Primax - Annual Report 2014 | FinancialReports.eu

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	*Contents*	*Contents*
I.	LETTER TO SHAREHOLDERS ................................................................................................................................ 1
	I.	BUSINESS HIGHLIGHTS INFY 2014 ............................................................................................................................... 1
	II.	BUSINESS PLAN FOR2015AND THE FUTURE DEVELOPMENT STRATEGY................................................................................. 2
	III.	THEIMPACT OF THEEXTERNALCOMPETITIVEENVIRONMENT, REGULATORYENVIRONMENT,ANDMACROECONOMICCONDITIONS.. 3
II.	COMPANY PROFILE ............................................................................................................................................ 4
	I.	DATE OFINCORPORATION: MARCH20, 2006 ................................................................................................................. 4
	II.	COMPANYHISTORY.................................................................................................................................................... 4
III.	CORPORATE GOVERNANCE REPORT .................................................................................................................. 5
	I.	ORGANIZATION......................................................................................................................................................... 5
	II.	PROFILES OF THEDIRECTORS, SUPERVISORS, GENERAL MANAGER, VICEPRESIDENTS, ASSISTANTVICEPRESIDENTS,AND THE
		MANGERS OF THE DEPARTMENTS AND BRANCHES............................................................................................................. 7
	III.	REMUNERATION TO THEDIRECTORS, SUPERVISORS, GENERAL MANAGER AND THEVICEPRESIDENTS IN THE MOST RECENT PERIOD. 13
	IV.	IMPLEMENTATION OFCORPORATEGOVERNANCE........................................................................................................... 23
	V.	INFORMATION ON SERVICE FEES FOR CERTIFIED PUBLIC ACCOUNTANTS................................................................................ 34
	VI.	REPLACEMENT OFCPA ............................................................................................................................................. 34
	VII.	IF THECHAIRMAN, GENERALMANAGER, CHIEFFINANCIALOFFICER OR THECHIEFACCOUNTINGOFFICER HAS BEEN WORKING WITH
		THECPAFIRM RETAINED FOR AUDITING SERVICE OR ITS AFFILIATES IN THE MOST RECENT YEAR,SPECIFY THE NAME OF PERSON AND
		TITLE,AND THE NAME OF THECPAFIRM CONCERNED OR ITS AFFILIATES. ............................................................................. 34
	VIII.	TRANSFER OF COMPANY SHARES OR PLEDGE COMPANY SHARES UNDER LIEN BYDIRECTORS, SUPERVISORS,MANAGERS AND
		SHAREHOLDERS HOLDING MORE THAN10%OF THE COMPANY SHARES IN THE MOST RECENT PERIOD TO THE DATE THIS REPORT WAS
		PRINTED................................................................................................................................................................. 34
	IX.	INFORMATION ON THE TOP10SHAREHOLDERS BY PROPORTION OF SHAREHOLDING AND THEY ARE RELATED PARTIES OR SPOUSE,
		KINDRED WITHIN THE2 NDTIER UNDER THECIVILCODE,IF APPLICABLE................................................................................ 36
	X.	THE INVESTMENT DIRECTLY OR INDIRECTLY CONTROLLED BY THEDIRECTORS, SUPERVISORS ANDMANAGERS OF THE COMPANY AND
		THE OVERALL QUANTITY OF SHAREHOLDING OF PARTICULAR INVESTEES AND THE PROPORTION OF SHAREHOLDING. ...................... 37
IV.	CAPITAL OVERVIEW ..........................................................................................................................................38
	I.	SOURCES OFCAPITAL................................................................................................................................................ 38
	II.	STATUS OFSHAREHOLDERS........................................................................................................................................ 40
	III.	SHAREHOLDINGDISTRIBUTIONSTATUS........................................................................................................................ 40
	IV.	LIST OFMAJORSHAREHOLDERS.................................................................................................................................. 41
	V.	MARKET PRICE,NET ASSET VALUE,EARNINGS AND DIVIDEND PER SHARE IN THE LAST2YEARS AND RELATED INFORMATION........... 41
	VI.	DIVIDENDPOLICY ANDIMPLEMENTATION STATUS........................................................................................................... 42
	VII.	THE INFLUENCE OF STOCK DIVIDENDS PLANNED TO THE RELEASE BY THEGENERALMEETING ON THE OPERATION PERFORMANCE OF
		THECOMPANY AND EARNINGS PER SHARE..................................................................................................................... 42
	VIII.	EMPLOYEEBONUS ANDDIRECTORS'ANDSUPERVISORS' REMUNERATION........................................................................... 42
	IX.	BUYBACK OFTREASURYSTOCK................................................................................................................................... 44
	X.	CORPORATE BONDS,PREFERRED SHARES,OVERSEAS DEPOSITORY RECEIPTS.......................................................................... 44

XI.		EMPLOYEESTOCKOPTIONS(ESOP) ............................................................................................................................ 45
XII.		ISSUANCE OFNEWRESTRICTEDEMPLOYEESHARES........................................................................................................ 47
XIII.		STATUS OFNEWSHARESISSUANCE INCONNECTION WITHMERGERS ANDACQUISITIONS....................................................... 48
XIV.		FINANCINGPLANS ANDIMPLEMENTATION.................................................................................................................... 48
V.	OPERATION OUTLOOK ......................................................................................................................................49
I.		OPERATIONALHIGHLIGHTS........................................................................................................................................ 49
II.		MARKET ANDSALESOVERVIEW.................................................................................................................................. 71
III.		THE NUMBER OF EMPLOYEES,AVERAGE TERM OF SERVICE,AVERAGE AGE,AND EDUCATION IN THE LAST TWO YEARS TO THE DATE THIS
		REPORT WAS PRINTED. .............................................................................................................................................. 83
IV.		INFORMATION ON ENVIRONMENTAL SPENDING.............................................................................................................. 83
V.		LABOR-MANAGEMENT RELATION................................................................................................................................ 83
VI.		MAJOR AGREEMENTS............................................................................................................................................... 86
VI.	FINANCIAL POSITION ........................................................................................................................................ 87
I.		CONDENSED CONSOLIDATED BALANCE SHEET AND CONSOLIDATED INCOME STATEMENTS COVERING THE LAST5YEARS.................. 87
II.		FINANCIAL ANALYSIS OF THE LAST5YEARS.................................................................................................................... 96
III.		SUPERVISORAUDITREPORT ONFINANCIALSTATEMENTS OFFY 2014 ............................................................................. 101
IV.		NOTES TO THE AUDITED FINANCIAL STATEMENTS OFFY 2014 ......................................................................................... 102
V.		THE AUDITED PARENT COMPANY ONLY FINANCIAL STATEMENTS AND ATTACHED NOTES OFFY2014 ......................................... 176
VI.		ANY INSOLVENCY OF THE COMPANY AND ITS AFFILIATES IN THE MOST RECENT PERIOD TO THE DATE THIS REPORT WAS PRINTED,AND
		THE IMPACT ON THE FINANCIAL POSITION OF THE COMPANY. ........................................................................................... 239
VII.	REVIEW OF FINANCIAL CONDITIONS, FINANCIAL PERFORMANCE, AND RISK MANAGEMENT ....................... 240
I.		ANALYSIS OFFINANCIALSTATUS.............................................................................................................................. 240
II.		ANALYSIS OFFINANCIALPERFORMANCE................................................................................................................... 241
III.		CASHFLOWS........................................................................................................................................................ 242
IV.		MAJOR CAPITAL EXPENDITURE IN THE MOST RECENT PERIOD AND THE INFLUENCE ON FINANCIAL POSITION AND OPERATION........ 242
V.		INVESTMENTPOLICY IN THELASTYEAR, MAINCAUSES FORPROFITS ORLOSSES, IMPROVEMENTPLANS ANDINVESTMENTPLANS FOR
		THECOMINGYEAR................................................................................................................................................. 242
VI.		ANALYSIS OFRISKMANAGEMENT............................................................................................................................. 243
VII.		OTHERMAJORRISKS............................................................................................................................................. 248
VIII.	SPECIAL DISCLOSURE ...................................................................................................................................... 249
I.		SUMMARY OFAFFILIATEDCOMPANIES....................................................................................................................... 249
II.		ANY PRIVATE PLACEMENT OF SECURITIES IN THE MOST RECENT PERIOD TO THE DATE THIS REPORT WAS PRINTED. ....................... 254
III.		THE HOLDING OR DISPOSITION OF SHARES OF THE COMPANY BY SUBSIDIARIES IN THE MOST RECENT PERIOD TO THE DATE THIS REPORT
		WAS PRINTED........................................................................................................................................................ 254
IV.		OTHER SUPPLEMENTARY INFORMATION...................................................................................................................... 254
V.		ANYTHING HAPPENED AS STATED INARTICLE36-II-(II)OF THESECURITIES ANDEXCHANGEACT IN THE MOST RECENT YEAR TO THE
		DATE THIS REPORT WAS PRINTED,AND THE SIGNIFICANT IMPACT ON SHAREHOLDERS’EQUITY OR STOCK PRICE........................... 254

I. Letter to Shareholders

Dear shareholders,

The hot sales of digital communication products worldwide and the strong confidence of the consumers in 2014 are reflected in the purchase orders and production momentum in the industry supply chain of the year. It was echoed with the prevalent use of smart phones and the change in the habit of the consumers, which triggered a strong demand for wireless acoustic products. In this favorable environment, PRIMAX revenue had surged to a record high in FY 2014. Furthermore, the massive capacity expansion activated in 2014 is about to be accomplished in this year. After the expansion, the production capacity can support the rapid growth in demand for camera modules and acoustic products. In January 2015, PRIMAX acquired 30% of the shareholdings of GLOBALTEK, a manufacturer of automobile and aerospace precision machinery. In the future, the company can outreach to different applications and platforms through the current product lines of GLOBALTEK. By then, the company will be able to utilize its corporate resources more effectively and increase the overall revenue and profit. The following is the report on our operation.

i.Business highlights in FY 2014

1. Business performance

The company had net sales revenue amounting to NT$42,356,385 thousand in FY 2014, which indicated growth of 14% from the same period of FY 2013. The consolidated net sales revenue of the whole business group amounted to NT$52,239,777 thousand in FY 2014, which indicated growth of 23% from the same period of FY 2013. The consolidated net income amounted to NT$1,608,967 thousand, which indicated growth of 141% from the same period of FY 2013.

2. Budget implementation

Not applicable. The company has not disclosed financial projection in FY 2014.

3. Financial analysis

	Currencyunit: NTD thousand FY 2014 FY 2013 Amount change 3,354,195 2,991,012 363,183 (3,756,779) (722,280) (3,034,499) 2,279,602 87,632 2,191,970	Currencyunit: NTD thousand FY 2014 FY 2013 Amount change 3,354,195 2,991,012 363,183 (3,756,779) (722,280) (3,034,499) 2,279,602 87,632 2,191,970	Currencyunit: NTD thousand FY 2014 FY 2013 Amount change 3,354,195 2,991,012 363,183 (3,756,779) (722,280) (3,034,499) 2,279,602 87,632 2,191,970
	FY 2014	FY 2013	Amount change
Net cash inflow (outflow) from operation	3,354,195	2,991,012	363,183
Net cash inflow (outflow) from investment	(3,756,779)	(722,280)	(3,034,499)
Net cash inflow (outflow) from financing	2,279,602	87,632	2,191,970

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4. Profitability analysis

	FY 2014	FY 2013
Return on Equity (%)	18.03	9.05
Earnings to Paid-in Capital Ratio(%)	42.10	16.02
Pre-tax income to Paid-in Capital Ratio(%)	47.11	21.01
Net Profit Margin(%)	3.08	1.58
Earningsper share(NTD)	3.57	1.55

5. Research and Development Status

The PRIMAX group has devoted NT$ 1,893,251 thousand in FY 2014 to Research and Development, including the development and design of new product and the production process improvement.

ii.Business plan for 2015 and the future development strategy

The company operates in the acute competitive and fast changing environment of the electronic industry. The challenge is echoed with the change in the global macroeconomic environment and the challenges from the industry competitors. Yet, the company can keep abreast of the mainstream market trend of technologies. With stable paces in operation, and the principle of “Customer Foremost, Quality First”, the company provides services to the satisfaction of the customers for creating stable profit. In the future, the IT industry will develop towards cloud computing technology, mobile device, and digital home. PRIMAX will spare no effort in fortifying the research and development of key technologies, such as RFID, touch activation technology, backlight keyboard, cable/wireless acoustics, and high-end camera module encapsulation process. PRIMAX aims at the development of high-end product market and the proactive development of new products for enriching its product lines. Under the diversification strategy in FY 2015, PRIMAX expects further growth in revenue and gross profit.

In production, the company launched massive capacity expansion in FY 2015 for meeting the growth in demand of products under performance growth in the year, the development needs of products, the diversification of concentration risk in a single market, and response to the change in the labor market in Mainland China. It is expected that the expansion will be accomplished in this year. By then, PRIMAX can provide high capacity and high quality production support. In the future, the plant sites in Dongguan, Chongqing, Kunshan, and Huizhou will be the four major production bases. PRIMAX will fortify its production capability and optimize its allocation of production capacity.

In sales, the 2 major business groups of PRIMAX have development strategies elaborated below. The computer peripherals group is in a market with well-developed products. The upgrade of product quality and reduction of production cost will be sustained. It will be supported by the development of new application technologies and corresponding new products to meet the needs in different markets.

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For the non-computer peripherals group, which runs camera modules, printers, and cable/wireless acoustics, will also make effort in the development of new products and technologies. It also maintains high level of product R&D capability for development of new accounts quickly and increase market share. Through the in-house development or acquisition of advanced technologies from vertical integration, the company seeks to accelerate its affiliation with world-class front line products for business and profit growth as the intermediate and long-term goal. The company also seeks to extend its current product portfolios and technologies to different applications and platforms as the objective for long-term development.

iii.The Impact of the External Competitive Environment, Regulatory Environment, and Macroeconomic Conditions

The overall industrial environment over the years has been hampered by the sluggish economic growth in most countries of the world the extent to which consumption power in market fell. The sustained growth of labor cost in Mainland China exerted additional operation risk to the enterprises. Fortunately, the macro economy showed signs of improvement since last year. It was coupled with the sustained cost control and reduction of sales and management expenses by the company to mitigate the impact of the macroeconomic environment on the company. The company runs its operation in compliance with applicable legal rules and any change in the legal environment caused no influence.

Finally, may I express my gratitude once again to all shareholders, for you long-term support and encouragement. May I wish you all good health and good luck.

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Chairman: Liang, Li-Sheng

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General Manger: Yang, Hai-Hung

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II. Company Profile

i.Date of Incorporation: March 20, 2006

ii.Company History:

March 2006: The company was approved to establish on March 20 2006. Formerly titled as Primax Electronics Ltd., the company had initial capital of NT$1,000,000.
October 2007: The company was renamed as Primax Electronics Ltd.
December 2007: The company acquired PRIMAX Technology Co., Ltd. (hereinafter, former “PRIMAX”). The company remained the acquirer and former PRIMAX remained the acquiree.
February 2008: The company renamed as PRIMAX Electronics Limited with Mr. Liang, Li-Sheng acted as the Chairman.
December 2009: IPO of the company shares.
December 2009: The company listed it stock for trading in the emerging stock market of Taiwan.
December 2009: The Board of Investment, MOEA, approved PRIMAX to invest for the establishment of PRIMAX Kunshan Plant via a third place.
February 2011: The Board of Investment, MOEA, approved PRIMAX to invest for the establishment of PRIMAX Chongqing Plant via a third place.
October 2012: PRIMAX successfully listed its stock for trading at TWSE.
October 2012: New capital of NT$235,290,000, raised by issuing new shares and made its stated capital amounting to NT$4,269,698,210.
January 2014: PRIMAX successfully acquired 70% of the equity shares issued by speaker manufacturer Tymphany Group and made registration of change in shareholding.
January 2015: PRIMAX successfully acquired 30% of the equity shares issued by automobile and aerospace precision machinery manufacturer, GLOBALTEK.

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III. Corporate Governance Report

i.Organization

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1. Organizational Chart
Shareholders’
Meeting
Supervisors
Board of Directors
Audit Office
Chairman
General Manager
Non-Computer Computer Technology Legal Affairs Quality IT Finance and Human
Peripherals Peripherals R&D Center and Intellectual Assurance Department Administration Resource Dept.
Unit Unit Property Rights Department Division
Division
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Functions	Conduct review and audit of the internal control system, present audit report to the Board and the managers at regular intervals and measure the operation efficiency of the company, present recommendation for improvement timely, ensure the effective implementation of the internal control system and upgrade the efficiency and effectiveness of the entire organization.	Design and monitoring of the quality system Upgrade the design of product quality and technology Upgrade product quality Response to customer complaints and make improvement The design and implementation of employee training in quality management	Manage the intellectual property rights and legal affairs	Perform the functions of accounting, treasury, taxation, and share registration and transfer. Assistance to the execution and advocacy of projects.	Personnel and human resource management Payroll and benefits management Education, training, and development General affairs management Environmental, Safety and Health (ESH) management	The business is classified into two categories: computer peripherals and non-computer peripherals units. Each group manages its own R&D and marketing. ‧R&D: The research, design, and development of new products Assessment, analysis and design of new product plans Production technologies of new products and documents and data transfer ‧Marketing: The planning, marketing, and market development for products	The research, design, and development of advanced key technologies of new products	Coordination and planning of the security, use, and system integration of the electronic information system of the whole company Process design for the future system operation Design and development of new application system, and functional expansion and update of developed application system User training and operation planning Design and implementation of disaster recovery management Equipment planning and management Computer operation management
Department	Audit office	Quality Assurance Dept.	Legal Affairs and Intellectual Property Right Division	Financial and Administration Division	Human Resource Dept.	Business Units	Technology R&D Center	IT Dept.

