,784,000 32,556 545,679		4.00
	2,723,968

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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. The difference of NT$814 thousand between the actual payment and the accrual of NT$492,104 thousand for employees’ bonuses and NT$28,947 thousand for remuneration to directors and supervisors for the year ended December 31, 2013 was recorded in the profit or loss for the year ended December 31, 2014.

The actual payment of 2014 earning distribution comprised the employees’ bonuses of NT$545,679 thousand and the remuneration to directors and supervisors of NT$32,556 thousand. The difference of NT$457 thousand between the actual payment and the accrual of NT$545,679 thousand for employees’ bonuses and NT$32,099 thousand for remuneration to directors and supervisors for the year ended December 31, 2014 was recorded in the profit or loss for the year ended December 31, 2015.

Note: For 2015 employee and directors’ compensation under the new Article to be amended, please refer to Note 6(20) for details.

E. Non-controlling interests

Beginning balance Net loss attributable to NCIs Other comprehensive income attributable to NCIs: Exchange differences arising on translation of foreign operations Capital increase at subsidiary by issuing new shares The difference between the consideration and the carrying value from disposal of subsidiaries’equity Ending balance	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	2,654,765 (174,426) (43,674) - -	2,450,199 (127,094) 115,330 200,966 15,364
	2,436,665	2,654,765

(20)Sale

Sale of goods Less: sales returns and allowances	For theyear ended December 31, 2015 (NT$’000) 2014 (NT$’000) 23,155,396 24,750,695 (491,745) (345,496)	For theyear ended December 31, 2015 (NT$’000) 2014 (NT$’000) 23,155,396 24,750,695 (491,745) (345,496)
		2014 (NT$’000)
		24,750,695 (345,496)

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Services rendered Other operating revenue Total	190,589 207,071	186,656 351,979
	23,061,311	24,943,834

(21)Operating lease
A. Group as a lessee

The commercial leasing agreements that the Group entered into for buildings and plants have an average term of one to five years. There are no restrictive covenants for the Group in the contracts.

Total future minimum lease payments due to irrevocable leasing contracts were as follows:

Less than one year More than one year but less than five years Total	As of December 31,	As of December 31,
	2015 (NT$’000)	2014 (NT$’000)
	84,745 394,056	40,146 -
	478,801	40,146

Expenses under operating lease were as follows:

Minimum lease payment	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	149,112	136,263

B. Group as a lessor

The leasing agreements that the Group entered into for plants have an average term of one year.

As of December 31, 2015 and 2014, the total future minimum lease payments from the leasees due to irrevocable leasing contracts were both NT$0.

For the years ended December 31, 2015 and 2014, rent incomes of the Group amounted to NT$22,716 thousand and NT$20,407 thousand, respectively.

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(22)Summary statement of employee benefits, depreciation and amortization by function is as follows:

Function Nature	2015 (NT$’000)	2015 (NT$’000)	2015 (NT$’000)	2014 (NT$’000)	2014 (NT$’000)	2014 (NT$’000)
	Cost of goods sold	Operating expense	Total	Cost of goods sold	Operating expense	Total
Employee benefit
Salaries & wages	$3,182,359	$921,541	$4,103,900	$3,294,081	$808,920	$4,103,001
Labor and health insurance	189,146	67,082	256,228	169,967	58,018	227,985
Pension	79,690	33,226	112,916	76,253	28,833	105,086
Other employee benefit	214,987	93,195	308,182	172,313	54,112	226,425
Depreciation	2,952,612	244,291	3,196,903	2,785,951	232,052	3,018,003
Amortization	-	34,432	34,432	292	26,275	26,567

The Company estimated the amounts of the employee and directors’ compensation based on the profit for the year ended December 31, 2015 in accordance to the new Article to be amended. If the board subsequently modifies the estimates significantly, the Company will recognize the change as an adjustment in the profit or loss retroactively. For the year ended December 31, 2015, the amounts of employee and directors’ compensation were NT$442,444 thousand and NT$26,026 thousand, respectively.

For the year ended December 31, 2014, the Company estimated the amounts of the employee bonuses and the remuneration to directors 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 were 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 retroactively. 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. For the year ended December 31, 2014, the amounts of the employee compensation & remuneration to directors were NT$545,679 thousand & NT$32,099 thousand.

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(23)Non-operating incomes and expenses

A. Other incomes

Interest income Dividend income Other income－others Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000) 86,116 - 223,360 309,476	2014 (NT$’000)
		96,170 1,531 36,260
		133,961

B. Other gains and losses

Gain (loss) from disposal of property, plant and equipment Foreign exchange gains, net Financial assets at fair value through profit Gain from disposal of investment Impairment loss on non-financial assets Other expenses Total C. Finance costs Interests on bank loans	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	(108,807) (14,925) 24,586 30,845 (14,211) (28,472)	(724) 32,414 26,895 26,135 - (20,286)
	(110,984)	64,434
	2014 (NT$’000)	2014 (NT$’000)
	56,968	56,482

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(24)Components of other comprehensive income (OCI)

For the year ended December 31, 2015

Arising during the period (NT$’000)	Subtotal (NT$’000)	OCI, Net of tax (NT$’000)
(8,721) (116,596) 6,151	(8,721) (116,596) (24,694)	(8,721) (104,199) (24,694)
(119,166)	(150,011)	(137,614)
31, 2014 Arising during the period (NT$’000)	Subtotal (NT$’000)	OCI, Net of tax (NT$’000)
15,710 309,597 34,474	15,710 309,597 9,583	15,710 276,571 9,583
359,781	334,890	301,864

For the year ended December 31, 2014

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(25)Income tax
A. The major components of income tax expense (income) are as follows:

Income tax expense (benefit) recognized in profit or loss

Current income tax expense (benefit): Current income tax expense Reversal of uncertain tax position upon finalization Deferred tax expense (benefit): Deferred tax expense (benefit) relating to origination and reversal of temporary differences Total income tax expense	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	687,692 (210,169) (1,801)	759,501 (93,355) (5,307)
	475,722	660,839

B. Income tax recognized in other comprehensive income

Deferred tax expense (benefit): Exchange differences arising on translation of foreign operations	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	(12,397)	33,026

C. A reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates is as follows:

Accounting profit (loss) before tax from continuing operations	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	3,205,248	4,151,072

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Tax payable at the enacted tax rates 10% surtax on Undistributed earnings Tax effect of income tax-exempted Tax effect of expenses not deductible for tax purposes Tax effect of deferred tax assets/liabilities Reversal of uncertain tax position upon finalization Total income tax expense (income) recognized in profit or loss	501,265 157,191 (112,954) 506 139,883 (210,169)	645,428 141,511 (103,339) 13,493 57,101 (93,355)
	475,722	660,839

D. Deferred tax assets (liabilities) relate to the following:

For the year ended December 31, 2015

Beginning balance as of Jan. 1, 2015 (NT$’000)	Deferred tax income (expense) recognized in P/L (NT$’000)	Deferred tax income (expense) recognized in OCI (NT$’000)	Deferred tax income (expense) recognized in equity (NT$’000)	Increase from business acquisition (NT$’000)	Exchange adjustment (NT$’000)	Ending balance as of Dec. 31, 2015 (NT$’000)
- 276 (2,146) (52,231)	9,593 11 1,790 -	- - - 12,397	- - - -	- - - -	- - - -	9,593 287 (356) (39,834)
(54,101)	11,394	12,397	-	-	-	(30,310)

276						9,880
(54,377)						(40,190)

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For the year ended December 31, 2014

Beginning balance as of Jan. 1, 2014 (NT$’000)	Deferred tax income (expense) recognized in P/L (NT$’000)	Deferred tax income (expense) recognized in OCI (NT$’000)	Deferred tax income (expense) recognized in equity (NT$’000)	Increase from business acquisition (NT$’000)	Exchange adjustment (NT$’000)	Ending balance as of Dec. 31, 2014 (NT$’000)
	256 5,051 -	- - (33,026)	- - -	- - -	- - -	276 (2,146) (52,231)
(26,382)	5,307	(33,026)	-	-	-	(54,101)

20						276
(26,402)						(54,377)

E. Unrecognized deferred tax assets

As of December 31, 2015 and 2014, deferred tax assets that have not been recognized as they may not be used to offset future taxable income amounted to NT$1,078,696 thousand and NT$1,016,063 thousand, respectively.

F. The investments and capital additions of the Company and its subsidiary, Pegavision, are qualified as the investment on manufacture or technology service industry during the period from July 1, 2008 to December 31, 2009 and, therefore, entitled to a 5-year tax holidays/exemption enjoyed by the Group are listed as below.

Item 1 2	Approval authority Ministry of Economic Affairs Ministry of Economic Affairs	Approval document No. 10005112010 issued at Aug. 25, 2011 No. 10005116950 issued at Dec. 27, 2011	Exemptionperiod
			Jan. 1, 2013~ Dec. 31, 2017 Jan. 1, 2014~ Dec. 31, 2018

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G. Unused balance of deductible net operating loss within the Group was listed as following.

Occurrence year	Accumulated net operating loss (NT$’000)	Unused balance As of December 31, 2015 (NT$’000) 2014 (NT$’000) - 27,445 98,751 126,986 98,751 154,431	Expiration Year
		2015 (NT$’000)
2011 2012 Total	95,522 135,158	- 98,751	2021 2022
		98,751

H. Imputation credit information

Balances of imputation credit	As of December 31,	As of December 31,
	2015 (NT$’000) 1,942,384	2014 (NT$’000)
		1,431,359

I. The assessment of income tax return

As of December 31, 2015, the assessment status of 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 2013 Assessed and approved up to 2013 Assessed and approved up to 2013

(26)Earnings per share

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Diluted earnings per share are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

A. Basic earnings per share

Net income available to common shareholders of the parent (in NT$’000) Weighted average number of common shares outstanding (in thousand shares) Basic earnings per share (in NT$) B. Diluted earnings per share Net income available to common shareholders of the parent (in NT$’000) Net income available to common shareholders of the parent after dilution (in NT$’000) Weighted average number of common shares outstanding (in thousand shares) Effect of dilution: Employee bonus – stock (in thousand shares) Weighted average number of common shares outstanding after dilution (in thousand shares) Diluted earnings per share (in NT$)	For theyear ended December 31,	For theyear ended December 31,
	2015	2014
	2,903,952	3,617,327
	445,822	446,000
	$6.51	$8.11
	2015	2014
	2,903,952	3,617,327
	2,903,952	3,617,327
	445,822 9,611	446,000 7,305
	455,433	453,305
	6.38	7.98