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Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Relation	Relative through marriage	Relative through marriage	－	Brothers	Brothers	－	－	－	－	－
	Name	Yang, Hai-Hung	Liang, Li-Sheng	－	Pan, Yung-Tai	Pan, Yung-Chung	－	－	－	－	－
	Title	Director and General manager	Chairman	－	Director and Business Unit Director	Director and Business Unit Director	－	－	－	－	－
Other	position	Note 1	Note 2	Note 3	Note 4	Note 5	－	Note 6	－	Note 7	－
Experience (Education)		Dept of Business Administration, Tamkang University Chairman, Destiny Technology Corporation	Master of Mechanical Engineering, Texas State University, USA General manager, Products Business Unit, PRIMAX	MBA, University of Southern California, USA Chief Auditor, Chailease Holding	Dept of Mechanical Engineering, Christian Chung Yuan University Vice President, Ether Optronics	Dept of Eletronics, Feng Chia University Vice President, Technology Business Unit, PRIMAX	BBA, College of Law, National Taiwan University Vice President, TSEC Division Manager, TSMC	Master, Purdue University, USA Executive VP, Transpac Capital Ptd. Ltd.	Dept of Electronical Engineering, National Taipei University of Science and Technology General manager, JEN JEN engineering co., ltd.	Dept of Mechnical Engineering, NationalCheng Kung University Vice Chairman, PRIMAX	Institute of Internatoinal Trade, National Chengchi University SVP, PRIMAX
Shareholding by Nominee Arrangement	%	0	0	0	0	0	0	0	0	0	0
	Shares	0	0	0	0	0	0	0	0	0	0
Spouse & Minor Shareholding	%	0	0	0.43	0	0	0	0	0	0	0
	Shares	0	0	1,900,962	0	0	0	0	0	0	0
Current Shareholding	%	0.34	0.45	0.44	1.89	1.05	0	0	0.23	0.81	0.44
	Shares	1,500,001	1,962,465	1,926,963	8,291,046	4,617,987	0	0	1,000,000	3,580,977	1,937,828
Shareholding when Elected	%	0.12	0.19	0.45	1.92	1.01	0	0	0.23	0.83	0.44
	Shares	500,001	829,308	1,926,963	8,354,046	4,367,987	0	0	1,000,000	3,590,977	1,937,828
Date First	Elected	2009.10.23	2009.10.23	2011.3.11	2014.9.5	2014.9.5	2010.03.30	2010.03.30	2009.10.23	2009.10.23	2013.6.25
Term	(Years)	3 Years	3 Years	3 Years	0.75 Year	0.75 Year	3 Years	3 Years	3 Years	3 Years	2 Years
Date	Elected	2012.6.19	2012.6.19	2012.6.19	2014.9.5	2014.9.5	2012.6.19	2012.6.19	2012.6.19	2012.6.19	2013.6.25
Name		Liang, Li-Sheng	Yang, Hai-Hung	Yang, Chi-Ting	Pan, Yung-Chu ng	Pan, Yung-Tai	Ku, Tai-Chao	Liu, Jong-Shi	Tsai, You-Wei	Hsu, Chiang-C han	Chang, Deh-Tsai
Nationality / Country of Origin		ROC	ROC	ROC	ROC	ROC	ROC	ROC	ROC	ROC	ROC
Title		Director	Director and General Manager	Director	Director and Business Unit Director	Director and Business Unit Director	Independent Director	Independent Director	Supervisor	Supervisor	Supervisor

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	Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director	0	0	0	0	0	0	2	0	0	0
Independence Criteria (Note)	10	�	�	�	�	�	�	�	�	�	�
	9	�	�	�	�	�	�	�	�	�	�
	8			�			�	�	�	�	�
	7	�	�	�	�	�	�	�	�	�	�
	6	�	�	�	�	�	�	�	�	�	�
	5	�	�	�	�	�	�	�	�	�	�
	4			�			�	�	�	�	�
	3	�	�	�	�	�	�	�	�	�	�
	2			�			�	�	�	�
	1			�			�	�	�	�
Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience	Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	�	�	�	�	�	�	�	�	�	�
	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	－	－	－	－	－	－	－	－	－	－
	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	－	－	－	－	－	－	－	－	－	－
Criteria	Name	Liang, Li-Sheng	Yang, Hai-Hung	Yang, Chi-Ting	Pan, Yung-Chung	Pan, Yung-Tai	Ku, Tai-Chao	Liu, Jong-Shi	Tsai, You-Wei	Hsu, Chiang-Chan	Chang, Deh-Tsai

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							Vice President ROC Chou, Yen-Chou 2011.1.17 252,000 0.06 0 0 0 0 PhD, Industrial Engineering, University of Cincinnati, USA Operation Senior AVP, Hon Hai Group No －－－ Vice President ROC Liu, Chia-Lun 2012.2.1 12,000 0.0027 0 0 0 0 Master of Industrial Engineering & MBA, California State Polytechnic University; Senior Division Manager, Top Victory Electronics (Taiwan) Co., Ltd. Note 5 －－－ Vice President ROC Lee, Chiu-Sheng2014.10.1 315,000 0.07 0 0 0 0 Dept of Industrial Engineering, National Tsing Hua University FOXCONN VP Operations Note 6 Vice President ROC Chiang, Yan-Ying 2015.4.1 663,106 0.15 0 0 0 0Dept of Labor Relation, University of Chinese Culture; MBA credit program, National Chengchi University Senior AVP, PRIMAX No Vice President ROC Chang, Ching-Kai 2015.4.1 564,703 0.13 0 0 0 0Information Engineering Dept, Tamkang University NTOOL COOPORATION Service Manager No Asst Vice President ROC Pan, Yan-Jen 2014.12.5 0 0 0 0 0 0Dept of Accounting, Soochow University AVP, Auditing Service Dept, PwC Taiwan No －－－ Note 1: Director, Primax Ind.(Cayman Holding) Ltd. ; Director, Polaris Electronics, Inc. ; Director, Primax Tech.(Cayman Holding) Ltd. ; Representative to	Vice President ROC Chou, Yen-Chou 2011.1.17 252,000 0.06 0 0 0 0 PhD, Industrial Engineering, University of Cincinnati, USA Operation Senior AVP, Hon Hai Group No －－－ Vice President ROC Liu, Chia-Lun 2012.2.1 12,000 0.0027 0 0 0 0 Master of Industrial Engineering & MBA, California State Polytechnic University; Senior Division Manager, Top Victory Electronics (Taiwan) Co., Ltd. Note 5 －－－ Vice President ROC Lee, Chiu-Sheng2014.10.1 315,000 0.07 0 0 0 0 Dept of Industrial Engineering, National Tsing Hua University FOXCONN VP Operations Note 6 Vice President ROC Chiang, Yan-Ying 2015.4.1 663,106 0.15 0 0 0 0Dept of Labor Relation, University of Chinese Culture; MBA credit program, National Chengchi University Senior AVP, PRIMAX No Vice President ROC Chang, Ching-Kai 2015.4.1 564,703 0.13 0 0 0 0Information Engineering Dept, Tamkang University NTOOL COOPORATION Service Manager No Asst Vice President ROC Pan, Yan-Jen 2014.12.5 0 0 0 0 0 0Dept of Accounting, Soochow University AVP, Auditing Service Dept, PwC Taiwan No －－－ Note 1: Director, Primax Ind.(Cayman Holding) Ltd. ; Director, Polaris Electronics, Inc. ; Director, Primax Tech.(Cayman Holding) Ltd. ; Representative to	Vice President ROC Chou, Yen-Chou 2011.1.17 252,000 0.06 0 0 0 0 PhD, Industrial Engineering, University of Cincinnati, USA Operation Senior AVP, Hon Hai Group No －－－ Vice President ROC Liu, Chia-Lun 2012.2.1 12,000 0.0027 0 0 0 0 Master of Industrial Engineering & MBA, California State Polytechnic University; Senior Division Manager, Top Victory Electronics (Taiwan) Co., Ltd. Note 5 －－－ Vice President ROC Lee, Chiu-Sheng2014.10.1 315,000 0.07 0 0 0 0 Dept of Industrial Engineering, National Tsing Hua University FOXCONN VP Operations Note 6 Vice President ROC Chiang, Yan-Ying 2015.4.1 663,106 0.15 0 0 0 0Dept of Labor Relation, University of Chinese Culture; MBA credit program, National Chengchi University Senior AVP, PRIMAX No Vice President ROC Chang, Ching-Kai 2015.4.1 564,703 0.13 0 0 0 0Information Engineering Dept, Tamkang University NTOOL COOPORATION Service Manager No Asst Vice President ROC Pan, Yan-Jen 2014.12.5 0 0 0 0 0 0Dept of Accounting, Soochow University AVP, Auditing Service Dept, PwC Taiwan No －－－ Note 1: Director, Primax Ind.(Cayman Holding) Ltd. ; Director, Polaris Electronics, Inc. ; Director, Primax Tech.(Cayman Holding) Ltd. ; Representative to	Vice President ROC Chou, Yen-Chou 2011.1.17 252,000 0.06 0 0 0 0 PhD, Industrial Engineering, University of Cincinnati, USA Operation Senior AVP, Hon Hai Group No －－－ Vice President ROC Liu, Chia-Lun 2012.2.1 12,000 0.0027 0 0 0 0 Master of Industrial Engineering & MBA, California State Polytechnic University; Senior Division Manager, Top Victory Electronics (Taiwan) Co., Ltd. Note 5 －－－ Vice President ROC Lee, Chiu-Sheng2014.10.1 315,000 0.07 0 0 0 0 Dept of Industrial Engineering, National Tsing Hua University FOXCONN VP Operations Note 6 Vice President ROC Chiang, Yan-Ying 2015.4.1 663,106 0.15 0 0 0 0Dept of Labor Relation, University of Chinese Culture; MBA credit program, National Chengchi University Senior AVP, PRIMAX No Vice President ROC Chang, Ching-Kai 2015.4.1 564,703 0.13 0 0 0 0Information Engineering Dept, Tamkang University NTOOL COOPORATION Service Manager No Asst Vice President ROC Pan, Yan-Jen 2014.12.5 0 0 0 0 0 0Dept of Accounting, Soochow University AVP, Auditing Service Dept, PwC Taiwan No －－－ Note 1: Director, Primax Ind.(Cayman Holding) Ltd. ; Director, Polaris Electronics, Inc. ; Director, Primax Tech.(Cayman Holding) Ltd. ; Representative to	Vice President ROC Chou, Yen-Chou 2011.1.17 252,000 0.06 0 0 0 0 PhD, Industrial Engineering, University of Cincinnati, USA Operation Senior AVP, Hon Hai Group No －－－ Vice President ROC Liu, Chia-Lun 2012.2.1 12,000 0.0027 0 0 0 0 Master of Industrial Engineering & MBA, California State Polytechnic University; Senior Division Manager, Top Victory Electronics (Taiwan) Co., Ltd. Note 5 －－－ Vice President ROC Lee, Chiu-Sheng2014.10.1 315,000 0.07 0 0 0 0 Dept of Industrial Engineering, National Tsing Hua University FOXCONN VP Operations Note 6 Vice President ROC Chiang, Yan-Ying 2015.4.1 663,106 0.15 0 0 0 0Dept of Labor Relation, University of Chinese Culture; MBA credit program, National Chengchi University Senior AVP, PRIMAX No Vice President ROC Chang, Ching-Kai 2015.4.1 564,703 0.13 0 0 0 0Information Engineering Dept, Tamkang University NTOOL COOPORATION Service Manager No Asst Vice President ROC Pan, Yan-Jen 2014.12.5 0 0 0 0 0 0Dept of Accounting, Soochow University AVP, Auditing Service Dept, PwC Taiwan No －－－ Note 1: Director, Primax Ind.(Cayman Holding) Ltd. ; Director, Polaris Electronics, Inc. ; Director, Primax Tech.(Cayman Holding) Ltd. ; Representative to	Vice President ROC Chou, Yen-Chou 2011.1.17 252,000 0.06 0 0 0 0 PhD, Industrial Engineering, University of Cincinnati, USA Operation Senior AVP, Hon Hai Group No －－－ Vice President ROC Liu, Chia-Lun 2012.2.1 12,000 0.0027 0 0 0 0 Master of Industrial Engineering & MBA, California State Polytechnic University; Senior Division Manager, Top Victory Electronics (Taiwan) Co., Ltd. Note 5 －－－ Vice President ROC Lee, Chiu-Sheng2014.10.1 315,000 0.07 0 0 0 0 Dept of Industrial Engineering, National Tsing Hua University FOXCONN VP Operations Note 6 Vice President ROC Chiang, Yan-Ying 2015.4.1 663,106 0.15 0 0 0 0Dept of Labor Relation, University of Chinese Culture; MBA credit program, National Chengchi University Senior AVP, PRIMAX No Vice President ROC Chang, Ching-Kai 2015.4.1 564,703 0.13 0 0 0 0Information Engineering Dept, Tamkang University NTOOL COOPORATION Service Manager No Asst Vice President ROC Pan, Yan-Jen 2014.12.5 0 0 0 0 0 0Dept of Accounting, Soochow University AVP, Auditing Service Dept, PwC Taiwan No －－－ Note 1: Director, Primax Ind.(Cayman Holding) Ltd. ; Director, Polaris Electronics, Inc. ; Director, Primax Tech.(Cayman Holding) Ltd. ; Representative to
Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Relation	－	Brothers	Brothers	－	－	－	－				－
	Name	－	Pan, Yung-Ta i	Pan, Yung-Ch ung	－	－	－	－				－
	Title	－	Director and Business Unit Director	Director and Business Unit Director	－	－	－	－				－
Other position		Note 1	Note 2	Note 3	Note 4	No	No	Note 5	Note 6	No	No	No
Experience (Education)		Master of Mechanical Engineering, Texas State University, USA General manager, Products Business Unit, PRIMAX	Dept of Eletronics, Feng Chia University Vice President, Technology Business Unit,PRIMAX	Dept of Mechanical Engineering, Christian Chung Yuan University Vice President, Ether Optronics	MBA, Central Missouri State University, USA CFO, Delta Networks, Inc.	MBA, National Taiwan University Senior AVP, PRIMAX	PhD, Industrial Engineering, University of Cincinnati, USA Operation Senior AVP, Hon Hai Group	Master of Industrial Engineering & MBA, California State Polytechnic University; Senior Division Manager, Top Victory Electronics (Taiwan) Co., Ltd.	Dept of Industrial Engineering, National Tsing Hua University FOXCONN VP Operations	Dept of Labor Relation, University of Chinese Culture; MBA credit program, National Chengchi University Senior AVP, PRIMAX	Information Engineering Dept, Tamkang University NTOOL COOPORATION Service Manager	Dept of Accounting, Soochow University AVP, Auditing Service Dept, PwC Taiwan
Shareholding by Nominee Arrangement	%	0	0	0	0	0	0	0	0	0	0	0
	Shares	0	0	0	0	0	0	0	0	0	0	0
Spouse & Minor Shareholding	%	0	0	0.19	0	0.11	0	0	0	0	0	0
	Shares	0	0	815,517	0	486,586	0	0	0	0	0	0
Current Shareholding	%	0.45	1.89	1.05	0.04	0.70	0.06	0.0027	0.07	0.15	0.13	0
	Shares	1,962,465	8,291,046	4,617,987	155,000	3,078,651	252,000	12,000	315,000	663,106	564,703	0
Date Elected		2010.07.02	2007.12.28 (No 7)	2007.12.28 (No 7)	2013.1.2	2007.12.28 (No 7)	2011.1.17	2012.2.1	2014.10.1	2015.4.1	2015.4.1	2014.12.5
Name		Yang, Hai-Hung	Pan, Yung-Chun g	Pan, Yung-Tai	Lee, Yi-Ping	Tsao, Chung-Fen g	Chou, Yen-Chou	Liu, Chia-Lun	Lee, Chiu-Sheng	Chiang, Yan-Ying	Chang, Ching-Kai	Pan, Yan-Jen
Nation ality/ Countr	y of Origin	ROC	ROC	ROC	ROC	ROC	ROC	ROC	ROC	ROC	ROC	ROC
Title		Director & General manager	Director & Business Unit Director	Director & Business Unit Director	Senior Vice President	Vice President	Vice President	Vice President	Vice President	Vice President	Vice President	Asst Vice President

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										Director and Business Unit Director Pan, Yung-Tai (Note 6) Independent Director Ku, Tai-Chao Independent Director Liu, Jong-Shi Note 1: The company had net income of NT$1,608,967 thousand in FY 2014. Note 2: The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24) as remuneration to Directors and Supervisors amounted to NT$27,800 thousand. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 3: The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24) as employee bonus amounted to NT$71,000 thousand. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 4: this refers to the portion of ESOP issued by the company not being exercised as of the day this report was printed (2015.05.20).	Director and Business Unit Director Pan, Yung-Tai (Note 6) Independent Director Ku, Tai-Chao Independent Director Liu, Jong-Shi Note 1: The company had net income of NT$1,608,967 thousand in FY 2014. Note 2: The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24) as remuneration to Directors and Supervisors amounted to NT$27,800 thousand. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 3: The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24) as employee bonus amounted to NT$71,000 thousand. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 4: this refers to the portion of ESOP issued by the company not being exercised as of the day this report was printed (2015.05.20).	Director and Business Unit Director Pan, Yung-Tai (Note 6) Independent Director Ku, Tai-Chao Independent Director Liu, Jong-Shi Note 1: The company had net income of NT$1,608,967 thousand in FY 2014. Note 2: The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24) as remuneration to Directors and Supervisors amounted to NT$27,800 thousand. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 3: The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24) as employee bonus amounted to NT$71,000 thousand. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 4: this refers to the portion of ESOP issued by the company not being exercised as of the day this report was printed (2015.05.20).
Compensation Paid to Directors from an Invested Company Other than the Company’s Subsidiary						0
Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%) (Note 1)		All companies in the consolidated financial statements				3.63
		The company				3.63
Relevant Remuneration Received by Directors Who are Also Employees	New Restricted Employee Shares (I)	All companies in the consolidated financial statements				0
		The company				0
	Exercisable Employee Stock Options (H) (Note 4)	All companies in the consolidated financial statements				446
		The company				446
	Profit Sharing- Employee Bonus (G) (Note 3)	All stated in the financial statements	Stock			0
			Cash			0
		The company	Stock			0
			Cash			0
	Severance Pay (F)	All companies in the consolidated financial statements				167
		The company				167
	Salary, bonus, and Allowances (E)	All companies in the consolidate d financial statements				28,164
		The company				28,164
	Ratio of Total Remuneration (A+B+C+D) to Net Income (%) (Note 2)	All companies in the consolidated financial statements				1.87
		The company				1.87
Remuneration	Bonus to Directors (D)	All companies in the consolidated financial statements				0
		The company				0
	Disbursement from earnings (C) (Note 3)	All companies in the consolidated financial statements				19,610
		The company				19,610
	Pension (B)	All companies in the consolidated financial statements				0
		The company				0
	Base Compensation (A)	All companies in the consolidated financial statements				10,436
		The company				10,436
		Name		Liang, Li-Sheng	Yang, Hai-Hung	PMX LLC of USA; Representaive: Bonnie Sum Wai Lo( Note 5)	ASIA PACIFIC GROWTH FUND V,L.P., Caymand Islands, representative: Hsu, Ta-Lin (Note 5)	Yang, Chi-Ting	Pan, Yung-Chung (Note 6)	Pan, Yung-Tai (Note 6)	Ku, Tai-Chao	Liu, Jong-Shi
		Title		Director	General manager	Director	Director	Director	Director and Business Unit Director	Director and Business Unit Director	Independent Director	Independent Director

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-14-

Total (A+B+C+D+E+F+G)	All companies in the consolidated financial statements	PMX LLC of USA: Representative: Bonnie Sum Wai Lo; ASIA PACIFIC GROWTH FUND V,L.P. of Caymand Islands: Reprsentative: Hsu, Ta-Lin	Yang, Chi-Ting, Ku, Chao-Tai, Liu, Jong-Shi	Pan, Yung-Tai, Pan, Yung-Chung	Liang, Li-Sheng	Yang, Hai-Hung				9
	The company	PMX LLC of USA: Representative: Bonnie Sum Wai Lo; ASIA PACIFIC GROWTH FUND V,L.P. of Caymand Islands: Reprsentative: Hsu, Ta-Lin	Yang, Chi-Ting, Ku, Chao-Tai, Liu, Jong-Shi	Pan, Yung-Tai, Pan, Yung-Chung	Liang, Li-Sheng	Yang, Hai-Hung				9
Total of (A+B+C+D)	All companies in the consolidated financial statements	PMX LLC of USA: Representative: Bonnie Sum Wai Lo; ASIA PACIFIC GROWTH FUND V,L.P. of Caymand Islands: Reprsentative: Hsu, Ta-Lin, Pan, Yung-Tai, Pan, Yung-Chung	Yang, Hai-Hung, Yang, Chi-Ting, Ku, Chao-Tai, Liu, Jong-Shi		Liang, Li-Sheng					9
	The company	PMX LLC of USA: Representative: Bonnie Sum Wai Lo; ASIA PACIFIC GROWTH FUND V,L.P. of Caymand Islands: Reprsentative: Hsu, Ta-Lin, Pan, Yung-Tai, Pan, Yung-Chung	Yang, Hai-Hung, Yang, Chi-Ting, Ku, Chao-Tai, Liu, Jong-Shi		Liang, Li-Sheng					9
Range of payment to the Directors of the company		Less than NT$ 2,000,000	NT$ 2,000,000～NT$ 5,000,000 (exclusive)	NT$ 5,000,000～NT$ 10,000,000 (exclusive)	NT$ 10,000,000～NT$ 15,000,000 (exclusive)	NT$ 15,000,000～NT$ 30,000,000 (exclusive)	NT$ 30,000,000～NT$ 50,000,000 (exclusive)	NT$ 50,000,000～NT$ 100,000,000 (exclusive)	NT$ 100,000,000 and more	Total

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			Supervisor Tsai, You-Wei 0 0 8,190 8,190 9 9 0.51 0.51 NA Supervisor Hsu, Chiang-Chan Supervisor Chang, Deh-Tsai Note 1: The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24) as remuneration to Directors and Supervisors amounted to NT$27,800 thousand. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The company had net income amounting to NT$1,608,967 thousand in FY 2014.	Supervisor Tsai, You-Wei 0 0 8,190 8,190 9 9 0.51 0.51 NA Supervisor Hsu, Chiang-Chan Supervisor Chang, Deh-Tsai Note 1: The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24) as remuneration to Directors and Supervisors amounted to NT$27,800 thousand. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The company had net income amounting to NT$1,608,967 thousand in FY 2014.	Supervisor Tsai, You-Wei 0 0 8,190 8,190 9 9 0.51 0.51 NA Supervisor Hsu, Chiang-Chan Supervisor Chang, Deh-Tsai Note 1: The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24) as remuneration to Directors and Supervisors amounted to NT$27,800 thousand. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The company had net income amounting to NT$1,608,967 thousand in FY 2014.
Compensati on Paid to Supervisors from an Invested		Company Other than the Company’s Subsidiary	NA
Ratio of Total	Remuneration (A+B+C) to Net Income (%) (Note 2)	Companies in the consolidated financial statements	0.51
		The company	0.51
Remuneration to Supervisors	Business expense account (C)	Companies in the consolidated financial statements	9
		The company	9
	Disbursement from distribution of earnings (B) (Note 1)	Companies in the consolidated financial statements	8,190
		The company	8,190
	Payment (A)	Companies in the consolidated financial statements	0
		The company	0
	Name		Tsai, You-Wei	Hsu, Chiang-Chan	Chang, Deh-Tsai
	Title		Supervisor	Supervisor	Supervisor

-16-

Name of Supervisor	Total of (A+B+C)	Company D in the consolidated financial statements		Tsai, You-Wei, Hsu, Chiang-Chan, Chang, Deh-Tsai							3
		The company		Tsai, You-Wei, Hsu, Chiang-Chan, Chang, Deh-Tsai							3
Range of payment to the Supervisors of the company			Less than NT$ 2,000,000	NT$ 2,000,000～NT$ 5,000,000 (exclusive)	NT$ 5,000,000～NT$ 10,000,000 (exclusive)	NT$ 10,000,000～NT$ 15,000,000 (exclusive)	NT$ 15,000,000～NT$ 30,000,000 (exclusive)	NT$ 30,000,000～NT$ 50,000,000 (exclusive)	NT$ 50,000,000～NT$ 100,000,000 (exclusive)	NT$ 100,000,000 and more	Total

-17-

		Invested Company Other Than the Company’s Subsidiary The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements Cash Stock Cash Stock Director & General manager Yang, Hai-Hung 25,731 27,334 8,694 8,694 30,000 30,000 2,219 0 2,219 0 4.31% 4.24% 1,432 1,432 240 240 NA Director & Business Unit Director Pan, Yung-Chung Director & Business Unit Director Pan, Yung-Tai Senior Vice President Lee, Yi-Ping Vice President Tsao, Chung-Feng Vice President (Note 5) Luo, Chin-Kun Vice President Pan, Wu-Lung Vice President Chou, Yen-Chou Vice President Liu, Chia-Lun Vice President (Note 6) Wu, Shou-Yi Vice President (Note 7) Lee, Chiu-Sheng Note 1：The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24)as employee bonus amounted to NT$71,000 thousand. The proposal for employee bonus payable to the General manager and the Vice Presidents has not been discussed in the Remuneration Committee to the date this report was printed. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The parent company only and the consolidated financial statements for FY 2014 indicated net income amounting to NT$ 1,544,690 thousand and	Invested Company Other Than the Company’s Subsidiary The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements Cash Stock Cash Stock Director & General manager Yang, Hai-Hung 25,731 27,334 8,694 8,694 30,000 30,000 2,219 0 2,219 0 4.31% 4.24% 1,432 1,432 240 240 NA Director & Business Unit Director Pan, Yung-Chung Director & Business Unit Director Pan, Yung-Tai Senior Vice President Lee, Yi-Ping Vice President Tsao, Chung-Feng Vice President (Note 5) Luo, Chin-Kun Vice President Pan, Wu-Lung Vice President Chou, Yen-Chou Vice President Liu, Chia-Lun Vice President (Note 6) Wu, Shou-Yi Vice President (Note 7) Lee, Chiu-Sheng Note 1：The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24)as employee bonus amounted to NT$71,000 thousand. The proposal for employee bonus payable to the General manager and the Vice Presidents has not been discussed in the Remuneration Committee to the date this report was printed. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The parent company only and the consolidated financial statements for FY 2014 indicated net income amounting to NT$ 1,544,690 thousand and	Invested Company Other Than the Company’s Subsidiary The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements Cash Stock Cash Stock Director & General manager Yang, Hai-Hung 25,731 27,334 8,694 8,694 30,000 30,000 2,219 0 2,219 0 4.31% 4.24% 1,432 1,432 240 240 NA Director & Business Unit Director Pan, Yung-Chung Director & Business Unit Director Pan, Yung-Tai Senior Vice President Lee, Yi-Ping Vice President Tsao, Chung-Feng Vice President (Note 5) Luo, Chin-Kun Vice President Pan, Wu-Lung Vice President Chou, Yen-Chou Vice President Liu, Chia-Lun Vice President (Note 6) Wu, Shou-Yi Vice President (Note 7) Lee, Chiu-Sheng Note 1：The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24)as employee bonus amounted to NT$71,000 thousand. The proposal for employee bonus payable to the General manager and the Vice Presidents has not been discussed in the Remuneration Committee to the date this report was printed. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The parent company only and the consolidated financial statements for FY 2014 indicated net income amounting to NT$ 1,544,690 thousand and	Invested Company Other Than the Company’s Subsidiary The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements Cash Stock Cash Stock Director & General manager Yang, Hai-Hung 25,731 27,334 8,694 8,694 30,000 30,000 2,219 0 2,219 0 4.31% 4.24% 1,432 1,432 240 240 NA Director & Business Unit Director Pan, Yung-Chung Director & Business Unit Director Pan, Yung-Tai Senior Vice President Lee, Yi-Ping Vice President Tsao, Chung-Feng Vice President (Note 5) Luo, Chin-Kun Vice President Pan, Wu-Lung Vice President Chou, Yen-Chou Vice President Liu, Chia-Lun Vice President (Note 6) Wu, Shou-Yi Vice President (Note 7) Lee, Chiu-Sheng Note 1：The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24)as employee bonus amounted to NT$71,000 thousand. The proposal for employee bonus payable to the General manager and the Vice Presidents has not been discussed in the Remuneration Committee to the date this report was printed. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The parent company only and the consolidated financial statements for FY 2014 indicated net income amounting to NT$ 1,544,690 thousand and	Invested Company Other Than the Company’s Subsidiary The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements Cash Stock Cash Stock Director & General manager Yang, Hai-Hung 25,731 27,334 8,694 8,694 30,000 30,000 2,219 0 2,219 0 4.31% 4.24% 1,432 1,432 240 240 NA Director & Business Unit Director Pan, Yung-Chung Director & Business Unit Director Pan, Yung-Tai Senior Vice President Lee, Yi-Ping Vice President Tsao, Chung-Feng Vice President (Note 5) Luo, Chin-Kun Vice President Pan, Wu-Lung Vice President Chou, Yen-Chou Vice President Liu, Chia-Lun Vice President (Note 6) Wu, Shou-Yi Vice President (Note 7) Lee, Chiu-Sheng Note 1：The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24)as employee bonus amounted to NT$71,000 thousand. The proposal for employee bonus payable to the General manager and the Vice Presidents has not been discussed in the Remuneration Committee to the date this report was printed. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The parent company only and the consolidated financial statements for FY 2014 indicated net income amounting to NT$ 1,544,690 thousand and	Invested Company Other Than the Company’s Subsidiary The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements Cash Stock Cash Stock Director & General manager Yang, Hai-Hung 25,731 27,334 8,694 8,694 30,000 30,000 2,219 0 2,219 0 4.31% 4.24% 1,432 1,432 240 240 NA Director & Business Unit Director Pan, Yung-Chung Director & Business Unit Director Pan, Yung-Tai Senior Vice President Lee, Yi-Ping Vice President Tsao, Chung-Feng Vice President (Note 5) Luo, Chin-Kun Vice President Pan, Wu-Lung Vice President Chou, Yen-Chou Vice President Liu, Chia-Lun Vice President (Note 6) Wu, Shou-Yi Vice President (Note 7) Lee, Chiu-Sheng Note 1：The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24)as employee bonus amounted to NT$71,000 thousand. The proposal for employee bonus payable to the General manager and the Vice Presidents has not been discussed in the Remuneration Committee to the date this report was printed. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The parent company only and the consolidated financial statements for FY 2014 indicated net income amounting to NT$ 1,544,690 thousand and	Invested Company Other Than the Company’s Subsidiary The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements Cash Stock Cash Stock Director & General manager Yang, Hai-Hung 25,731 27,334 8,694 8,694 30,000 30,000 2,219 0 2,219 0 4.31% 4.24% 1,432 1,432 240 240 NA Director & Business Unit Director Pan, Yung-Chung Director & Business Unit Director Pan, Yung-Tai Senior Vice President Lee, Yi-Ping Vice President Tsao, Chung-Feng Vice President (Note 5) Luo, Chin-Kun Vice President Pan, Wu-Lung Vice President Chou, Yen-Chou Vice President Liu, Chia-Lun Vice President (Note 6) Wu, Shou-Yi Vice President (Note 7) Lee, Chiu-Sheng Note 1：The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24)as employee bonus amounted to NT$71,000 thousand. The proposal for employee bonus payable to the General manager and the Vice Presidents has not been discussed in the Remuneration Committee to the date this report was printed. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The parent company only and the consolidated financial statements for FY 2014 indicated net income amounting to NT$ 1,544,690 thousand and	Invested Company Other Than the Company’s Subsidiary The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements Cash Stock Cash Stock Director & General manager Yang, Hai-Hung 25,731 27,334 8,694 8,694 30,000 30,000 2,219 0 2,219 0 4.31% 4.24% 1,432 1,432 240 240 NA Director & Business Unit Director Pan, Yung-Chung Director & Business Unit Director Pan, Yung-Tai Senior Vice President Lee, Yi-Ping Vice President Tsao, Chung-Feng Vice President (Note 5) Luo, Chin-Kun Vice President Pan, Wu-Lung Vice President Chou, Yen-Chou Vice President Liu, Chia-Lun Vice President (Note 6) Wu, Shou-Yi Vice President (Note 7) Lee, Chiu-Sheng Note 1：The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24)as employee bonus amounted to NT$71,000 thousand. The proposal for employee bonus payable to the General manager and the Vice Presidents has not been discussed in the Remuneration Committee to the date this report was printed. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The parent company only and the consolidated financial statements for FY 2014 indicated net income amounting to NT$ 1,544,690 thousand and	Invested Company Other Than the Company’s Subsidiary The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements Cash Stock Cash Stock Director & General manager Yang, Hai-Hung 25,731 27,334 8,694 8,694 30,000 30,000 2,219 0 2,219 0 4.31% 4.24% 1,432 1,432 240 240 NA Director & Business Unit Director Pan, Yung-Chung Director & Business Unit Director Pan, Yung-Tai Senior Vice President Lee, Yi-Ping Vice President Tsao, Chung-Feng Vice President (Note 5) Luo, Chin-Kun Vice President Pan, Wu-Lung Vice President Chou, Yen-Chou Vice President Liu, Chia-Lun Vice President (Note 6) Wu, Shou-Yi Vice President (Note 7) Lee, Chiu-Sheng Note 1：The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24)as employee bonus amounted to NT$71,000 thousand. The proposal for employee bonus payable to the General manager and the Vice Presidents has not been discussed in the Remuneration Committee to the date this report was printed. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The parent company only and the consolidated financial statements for FY 2014 indicated net income amounting to NT$ 1,544,690 thousand and	Invested Company Other Than the Company’s Subsidiary The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements Cash Stock Cash Stock Director & General manager Yang, Hai-Hung 25,731 27,334 8,694 8,694 30,000 30,000 2,219 0 2,219 0 4.31% 4.24% 1,432 1,432 240 240 NA Director & Business Unit Director Pan, Yung-Chung Director & Business Unit Director Pan, Yung-Tai Senior Vice President Lee, Yi-Ping Vice President Tsao, Chung-Feng Vice President (Note 5) Luo, Chin-Kun Vice President Pan, Wu-Lung Vice President Chou, Yen-Chou Vice President Liu, Chia-Lun Vice President (Note 6) Wu, Shou-Yi Vice President (Note 7) Lee, Chiu-Sheng Note 1：The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24)as employee bonus amounted to NT$71,000 thousand. The proposal for employee bonus payable to the General manager and the Vice Presidents has not been discussed in the Remuneration Committee to the date this report was printed. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The parent company only and the consolidated financial statements for FY 2014 indicated net income amounting to NT$ 1,544,690 thousand and	Invested Company Other Than the Company’s Subsidiary The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements Cash Stock Cash Stock Director & General manager Yang, Hai-Hung 25,731 27,334 8,694 8,694 30,000 30,000 2,219 0 2,219 0 4.31% 4.24% 1,432 1,432 240 240 NA Director & Business Unit Director Pan, Yung-Chung Director & Business Unit Director Pan, Yung-Tai Senior Vice President Lee, Yi-Ping Vice President Tsao, Chung-Feng Vice President (Note 5) Luo, Chin-Kun Vice President Pan, Wu-Lung Vice President Chou, Yen-Chou Vice President Liu, Chia-Lun Vice President (Note 6) Wu, Shou-Yi Vice President (Note 7) Lee, Chiu-Sheng Note 1：The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24)as employee bonus amounted to NT$71,000 thousand. The proposal for employee bonus payable to the General manager and the Vice Presidents has not been discussed in the Remuneration Committee to the date this report was printed. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The parent company only and the consolidated financial statements for FY 2014 indicated net income amounting to NT$ 1,544,690 thousand and	Invested Company Other Than the Company’s Subsidiary The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements The company companies in the consolidate d financial statements Cash Stock Cash Stock Director & General manager Yang, Hai-Hung 25,731 27,334 8,694 8,694 30,000 30,000 2,219 0 2,219 0 4.31% 4.24% 1,432 1,432 240 240 NA Director & Business Unit Director Pan, Yung-Chung Director & Business Unit Director Pan, Yung-Tai Senior Vice President Lee, Yi-Ping Vice President Tsao, Chung-Feng Vice President (Note 5) Luo, Chin-Kun Vice President Pan, Wu-Lung Vice President Chou, Yen-Chou Vice President Liu, Chia-Lun Vice President (Note 6) Wu, Shou-Yi Vice President (Note 7) Lee, Chiu-Sheng Note 1：The proposal for distribution of earnings from the most recent period (FY 2014) resolved by the Board (2015.03.24)as employee bonus amounted to NT$71,000 thousand. The proposal for employee bonus payable to the General manager and the Vice Presidents has not been discussed in the Remuneration Committee to the date this report was printed. The amount to be paid out in current period is estimated on the basis of the proportion of payment in the previous period. Note 2: The parent company only and the consolidated financial statements for FY 2014 indicated net income amounting to NT$ 1,544,690 thousand and
Compensati on paid to the General manager and Vice President from an		Invested Company Other Than the Company’s Subsidiary	NA
New Restricted Employee Shares (Note 4)	All	companies in the consolidate d financial statements	240
		The company	240
Exercisable Employee Stock Options (Note 3)	All	companies in the consolidate d financial statements	1,432
		The company	1,432
Ratio of total compensation (A+B+C+D) to net income (%)(Note 2)	All	companies in the consolidate d financial statements	4.24%
		The company	4.31%
Profit Sharing- Employee Bonus (D) (Note 1)	All companies in the consolidated financial statements	Stock	0
		Cash	2,219
	The company	Stock	0
		Cash	2,219
Bonuses and Allowances (C)	All	companies in the consolidate d financial statements	30,000
		The company	30,000
Severance Pay (B)	All	companies in the consolidate d financial statements	8,694
		The company	8,694
Salary (A)	All	companies in the consolidate d financial statements	27,334
		The company	25,731
	Name		Yang, Hai-Hung	Pan, Yung-Chung	Pan, Yung-Tai	Lee, Yi-Ping	Tsao, Chung-Feng	Luo, Chin-Kun	Pan, Wu-Lung	Chou, Yen-Chou	Liu, Chia-Lun	Wu, Shou-Yi	Lee, Chiu-Sheng
	Title		Director & General manager	Director & Business Unit Director	Director & Business Unit Director	Senior Vice President	Vice President	Vice President (Note 5)	Vice President	Vice President	Vice President	Vice President (Note 6)	Vice President (Note 7)

-18-

-19-

Name of General manager and Vice Presidents	Companies in the consolidated financial statements (E)	Luo, Chin-Kun, Wu, Shou-Yi	Pan, Wu-Lung, Tsao, Chung-Feng, Lee, Chiu-Sheng, Liu, Chia-Lun	Pan, Yung-Tai, Chou Yan-Chou, Pan, Yung-Chung, Lee, Yi-Ping	Yang, Hai-Hung					11
	The company	Luo, Chin-Kun, Wu, Shou-Yi	Pan, Wu-Lung, Tsao, Chung-Feng, Lee, Chiu-Sheng, Liu, Chia-Lun	Pan, Yung-Tai, Chou Yan-Chou, Pan, Yung-Chung, Lee, Yi-Ping	Yang, Hai-Hung					11
Range of payment to the General manager and Vice Presidens of the company		Less than NT$ 2,000,000	NT$ 2,000,000～NT$ 5,000,000 (exclusive)	NT$ 5,000,000～NT$ 10,000,000 (exclusive)	NT$ 10,000,000～NT$ 15,000,000 (exclusive)	NT$ 15,000,000～NT$ 30,000,000 (exclusive)	NT$ 30,000,000～NT$ 50,000,000 (exclusive)	NT$ 50,000,000～NT$ 100,000,000 (exclusive)	NT$ 100,000,000 and more	Total

-20-

Ratio of Total Amount to Net Income (%) (%) (Note 2)				0.14%	0.14%	0.14%	0.14%	0.14%	0.14%	0.14%
Total				－
Employee Bonus - in Cash (Note 1)				2,219
Employee Bonus - in Stock (Fair Market Value) (Note 1)				－
Name	Yang, Hai-Hung	Pan, Yung-Chung	Pan, Yung-Tai	Tsao, Chung-Feng	Luo, Chin-Kun	Pan, Wu-Lung	Chou, Yan-Chou	Liu, Chia-Lun	Lee, Yi-Ping	Wu, Shou-Yi	Lee, Chiu-Sheng	Pan, Yan-Jen
Title	Director & General manager	Business Unit Director	Business Unit Director	Vice President	Vice President (Note 3)	Vice President	Vice President	Vice President	Senior Vice President	Vice President (Note 4)	Vice President (Note 5)	Asst Vice President
	Managers

-21-

		The company Consolidated The company Consolidated Directors 2.81% 2.81% 3.63% 3.63% Supervisors 0.54% 0.54% 0.51% 0.51% General manager/Vice Presidents 8.39% 8.48% 4.31% 4.24% 2. The policy, standard, and components of remuneration, the procedure for setting level of remuneration, and its association with operation performance: The company set the level of remuneration in accordance with the Articles of Incorporation subject to the resolution of the Board and the ratification of the General Meeting of Shareholders before disbursement. The remuneration to the General manager and the Vice Presidents is based on the duties being assigned and the roles they played with reference to industry standard pending on the resolution of the Remuneration Committee and the final approval of the Board. The performance bonus for them shall commensurate with the operation performance of the company in the year as a whole and their individual performance at work.	The company Consolidated The company Consolidated Directors 2.81% 2.81% 3.63% 3.63% Supervisors 0.54% 0.54% 0.51% 0.51% General manager/Vice Presidents 8.39% 8.48% 4.31% 4.24% 2. The policy, standard, and components of remuneration, the procedure for setting level of remuneration, and its association with operation performance: The company set the level of remuneration in accordance with the Articles of Incorporation subject to the resolution of the Board and the ratification of the General Meeting of Shareholders before disbursement. The remuneration to the General manager and the Vice Presidents is based on the duties being assigned and the roles they played with reference to industry standard pending on the resolution of the Remuneration Committee and the final approval of the Board. The performance bonus for them shall commensurate with the operation performance of the company in the year as a whole and their individual performance at work.	The company Consolidated The company Consolidated Directors 2.81% 2.81% 3.63% 3.63% Supervisors 0.54% 0.54% 0.51% 0.51% General manager/Vice Presidents 8.39% 8.48% 4.31% 4.24% 2. The policy, standard, and components of remuneration, the procedure for setting level of remuneration, and its association with operation performance: The company set the level of remuneration in accordance with the Articles of Incorporation subject to the resolution of the Board and the ratification of the General Meeting of Shareholders before disbursement. The remuneration to the General manager and the Vice Presidents is based on the duties being assigned and the roles they played with reference to industry standard pending on the resolution of the Remuneration Committee and the final approval of the Board. The performance bonus for them shall commensurate with the operation performance of the company in the year as a whole and their individual performance at work.	The company Consolidated The company Consolidated Directors 2.81% 2.81% 3.63% 3.63% Supervisors 0.54% 0.54% 0.51% 0.51% General manager/Vice Presidents 8.39% 8.48% 4.31% 4.24% 2. The policy, standard, and components of remuneration, the procedure for setting level of remuneration, and its association with operation performance: The company set the level of remuneration in accordance with the Articles of Incorporation subject to the resolution of the Board and the ratification of the General Meeting of Shareholders before disbursement. The remuneration to the General manager and the Vice Presidents is based on the duties being assigned and the roles they played with reference to industry standard pending on the resolution of the Remuneration Committee and the final approval of the Board. The performance bonus for them shall commensurate with the operation performance of the company in the year as a whole and their individual performance at work.
Remunerations in proportion to net income	FY 2014	Consolidated	3.63%	0.51%	4.24%
		The company	3.63%	0.51%	4.31%
	FY 2013	Consolidated	2.81%	0.54%	8.48%
		The company	2.81%	0.54%	8.39%
	Identity		Directors	Supervisors	General manager/Vice Presidents