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(27)Subsidiary that has material non-controlling interests

Proportion of equity interest held by non-controlling interests:

As of December 31, Name Country 2015 2014 PIOTEK HOLDINGS LTD. and its subsidary China 51.00% 51.00% As of December 31, Accumulated balances of material non-controlling interest: 2015 (NT$’000) 2014 (NT$’000) PIOTEK HOLDINGS LTD. and its subsidary 1,777,880 2,076,348 For the year ended December 31, Profit/(loss) allocated to material non-controlling interest: 2015 (NT$’000) 2014 (NT$’000) PIOTEK HOLDINGS LTD. and its subsidary (254,741) (168,254)	As of December 31, Name Country 2015 2014 PIOTEK HOLDINGS LTD. and its subsidary China 51.00% 51.00% As of December 31, Accumulated balances of material non-controlling interest: 2015 (NT$’000) 2014 (NT$’000) PIOTEK HOLDINGS LTD. and its subsidary 1,777,880 2,076,348 For the year ended December 31, Profit/(loss) allocated to material non-controlling interest: 2015 (NT$’000) 2014 (NT$’000) PIOTEK HOLDINGS LTD. and its subsidary (254,741) (168,254)	As of December 31, Name Country 2015 2014 PIOTEK HOLDINGS LTD. and its subsidary China 51.00% 51.00% As of December 31, Accumulated balances of material non-controlling interest: 2015 (NT$’000) 2014 (NT$’000) PIOTEK HOLDINGS LTD. and its subsidary 1,777,880 2,076,348 For the year ended December 31, Profit/(loss) allocated to material non-controlling interest: 2015 (NT$’000) 2014 (NT$’000) PIOTEK HOLDINGS LTD. and its subsidary (254,741) (168,254)
	2015 (NT$’000) (254,741)	2014 (NT$’000)
		(168,254)

The summarized financial information of this subsidiary is provided below. This information is based on amounts before inter-company eliminations.

Summarized information of profit or loss is as follows:

Operating revenue Profit/loss from continuing operation Total comprehensive income for the period	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000) 4,700,977 (520,173) (609,370)	2014 (NT$’000)
		5,675,578 (343,377) (108,482)

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Summarized information of financial position is as follows:

Current assets Non-current assets Current liabilities Non-current liabilities		As of
		December 31, 2015 (NT$’000) 2014 (NT$’000) 2,516,463 2,390,493 3,336,563 4,005,340 1,188,561 1,526,385 1,036,121 631,734
		2015 (NT$’000) 2,516,463 3,336,563 1,188,561 1,036,121

Summarized cash flow information is as follows:

Operating activities Investing activities Financing activities Net increase/(decrease) in cash and cash equivalents	For theyear ended Deceember 31,	For theyear ended Deceember 31,
	2015 (NT$’000)	2014 (NT$’000)
	123,821 (171,773) 404,416 349,218	282,292 (124,952) (613,554) (427,630)

7. RELATED PARTY TRANSACTIONS

(1) Significant transactions with related parties

A. Sales to

Parent company Other related parties Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	1,452,652 62,426	1,834,138 59,169
	1,515,078	1,893,307

B. For the years ended December 31, 2015 and 2014, the Group recognized travelling expenses of NT$340 thousand and NT$498 thousand, respectively, for commissioning other related parties to handle travelling logistics.

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C. For the years ended December 31, 2015 and 2014, the Group recognized rent expenses of NT$50,460 thousand and NT$27,109 thousand, respectively, for plants leased from the Parent.

Moreover, for the years ended December 31, 2015 and 2014, the Group recognized rent expenses of NT$7,769 thousand and NT$19,338 thousand, respectively, for plants leased from other related parties.

In addition, for the years ended December 31, 2015 and 2014, the Group recognized rent expenses of NT$183 thousand and NT$2,757 thousand (tax included), respectively, for various facilities leased from the Parent.

D. For the years ended December 31, 2015 and 2014, the Group recognized operating expenses of NT$7,554 thousand and NT$6,486 thousand, respectively, for services provided by other related parties.

Moreover, for the years ended December 31, 2015 and 2014, the Group recognized operating expenses of NT$1,261 thousand and NT$753 thousand (tax included), respectively, for services provided by the Parent.

In addition, for the years ended December 31, 2015 and 2014, the Group incurred operating expenses of NT$91,965 thousand and NT$57,945 thousand (tax included), respectively, for utility bills paid by the Parent on behalf of the Group.