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iv.Implementation of Corporate Governance

1. Board of Directors:

In FY 2014 (9 sessions) and in FY2015 (3 sessions) to the date this report was printed, the Board of the Company convened for 12 instances (A) with the attendance of the members specified below:

Title	Name	Attendance in Person (B)	By proxy	Attendance Rate (%) 【B/A】	Remarks
Chairman	Liang, Li-Sheng	12	0	100
Director	Yang, Hai-Hung	10	2	83
Director	PMX LLC. Of USA Representative: Bonnie Sum Wai Lo	3	0	100	Relieved on 2014/6/16, 3 instances of presence required.
Director	ASIA PACIFIC GROWTH FUND V, L.P. of the Cayman Islands Representative: Hsu,Ta-Lin	1	2	33	Relieved on 2014/6/16, 3 instances of presence required.
Director	Yang, Chi-Ting	7	4	58
Director	Pan, Yung-Chung	4	2	67	Assumed office on 2014/9/5, presence as observer for 6 instances is required.
Director	Pan, Yung-Tai	5	1	83	Assumed office on 2014/9/5, presence as observer for 6 instances is required.
Independent Director	Ku, Tai-Chao	12	0	100
Independent Director	Liu, Jong-Shi	8	2	67
Supervisor	Tsai, You-Wei	12	0	100
Supervisor	Hsu, Chiang-Chan	12	0	100
Supervisor	Chang, Deh-Tsai	10	0	83
Other mentionable items: 1. For issues of Board resolutions as specified in Article 14-3 of the Securities and Exchange Act, and the adverse opinions or qualified opinions of the independent directors with record or written declaration, if applicable, specify the date of the meeting, the session series, the content of the motions, and opinions of all independent directors, and the responses of the Company to the opinions of the independent directors: None. 2. The practice of the avoidance of the conflict of interest by the Directors on issues involving their personal interests, if applicable, specify the names of the Directors, the content of the motion, the reasons for the avoidance of the conflict of interest, and the voting: the Directors attend the Board sessions in good order and perform their duties and cast vote in due procedure. The following is the pursuit of the avoidance of the conflict of interest on motions involving their personal interests. (1) In the session dated 2014/1/22, motion no. 2 was in discussion where the disbursement of the year-end bonus for FY 2013 for the Chairman and the senior managers was discussed. The Chairman and Yang, Hai-Hung were excused from the discussion of this motion as the practice for the avoidance of the conflict of interest; (2) in the session dated 2014/3/27, motion no. 2 was in discussion where the adjustment of the salary for the senior managers and motion no. 3 on the plan for the disbursement of bonus for the senior managers and key personnel for FY 2014 was discussed. Yang, Hai-Hung is the party concerned and was excused from the discussion and voting for the avoidance of conflict of interest. (3) in the session dated 2015/1/28, motion no. 2 was in discussion where the year-end bonus of the senior managers of the Company for FY 2014 and the release of employee bonus for FY 2013 was discussed. Yang, Hai-Hung (represented by Liang, Li-Sheng), Pan, Yung-Tai, and Pan, Yung-Chung, are the parties concerned and were executed from the discussion and voting. In motion no. 3, the bonus for the Chairman for FY 2014 was discussed. The Chairman is a party concerned and was excused from the discussion and voting. (4) in the session dated 2015/3/24, motion no. 2 was in discussion where the plan for the adjustment of the salary for the senior managers of the Company for FY 2015 was discussed. Yang, Hai-Hung, Pan, Yung-Tai, and Pan, Yung-Chung (represented by Liang, Li-Sheng) are the parties concerned and were excused from the discussion and voting for the avoidance of the conflict of interest. In motion no. 3, the bonus plan for the senior managers and key personnel for FY 2015 was discussed. Yang, Hai Hung, Pan, Yung-Tai, and Pan, Yung-Chung (represented by Liang, Li-Sheng)are the parties concerned and were excused from the discussion and voting for the avoidance of the conflict of interest. In motion no. 4, the remuneration plan for the Chairman was discussed. The Chairman is the party concerned and was excused from the discussion and voting for the avoidance of the conflict of interest. (5) in the session dated 2015/5/13, motion no. 2 was in discussion where the proposal for the nomination of the candidates to the seats of independent directors would be held in the General Meeting of Shareholders. Ku, Tai-Chao is the party concerned and was excused from the discussion and voting for the avoidance of the conflict of interest. 3. The objectives for the reinforcement of the functions of the Board in current period the most recent period (e.g., the establishment of the Auditing Committee, the enhance of information transparency), and the assessment on the implementation: (1) The objectives for reinforcing the functions of the Board a. The Remuneration Committee was established under the resolution of the Board on 2011/1/12. The members of the committee were appointed pursuant to Article 5 of the Organization Code of the Remuneration Committee. This committee will fortify the functions of the Board. b. The pursuit of corporate governance and enhancement of information transparency: the Board operates in accordance with the “Parliamentary Procedures of the Board of Directors” thereby convenes as required. The state of Board performance is sound. c. Continuing education of the Directors and the Supervisors: the Company arranged trainings for the Directors and Supervisors for continuing education so that they could access to related information timely and keeping the core value and professional competence. (2) Assessment of the pursuit: the Company insists on the principle of transparency in operation. All major resolutions of the Board will be posted at MOPS immediately after the sessions for the protection of the rights of the shareholders.

-23-

Remark
Attendance Rate (%) 【B/A】	100	100	83
Attendance in Person (B)	12	12	10
Name	Tsai, You-Wei	Hsu, Chiang-Chan	Chang, Deh-Tsai
Title	Supervisor	Supervisor	Supervisor

-24-

Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	The company has not yet stablished the corporate governance best practice principles	None	None	None	None	None	None	None
Implementation Status	Abstract Illustration	The Company has not yet established the corporate governance best practice principles, but has established the seats of Directors and Supervisors and internal control system in accordance with the “Corporate Governance Best Practice Principles for TWSE/GTSM-listed Companies” and related supervisory and monitoring regulations.	(I) The Company has established the system of spokesman and acting spokesman and also the functional departments for share registration and transfer and legal affairs for handling suggestions from shareholders or disputes. (II) The Company has commissioned professional share registration service agency to keep the status of shareholding of the Directors, managers, and dominant shareholders. (III) The Company has established appropriate risk control mechanism and firewall in its internal control system. (IV) The Company has established its internal code for the prohibition of internal personnel for using information undisclosed in the market for trading of securities.	(I) They are inputs to the development and operation of the Company. (II) The Company will establish various functional committees as needed in the future. (III) The Company reviews the functions and performance of the Board at any time for fortifying corporate governance. However, there is no regulation governance the performance evaluation and related methods and will establish as needed for performance evaluation in the future. (IV) The Company commissioned KPMG Taiwan as the independent auditor, and has assessed the independence of its certified public accountants at the time of signing the service contract.	The Company has established the system of spokesman and acting spokesman and website for communications with outside.	The Company has commissioned “SinoPac Securities Shares Registration Service Department” in handling related matters.	(I) The Company has established an official website, and the “Investors Zone” on the site for disclosure of related information through the linking to MOPS. (II) The Company has established a website in both the Chinese and English languages, and has the system of spokesman and acting spokesman who will be responsible for communications with outside. In addition, the Company has also appointed designated personnel for disclosure of company information at MOPS as required by law.	1. The Company protects the fundamental rights of the employees in accordance with the Labor Standards Act, and has established the Employee Welfare Committee with the appropriation of employee benefits as required by law. 2. The Company highly treasures labor-management harmony, and values employee benefits and rights thereby makes ceaseless effort to make improvement in the hardware and software and service quality in food, clothing, residence, mobility, education and entertainment for the employees, including the facilities of no-frills employee canteen, employee parking lot, health examination, pleasure traveling programs. These help to provide a viable system for the fringe benefits of the employees so that they can have the peace of mind to contribute to their work to its entirety. 3. The employees, service banks, customers, or suppliers or other companies are the stakeholders of the Company. The Company has established through channels for communication with these stakeholders to protect the lawful rights of all sides. 4. The Company has established the procedure for the management of customer service, customer satisfaction survey, and customer complaints. For customer complaints, the Company has properly identified the problems and the responsibility and conducted customer satisfaction survey regularly to ensure best service for the customers. 5. The Company has established different internal rules and regulations, and internal control system for the management and assessment of different risks. In addition, the internal audit function has conducted regular and special audits for ensuring the proper implementation of the internal control system. 6. The Directors and Supervisors of the Company has taken different programs and courses for continuing education as required by law. In the future, the Company will arrange suitable programs for the Directors and Supervisors at regular intervals or as needed. 7. The Company has taken liability insurance for the protection of the Directors and Supervisors annually.	No.
	No	�							�
	Yes		�	�	�	�	�	�
	Evaluation Item	I. Does the Company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?	II. Shareholding structure & shareholders’ rights (I) Does the Company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure? (II) Does the Company possess the list of its major shareholders as well as the ultimate owners of those shares? (III) Does the Company establish and execute the risk management and firewall system within its conglomerate structure? (IV) Does the Company establish internal rules against insiders trading with undisclosed information?	III. Composition and Responsibilities of the Board of Directors (I) Does the Board develop and implement a diversified policy for the composition of its members? (II) Does the Company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? (III) Does the Company established a stabdard to measure the performance of the Board, and implement it annually? (IV) Does the Company regularly evaluate the independence status of CPAs?	IV. Does the Company establish a communication channel and build a designated section on its website for stakeholders, as well as handle all the issues they care for in terms of corporate social responsibilities?	V. Does the Company appoint a professional shareholder service agency to deal with shareholder affairs?	VI. Information Disclosure (I) Does the Company have a corporate website to disclose both financial standings and the status of corporate governance? (II) Does the Company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)?	VII. 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)?	VIII. 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.

-25-


	Remarks			Resigned on 2014.3.19	Assumed office on 2014.3.27
	Number of Other Public Companies in Which the Individual is Concurrently Serving as an Remuneration Committee	0	0	0	0
Independence Criteria (Note)	8	�	�	�	�
	7	�	�	�	�
	6	�	�	�	�
	5	�	�	�	�
	4	�	�	�	�
	3	�	�	�	�
	2	�	�		�
	1	�	�	�	�
Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience	Has work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the Company.	�	�	�	�
	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
	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
Criteria	Name	Ku, Tai-Chao	Liu, Jong-Shi	Yang, Chi-Ting	Yao, Heng-Shan
	Identity	Independent Director	Independent Director	Director	Professional staff

-26-

-27-

Remarks	Assumed office of the 2ndterm of the Remuneration Committee on 2012.6.27	Assumed office of the 2ndterm of the Remuneration Committee on 2012.6.27	Assumed office of the 2ndterm of the Remuneration Committee on 2012.6.27 Resigned from office on 2014.3.19 (Note1) resigned as of the time the 2ndsession was held	Assumed office of the 2ndterm of the Remuneration Committee on 2014.3
Attendance Rate (%) (B/A)	100%	100%	50% (Note 1)	-
By proxy
Attendance in Person (B)	2	2	1	0
Name	Ku, Tai-Chao	Liu, Jong-Shi	Yang, Chi-Ting	Yao, Heng-Shan
Title	Convener	Committee Member	Committee Member	Committee Member

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Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasonss		None	None	None	None	V. If the Company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the Principles and their implementation: The Company highly value people as its vital asset, and takes corporate social responsibility as its core value under the principles of concern for the employees, guarding the community, and protecting the earth. The summary is: 1. Concern for the employees — taking care of the employees: the Company duly observes the laws governing labor force and spares no effort in creating a fair and open work environment, including the communication platform and career development opportunities. 2. Corporate governance — advocacy of information transparency: the Company discloses related corporate information and development status at regular intervals, and fulfills its obligations in paying tax, respect for intellectual property rights, protection of the privacy of business partners, and fight corruption and strictly prohibits illicit benefits and undue business competition. 3. Guarding the community – for the cause of social charity: the Company advocates different forms of social charities, including the participation in the organization for community development, social charity groups, the charity for the social misfortunes and the governments for the improvement of community development. 4. Protecting the earth – environment for sustainable development: the Company commits to the goal of environmental sustainability and duly observes the code of conduct of the Electronic Industry Citizenship Coalition (EICC), environmental protection laws, and related international regulations and standards. In addition, the Company also organizes training for the suppliers regularly to upgrade the knowledge and capacity in the understanding of environmental protection laws.	VI. Other important information to facilitate better understanding of the Company’s corporate social responsibility practices 1. The Company manages its employees in accordance with the Labor Standards Act and other applicable legal rules, and has designated personnel to handle本公the works related to the employees for the protection of their rights. 2. The Company has organized the duties of safety and health in accordance with the Labor Safety and Health Act and other applicable rules and regulations, and provides training on the safety and health related to the assigned duties of the employees and the prevention and response to disasters, and also provide health examination for the employees. 3. The Company seeks to protect consumer rights and product safety as its responsibility, and spares no effort to find solution for the problems presented by the customers. 4. The Company takes the health of the employees as its responsibility, and launches related programs and activities for the physical and mental health of the employees, including fitness class, weight loss class, and subsidy for light meal box, disease prevention, stress alleviation, and withdrawal from smoking.	VII. If the products of the Company or corporate social responsibility report have been accredited by an accreditation agency, specify the detail: None.
Implementation Status	Abstract Explanation	(I) The Company made its policy and system for corporate social responsibility for the first time in current period, and has reviewed the result of the performance in conformity to relevant operation procedures. (II) The Company organizes training in conformity to the operation procedure for social responsibility for enriching related knowledge. (III) Related departments perform their duties in corporate social responsibility as assigned. (IV) The Company conducts routine survey on the external salary market to ensure the competitiveness of the salary level and as reference for making remuneration policy. In addition, the Company also offers personal performance reward depending on the performance of the employees upon the proper attainment of the annual objective further to the fixed annual salary.	(I) The Company has proactively realized its concept of environmental protection in green design and green management in offering products and services. All materials contained in the products are in compliance with the international environmental protection standards and customer needs. (II) The Company has established the green procurement management system and exercised control over the production process and materials to ensure the products produced are conforming to the requirements of environmental protection. In addition, the Company has established a designated body in quality control of all production plants in Mainland China with the intensification of the practice of energy saving and carbon reduction. (III) The Company has established the “Greenhouse Gas Inspection and Voluntary Reduction Declaration” and spares no effort in the inspection of greenhouse gas to ensure gaseous emission can be kept under control and makes the inspection result relevant with the plan of voluntary reduction of greenhouse gas.	(I) The policies of the Company for employment and management of personnel are in compliance with applicable laws governing labor force and related internationally accepted human rights principles. The Company also reviews and revises its internal code governing human resources regularly, and makes positive effort to protect the lawful right of the employees. There is no discrimination in employment. The Company is dedicated to the corporate philosophy of “the best employer”. (II) For bolstering labor-management understanding, the Company has arranged the employee mail box, President’s mail box, complaints through the labor representatives, complaints through the immediate supervisor/HR Division. Through proper procedures for handling complaints, the Company highly values every bit of opinion from the employees. (III) The Company reviews and protects the safety and health of the work environment at regular intervals, and spares no effort in improving the work safety and health of the employees. In addition, the Company also provides training in safety and health at regular intervals. (IV) The Company has developed the mechanism for the communication with the employees at regular intervals. The Chief Operation Officer is engaged in dialogues with the employees through the semi-annual colloquium. The content covers the overall business plan of the Company at the moment, the result, and the gravity of corporate culture. The heads of the business units call for quarterly meeting at the department level to ensure the employees understand the situations of the business units. Furthermore, one-to-one interactions between the supervisors and the employees are encouraged to ensure positive interaction. (V) Job function and skills remained the core structure of learning and development in the Company, which is tightly woven with the strategies and objectives of corporate development in the future. The training system covers professional skills, leadership skills, and regular training. (VI) The Company has established the procedures for customer service management, customer satisfaction survey, and handling customer complaints thereby identify the problem from customer complaints and the responsibility, and evaluate customer satisfaction at regular intervals for providing best service to the customers. (VII) In providing products and services, the Company realizes the concept of environmental protection in green design and green management and performs the best of corporate responsibility as a corporate citizen in compliance with applicable laws and in conformity to the requirements of the customers. Further to applicable legal rules governing green products (e.g., RoHS, REACH, ErP and others) and customer requirements, the Company also established its internal capacity and the reciprocal reponses of the suppliers through related trainings and integrates with the IT system (PLM) to realize the policy of green products. (VIII) Before the Company officially qualify firm as a supplier, the Company takes cautious procedures for evaluation (including review, contract review, two-way communications and mechanism for complaints), the Company will evaluate the firm in ESH management including monitoring of the environment and compliance with the Labor Standards Act. At the same time, the Company also conducts an on-site inspection for assessment of the management of hazardous substances, including: the organizational structure of the supplier in the implementation of green product management, employee training, production control, product design, IQC and the prevention of contamination by hazardous substances. (IX) The Company demands all suppliers to issue the “Declaration of Suppliers” the content of which contains the declaration of environmental protection and no use of conflict materials. If specific supplier violates the declaration, the Company shall terminate or discharge the business transactions with such supplier.	(I) The Company compiled a corporate social responsibility report for the first time, and has disclosed related documents and information at the official website and the annual report of the Company.
	No
	Yes	V V V V	V V V		V
Evaluation Item		I. Corporate Governance Implementation (I) Does the Company declare its corporate social responsibility policy and examine the results of the implementation? (II) Does the Company provide educational training on corporate social responsibility on a regular basis? (III) 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? (IV) Does the Company declare a reasonable salary remuneration policy, and integrate the employee performance appraisal system with its corporate social responsibility policy, as well as establish an effective reward and disciplinary system?	II. Sustainable Environment Development (I) Does the Company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment? (II) Does the Company establish proper environmental management systems based on the characteristics of their industries? (III) 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?	III. Preserving Public Welfare (I) Does the Company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights? (II) Has the Company set up an employee hotline or grievance mechanism to handle complaints with appropriate solutions? (III) Does the Company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis? (IV) 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? (V) Does the Company provide its employees with career development and training sessions? (VI) Does the Company establish any consumer protection mechanisms and appealing procedures regarding research development, purchasing, producing, operating and service? (VII) Does the Company advertise and label its goods and services according to relevant regulations and international standards? (VIII) Does the Company evaluate the records of suppliers’ impact on the environment and society before taking on business partnerships? (IX) 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?	IV. Enhancing Information Disclosure (I) Does the Company disclose relevant and reliable information regarding its corporate social responsibility on its website and the Market Observation Post System (MOPS)?

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Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	None	None	None	None
Implementation Status	Abstract Illustration	(I) 1. The Company has established the “Procedure for Ethical Corporate Management Best Practice Principles and Code of Conduct” and the corporate management of the Company is in compliance with the laws governing TWSE/GTSM-listed companies or other code of conduct in business and applicable laws. 2. The Company has incorporated the provision of the avoidance of the conflate of interest by the Directors in the “Parliamentary Procedure of the Board of Directors” thereby respective Directors may express opinions or respond to questions in motions that has an interest to themselves or the institutions they represented the extent to which the interest of the Company may be jeopardized but shall be excused from discussion and voting of these motions. 3. The Company has instituted the “Regulation for the Prevention of Insider Trade” thereby Directors, Supervisors, Managers, and employees shall pay utmost attention with sincerity as reasonable persons under due diligence, and shall perform their duties under the principle of integrity and trust. In addition, they shall enter into the agreement on confidentiality and non-disclosure for not disclosing material information of the Company to any third party. (II) Further to the establishment of “Procedure for Ethical Corporate Management and Code of Conduct”, the Company has also demands the employees to duly observe applicable laws as mentioned in the “Work Regulation” and “Code of Conduct”. The Company also demands the suppliers and vendors to issue the “Declaration of Suppliers” to establish fair, sincere, trustworthy, and transparent principles of trade. (III) As explicitly stated in the “Procedure for Ethical Corporate Management and Code of Conduct”, the Company prohibits the offering or acceptance of illicit benefits and finder fees, and regulates political donations, charity donation and sponsorship.	II. (I) As explicitly stated in the “Procedure for Ethical Corporate Management and Code of Conduct”, the Company has set forth the procedure for the assessment of business integrity of prospective business partners before engaging in business relation to avoid trading with unethical business partners. In addition, the provision of ethical business practice is also included in the business contracts to be entered with the business partners. (II) The Company appoints HR Division as the designated body for the advocacy of ethical business practice. In the event of unethical business practice, the designated body shall report to the Board on the responses and subsequent review for improvement. (III) 1. The provision of the avoidance of the conflict of interest has been explicitly stated in the “Parliamentary Procedure for the Board of Directors and the ““Procedure for Ethical Corporate Management and Code of Conduct”, Directors and Supervisors may express opinions or respond to questions on motions that involved their personal interest or the interest of the institutions they represented, to the extent that such interests may jeopardize the interest of the Company. However, these Directors and Supervisors shall be excused from the discussion and voting on these motions and shall not represent other Directors to take part in the discussion or voting. 2. In case the employees of the Company encounter the conflict of interest in the course of business pursuit, report to the supervisor and the designated body. (IV) The Company has established the accounting system and the internal control system as required by applicable laws. The operation auditing function also audits the status of compliance with the accounting system and the internal control system and report to the Board on the findings. (V) The Company organizes training in business integrity and ethical practices for the promotion of the importance of confidentiality of business information.	(I) The Company has explicitly stated the regulations for reward and punishment, complaint system and disciplinary actions in the “Procedure for Ethical Corporate Management and Code of Conduct”, and incorporated ethical business practices as an integral part of the code of conduct and the human resources policy. (II) The Company has established a designated body for handling business secrets. This body is responsible for the establishment and enforcement of the procedures for the management, custody and confidentiality of business secrets, and reviews the result of the implementation to ensure the procedures are effective. (III) The Company has not yet established related policies and procedures for the protection of the informants but has started to revise by adding related rules into the “Procedure for Ethical Corporate Management and Code of Conduct”.	(I) The Company has set up an Investors Zone at its website for the download of its financial statements and related business information, and disclosed the information on corporate governance and ethical corporate management with the appointment of designated personnel to gather company information and disclose at the Company website.
	No			V
	Yes	V V V	V V V V V	V V	V
	Evaluation Item	I. Making of business integrity policy and action plans (I) Has The Company explicitly stated its policy of business integrity in its internal code and external documents, with the commitment of the Board of Directors and the management for the realization of business integrity? (II) Has The Company mapped out action plans for the prevention of unethical practices and related operation procedures, code of conduct, punishment for violation, and the system of complaints, and has properly implemented these systems? (III) Has the Company taken preventive measures in response to the business activities bearing higher risk of business integrity as stated in Article 7-2 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTWM-listed Companies” or other business areas?	II. Fulfil operations integrity policyt (I) Does the Company evaluate business partners’ ethical records and include ethics-related clauses in business contracts? (II) Does the Company establish an exclusively (or concurrently) dedicated unit supervised by the Board to be in charge of corporate integrity? (III) Does the Company establish policiesto prevent conflict of interest and provide appropriate communication channels, and implement it? (IV) Has the Company established an 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? (V) Does the Company regularly hold internal and external training on operational integrity?	III. The reporting system of the Company (I) Has the Company established the system for reporting and rewarding system and the channels for facilitating reporting on unethical practices, and appointed designated personnel to investigate the persons being reported? (II) Has the Company established the standard operation procedures for the investigation of the events being reported and keep the investigation and related matters in strict confidence? (III) Has The Company established channels for reporting on unethical practice in business, and the punishment of violation and the system of complaint.？	IV. Reinforcement of disclosure (I) Has the Company disclosed its ethical corporate management best practice principles at its website and MOPS and the result of the implementation of the code?

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The implementation of the internal control system shall include the disclosure of the following (1) Declaration of Internal Control

PRIMAX Electronics Limited

Declaration of Internal Control System

Date: March 24 2015

PRIMAX Electronics Limited has conducted internal audit in accordance with its Internal Control Regulation covering the period from January 1 to December 31 2014, and hereby declares as follows:

I. The Company acknowledges and understands that, the establishment, enforcement and preservation of internal control system is the responsibility of the Board and the managers, and that the Company has already established such system. The purpose it to reasonably ensure the effect and efficiency of operation (including profitability, performance and security of assets), the reliability of financial reporting and the compliance with relevant legal rules.
II. There is limitation inherent to internal control system, no matter how perfect the design. As such, effective internal control system may only reasonably ensure the achievement of the aforementioned goals. Further, the operation environment and situation may vary, and hence the effectiveness of the internal controls system. The internal control system of the Company features the self-monitoring mechanism. Once identified, any shortcoming will be corrected immediately.
III. The Company judges the effectiveness of the internal control system in design and enforcement in accordance with the “Criteria for the Establishment of Internal Control System of Public Offering Companies” (hereinafter referred to as “the Criteria”). The Criteria is instituted for judging the effectiveness of the design and enforcement of internal control system. There are five components of effective internal control as specified in the Criteria, with which the procedure for effective internal control is composed by five elements, namely, 1. Control Environment, 2. Risk Evaluation, 3. Control Operation, 4. Information and Communication, and 5. Monitoring. Each of the elements in turn contains certain audit items, and shall be referred to the Criteria for detail.
IV. The Company has adopted the aforementioned internal control system for internal audit on the effectiveness of the design and enforcement of the internal control system.
V. Basing on the aforementioned audit findings, the Company holds that has reasonably preserved the achievement of the aforementioned goals within the aforementioned period of internal control (including the monitoring over the subsidiaries), including the effectiveness and efficiency in operation, reliability in financial reporting and compliance with relevant legal rules, and that the design and enforcement of internal control are effective.

VI. This statement of declaration shall form an integral part of the annual report and prospectus on the Company and will be announced. If there is any fraud, concealment and unlawful practice discovered in the content of the aforementioned information, the Company shall be liable to legal consequences under Article 20, Article 32, Article 171 and Article 174 of the Securities and Exchange Act.

VII. This statement of declaration has been approved by the Board on March 24 2015 with presence of 7 Directors with common consent.

==> picture [184 x 143] intentionally omitted <==

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PRIMAX Electronics Limited
Chairman:
General Manager:
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(2) If a certified public accountant is being appointed for the audit on the internal control system, disclose the audit report: None.
The Company or its personnel were punished by law; the personnel of the Company were
punished by the Company for violation of internal control system in the most recent period to the date this report was printed, the major short comings and the status of improvement: None.

11. Major resolutions of the General Meeting of Shareholders and the Board in the most recent period to the date this report was printed.

(1) Major Resolutions of Shareholders’ Meeting

Resolutions	of Shareholders’ Meeting
Time	Major resolutions
2014.6.24	1. Approval of the 2013 business report and financial statements. 2. Approval of the distribution of 2013 retained earnings and employee profit sharing. 3. Passing the amendment to the “Procedure for the Acquisitions and Dispositions of Assets”. 4. Passingthe motion of “Restricted Stock Awards”.
2014.9.5	1. Passing the amendment to the “Articles of Incorporation”. 2. Election of Directors to fill two vacancies. 3. Passingthe motion of liftingthe ban of the conflict of interest amongthe directors.

(2) Major Resolutions of Board Meetings

Time	Major resolutions
2014.1.22	1. Approval of the change in chief accounting officer of the Company. 2. Passing the motion of the distribution of year-end bonus for the Chairman and the senior managers for FY2013. 3. Passing the motion for the distribution of employee bonus to the senior managers for FY2012. 4. Passing the motion of the issuance of restricted stock awards and the list of employees entitled to the shares issued at the 3rdtranche in FY2012 and thequantityallocated.
2014.3.27	1. Passing the motion of the salary adjustment for the senior managers for FY 2014. 2. Passing the motion of planning for the bonus for the senior managers and key personnel for FY 2014. 3. Passing the motion of the remuneration to the Chairman for FY 2014. 4. Passing the date, time, place and agenda for the regular session of the General Meeting of Shareholders in 2014. 5. Passing the motion for the distribution of earnings for FY 2013. 6. Passing the motion for the restricted stock awards. 7. Passingthe motion of election of the members for the Remuneration Committee for fillingthe vacancies.
2014.5.13	1. Passing the regulation governing the issuance of restricted stock awards in FY 2014. 2. Passingthe motion of theguarantee in favor of TymphanyHK Limited.
2014.6.27	1. Passing the motion of the issuance of restricted stock awards and the list of employees entitled to the shares issued at the 4thtranche in FY 2013 and the quantity allocated. 2. Passing the motion of the distribution of earnings in cash dividend for FY 2013, the after distribution day and thepayout day.
2014.7.17	1. Passing the amendment to the “Articles of Incorporation”. 2. Election of Directors to fill two vacancies. 3. Passingthe motion of liftingthe ban of the conflict of interest amongthe directors.
2014.08.13	1. Passingthe motion of raisingnew capital byissuingnew shares at Primax Electronics(Chong Qing)Corp.,Ltd.
2014.10.15	1. Passing the motion of the investment into Global TEK group.
2014.11.12	1. Passingthe motion of the investment in Nien Made Enterprise Co.,Ltd.
2015.1.28	1. Passing the motion of the release of year-end bonus for the senior managers for FY2014 and the employee bonus for FY 2013. 2. Passing the motion of the bonus to the Chairman for FY 2014. 3. Passing the motion of the issuance of restricted stock awards and the list of employees entitled to the shares issued at the 1sttranche in FY 2014 and thequantityallocated.
2015.3.24	1. Passing the motion of the plan for the salary adjustment for the senior managers in FY 2015. 2. Passing the motion of the bonus for the senior managers and the key personnel for FY 2015. 3. Passing the motion of the remuneration to the Chairman for FY 2015. 4. Passing the motion of the amendment to the “Articles of Incorporation”. 5. Passing the date, time, place and agenda for the regular session of the General Meeting of Shareholders in 2015. 6. Passing the motion of the destruction of earnings for FY 2014 7. Passing the motion of the election of a new term of the Board. 8. Passingthe motion of liftingthe ban of the conflict of interest amongthe directors.
2015.5.13	1. Passing the motion of the replacement of certified public accountants. 2. Passing the motion of the review of the nomination of candidates to the seats of independent directors in the 2015 regular session of the General Meetingof Shareholders.

Adverse opinions of the Directors or Supervisors against important resolutions of the Board the summary of the content: None.

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The resignation or dismissal of the Chairman, General manager, Chief Accounting Officer, Chief Internal Auditor and Chief R&D Officer, if applicable: None.

v.Information on service fees for certified public accountants

Name of CPA firm	Name of CPA	Name of CPA	Auditperiod	Remarks
KPMG Taiwan	MEI-PIN WU	CHENG-CHIEN CHEN	FY 2014,fullperiod

Currency unit: NTD thousand

Fee Items Fee Range	Fee Items Fee Range	Audit Fee	Total
1	Under 2,000
2	2,000(inclusive)～4,000
3	4,000(inclusive)～6,000
4	6,000(inclusive)～8,000
5	8,000(inclusive)～10,000	8,030	8,030
6	10,000 and more

If any of the followings applies to the service fee for the certified public accountants, disclosure is required:

If the amount of service fees paid to the CPA, CPA firm, and its affiliates for non-auditing services accounted for more than 1/4 of the service fees for auditing, disclose the content of auditing service and services beyond auditing and the amount.

Accounting Firm	Name of CPA	Audit Fee	Fees for non-auditingservice	Fees for non-auditingservice	Fees for non-auditingservice	Fees for non-auditingservice	Fees for non-auditingservice	Period Covered by CPA’s Audit
			System of design	Company Registration	Human resources	Others	Subtotal
KPMG Taiwan	Wu Mei-Pin	8,030	0	0	0	0	0	FY 2014, full period
	Chen Chen-Chien

Replacement of a CPA firm and the payment for service fee in the year of replacement was lower than the service fee paid in the previous year, disclose the amount difference and the reasons for the difference, if applicable: None.
If the service fee is more than 50% lower than the fee for the previous year, disclose the amount change, the proportion, and the reasons: None.

vi.Replacement of CPA

The company did not replace its CPA in the last 2 years.

vii.If the Chairman, General Manager, Chief Financial Officer or the Chief Accounting Officer has been working with the CPA firm retained for auditing service or its affiliates in the most recent year, specify the name of person and title, and the name of the CPA firm concerned or its affiliates: None.

viii.Transfer of company shares or pledge company shares under lien by Directors, Supervisors,

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managers and shareholders holding more than 10% of the company shares in the most recent period to the date this report was printed.

Transfer of shares and change in the shares under lien

Title	Name	FY 2014	FY 2014	FY 2015 to April 30	FY 2015 to April 30
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Chairman	Liang,Li-Sheng	1,000,000	0	0	0
Director and President	Yang,Hai-Hung	756,723	0	0	0
Director	PMX LLC. Of USA (note 1) Representative: Bonnie Sum Wai Lo	(73,388,691)	0	－	－
Director	ASIA PACIFIC GROWTH FUND V, L.P. of the Cayman Islands (note 1) Representative: Hsu, Ta-Lin	(73,388,691)	0	－	－
Director	Yang, Chi-Ting	0	0	0	0
Director and Business Unit Director	Pang, Yung-Chung (note 2)	(63,000)	0	0	0
Director and Business Unit Director	Pan, Yung-Tai (note 2)	250,000	0	0	0
Independent Director	Ku, Tai-Chao	0	0	0	0
Independent Director	Liu, Jong-Shi	0	0	0	0
Supervisor	Tsai, You-Wei	0	0	0	0
Supervisor	Hsu, Chiang-Chan	0	0	(10,000)	0
Supervisor	Chang, Deh-Tsai	0	0	0	0
Senior Vice President	Lee, Yi-Ping	200,000	0	(45,000)	0
Vice President	Tsao, Chung-Feng	(55,000)	0	10,000	0
Vice President	Chou, Yen-Chou	150,000	0	0	0
Vice President	Liu, Chia-Lun	0	0	0	0
Vice President	Wu, Shou-Yi(note 3)	0	0	－	－
Vice President	Luo, Chin-Kun(Note4)	0	0	－	－
Vice President	Pan, Wu-Lung (Note5)	(18,000)	0	586,530	0
Vice President	Lee, Chiu-Sheng (note 6)	50,000	0	0	0
Vice President	Chiang, Yan-Ying (note 7)	－	－	0	0
Vice President	Chang, Ching-Kai(note 7)	－	－	0	0
Asst Vice President	Pan, Yan-Jen	0	0	0	0
Note 1: Relieved on 2014/6/16 Note 5: Retired on 2015/3/31 Note 2: Elected Director on 2014/9/5 Note 6: Assumed office on 2014/10/1 Note 3: Resigned on 2014/1/31 Note 7: Assumed office on 2015/4/1 Note 4: Retired on 2014/3/31

The counterparty of share transfer is a stakeholder: None.
The lien holder of the shares pledged is a stakeholder: None.

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ix.Information on the top 10 shareholders by proportion of shareholding and they are related parties or spouse, kindred within the 2[nd] tier under the Civil Code, if applicable

May 1 2015; Unit: share

Unit: share
Name	Current Shareholding		Spouse’s/minor’s Shareholding		Shareholding by Nominee Arrangement		Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees		Remark
	Quantity	Proportion	Quantity	Proportion	Quantity	Proportion	Name	Relation
ALPINE ASIA INVESTMENTS LIMITED (BVI)	30,561,062	6.95%	0	0	0	0	CAMPBELL TECHNOLOGY CORPORATION (BVI) (Director: Yang, Hai-Hung)	Kindred within the 2ndtier
Nan Shan Life Insurance Co., Ltd.	21,983,000	5.00%	0	0	0	0	None	None
Yeh, You-Fen	11,455,227	2.61%	0	0	0	0	None	None
CAMPBELL TECHNOLOGY CORPORATION (BVI)	11,204,909	2.55%	0	0	0	0	ALPINE ASIA INVESTMENTS LIMITED (BVI) (Director: Liang, Li-Sheng)	Kindred within the 2ndtier
UBS account in custody of HSBC	9,417,000	2.14%	0	0	0	0	None	None
Pan, Yung-Chung	8,291,046	1.89%	0	0	0	0	None	None
Special Investment Account at Nomura Asset Management (UK) at the appointment of the Central Bank of Saudi Arabia in custody of Morgan Chase Bank	7,135,000	1.62%	0	0	0	0	None	None
Labor Pension Fund under the new system	7,015,000	1.60%	0	0	0	0	None	None
Cathay Life Insurance Co., Ltd.	6,943,000	1.58%	0	0	0	0	None	None
PineBridge Global Funds –PineBridge Greater China Equity Fund in custodyof HSBC	6,636,000	1.51%	0	0	0	0	None	None

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x.The investment directly or indirectly controlled by the Directors, Supervisors and Managers of the company and the overall quantity of shareholding of particular investees and the proportion of shareholding.

March 31 2015; Unit; thousand shares; %

proportion of shareholding. thousand shares; %			March	March	31 2015; Unit;	31 2015; Unit;
Affiliated Enterprises	Ownership by the Company		Direct or Indirect Ownership by Directors, Supervisors, Managers		Total Ownership
	Quantity	Proporti on	Quantity	Proportio n	Quantity	Proportion
Dongguan PRIMAX Electronic Telecommunication Products Co.,Ltd.	－(Note 1)	100.00	－	－	－(Note 1)	100.00
Kunshan Primax Eastpoly-Electronics Co.,Ltd.	－(Note 1)	100.00	－	－	－(Note 1)	100.00
PRIMAX Electronics(Chongqing)Corp.,Ltd.	－(Note 1)	100.00	－	－	－(Note 1)	100.00
BeijingDexingElectronics TechnologyCo.,Ltd	－(Note 1)	100.00	－	－	－(Note 1)	100.00
DestinyTechnology (Japan)Corporation	0.5	100.00	－	－	0.5	100.00
Primax Electronics Korea Co.,Ltd.	67	100.00	－	－	67	100.00
Polaris Electronics Inc.	1,600	100.00	－	－	1,600	100.00
Primax Industries(HongKong)Ltd.	602,817	100.00	－	－	602,817	100.00
Primax Technology (Cayman Holding)Ltd.	285,067	100.00	－	－	285,067	100.00
Primax Industries(Cayman Holding)Ltd.	8,147,636	100.00	－	－	8,147,636	100.00
DestinyTechnologyHoldingCo.,Ltd	1,050	100.00	－	－	1,050	100.00
Diamond(Cayman)Holdings Ltd.	84,050	100.00	－	－	84,050	100.00
TymphanyWorldwide Enterprises Ltd.(註2)	38,501	70.00	－	－	38,501	70.00
TYP Enterprises,Inc.(Note 2)	0.35	70.00	－	－	0.35	70.00
TymphanyHK Ltd.(Note 2)	13,577	70.00	－	－	13,577	70.00
Tymphany (Huizhou)Co.,Ltd.(Note 2)	－(Note 1)	70.00	－	－	－(Note 1)	70.00
TymphanyAustralia PtyLtd.(Note2)	0.0	70.00	－	－	0.0	70.00
GLOBAL-TEK(Note 3)	16,530	30.00	－	－	16,530	30.00
GLOBAL-TEK(Note 3)	4,980	30.00	－	－	4,980	30.00
Global Tek Fabrication Co.,Ltd.(Samoa) (Note 3)	3,750	30.00	－	－	3,750	30.00
Global Tek Co.,Ltd.(Samoa) (Note 3)	2,760	30.00	－	－	2,760	30.00
Global Tek Fabrication Co.,Ltd.(HK) (Note 3)	7,860	30.00	－	－	7,860	30.00
GP Tech. Inc.(Note 3)	6	30.00	－	－	6	30.00
GLOBAL-TEK(Wuxi)Limited(Note 3)	－(Note 1)	30.00	－	－	－(Note 1)	30.00
GLOBAL-TEK Metal Products (Wuxi) Limited (Note 3)	－(Note 1)	30.00	－	－	－(Note 1)	30.00
GLOBAL-TEK(Xi’an)Limited(Note 3)	－(Note 1)	30.00	－	－	－(Note 1)	30.00

Note 1 ： a limited liability company, no share being issued. Note 2 ： Holding of 70% of the shares indirectly through Diamond (Cayman) Holdings Ltd. Note 3 ： Holding of 30% of the shares indirectly through GLOBAL-TEK.