E. For the years ended December 31, 2015 and 2014, the Group recognized rent income of NT$7,243 thousand and NT$5,150 thousand, respectively, for plants leased to other related parties.
F. Accounts receivable - related parties

Parent company Other related parties Total Less: allowance for doubtful accounts Net	As of December 31,	As of December 31,
	2015 (NT$’000) 227,150 21,759 248,909 - 248,909	2014 (NT$’000)
		435,398 1,008
		436,406 -
		436,406

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G. Salaries and rewards to key management of the Group

Short-term employee benefits Post-employee benefits Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	90,101 819	88,704 838
	90,920	89,542

H. Other receivables

I. Refundable deposits J. Accrued expenses Other related parties Parent company		As of December 31,
		2015 (NT$’000)
		2,081
		2015 (NT$’000) 5,700

Ultimate parent company Other related parties Total	As of December 31,	As of December 31,
	2015 (NT$’000) 22,971 1,607 24,578	2014 (NT$’000)
		15,855 5,719
		21,574

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8. PLEDGED ASSETS

The following assets of the Group are pledged as collaterals:

Item	Carrying Amount As of December 31,	Carrying Amount As of December 31,	Purpose
	2015 (NT$’000)	2014 (NT$’000) 285,931 16,401 3,057 305,389
Property, plant and equipment - machinery (carrying amount) Property, plant and equipment – other equipment (carrying amount) Refundable deposits Total	332,913 13,400 -		Long-term secured loans Long-term secured loans Bonded factory
	346,313

5. 9. SIGNIFICANT CONTINGENCIES AND UNRECOGNIZED CONTRACT COMMITMENTS

(1) The Group’s unused letters of credit (LC) as of December 31, 2015 were as follows:

	Currency	LC Amount(in thousand)	LC Amount(in thousand)	Security(in thousand)
	JPY	JPY	3,262,883	-
	USD	USD	7,160	-
	Euro	EUR	42	-
)	Details of significant constructions in progress and outstanding contracts of property, plant
	and equipment as of December 31, 2015 were as		follows:
				Outstanding
		Contract Amount	Amount Paid	Balance
	Nature of Contract	(NT$’000)	(NT$’000)	(NT$’000)
	Machinery and
	contruction contracts	5,011,696	3,388,654	1,623,042

(2) Details of significant constructions in progress and outstanding contracts of property, plant and equipment as of December 31, 2015 were as follows:

10. SIGNIFICANT DISASTER LOSS

None

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11. SIGNIFICANT SUBSEQUENT EVENT

None

12. OTHERS

(1) 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 receivable Cash and cash equivalents (excluding cash on hand) Bond investments with no active market Notes receivable Accounts receivable Accounts receivable - related parties Other receivable Other receivable - related parties Total Financial liabilities Financial liabilities measured at amortized cost: Short-term loans	As of December 31,	As of December 31,
	2015 (NT$’000)	2014 (NT$’000)
	3,536,370 - 12,740,073 428,112 1,835 3,590,193 248,909 336,543 2,081	5,135,434 40,369 11,510,041 463,827 6,252 3,040,343 436,406 452,265 1,307
	20,884,116	21,086,244

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Payables Long-term loans (including current portion) Total	5,985,045 1,938,939 11,019,014	5,856,512 2,164,311
		9,827,719

(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

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

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is as follows:

If NT dollars appreciates/depreciates against US dollars by 1%, net income (loss) for the years ended December 31, 2015 and 2014 would increase/decrease by NT$11,442 thousand and NT$13,613 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, 2015 and 2014 would decrease/increase by NT$7,383 thousand and decrease/increase by NT$1,320 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$0 thousand and NT$404 thousand for the years ended December 31, 2015 and 2014, 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).

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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 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, 2015 and 2014, receivables from the top ten customers were accounted for 51.71% and 45.65% 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, there is no significant default risk. Conclusively, no significant credit risk is expected by the Group.

(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

As of December	Less than 1 year (NT$’000) 2 to 3 years (NT$’000) 3 to 4 years (NT$’000) 4 to 5 years (NT$’000) Less than 5 years (NT$’000) Total (NT$’000) 31, 2015 3,734,453 831,211 228,215 252,199 117,342 5,163,420 5,985,045 - - - 5,985,045 31, 2014 3,290,131 694,452 63,266 5,495 $- $4,053,344 5,856,512 - - - 5,856,512
Loans Payables As of December
Loans Payables

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(6) Fair values of financial instruments
A. The evaluation methods and assumptions applied in determining the fair value

(a) The carrying amount of cash and cash equivalents, receivables, payables and other current liabilities approximate their fair value due to their 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 listed companies’ shares from private placement, stocks of public companies not traded in an active market and unlisted stocks) are estimated using the market approach. Under the approach, factors, such as the trading prices of comparable equity instruments in an active market, and other relevant informations (i.e. discount due to lack of liquidity, stock price-to-earning ratio (PER) and price-to-book ratio (PBR) of similar companies) are input into the pricing model for its fair value.
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 measurement hierarchy for financial instruments

Please refer to Note 12(7) for fair value measurement hierarchy for financial instruments of the Group.

(7) Fair value measurement hierarchy
A. Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are

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described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 – Unobservable inputs for the asset or liability

B. Fair value measurement hierarchy of the Group’s assets and liabilities

As of December 31, 2015

Financial assets: Financial assets at fair value through profit or loss Funds Financial liabilities: None As of December 31, 2014 Financial assets: Financial assets at fair value through profit or loss Funds Available-for-sale financial assets Stocks	Level 1 (NT$’000)	Level 2 (NT$’000)	Level 3 (NT$’000)	Total (NT$’000)
	3,536,370 Level 1 (NT$’000)	- Level 2 (NT$’000)	- Level 3 (NT$’000)	3,536,370 Total (NT$’000)
	5,135,434 - 40,369 -		- -	5,135,434 40,369

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Level 1 (NT$’000)	Level 2 (NT$’000)	Level 3 (NT$’000)	Total (NT$’000)

Financial liabilities: None

Transfers between Level 1 and Level 2 during the period

For the years ended December 31, 2015 and 2014, there were no transfers between Level 1 and Level 2 fair value hierarchy.