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IV. Capital Overview

i.Sources of Capital

March 26 2015 Unit: share

Share category	Stated capital	Stated capital		Remarks
	Outstandingshares	Unissued shares	Total
Registered common shares	438,648,682	61,351,318	500,000,000	Listed in TWSE

March 26 2015 currency unit: NTD thousand; thousand shares

Month/ Year	Par Value (NT$)	Authorized Capital	Authorized Capital	Paid-in capital	Paid-in capital	Remarks	Remarks	Remarks
		Quantity of shares	Amount	Shares	Amount (NT$ thousands )	Sources of capital	Capital Increased by Assets Other than Cash	Other
2006.03	10	100	1,000	100	1,000	Initial investment	None	Note 1
2007.06	10	90,000	900,000	85,400	854,000	Issuing new shares for raising capital amounting to NT$853,000 thousand	None	Note 2
2007.09	10	400,000	4,000,000	321,500	3,215,000	Issuing new shares for raising capital NT$2,361,000 thousand	None	Note 3
2007.11	10	400,000	4,000,000	379,000	3,790,000	Issuing new shares for raising capital NT$575,000 thousand	None	Note 4
2009.11	10	500,000	5,000,000	379,935	3,799,349	Exercise of ESOP amounting to NT$9,349 thousand	None	Note 5
2010.04	10	500,000	5,000,000	383,079	3,830,791	Exercise of ESOP amounting to NT$31,442 thousand	None	Note 6
2010.09	10	500,000	5,000,000	385,336	3,853,364	Exercise of ESOP amounting to NT$22,573 thousand	None	Note 7
2011.01	10	500,000	5,000,000	386,397	3,863,965	Exercise of ESOP amounting to NT$10,601 thousand	None	Note 8
2011.03	10	500,000	5,000,000	397,475	3,974,746	Exercise of ESOP amounting to NT$110,781 thousand	None	Note 9
2011.12	10	500,000	5,000,000	398,439	3,984,399	Exercise of ESOP amounting to NT$9,653 thousand	None	Note 10
2012.04	10	500,000	5,000,000	401,080	4,010,798	Exercise of ESOP amounting to NT$26,399 thousand	None	Note 11
2012.05	10	500,000	5,000,000	401,458	4,014,582	Exercise of ESOP amounting to NT$3,785 thousand	None	Note 12
2012.10	10	500,000	5,000,000	403,441	4,034,408	Exercise of ESOP amounting to NT$19,826 thousand	None	Note 13
2012.10	10	500,000	5,000,000	426,970	4,269,698	Issuing new shares for raising capital NT$235,290 thousand	None	Note 13
2013.03	10	500,000	5,000,000	428,966	4,289,658	Exercise of ESOP amounting to NT$19,960 thousand	None	Note 14
2013.05	10	500,000	5,000,000	431,346	4,313,457	Exercise of ESOP amounting to NT$23,799 thousand	None	Note 15
2013.10	10	500,000	5,000,000	432,796	4,327,957	Stock dividend in the form of stock options amounting to NT$14,500 thousand	None	Note 16
2013.12	10	500,000	5,000,000	433,573	4,335,733	1. Exercise of ESOP amounting to NT$5,916 thousand 2. Stock dividend in the form of stock options amountingto NT$1,860 thousand	None	Note 17
2014.03	10	500,000	5,000,000	433,981	4,339,813	1. Exercise of ESOP amounting to NT$2,730 thousand 2. Stock dividend in the form of stock options amountingto NT$1,350 thousand	None	Note 18
2014.06	10	500,000	5,000,000	433,831	4,338,313	1. Exercise of ESOP amounting to NT$750 thousand 2. Cancellaion of RSO amounting to NT$2,250 thousand	None	Note 19
2014.08	10	500,000	5,000,000	434,051	4,340,513	1. Stock dividend in the form of stock options amountingto NT$2,200 thousand	None	Note 20
2014.12	10	500,000	5,000,000	434,658	4,346,578	1. Exercise of ESOP amounting to NT$7,015 thousand 2. Cancellaion of RSO amountingto NT$950 thousand	None	Note 21
2015.03	10	500,000	5,000,000	438,649	4,386,487	1. Exercise of ESOP amounting to NT$27,659 thousand 2. Stock dividend in the form of stock options amountingto NT$12,250 thousand	None	Note 22

Note 1：95.03.20 Letter Fu-Chien-Shang-Zi No. 09574650700. Note 2：96.06.26 Letter Ching-Shou-Shang-Zi No. 09601140030.

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Note 3：96.09.27 Letter Ching-Shou-Shang-Zi No.09601235870. Note 4：96.11.07 Letter Ching-Shou-Shang-Zi No.09601273090. Note 5：98.11.04 Letter Ching-Shou-Shang-Zi No.09801254590. Note 6：99.04.16 Letter Ching-Shou-Shang-Zi No.09901076470. Note 7：99.09.13 Letter Ching-Shou-Shang-Zi No.09901206110. Note 8：100.01.11 Letter Ching-Shou-Shang-Zi No.10001005610. Note 9：100.03.31 Letter Ching-Shou-Shang-Zi No.10001060980. Note 10: 100.12.05 Letter Ching-Shou-Shang-Zi No.10001275550. Note 11: 101.04.09 Letter Ching-Shou-Shang-Zi No.10101059950. Note 12: 101.05.22 Letter Ching-Shou-Shang-Zi No.10101091810. Note 13: 101.10.12 Letter Ching-Shou-Shang-Zi No.10101211370. Note 14: 102.03.07 Letter Ching-Shou-Shang-Zi No.10201041250. Note 15: 102.05.28 Letter Ching-Shou-Shang-Zi No.10201096770. Note 16: 102.10.22 Letter Ching-Shou-Shang-Zi No.10201214400. Note 17: 102.12.11 Letter Ching-Shou-Shang-Zi No.10201247440. Note 18: 102.12.11 Letter Ching-Shou-Shang-Zi No.10301032580. Note 19: 103.06.12 Letter Ching-Shou-Shang-Zi No.10301102920. Note 20: 103.08.14 Letter Ching-Shou-Shang-Zi No.10301160910. Note 21: 103.12.12 Letter Ching-Shou-Shang-Zi No.10301251420. Note 22: 104.03.24 Letter Ching-Shou-Shang-Zi No.10401045290. Note 23: NT$8,800,300 was the exercised amount of ESOP pending on registration for change.

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ii.Status of Shareholders

May 1 2015; unit: person; share

Shareholder Quantity	Government Agencies	Financial institutions	Other Juridical Persons	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Number of Shareholders	3	51	50	15,180	191	15,475
Shareholding (shares)	13,242,000	54,333,175	7,482,005	177,554,230	186,917,302	439,528,712
Percentage	3.01%	12.36%	1.70%	40.40%	42.53%	100%

iii.Shareholding Distribution Status

May 1 2015; unit: person; share

		May 1	2015; unit: person; share
Class ofShareholding	Number of shareholders	Shareholding (Shares)	Percentage
1 to 999	234	39,730	0.01%
1,000 to 5,000	11,209	24,233,876	5.51%
5,001 to 10,000	1,928	16,258,622	3.70%
10,001 to 15,000	476	6,337,817	1.44%
15,001 to 20,000	450	8,623,031	1.96%
20,001 to 30,000	332	8,850,187	2.01%
30,001 to 50,000	300	12,361,143	2.81%
50,001 to 100,000	226	17,056,909	3.88%
100,001 to 200,000	98	14,138,120	3.22%
200,001 to 400,000	80	22,818,538	5.19%
400,001 to 600,000	27	13,252,636	3.02%
600,001 to 800,000	20	14,659,270	3.34%
800,001 to 1,000,000	19	17,118,621	3.89%
More than 1,000,001	76	263,780,212	60.02%
Total	15,475	439,528,712	100.00%

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iv.List of Major Shareholders

May 1 2015; unit: person; share

Quantity of shares Name of major shareholders	Shareholding (Shares)	Percentage
ALPINE ASIA INVESTMENTS LIMITED (BVI)	30,561,062	6.95%
Nan Shan Life Insurance Co., Ltd.	21,983,000	5.00%
Yeh, You-Fen	11,455,227	2.61%
CAMPBELL TECHNOLOGY CORPORATION (BVI)	11,204,909	2.55%
UBS account in custody of HSBC	9,417,000	2.14%
Pan, Yung-Chung	8,291,046	1.89%
Special Investment Account at Nomura Asset Management (UK) at the appointment of the Central Bank of Saudi Arabia in custody of Morgan Chase Bank	7,135,000	1.62%
Labor Pension Fund under the new system	7,015,000	1.60%
Cathay Life Insurance Co., Ltd.	6,943,000	1.58%
PineBridge Global Funds –PineBridge Greater China Equity Fund in custodyof HSBC	6,636,000	1.51%

v.Market price, net asset value, earnings and dividend per share in the last 2 years and related

information

formation	formation	formation
Year Title			2013	2014	2015 to March 31
Market price per share	Highest Market Price		29.2	54.2	48.5
	Lowest Market Price		21.9	25.5	37.7
	Average(Note 1)		26.29	38.72	43.71
Net Worth per Share	Before Distribution		17.53	21.16	21.85
	After Distribution		16.73	19.36	21.85
Earnings per Share	Weighted Average Shares (thousand shares)		430,269	432,362	434,306
	Diluted Earnings Per Share		1.55	3.57	0.85
Dividend per share (Note 2)	Cash dividend		0.8	1.8	0
	Stock dividend	Cash Dividends	0	0	0
		Stock Dividends	0	0	0
	Accumulated Undistributed Dividends		0	0	0
Return on Investment analysis (Note 3)	Price / Earnings Ratio		16.96	10.85	12.86
	Price / Dividend Ratio		32.86	21.51	n/a
	Cash dividend yield rate		0.0304	0.0465	n/a

Note 1： Calculation of average market price is based on the transaction value and the transaction volume in respective year.

Note 2：The Board of the Company resolved in a session dated March 24 2014 to distribute earnings pending on the final approval of the General Meeting.

Note 3：P/E ratio = average closing price per share in the year/earnings per share

P/P ratio = average closing price per share in the year/cash dividend per share Cash dividend yield rate = cash dividend per share/ average closing price per share in the year

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vi.Dividend Policy and Implementation status

Dividend policy provided in the Articles of Incorporation:

If there is a surplus in account settlement of the fiscal year, the Company shall allocate the surplus in the following priorities:

(1) Covering loss carried forward.
(2) Appropriation of 10% as legal reserve except when the legal reserve is equivalent to the total capital.
(3) Appropriation or reversal of special reserve as required by law or the competent authority.
(4) The remainder net of the appropriations from 1 to 3 as mentioned shall be allocated as employee bonus at 2%~10% and as remuneration to the Directors and Supervisors at up to 2%.
(5) The remainder will be pooled up with the retained earnings accumulated. The Board shall propose the plan for the distribution of the earnings subject to the ratification of the General Meeting of Shareholders.

The aforementioned employee bonus may be released in the form of stock dividends, and the employees of subsidiaries meeting certain conditions shall also be entitled to the stock dividends. The Board shall institute related regulation for such purpose.

The Company will consider the operation environment and the stage of development, and also the capital requirement and long-term financial planning in the future with a proper balance for the interest of the shareholders and dividend thereby paying out earnings in the forms of stock dividends or cash dividend. Cash dividend shall not fall below 10% of the total dividend for release subject to the condition of the operation performance in the year.

The dividend plan for current period:

The plan for the distribution of earnings for FY2014 has been passed by the Board on March 24 2015. The proposed cash dividend for distribution to shareholders amounted to NT$791,106,682. The Board will follow the instruction under the resolution of the General Meeting of Shareholders scheduled to the held on June 29 2015.

vii.The influence of stock dividends planned to the release by the General Meeting on the operation performance of the Company and earnings per share: no release.

viii.Employee Bonus and Directors' and Supervisors' Remuneration

The percentage or scope of employee bonus and remuneration to the Directors and the Supervisors provided in the Articles of Incorporation.

If there is a surplus in account settlement of the fiscal year, the Company shall allocate the surplus in the following priorities:

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(1) Covering loss carried forward.
(2) Appropriation of 10% as legal reserve except when the legal reserve is equivalent to the total capital.
(3) Appropriation or reversal of special reserve as required by law or the competent authority.
(4) The remainder net of the appropriations from 1 to 3 as mentioned shall be allocated as employee bonus at 2%~10% and as remuneration to the Directors and Supervisors at up to 2%.
(5) The remainder will be pooled up with the retained earnings accumulated. The Board shall propose the plan for the distribution of the earnings subject to the ratification of the General Meeting of Shareholders.

The basis for the estimation of employee bonus and remuneration to the Directors and the Supervisors in current period, the calculation of share quantity in stock dividends, and the accounting of the difference between the estimates and the actual payment.

The Company estimates the employee bonus and remuneration to the Directors and the Supervisors in accordance with the Company Act, the Articles of Incorporation of the Company, and the Letter of interpretation by Accounting Research and Development Foundation (96) Chi-Mi-Zi No. 052 thereby employee bonus and remuneration to the Directors and the Supervisors will be estimated in preparing the interim financial reporting and annual financial reporting. Employee bonus and remuneration to the Directors and the Supervisors will be recognized as an item under the cost of operation or operating expenses depending on the nature of the payment. If the amount approved by the General Meeting varied with the estimate in the financial statement, the difference shall be deemed change in estimation and recognized as profit or loss in current period.

Information on employee bonus approved by the General Meeting:
(1) For distribution of cash dividend and stock dividends to employees, and remuneration to the Directors and the Supervisors, if the expense recognized in the year varied with the estimated amount, disclose the difference, the cause and the response to the situation. The Board resolved on March 24 2015 to appropriate cash dividend for employees
and remuneration to the Directors and Supervisors amounting to NT$71,000,000 and NT$27,800,000, respectively. The estimated amount was NT$71,318,216 and NT$28,527,286 with differences of NT$318,216 and NT$727,286, respectively. The difference is caused by the calculation in the estimate. If the actual amount approved by the General Meeting for distribution does not required a revision of the financial statements, the difference will be recognized as profit or loss in the next fiscal period.
(2) The amount of stock dividends planned to released to the employees in proportion to the sum of net earnings and total employee bonus:

The Company did not plan to release stock dividends and this rule is not applicable.

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(3) The earnings of share in consideration of the distribution of employee bonus and remuneration to the Directors and the Supervisors.

The Company has complied with IFRS 2 “Share-based Payment” thereby employee bonus and remuneration to the Directors and the Supervisors are booked on a monthly basis. As such, it will not be necessary to consider the earnings per share after the distribution of employee bonus and the remuneration to the Directors and the Supervisors.

The difference between the actual release of employee bonus and remuneration to the Directors and the Supervisors (including the quantity of shares, the amount, and stock price) and the estimated employee bonus and remuneration to the Directors and the Supervisors, if applicable, specify the difference, the cause, and the response to the situation:

In FY2013, the Company released cash dividend to the employees and remuneration to the Directors and the Supervisors amounting to NT$32,000,000 and NT$12,000,000, respectively. These amount varied with the estimated amount of NT$31,966,254 and NT$12,786,504 by -NT$33,746 and NT$786,504, respectively. The difference is caused by the calculation in the estimate. The amount different does not required a revision of the financial statements; the difference will be recognized as profit or loss in the next fiscal period.

ix.Buyback of Treasury Stock: None.

x.Corporate bonds, preferred shares, overseas depository receipts: None.

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ESOP issued in 2011 (note 2)	100.10.26	101.10.22	5 years	3,500	0.80	After the 2ndanniversary of the issuance, 50% of the option can be exercised. After the 3rd anniversary of the issuance, 100% of the option can be exercised until maturity.	Exchange for new shares	Note 2	558,500	15,470,450	2,941,500	27.70	0.67	This issue of ESOP can be exercised after the 2ndand the 3rdanniversary of issuance and will cause dilution to shareholders’ equity annually. However, the dilution effect is marginal.
	100.10.26	100.11.24	5 years	1,500	0.34	After the 2ndanniversary of the issuance, 50% of the option can be exercised. After the 3rdanniversary of the issuance, 100% of the option can be exercised until maturity.	Exchange for new shares	Note 2	575,000	10,330,000	925,000	17.90	0.21	This issue of ESOP can be exercised after the 2ndand the 3rdanniversary of issuance and will cause dilution to shareholders’ equity annually. However, the dilution effect is marginal.
2ndTranche ESOP in 2008 (Note 21)	98.12.1	98.11.12	5 years	9,174,808	2.09	After the 2ndanniversary of the issuance, 50% of the option can be exercised. After the 3rdanniversary of the issuance, 100% of the option can be exercised until maturity.	Exchange for new shares	Note 2	7,428,708	84,835,847	1,746,100	11.42	0.40	This issue of ESOP can be exercised after the 2ndand the 3rdanniversary of issuance and will cause dilution to shareholders’ equity annually. However, the dilution effect is marginal.
1stTranche ESOP in 2008 (Note 1)	98.12.1	98.11.12	8 years	370,440	0.08	From the 4thanniversary to the 6thanniversary of the issuance, 43% of the option can be exercised. From the 6thanniversary to the 8th anniversary of the issuance, 57% of the option can be exercised.	Exchange for new shares	Note 1	159,289	1,819,081	211,151	11.42	0.05	This issue of ESOP can be exercised from the 3rdto the 5thanniversary of issuance and will cause dilution to shareholders’ equity annually. However, the dilution effect is marginal.。
	98.12.1	97.1.2	8 years	6,482,700	1.48	From the 4thanniversary to the 6thanniversary of the issuance, 43% of the option can be exercised. From the 6thanniversary to the 8th anniversary of the issuance, 57% of the option can be exercised.	Exchange for new shares	Note 1	5,939,388	67,827,814	543,312	11.42	0.12	This issue of ESOP can be exercised from the 3rdto the 5thanniversary of issuance and will cause dilution to shareholders’ equity annually. However, the dilution effect is marginal.
Type of Stock Option	Declaration effective date	Issuing date (Note 3)	Duration	Units issued (Note 4)	Quantity entitled to subscription in proportion to the total outstanding shares (%)	Subscription period	Mode of exercise	Period and ratio restricted for subscription (%)	Quantity of shares acquired through exercise of ESOP	Amount of subscription exercised	Quantity of shares not being subscribed under ESOP (Note5)	Subscription price per share for the unexercised options	Quantity of shares not being subscription under the exercise of options in proportion to total outstanding shares (%)	Impact on possible dilution of shareholdings

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Unreleased	Unreleased Restricted Shares as a Percentage of Shares Issued	0.19	0.19	0.19	0.19	0.19	0.19	0.19
	Amount (NT$ thousands)	16,171
	Issued Price (NT$)	11.42 27.70
	No. of Shares	446 400
Released	Released Restricted Shares as a Percentage of Shares Issued	1.08
	Amount (NT$ thousands)	52,913 910 895
	Issued Price (NT$)	11.42 18.20 17.90
	No. of Shares	4,633 50 50
The quantity of subscription units in proportion to the total subscription quantity		1.27
No. of New Restricted Shares		5,579
Name		Yang, Hai-Hung	Pang, Yung-Chung	Pan, Yung-Tai	Pan, Wu-Lung	Chou, Yan-Chou	Liu, Chia-Lun	Lee, Chiu-Sheng
Title		Director & General Manager	Business Unit Director	Business Unit Director	Vice President (Note 1)	Vice President	Vice President	Vice President	N/A (note 2)
		Managers							Employees

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xii.Issuance of New Restricted Employee Shares

Restricted employee shares not fully satisfy the conditions and the influence on shareholders’ equity:

April 30 2015

List of Executives Receiving New Restricted Employee Shares and the Top Ten Employees with New

Type of 1. restricted employee shares	1sttranche in 2013	2ndtranche in 2013	3rdtranche in 2013	4thtranche in 2013	1sttranche in 2014
Date of Effective Registration	Jul 31,2013	Jul 31, 2013	Jul 31, 2013	Jul 31, 2013	Oct 6, 2014
Issuing date	Oct 01, 2013	Nov 20, 2013	Feb 10, 2013	Jul 17, 2013	Feb 24, 2015
Number of New Restricted Employee Shares Issued	1,450,000	186,000	135,000	220,000	1,225,000
Issuing price	0	0	0	0	0
Units of restricted employee shares issued in proportion to total outstandingshares(%)	0.33	0.04	0.03	0.05	0.28
Conditions for entitlement to restricted employee shares	The person must satisfy the conditions set forth in related regulations of the Company on the actual operation result and individual performance at work.				The person must satisfy the conditions set forth in related regulations of the Company on the actual operation result and individual performance at work.
Restriction of rights of the restricted employee shares	1. If a specific employee was issued restricted employee shares but fails to meet the aforementioned conditions, such employee shall not sell, pledge, assign, offer, lien the restricted employee shares or refer to any other means of disposition. 2. The attendance, proposal, expression of opinion, and voting right at the General Meeting shall be executed in accordance with the trust and custody agreements. 3. Further to the aforementioned restrictions, employees being issued the restricted employee shares provided in this regulation are not deprived of any other rights before their satisfaction of the aforementioned conditions, including but not limiting to: dividend, bonus and entitlement to the distribution of capital surplus, the subscription right of new shares for raising new capital and voting rights, which are identical with the outstanding common shares of the Company.				1. If a specific employee was issued RSO but fails to meet the aforementioned conditions, such employee shall not sell, pledge, assign, offer, lien the restricted employee shares or refer to any other means of disposition. 2. The attendance, proposal, expression of opinion, and voting right at the General Meeting shall be executed in accordance with the trust and custody agreements. 3. Further to the aforementioned restrictions, employees being issued the restricted employee shares provided in this regulation are not deprived of any other rights before their satisfaction of the aforementioned conditions, including but not limiting to: dividend, bonus and entitlement to the distribution of capital surplus, the subscription right of new shares for raising new capital and voting rights, which are identical with the outstanding common shares of the Company.
The custody of restricted employee shares	Under trust custody				Under trust custody
The measures for employees who have been issued or have subscribed new shares but failed to satisfy the conditions.	The Company shall recall the shares in full for employees who have been issued or have subscribed new shares under the RSO but failed to satisfy the conditions for cancellation.				The Company shall recall the shares in full for employees who have been issued or have subscribed new shares under the restricted employee shares but failed to satisfy the conditions for cancellation.
Number of New Restricted Employee Shares that have been Redeemed or Bought Back	285,000	0	35,000	0	0
Number of Released New Restricted Employee Shares	250,000	111,000	55,000	0	0
Number of Unreleased New Restricted Shares	915,000	75,000	45,000	220,000	1,225,000
Ratio of Unreleased New Restricted Shares to Total Issued Shares(%)	0.21	0.02	0.01	0.05	0.28
Impact on possible dilution of shareholdings	No significant influence				No significant influence

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Restricted Employee Shares:

April 30 2015

									April 30 2015	April 30 2015	April 30 2015	April 30 2015
	Title	Name	No. of New Restricte d Shares	New Rest rict ed S hare s as a Pe rce nta ge o f S hare s Iss ued	Released				Unreleased
					No. of Shares	Issued Price	Issuing amount	Released Restricted Shares as a Percentage of Shares Issued	No. of Shares	Strike Price	Issuing amount	Unreleased Restricted Shares as a Percentage of Shares Issued
Managers	Senior Vice President	Lee, Yi-Ping	1,380,000	0.31%	100,000	0	0	0.02%	1,070,000	0	0	0.24%
	Vice President	Chou, Yen-Chou
	Vice President	Tsao,Chung-Feng
	Vice President	Liu, Chia-Lun
	Vice President	Lee,Chiu-Sheng
	Vice President	Chiang, Yan-Ying
	Vice President	Chang, Ching-Kai
	Vice President	Wu, Shou-Yi (Note 1)
	Asst Vice President	Pan, Yen -Jen
Employees	Senior Asst VP	Chang,Yao-Han	1,140,000	0.26%	220,000	0	0	0.05%	920,000	0	0	0.21%
	Senior Asst VP	Luo,Ming-Deh
	Senior Asst VP	Wu,Chi-Ming
	Senior Asst VP	Wu,Chang-Yi
	Asst Vice President	Chiang, Chao-Chung
	Asst Vice President	Ho,Hsin-Yi
	Asst Vice President	Wu,Ta-Chuan
	Asst Vice President	Chen,Cheng
	Asst Vice President	Chen,Ying-Shou
	Asst Vice President	Tang,Rou

Note 1: resigned on Jan 31, 2014

Note 2: A total of 438,648,682 shares were issued on Apr 30, 2015.

xiii.Status of New Shares Issuance in Connection with Mergers and Acquisitions

M&A accomplished or acceptance of new shares assigned by other companies in the most recent period to the date this report was printed: None.
M&A or acceptance of new shares assigned by other companies approved by the Board in the most recent period to the date this report was printed: None.

xiv.Financing Plans and Implementation

Content of the plan:

To the quarter prior to the printing date of this report, different issues or private placement of securities not being accomplished, or the plan has been accomplished in the last 3 years but no obvious result yet: None.

Status of execution:

Analyze the use of fund as stated in the plan previously mentioned to the quarter prior to the printing date of this report on the status of execution and comparison of the expected result of the original plan: None.

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V. Operation Outlook

I. Operational Highlights:

1. Business Scope

(1) The principal business of the company
- CB01020 Business machine manufacturer

CC01030 Appliances and audiovisual electronic products manufacturing CC01060 Cable communication machinery and equipment manufacturing. CC01070 Wireless communication machinery and equipment manufacturing.

CC01080 Electronic parts and components manufacturing.

CC01101 Telecommunication controlled RF equipment and materials manufacturing. CC01110 Computer and peripherals equipment manufacturing.

CE01030 Optical instruments manufacturing.

F401021 Import of telecommunication controlled RF equipment and materials.

I301010 Information software service.

F113050 Computer and business machine and equipment wholesaling.

F118010 Information software wholesaling.

F213030 Computer and business machine and equipment retailing.

F218010 Information software retailing

C805050 Industrial use plastic products manufacturing.

CA02010 Metallic structure and construction components manufacturing.

CA02090 Metallic line products manufacturing.

F401010 International trade.

ZZ99999 All other business not prohibited or restricted by law except the business that requires special licensing.

(2) Proportion of business

Currency unit: NTD thousand; %

Year Items	FY 2014	FY 2014
	Total Sales	(%) of Total Sales
Computerperipherals	24,160,676	46.25
Non-computer peripherals	28,079,101	53.75
Total	52,239,777	100.00

(3) Products (services) currently run by the company
(1) Computer peripherals
- Computer input devices
  - Basic roller mouse
  - Traditional optical mouse
  - Advanced laser mouse

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  - Wireless R/F mouse, laser mouse

  - Bluetooth mouse

  - Wireless Bluetooth dual-mode mouse

  - Wireless presenter

  - Mini mouse

  - Keyboard

  - Wireless keyboard

  - Bluetooth keyboard

  - Mechanical keyboard

  - Game mouse and keyboard.

  - Backlight keyboard

  - NB PC keyboard

  - Ultra slim tablet keyboard

  - Keyboard modules

  - Smart TV remote control

  - Living room use input devices

  - MFi (Made for iPad, Made for iPhone) keyboard

NB PC touch panel
Digital writing pad
Network camera modules
- 300 to 2000 mega pixels cameras
- 2000 mega pixels automatic focus network camera
(2) Non-computer peripherals

2-1. Mobile device parts and components

Tablet and NB PC built-in camera module
300 to 800 mega pixels camera module
1400 mega pixels camera module
Full HD network camera module
Business card identification network camera module
Mobile phone built-in camera modules
300 to1300 mega pixels /ultra micro size
300 to 800 mega pixels auto focus camera module
1300 mega pixels auto focus camera module
2380 mega pixels Optical anti-shake + auto focus camera modules
Multiple lens floating touch (gesture recognition) camera module
Communication peripherals
Bluetooth earphone/Bluetooth Hi-Fi earphone/Bluetooth Hi-Fi module/Bluetooth desktop/hand-free receiving device/Bluetooth USD sound signal receiver.
Bluetooth GPRS receiver/Bluetooth USD data transmitter and receiver
Desktop charger/ car-mounted charger/USB charger/portable power supply/wireless charger module
MP3 charger/radio controller/remote control
Cell phone data line/USB card reader
2-2. Business machines
Image scanner
Color flatbed scanner

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High-speed auto feeding scanner (ADF)
Automatic flipping double-side paper feeder (ARDF)
Document and business card both-side scanner (DADF)
Business use scanner module
Scanner module software and firmware development
Printers
B/W and color laser printer control panel development
B/W and color laser printer software and firmware development
Business use pin printers
Thermal sensor printers
Portable thermal photo printers
Multiple-function business machine
B/W and color laser multiple- function business machine
Multiple-function control panel development
Multiple-function control panel software and firmware development
Fax machine
B/W fax machine
Data processing devices
Computer terminals
Mobile access devices
Point of sale device (POS)
Cashier receiver (CR)
Lottery machine
Office automation products
Paper shredder
Lamination machine
Stapler
Paper cutter

2-3. Digital home products

Portable wireless storage device
Bluetooth portable speaker
One piece surround sound system (2.1, 5.1 channels)
Computer/sound system use speaker
Single speaker

2-4. Wearable devices

Smart bracelet
Smart watch
(4) New products (services) under planning

(1) Computer peripherals

PC input device mouse and keyboard
Backlight keyboard
Keyboard module
Bluetooth and wireless controller and presenter
- Mouse and keyboard for game
Game server peripherals
Multiple-point touch panel

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Hand writing digital pad
Smart TV controller
Ultra slim tablet PC keyboard and leather-bind keyboard
Capacitor stylus pens
Bluetooth stylus pens
Flatbed game controller
Living room use input devices

(2) Non-computer peripherals

2-1. Mobile device parts and components

Full HD slim NB camera module
800 mega pixels single focus camera module (front)
800 mega pixels telescopic optical variable focus camera module
1300 mega pixels close-circuit fast auto focus camera module
1300 mega pixels double-len focus camera module
2380 mega pixels optical shake-resistance + auto focus camera module
Distance detecting fast focus camera module

2-2. Business machines

Business high-speed synchronized double face scanner(DADF)
Business network scanner
High-speed multiple- function business machine scanner
High-speed color laser printer control panel development
Label barcode B/W printer
High-speed B/W laser multiple-function business control panel development
- Mobile access device
POS control panel development
Portable photo printer and Internet interface development

2-3. Digital home products

Home network storage device
Portable wireless storage HDD
Digital home entertainment multimedia server
Digital home wireless sound system
Portable wireless speaker
Digital home related application software

2. Industry Overview

(1) Industry overview and development

1. Computer peripherals

The peripherals carried by the Group are mostly keyboards and mice for use in conjunction with desktop PCs and NB PCs. The change in this market is closely associated with the development of PC products. The shipment volume of the world market and Taiwan over the years was hit by the rise of tablet PCs and over-optimism of the replacement of new systems after the launch of Windows 8. As such, growth turned negative. Desktop PC and NB PC sales tended to be concentrated at the 3 major brands, which resulted in the big getting bigger. The

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Group adopted a key customer strategy and was able to survive the impact brought by the weak PC market. According to the data released by IDC, a famous market research firm, the growth of tablet PCs in 2014 was just 4.4%, with weaker momentum from 2013 mainly because the demand of the consumers turned weak and the scale of the tablet PC market has been developed to a certain level. The softening of the consumer market was echoed with the rise of the commercial, education, and large size tablet PC market. Accordingly, the demand for input device is also on the growth. The Group has established a foothold in the consumer tablet PC market and will commit its effort to develop the commercial, education and big size tablet for stable growth.

2. Non-computer peripherals

2-1. Mobile device parts and components

The consumption of smart phones exceeded 1 billion units for the first time in 2014. This item emerged as the center of personal information and control. In 2015, the exploding growth of the smart phone market appears to have cooled down but the newly emerged markets in Southeast Asia, South America, Africa, and Russia will be the prime force of cell phone market worldwide. It is expected that the shipment volume of smart phones will be as high as 1.4 billion sets. It was echoed with the sustained innovation of APP for mobile application. The integrated application of the ecology chain started to ferment, including mobile payment, Internet of Things, and others, which gives room for the imagination of how to improve the way of life for mankind. As such, related mobile device parts and components, such as camera lens, fingerprint ID, wireless charger, and different types of sensor devices will be on demand. As for cameras, the demand for high-end cameras will be on the rise in 2015. With the exception of shake resistance optical, fast focusing, smaller and slimmer appearance, the application of multiple-lens will be spelled out. There will be different types of new multiple-lens launched to the market for challenging the camera and lens suppliers in their encapsulation technology and production capacity planning.

2-2. Business machines

The group runs a variety of business machines, including scanner, printer, multiple-function printer (business machine), fax machine, data processing device (e.g.: computer terminals, CR) and office automation products (e.g.: paper shredders, laminator) with gravity in scanner and multiple-function business machine.

The technologies for scanner, printer, and business machine are well-developed. The price continues to fall regardless of the improvement in resolution and network

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function of the devices. Global economy is still unfavorable. The growth of the newly emerged market is also slow, to the effect that the sales of printers and business machine hardware fell further. According to a report of IDC, laser printer fell marginally at 0.7% but all other printer continues to fall in demand given the growth of the prevailing use of portable devices and digitized process. IDC also pointed out that the quantity of printing by papers worldwide continued to fall in 2014. In an assessment report of the outsourcing service providers of printing and document service worldwide in 2014- assessment report on management of service in work flow attracted the attention of people to the printing service market. The rapid growth of smart phone and tablet PC makes the firms engaged in the massive development of innovative application, such as cloud printing and cloud scanning. Users can directly send documents for printing via Wi-Fi transmission with mobile devices, or directly access to the graphic files of documents. These brand new functions emerged as the necessary functions of multiple- function business machine. Likewise, the demand for these new functions and the expansion of the newly emerged markets give new momentum for B/W and color printing with A4 paper with printers. In 2014, the market share of A4/A3 markets changed from 25% vs. 75% to 45% vs. 55%, respectively. This also demonstrated the momentum of growth for mid to low-end printers for A4 papers. The group runs a variety of business machines, including scanner, printer, multiple-function printer (business machine), fax machine, data processing device (e.g.: computer terminals, CR) and office automation products (e.g.: paper shredders, laminator) with gravity in scanner and multiple-function business machine.

The technologies for scanner, printer, and business machine are well-developed. The price continues to fall regardless of the improvement in resolution and network function of the devices. Global economy is still unfavorable. The growth of the newly emerged market is also slow, to the effect that the sales of printers and business machine hardware fell further. According to a report of IDC, laser printer fell marginally at 0.7% but all other printer continues to fall in demand given the growth of the prevailing use of portable devices and digitized process. IDC also pointed out that the quantity of printing by papers worldwide continued to fall in 2014. In an assessment report of the outsourcing service providers of printing and document service worldwide in 2014- assessment report on management of service in work flow attracted the attention of people to the printing service market. The rapid growth of smart phone and tablet PC makes the firms engaged in the massive development of innovative application, such as cloud printing and cloud scanning. Users can directly send documents for printing via Wi-Fi transmission with mobile devices, or directly access to the graphic files of documents. These brand new functions emerged as the necessary functions of multiple-function business machine. Likewise, the demand for these new functions and the expansion of the newly

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emerged markets give new momentum for B/W and color printing with A4 paper with printers. In 2014, the market share of A4/A3 markets changed from 25% vs. 75% to 45% vs. 55%, respectively. This also demonstrated the momentum of growth for mid to low-end printers for A4 papers.

2-3. Digital home products

The prevailing use of broadband and accelerating transmission speed helps to make home network environment perfect. This is reinforced by the abundant availability of wireless online products, smart phones, tablet PC and related products in market. Further, the boundaries of different interfaces and operation system of network/computer/mobile device (smart phone/tablet PC) and TV/appliances has become blurred, and different platforms and devices can be all connected that make home an environment fully covered with audiovisual entertainment. Operation of these devices is more direct and personalized for the users. Products and applications related to digital home would be an irreversible course of development and is also the favorites in most electronics exhibitions such as CES, CeBIT, and IFA. The improvement of wireless broadband (IEEE802.11n MIMO, ac MU-MIMO) makes the digital home audio/video streaming experience more satisfactory for the consumers and stimulates the development of related products and services.

All leading brands launched related products of higher profile recently, from UHD 4k LCD TV, different types of set top boxes (Apple TV, Roku, Google Chromecast, Amazon Fire TV), NAS, DLNA wireless storage, entertainment audio/video server (Xbox One, PS4), and wireless sound system such as Soundbar. Both hardware and software manufacturers and network service providers have made effort to their entirety for higher sales. There are a wide array of products and services offered by the firms, but audio/video streaming and cloud computing concept software and hardware, and related applications have emerged as the focus of digital home in the years ahead from the perspective of application in market.

If we take the living room of home as the family entertainment center, the trend of 4-screen-1-cloud environment (TV screen, computer screen, cell phone screen and home private cloud) gives rise to the demand for the storage of audiovisual data (private cloud) and the demand for sharing of the streaming for different devices for the consumers. Consumers demand for the storage management of digital movies, photographs, music, and document files and the sharing of streaming for practical purposes in hardware and software. This unveils many new business opportunities. Furthermore, many leading brands have demonstrated their strength in wearable products in CES 2014 (such as smart brand, smart watch, Google glasses) by presenting the abundance of products particularly the extension to healthcare and

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physical fitness applications.

After the outbreak of the product war in the digital home, international large firms are striving for a share in the market of smart sound products. Smart sound system manufacturers have to understand the needs of the users and make innovation and improvement, which will be critical for upgrading the competiveness of these products. Portable and movable smart hardware will be an essential condition for the age of mobile network. However, some of the devices are in bigger size for keeping the high quality of sound effect and housing more speakers contained in the devices, and also longer hours of battery service. If the quality of sound is not considered, the dimension of smart sound devices will become even smaller with the use of the standard battery. This allows the sound system to perform normal duty without being connected to power supply source.

The sound quality of smart sound devices has been severely criticized in the course of development in 2014. The feature of a high quality sound will be key for long-term use of smart sound system. In 2015, the smart sound system manufacturers will gradually go back to the production of high quality sound before moving straight and directly to the smart level of the devices. If smart sound system is to emerge as a vital instrument for the control of digital home, the support of more users in the age of all-connected networks will be essential. They may open the portal for the support of other partners to make the control of digital home more convenient.

2-4. Wearable devices

The market of wearable devices became hot in the last two years and has attracted many new firms, PC brands, and mobile devices manufacturers to commit their resources to the market. Business Insider, a renowned market research firm, mentioned in its assessment report that the annual compound growth of wearable devices will be as high as 35% from 2015 to 2019 worldwide. In 2019, the shipment volume will be 148 million pieces. Wearable devices include sports bracelets, smart watches, and smart glasses. Smart watches will enjoy compound growth of 41% per annum and emerge as the leader of the products of its kind. In 2019, this item will account for 70% of the wearable devices (59% at present).

New firms such as Fitbit and Pebble, entered the market of wearable devices very early. They were followed by the entrance of big firms such as Samsung, LG, and Sony, which launched smart watches at a higher price and feature more functions in an attempt to satisfy the needs of a larger group of customers. The market of wearable devices still has room for further development. Production

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applications, user operation interface, and operating system are being improved in a very high speed. The sustained expectation of consumers in mobile computing and the competition of the leading firms, echoed with the launch of smart watch by Apple, will attract higher attention of the consumers. Wearable items will be a vital area of growth among other consumer electronics in the years ahead.