(8) 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: (In Thousands)

As of December 31,

Foreign Currencies ($’000) Financial assets Monetary items: USD 139,277 CNY 93,723 Financial liabilities Monetary items: USD 166,990 CNY 118,755		2015			2014
		Exchange Rate 32.83 5.05 32.83 5.05	NTD (NT$’000)	Foreign Currencies ($’000)	Exchange Rate 31.65 5.17 31.65 5.17	NTD (NT$’000)
			4,571,767 473,750 5,482,634 600,304	128,682 104,450 162,457 144,860		4,072,131 540,089 5,141,564 749,274

The above information is disclosed based on the carrying amount of foreign currency (after being converted to functional currency).

Foreign exchange gain/loss on monetary financial assets and liabilities is shown as below.

Foreign currency resulting in exchange gain or loss USD Other	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000) (360) 2,438	2014 (NT$’000)
		(7,348) 17,081

268

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

(9) 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. 1 Financing provided to others: None.
B. Endorsement/Guarantee provided to others: Please refer to attachment 1.
C. Marketable securities held as of December 31, 2015 (excluding investments in subsidiaries, associates and joint ventures): Please refer to attachment 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, 2015: 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, 2015: Please refer to attachment 3.
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, 2015: 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, 2015: Please refer to attachment 4.
H. Receivables from related parties of at least NT$100 million or 20 percent of the paid-in capital as of Decemer 31, 2015: None.
I. Derivative instrument transactions: None.
J. Intercompany relationships and significant intercompany transactions for the year ended December 31, 2015: Please refer to attachment 9.

269

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

(2) Information on investees
A. Investees over whom the Company exercises significant influence or control (excluding investees in Mainland China): Please refer to attachment 5.
B. Investees over which the Company exercises 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, 2015 (excluding investments in subsidiaries, associates and joint ventures): Please refer to attachment 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, 2015: 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, 2015: 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, 2015: 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, 2015: Please refer to attachment 7.
- (h) Receivables from related parties of at least NT$100 million or 20 percent of the paid-in capital as of December 31, 2015: Please refer to attachment 8.
- (i) Derivative instrument transactions: None.

270

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

(3) Information on investments in Mainland China:

(In Thousands of New Taiwan Dollars)

Name of Investee in China	Main Business	Paid-in Capital (NT$’000)	Method of Investment	Accumulated Outflow of Investment from Taiwan as of Jan. 1, 2014 (NT$’000)	Investment Flows	Investment Flows	Accumulate d Outflow of Investment from Taiwan as of December 31, 2015 (NT$’000)	Profit/ Loss of Investee (NT$’000)	Percentage of Ownership (Direct or Indirect Investment)	Share of Profit/Loss (NT$’000)	Carrying Amount as of December 31, 2014 (NT$’000)	Accumulat ed Inward Remittance of Earnings as of Dec. 31, 2014 (NT$’000)	Accumulated Outflow of Investment from Taiwan to Mainland China as of Dec. 31, 2014 (NT$’000)	Investment Amounts Authorized by Investment Commission, MOEA (NT$’000)	Upper Limit on Investment in China by Investment Commission, MOEA (NT$’000)
					Outflow (NT$’000)	Inflow (NT$’000)
Kinsus Interconnect Technology Suzhou Corp.	Manufacturing and selling PCB (not high-density fine-line)	2,297,750 (Note 2)	(Note 1)	2,297,750 (Note 2)	-	-	2,297,750 (Note 2)	(113,792) (Note 2 and Note 4)	100%	(113,792) (Note 2、 Note 4 and Note 7)	1,092,219 (Note 2、 Note 4 and Note 7)	-	2,297,750 (Note 2)	2,297,750 (Note 2)	No upper limit (Note 5)

271

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

Piotek Computer (Suzhou) Co., Ltd.	Researching, developing, producing and selling electronic components, PCBs and related products and providing after-sale services	5,471,928 (Note 2)	(Note 1)	3,093,888 (Note 2)	-	-	3,093,888 (Note 2)	(544,556) (Note 2 and Note 4)	51%	(277,724) (Note 2、 Note 4 and Note 7)	1,820,119 (Note 2、 Note 4 and Note 7)	-	3,093,888 (Note 2)	3,093,888 (Note 2)	No upper limit (Note 5)
Xiang-Shuo (Suzhou) Trading Limited	Trading of PCB (not high-density fine-line) and material for related products	65,650 (Note 2)	(Note 1)	65,650 (Note 2)	-	-	65,650 (Note 2)	3,219 (Note 2 and Note 4)	100%	3,219 (Note 2、 Note 4 and Note 7)	69,621 (Note 2、 Note 4 and Note 7)	-	65,650 (Note 2)	65,650 (Note 2)	No upper limit (Note 5)
Pegavision Contact Lenses (Shanghai) Corporation	Selling medical equipment	65,062 (Note 3)	(Note 1)	10,598 (Note 2)	54,464	-	$65,062	(16,263) (Note 2 and Note 4)	100%	(16,263) (Note 2、 Note 4 and Note 7)	44,250 (Note 2、 Note 4 and Note 7)	-	65,062	65,062	625,574 (Note 6)

272

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

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: The paid-in capital is USD2,100 thousand, equivalent to NT$65,062 thousand.

Note 4: Gain/loss on investment is recognized based on the audited financial statements of the parent company in Taiwan.

Note 5: 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 6: The upper limit on investment for Pegavision Contact Lenses (Shanghai) Corporation is calculated as 60% of Pegavision Corporation’s net equity.

Note 7: Transactions are eliminated upon preparation of consolidated financial statements.

273

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

B. Significant transactions with investees in China:
(a) Purchase and balances of related accounts payable as of December 31, 2015: Please refer to attachment 9 for details.
(b) Sale and balance of related accounts receivable as of December 31, 2015: Please refer to attachment 9 for details.
(c) Property transaction amounts and resulting gain or loss:
- a. Details of property transaction between Piotek Computer (Suzhou) Co., Ltd. and related partiesas follow:

Type of Assets Other equipment	Related Parties	Book value ($’000)	Selling price ($’000) RMB 329	Gain ($’000)	Price reference
	Kinsus Interconnect Technology Suzhou	RMB 318		RMB 11	Negotiated

(d) Ending balance of endorsements/guarantees or collateral provided and the purposes: Please refer to attachment 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: Please refer to attachment 9 for details.
(g) Above transactions are eliminated upon preparation of consolidated financial statements. Please refer to attachment 9 for details.

14. OPERATING SEGMENT

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.

274

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

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.

(1)

(1)Segment income (loss), assets and liabilities

For the year ended December 31, 2015

IC Substrate (NT$’000)	PCB (NT$’000)	Elimination (NT$’000)	Consolidated (NT$’000)
17,820,429 -	5,240,882 -	- -	23,061,311 -
17,820,429	5,240,882	-	23,061,311
3,179,452	(449,926)	-	2,729,526

For the year ended December 31, 2014

IC Substrate (NT$’000)	PCB (NT$’000)	Elimination (NT$’000)	Consolidated (NT$’000)
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

Details of assets and liabilities under the Group’s operating segments are as follows:

Segment assets As of Dec. 31, 2015 As of Dec. 31, 2014	IC Substrate (NT$’000)	PCB (NT$’000)	Elimination (NT$’000)	Consolidated (NT$’000)
	35,118,866	7,519,866	-	42,638,732
	33,202,296	7,849,378	-	41,051,674

275

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese Kinsus Interconnect Technology Corp. Notes to Consolidated Financial Statements (Continued)

Segment liabilities As of Dec. 31, 2015 As of Dec. 31, 2014	IC Substrate (NT$’000) 9,012,667 8,371,561	PCB (NT$’000)	Elimination (NT$’000)	Consolidated (NT$’000)
		2,798,264	-	11,810,931
		2,627,339	-	10,998,900

(2)Geographical information

Revenues from external customers

Taiwan Other countries Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000)	2014 (NT$’000)
	9,184,614 13,876,697	10,924,071 14,019,763
	23,061,311	24,943,834

Note: The revenue information above is based on the location of the customers. A.

Non-current assets

Taiwan U.S.A China Japan Total	As of December 31,	As of December 31,
	2015 (NT$’000) 13,829,327 243 5,337,759 35 19,167,364	2014 (NT$’000)
		11,246,007 251 6,334,148 -
		17,580,406

(3)Information about major customers

Customer A from IC Substrate Customer B from IC Substrate Total	For theyear ended December 31,	For theyear ended December 31,
	2015 (NT$’000) 1,435,632 1,363,364 2,798,996	2014 (NT$’000) 1,898,187 2,258,344 4,156,531

276

English Translation of Consolidated Financial Statements Originally Issued in Chinese Kinsus Interconnect Technology Corp. and Subsidiaries Endorsement/Guarantee Provided to Others

For the Year Ended December 31, 2015

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. $5,678,227 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. $5,678,227	$4,595,500 (USD 140,000) (Note 2) $2,762,224 (USD 84,150) (Note 2)	$3,118,375 (USD 95,000) (Note 2) $1,004,445 (USD 30,600) (Note 2)	$1,359,586 $502,223	$- $-	10.98% 3.54%	$14,195,568 $14,195,568 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.

277

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Marketable Securities Held as of December 31, 2015

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	December31,2014	December31,2014	December31,2014			Note
				Shares / Units	Carrying Amount	Shareholding%		Fair Value (Note)
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 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	- - - - - - - - - - -	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	32,783,435 13,551,601 31,765,626 4,066,994 18,812,748 30,522,218 1,168,258 41,465,474 31,315,952 15,838,553 15,322,946	$510,667 157,637 458,515 56,495 255,796 400,000 200,000 500,000 450,000 203,448 250,000 3,442,558 82,184 $3,524,742	-% -% -% -% -% -% -% -% -% -% -%		$522,365 160,894 475,420 58,088 263,858 407,673 205,771 513,214 457,886 206,617 252,956 $3,524,742

Note: Companies without quotes in the open markets are valued at net equities.

278

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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, 2015

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	2015.03.24	$486,186	NT$ 405,860 thousand was paid as of December 31, 2015	Guo-Gong Construction Co., Ltd.	None	None	None	None	None	Bidding	Production expansion and operation planning	None

279

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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, 2015

Table 4

			Table 4	Table 4	Table 4	Table 4	Table 4	Table 4	Table 4	Table 4	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	$1,795,044	27.06%	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 $(413,130)	(27.95)%	Note

Note: Transactions are eliminated when preparing the consolidated financial statements.

280

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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, 2015

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	Balance as of December	31,2015	$1,776 $(371,975) $44,413 $127,110 USD(3,369) USD(16,392) USD(16,401) USD 196 $(16,293) $42 Net Income (Loss) of the Investee	Share of Income (Loss) of the Investee	Note
				December 31,2014	December 31, 2015	Shares	%	CarryingValue
Kinsus Investment Co., Ltd. KINSUS HOLDING (SAMOA) LIMITED KINSUS HOLDING (SAMOA) LIMITED PIOTEK HOLDINGS LTD. (CAYMAN) PIOTEK HOLDING LIMITED Pegavision Corporation Pegavision Corporation Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp. Kinsus Interconnect Technology Corp.	KINSUS CORP. (USA) CA. U.S.A. KINSUS HOLDING Samoa (SAMOA) LIMITED Kinsus Investment Co., Ltd. Taoyuan City Pegavision Corporation Taoyuan City KINSUS HOLDING Cayman Islands (CAYMAN) LIMITED PIOTEK HOLDINGS Cayman Islands LTD. (CAYMAN) PIOTEK HOLDING British Virgin LIMITED Islands PIOTEK (H.K.) Hong Kong TRADING LIMITED PEGAVISION HOLDINGS Samoa CORPORATION PEGAVISION JAPAN JAPAN		Investing activities Investing activities Manufacturing medical equipment Investing activities Investing activities Investing activities Trading activities Investing activities Selling Medical facility Designing substrates, formulating marketing strategy analysis, developing new customers, researching and development new product technology	USD500 USD166,309 $398,000 (Note1) $286,418 USD72,000 USD94,309 USD139,841 USD26 USD380 JPY-	USD500 USD166,309 $398,000 (Note1) $286,418 USD72,000 USD94,309 USD139,841 USD26 USD2,130 JPY 9,900	500,000 shares 166,308,720 shares 39,800,000 shares 22,088,736 shares 72,000,000 shares 95,755,000 shares 139,840,790 shares 200,000 shares 2,130,000 shares 198 shares	100.00% 100.00% 100.00% 36.81% 100.00% 51.00% 100.00% 100.00% 100.00% 100.00%	$33,462 $3,011,949 $566,385 $383,837 USD 35,385 USD 56,373 USD 110,535 USD 1,777 $37,229 $2,744		$1,776 $(371,975) $44,413 $46,795 USD(3,369) USD(8,360) USD(16,401) USD 196 $(16,293) $-	Note 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.

281

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Marketable Securities Held as of December 31, 2015 (Excluding Investments in Subsidiaries, Associates and Jointly Controlled Entities)

As of December 31, 2015

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 31,2015			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.	Money market funds: Taishin Ta Chong Money Market Fund Valuation adjustments of financial assets held for trading Total Stocks: Yi-Shuo Creative Co., Ltd.	- -	Financial assets carried at cost Financial assets at fair value through profit or loss	829,070 5,000,000	$11,315 313 $11,628 $50,000	-% 7.49%	$11,628 $-	- -	$-
									$-

Note: No quotes in active markets and fair values cannot be measured reliably.

282

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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, 2015

Table 7

(In Thousands of US Dollars)

CompanyName	Related Party	Nature of Relationship	Transaction Details	Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Payable or Receivable	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 Xiang-Shuo (Suzhou) Trading Limited Piotek Computer (Suzhou) Co., Ltd. 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. Piotek Computer (Suzhou) Co., Ltd. Xiang-Shuo (Suzhou) Trading Limited 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 Also a subsidiary under the Company's control Also a subsidiary under the Company's control	Sales Sales Purchase Sales Purchase Sales Purchase Sales	USD 45,802 USD 13,064 USD 13,064 USD 22,666 USD 22,666 RMB 27,693 RMB 27,693 USD 57,138	36.90% 10.53% 73.26% 18.26% 100.00% 24.66% 5.73% 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 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 Specs of goods sold are different from others. Cannot be reasonably compared Specs of goods sold are different from others. Cannot be reasonably d Specs of goods sold are different from others. Cannot be reasonably d Specs of goods sold are different from others. Cannot be reasonably compared Specs of goods sold are different from others. Cannot be reasonably d Specs of goods sold are different from others. Cannot be reasonably Specs of goods sold are different from others. Cannot be reasonably	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. No non-related parties to be compared with. No non-related parties to be compared with.	Accounts receivable USD 6,920 Accounts receivable USD 1,176 Accounts payable USD (1,176) Accounts receivable USD 4,277 Accounts payable USD (4,277) Accounts receivable RMB 5,407 Accounts payable RMB (5,407) Accounts receivable USD 12,695	27.65% 4.70% (36.80)% 17.09% (100.00)% 37.83% (3.81)% 100.00%	Note Note Note Note Note Note Note

Note: Transactions are eliminated when preparing the consolidated financial statements.

283

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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, 2015

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 6,920 (Note) USD 4,277 (Note and Note 1) USD 12,695 (Note and Note 1)	4.43 4.10 5.49	$- $- $-	- - -	$- $- $-	$- $- $-

Note: Accounts receivable

Note 1: Transactions are eliminated when preparing the consolidated financial statements.

284

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Table 9

Intercompany Relationships and Significant Intercompany Transactions for the Year Ended December 31, 2015

				Table 9	Table 9	Table 9	Table 9
				(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 0 1 1 1 1 1 1 1 2 2 2 2 2 4	Year 2015 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. 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. 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 PIOTEK (H.K.) TRADING LIMITED	Xiang-Shuo (Suzhou) Trading Limited Xiang-Shuo (Suzhou) Trading Limited KINSUS CORP. (USA) Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. 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. KINSUS CORP. (USA) KINSUS CORP. (USA) Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. Piotek Computer (Suzhou) Co., Ltd. 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 Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. Kinsus Interconnect Technology Suzhou Corp. 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. KINSUS CORP. (USA)	1 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 3	Other receivables Sales revenue Accrued expense Accrued expense Accounts payable Accounts payable Other receivables Other receivables Purchase Purchase Commission expense Travel expense Manufacturing - processing Sales revenue Other income Other income Other income Sales revenue Accounts receivable Accounts receivable Sales revenue Other income Other receivables Purchase Accounts receivable Other receivables Sales revenue Sales revenue Accounts receivable Commission expense	$817 $827 $3,397 $1,034 $413,130 $15,747 $2,191 $4,481 $1,795,044 $50,100 $40,798 $64 $15,350 $5,995 $10,925 $4,343 $3,253 USD 22,666 USD 4,277 USD 1,176 USD 13,064 USD 254 USD 86 USD 6 RMB 5,407 RMB 56 RMB 27,693 RMB 3,076 RMB 675 USD 132	Payment within 60 days from the end of delivery month 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 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 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 60~90 days from the end of delivery month 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% -% 0.97% 0.04% -% 0.01% 7.78% 0.22% 0.18% -% 0.07% 0.03% 0.05% 0.02% 0.01% 3.23% 0.33% 0.09% 1.86% 0.04% 0.01% -% 0.06% -% 0.61% 0.07% 0.01% 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.

285

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Intercompany Relationships and Significant Intercompany Transactions for the Year Ended December 31, 2015

Table 9

				Table 9	Table 9	Table 9	Table 9
				(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.

286

AI assistant

KINSUS — Annual Report 2015

52304_rns_2016-06-07_0de89c2d-b7af-4ca4-b807-3653dedb6068.pdf

KINSUS INTERCONNECT TECHNOLOGY CORP. 2014 Annual Report

Notice to readers

The inside cover of annual report

The contents of annual report

1. A report to the shareholders

(1)Operating results for 2015

(2)Summary of the business plan for FY2016

(A)Business Policy

2. A Company Profile

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

(2)A brief history of the Company

3. A Corporate Governance Report

(B)The tasks of its principal divisions

(A)Directors as of March 29, 2016

Major shareholders of the institutional shareholders

Major shareholders of the Company’s institutional shareholders

Professional qualifications and independence analysis of directors

Remark 1：The column will be adjusted as needed.

English Translation of The Annual Report Originally Issued in Chinese

(C)Remuneration paid during 2015 to directors, the general manager, and assistant general manager

Note:

English Translation of The Annual Report Originally Issued in Chinese

Range of Remuneration

Remark:

Remuneration of the general manager and assistant general managers

Note:

Range of Remuneration

Remark:

Remark:

Remark:

(B)The state of operations of the audit committee

Remark:

Remark:

b.Attendance of Members at Remuneration Committee Meetings

(a)There are 3 members in the Remuneration Committee.

Remark:

(E)The state of the Company's performance of corporate social responsibilities

Table 1

(4)Information on CPA professional fees

Consolidated Shareholding Percentage

Kinsus Interconnect Technology Corp. Statement on Internal Control Systems

4. Information on Capital Raising Activities

(1) Capital and Shares

a. Types of Shares

b. Formation of Capital Stock

(B)Shareholder Structure

(C)Diffusion of Ownership

(D)List of principal shareholders

Kinsus Interconnect Technology Corp. Earnings Distribution Schedule 2015

5. An Overview of Operations

c.Current Products

d. New Products to Be Developed

a. Overview and Development of the Industry

Estimated units of global semiconductor IC packaging

a. Short Term Plan

(b)Production Strategy

(d)Operation Scale and Finance

b.Long Term Plan

(a)Marketing Strategies

(d)Operation Scale and Finance

b.Market Share

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

d.Competitive Niche

(a) Favorable factors

(b)Unfavorable factors

a.Major applications of the primary products

(b) Manufacturing Process of the Primary Products

(C)Supply Condition of the Primary Raw Materials

(D)Major Suppliers in the Last Two Calendar Years

b.Major Suppliers in the Last Two Calendar Years

(E)Production in the Last Two Years

(F)Sales in the Last Two Years

(4)Disbursements for environmental protection

(5)Labor relations

(d)Agreement between labor and employee rights protection measures

a.Labor Coordination Meeting

6. An Overview of the Company's Financial Status

KINSUS Annual Report 2015