(2) The association of the upper course, middle course and lower course of industries 1. Computer peripherals ：

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

Consumer electronics
Parts and
components Peripherals System assembly
Network card
Output devices
CPU Printers, drawing devices
DRAM Main board
Drawing card
SHIP SET
Control
SRAM card
Display devices:
Monitoring items, thermals, LCD
display
PCB
Storage device: Computer
HDD, DISK Array, PC PCLAN sales
FDD, DISK, disk drives,
Other parts and
components Workstation Server Maint e nance
CRT and service
Input devices:
CCD & CIS Keyboard, mouse, image scanner,
……………… digital board and pens
Mini PC
Iron materials
Copper box
Power supply:
Chemical materials PC power supply, UPS Communication
Dry molding Software devices
Others:
PC casing, heat conductor tube,
related parts and components
----- End of picture text -----

Non-computer peripherals ：
2-1. Mobile device parts and components ：

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

Upper course Middle course Lower course
Optoelectronics Module maker Product maker
CMOS, Lens Camera module Cell phone
Electronic materials Product maker
PCB, Flex-PCB NB PC
Passive components,
Connector
IC industry
ISP, Memory, USB
----- End of picture text -----

2-2. Business Machine Products:

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

Upper Course Middle Course Lower Course
Optoelectronics System integrators
CCD, lens (SI / ODM)
Electronic materials
PCB, POWER
System makers
(OEM / ODM)
IC Industry Image input/output
SOC, DRAM Module Manufacturers
CIS, Inkjet Bead, Laser
engine, Controller Brand Makers
Plastic Materials (Brand)
Casing, gears
Metals
Screws, caskets
Software Design
OS, Driver Program,
grasphic processor
----- End of picture text -----

Multiple-function printer (business machine, MFP) Supply Chain

Multiple-function printers (business machines, MFPs) consist of a few major modules, namely, document scanner, printer head, control board, operation panel, automatic feeder, and paper feeding magazine. The key component of a document scanner is the image sensor, which relies on the CCD and CMOS technologies.

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These two technologies are mostly controlled by Japanese firms. The major suppliers of these technologies are Sony and Toshiba. The middle course industries provide scan module, sensor, mirrors, and lamps. The lower course industries provide the complete scanner, including image scanner module, motor control, image retrieving control circuit, data feed control circuit, casing, and software. The system providers will also provide automatic document feeder (ADF) for integrating the continuous scanning function of scanner.

The suppliers of the Company in the upper course are world-renowned firms and they have a stable and long-term cooperation with the Company. As such, the Company has marginal operation risk in shortage or interruption of materials supply or delay. The Group aims at the development of high-speed and multiple-function business machine modules, and strengthens its capacity in the application programs of software and firmware and system integration technologies for reducing the cost of manufacturing and upgrade product quality.

2-3. Digital home products ：

In the field of digital home products, the company provides different design and manufacturing of audiovisual related products, such as speakers, wireless ear phones, TV Soundbar, and camera-based video devices. In addition, the company also runs personal storage devices such as Wireless Flash Drive, and Wi-Fi Hard Drive.

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

Upper course Middle course Lower course
Special paper industry System
Speaker vibration paper Integration(SI/ODM)
Electronic materials
PCB, POWER Product manufacturer
(OEM/EMS)
IC Industry Sound output module maker
MCU, DSP, Acoustic transducer,
Bluetooth controller, case
Brand Vendor
Plastic materials
Case, keyboard
Metallic materials
Copper wire, magnet
Software design
Sound processing, driver
program, protocol
----- End of picture text -----

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Wireless speaker systems supply chain

2-4. Wearable devices:

Wearable devices mainly consist of sensors, display interfaces, wireless communication modules, batteries, and water-proof casings. The Company focuses on trendy items of wearable devices, including sport bracelets and intelligent watches in offering product design and manufacturing.

(3) Trends for the development of different products

1. Computer peripherals

The computer peripherals produced by the Company are mostly for desktop PCs, NB PCs, and personal digital communication products. The withering market of computers and the concentration of brands intensified the competition of computer peripherals in market. In attuning to the development trend of application products in the lower course, keyboard and mouse manufacturers tend to switch to smart home, mobile peripherals, IA products, IoT, wearables, and also the demand for personalized and friendly devices. The Company will continue to develop peripheral devices for supporting network TV, entertainment computer, game devices, palm computer, and other mobile devices in order to enhance the adding value of products and surpass the competitors and keep distance with them in technologies. The research and development of new products of high added-value will be the development trend of the industry.

2. Non-computer peripherals

2-1. Mobile device parts and components

The camera modules made by the Group are mainly for use in NB PC, tablet PC and smart phone. The development trend of NB PC: (1) Thin panels. Camera lenses must fit into the panel no matter how thin it is. As such, the encapsulation technology must be further developed to meet the demand. In addition to the CSP and COB technologies, which can be provided by most suppliers of regular camera lends, the Group is capable of performing Chip on Flex (known as CoF) and even the thinnest encapsulation of the world, the Chip on Stiffener (known as CoS). The Group has well-developed experience in Flip-chip encapsulation and has outcompeted all competitors in Taiwan; (2) the demand for high definition screens. From VGA to HD (720P) to FHD (1080), HD has emerged as the mainstream

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option of business use NB PC, and will also become the trend for consumer PC in this year; (3) gesture recognition. The Group has custom-made a camera lens module for gesture recognition for international firms. The volume is not sizable but the segment has been confirmed as the trend. There are a few developments in the trend of smart phone and other mobile devices: (1) High pixel: the trend this year is 1600 mega pixels and the items with 2600 mega pixels will be gradually launched to the market; (2) high sensitivity: most apertures are used at the high value. High aperture value tends to spoil the depth of field (DOF) and makes focusing difficult. As such, corresponding focus technology must be further developed. The precision of encapsulation in the Group is recognized as world-class. With the introduction of active matching AA technology introduced in 2011, efficient mass production was realized at the end of 2013. This will surpass the competitors and keep them behind; (3) fast focusing: for speeding up focus for capturing moving image on the spot, the introduction of close-loop motor helps to upgrade the speed and precision of the traditional motor and has emerged as the mainstream technology of 2014. In addition, the central motor is also an option for enhancing performance; (4) anti-shake technology: this is the basic feature for all digital cameras. However, the dimension, development, and cost in the past can no longer satisfy the needs of the cell phone. Nokia was the first to seek a breakthrough last year. In 2014, a number of leading brands planned to launch products of this kind. For the camera module firms, the Active Alignment (AA) technology will be critical for winning purchase orders; (5) thin: all portable devices will be going thinner and thinner, and it is the trend of development. This trend posses the challenge of materials control and encapsulation technology. As mentioned, the encapsulation technology of the Group in thin panel is second to none in the industry; (6) other new functions: Phase Detection Auto-Focus, or known as PDAF, duo camera module, or camera matching with other special light sources can help to access to depth of field information, and featuring optical focus variation effect, will be the trend of differentiation spelled out by a number of famous brand customers. Furthermore, the Group has also made positive effort in smart TV and camera for intelligent wearable devices, which will be the product trend in 2015.

2-2. Business machines

In the wake of the rapid sale of smart phones and tablet PCs by volume, consumers can print out photos immediately after capturing in a Wi-Fi environment, and they can print from a portable device (e.g., the Apple AirPrint®), or they can directly store the scanned document image to a cell phone or tablet PC. This helps to drive cloud printing (such as HP ePrint, Google Cloud Print), and scan the image to cloud (scan-to-cloud). These new functions can satisfy the needs in family life

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entertainment and work. For meeting the needs other portable devices of different brands and makers in printing (convenient, easy to operate, compatibility, and consistency in printing quality), multiple-function business machine leaders, including HP, Canon, Xerox, and Samsung jointly formed the Mopria Alliance in September 2013 for setting up mobile printing standard in collective effort. They established a unified code of mobile printing and targeted mobile devices using Android. Currently, this alliance has 20 members, including famous brands in business machines, control panel IC designers and application software developers in the USA and Japan.

We cannot deny that smart phones and tablet PCs have caused significant impact on the printer manufacturing sector, particularly jet printer manufacturers. For bringing in higher revenue and profits, famous brands tend to propose the Managed Print Solution to assist enterprises for reduce the spending on hardware and equipment and printing cost. Frontline firms even propose a complete solution for digitization process of documents for office environment and oriented towards service-lead operation mode in development. They propose different customized solutions and services for meeting the specific features inherent to different industries. One obvious example is Xerox. Others are HP, Canon, Lexmark, and Ricoh. All of them are first-rate brands. They focus on mid to low-end laser A4-MFP development and the support for mobile devices, which will have significant demand for hardware in 3 years ahead.

2-3. Digital home products

The prevailing use of broadband network and the acceleration of transmission speed, and also the voluminous supply of wireless products, smart phones, tablet PCs and related application products help stimulate the demand for digital information storage management and sharing and simultaneous linking of different digital products by consumers. This gives rise to the demand for a personal cloud or family cloud technology and products. In addition, digital home-related products and functions have extended to all types of personal mobile devices, such as Apply AirPlay and iTune, and cloud digital program service such as set top boxes for Apple TV, Google chromecast, Roku, Amazon fire TV and providers of digital content such as Netflex, Hulu, HBO, cable televisions and sports channels. The upgrade of bandwidth for wireless network (5G, WiFi, IEEE802.11ac) will help to speed up the development of digital home related industries. Products will cover wireless storage devices, portable mobile wireless disks, home digital audiovisual multimedia servers, family controller and security monitors, and digital home wireless sound systems.

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2-4.Wearable devices

Shipment volume of wearable devices has picked up its momentum and enjoyed stable growth worldwide since 2012 due to two major factors. First of all, the big firms in the industry started to enter the market of wearable devices. With the reliability of the consumers on their brands, it is expected that a new wave of purchase will be triggered. For example, Apple Watch has attracted much of the attention of the consumers. Secondly, there are more channels available for product sale. In the past, wearable devices only available from the cyber shops could be bought from regular sale channels. The visibility and exposure of this type of products has stimulated the desire of the consumers and hence the action for purchase.

The popularity of wearable devices is still low and there is room for further growth. New companies and the international big firms invested in the product with great effort. Gartner, a market research firm, forecasted that the sale volume of wearable devices could be as high as 70 million pieces in 2015 with annual growth rate of 38%. There will be double-digit growth in the 5 years ahead. Yet, wearable devices still cannot substitute smart phone in 5 years but emerge as an auxiliary tool for existing devices.

(4) State of competition in products

1. Computer peripherals

The keyboard and mouse are input devices for PCs. Currently, voice input and kinetic input are available as other options, but input recognition, input efficiency and terminal environment of these devices are still incomparable to the mainstream position of keyboard as an input device. The development of information and electronic products towards slim, light, and small size for easy portability gives rise to the popular use of touch panel so that consumers can receive and send data more easily. Touch panels are mostly applied to portable electronic products. Currently, the principal input device for desktop PCs and NB PCs is still the keyboard. Tests and feedback from the market indicated that the use of a touch panel for long time will not be convenient. Examples are word processing sensitivity and hand pain for prolonged use of a touch panel. As such, the input modes for a touch panel could only be applied to portable electronic products. There is no substitute for the keyboard as the principal input device for desktop PC and NB PC so far.

2. Non-computer peripherals

2-1. Parts and components for mobile devices

The cell phone industry is based in units of billions. As such, there are many

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competitors in the industry. There are some 70 camera module suppliers worldwide, but no more than 25 that can provide more than 1 million units of full-range camera products in a month. The market size is very big and attracts far too many competitors. This is particularly the case that related industries tend to undergo vertical integration with the upper and lower course of industries. In 2014, the gross margin of the industry fell significantly. Also, the investment for producing high-end models is sky high, which made big firms getting bigger and small firms moving to newly emerged market or niche market. This is indeed the forecast in 2015.

2-2. Business machines

Jet printers still have the lion share of the sales market by volume (about 60%). Low price B/W laser printers and multiple-function business machine rose quickly in the newly emerging markets that gave rise to keen competition. The size of growth for multiple-function business machine will exceed the printers. In sum, the development of laser multiple-function business machine is promising. With the advantage of rapid and automatic scanning and both side printing, it will satisfy the needs of the consumers in wireless functions, and continue the upgrade of product digitization. The risk of substitutes for this product is marginal. However, price, environmental concern, energy efficiency, printing cost, and wireless online printing, as well as localized design will be critical to win and excel in the competition.

2-3. Digital home products

Primax Electronics seeks to keep stable development of its existing product lines and also spares no effort in planning for new product lines with high market potential. At this stage, the center of development is digital home related products, including NAS, portable wireless disks, home digital audiovisual multimedia servers, digital home wireless sound systems, and personal mobile wireless speakers.

Currently, family use network storage devices are still in the initial stage of development and are not prevailing because most consumers are not familiar with these products. Manufacturers must make further efforts in promotion and communicate with the consumers with further information, and also make innovation in R&D and improvement in user control interface. Further to the traditional home use storage device, another opportunity is the wireless portable disk. The rapid surge in the demand for smart phones and tablet PCs, and the limitation of power supply and storage capacity of these items, provide ground for the wireless portable disk. This disk offers the space as extension for data storage

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for smart phones and tablets PCs, and can also be use as a portable power supply in case the portable devices run out of power. The design is human-centric and practical.

The market for technology consumption goods also emerges rapidly alongside the demand for smart phones, which eventually drove the demand for numerous personal wireless multimedia entertainments. The Company has long been engaged in image processing, wireless and Bluetooth communication technologies. From 2012 onwards, the Company has invested in the R&D of wireless audiovisual data transmission and sharing and focused on 2 directions: (1) wireless storage device; and (2) digital wireless sound systems, because smart phones have a high definition screen and powerful processor and can play films of high definition. But the major problem of a smart phone is the lack of storage space and it cannot connect to external hard disks such as computers. As such, wireless storage devices will be the optimal solution. We also observe that users watch films or listen to music with a smart phone though an earphone. They cannot link the phone to the sound system at home. The Company is a Bluetooth earphone supplier and has long been involved in and made investment in wireless transmission and acoustics. The engagement in the development of wireless sound system will be a reasonable move for expanding the overall strategic momentum.

Digital home wireless sound system is not at the initial stage in market by function and design, and is a newly emerged product. Most sound system brands, including TV makers, have launched stylish new products. Related applications are multiple speakers wireless streaming system, network radio broadcasting application service, digital sound receiver, and converters.

2-4. Wearable devices

Currently, low-end wearable devices such as sport bracelets have low entrance barrier for hardware. As such, plenty of manufacturers will go for the wearable device market of low entrance barrier in technology in the short run. The result will be an oversupply of homogeneous products and the market will be in a state of cut-throat competition. High-end wearable devices such as the smart watch have a higher level of demand for hardware specification, process, and matching software. Currently, a number of less attractive products are launched by Apple, Samsung and LG. All are international firms. These products are linked with information network service and healthcare services in order to explore the business mode that could help to boom the market of wearable devices.

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Research and Development
The investment in R&D

Currency unit: NTD thousand; %

Year	R&D expense	Proportion to operating income
FY 2014	1,893,251	3.62
FY 2015Q1	437,783	3.38

Note: the group starts to introduce IFRSs in FY 2013

Technologies or products successfully developed in the most recent period to the date this report was printed.

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Year R&D results
Design and development of Bluetooth keyboard for tablet PC
Design and development of 300 mega pixel optical anti-shake auto-focus camera module
2010 Design and development of high performance multiple-function wireless charger
Design and development of low voltage Bluetooth devices
Design and development of thermal printing and color management technology
Design and development of 800 mega pixel optical anti-shake auto-focus camera module.
Design and development of touch panel multimedia computer peripheral
2011 Design and development of backlight keyboard
Design and development of Wi-Fi mouse
Design and development of Wi-Fi keyboard
Design and development of 1300 optical anti-shake auto-focus camera module
Design and development of Smart TV remote controller
2012 Design and development of multiple-point touch panel and active stylus pen
Design and development of NFC pairing with Bluetooth keyboard and mouse
Design and development of network multimedia storage device
Design and development of composite object document scanner
Design and development of thin keyboard exclusive for tablet PC
Design and development of new generation low-power Bluetooth 4.0 input device
Design and development of dual mode (low-power Bluetooth, 2.4G) wireless mouse
Design and development of low-power Bluetooth 4.0 stylus pen
Design and development of gesture recognition keyboard
Design and development of voice input Smart TV remote controller
Design and development of 1,300 mega pixel optical anti-shake and auto-focus camera module
2013 Design and development of multiple-len floating touch (gesture recognition) camera module
Design and development of net generation big volume network multimedia wireless storage device
Design and development of wireless printer control panel
Design and development of full-function multiple-function printer IC control panel
Design and development of new generation color multiple-function printer controller
Design and development of high-speed high quality color scanner module
Design and development of high-speed ultra slim both side color scanner module
Design and development of visual recognition double-len camera module
Design and development of new mode slim multiple-color backlight keyboard
Design and development of new generation wearable device
Design and development of mobile device game peripherals
Design and development of all-in-one keyboard cover
Design and development of mechanical game keyboard
2014 Design and development of voice command Smart TV remote controller
Design and development of 1600, 2000, and 2600 mega pixel anti-shake auto-focus camera module
Design and development of 2400 mega pixels optical anti-shake auto-focus camera module
Design and development of the shortest 1300 mega pixels auto-focus camera module
Design and development of ultra thin speaker
Design and development of new structure push-pull speaker
Design and development of the platform, portal and terminal devices for the installation of the Internet of Things
Design and development of ANC ear phone
Design and development of biosensor ear phone and wearable device
Design and development of voice source recognition speaker array
Design and development of wireless sound system and ear phone for broadcasting online streaming music and synchronized
broadcasting
Design and development of new generation wireless access devices with ultra-high speed communication capacity
Design and development of 2100 and 500 mega pixel double-len camera module, the top of the line in specification.
2015 Design and development of 300 mega pixel car-mounted double-len camera module
Design and development of multiple-film backlight module for keyboard
Design and development of ultra thin film keyboard
Design and development of new generation folding Bluetooth low-power keyboard
Design and development of multiple-OS switching keyboard
Design and development of USB Type-C keyboard, mouse
Design and development of high-power wireless charger module
Design and development of small size speaker adaptor
Design and development of battery module GPS structure and battery module
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Note: the above table shows the technologies or products successfully developed by Primax Electronics.

(4) Long-term and short-term business development plans

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(1) Short-term Development

1. Computer peripherals

a. Keep abreast of the trend of the development of mouse, keyboard, tablet PC keyboard, stylus pen and smart remote control device related technologies and continue to develop new product for business promotion support.

b. Establish the supply chain of key parts and components and VMI/JIT system for the effective control of inventory level and shortage of materials.

c. Upgrade the production efficiency of the plant to reduce cost and continue to bolster OEM/EMS business to maintain stable revenue and enhance the profit margin. Keep abreast of the development trend of mobile application and related technologies.

(2) Non-computer peripherals

2-1. Parts and components of mobile devices

The short-term strategy will be based on the advantage given by the technological advancement of the Company to establish a foothold for a number of flagship items, and then go for a larger share of the mid- to high-end market. The leading position of the Company in fast focus technology (central motor, close-loop motor), low height encapsulation (flip-chip, cavity base board bonding), and optical anti-shake related technologies will be the best products for development new customers. Furthermore, the strategy of pioneering in technology and materials, and access to new resources before the others, and seeking coordination with the major IC partners allow the customers to achieve the advantage of accessing to new products in the industry in the shortest time. This strategy helps to bolster the strategic cooperation with the customers.

For existing customers, the Company seeks to enlarge the shares of their purchase and upgrade the gross margin as the two major indicators. In the market of China, the Company will target existing customers for a larger share of their business and introduce new product lines of cell phone to these customers.

In production, the Company will launch fully autonomous automated production, ultra-speed high-end production process and higher level of cleanliness management will be the gravity of work for the current year. In addition, the increase of purchase orders compels the expansion of production capacity for high-end products. This will be a mission to be accomplished in 2015.

2-2. Business machines

The Group spares no effort in the development of high-speed and low cost

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scanner modules, and has successfully launched the product into mass production. High-end business use scanners and modules are about to be launched for mass production covering markets all over the world. In the design and manufacturing of laser printers and multiple-function business machines, the Company will keep its existing customers and continue to development more competitive platforms and go for new product development projects with customers in USA and Japan. Currently, the Company is running a number of projects and will launch into mass production this year. The label barcode printer is a new product line. The products of the first generation have been launched into mass production and were highly acclaimed in market. The products of a new generation will be launched into mass production. OEM manufacturing of image modules and business machines is on stable growth. The Company will develop more new customers and new businesses. For office automation production, the ceaseless upgrade of proprietary technologies helps the Company file more patents. The Company has developed more new customers and has successful transformed to the ODM mode of operation and proactively engaged in joint ventures with the customers for the development of new products.

2-3. Digital home products

Regarding the in-depth development of existing product lines, the Company also seeks to development new product lines proactively for keeping its leading position in the new digital wave in product design capability and the accessibility to key technologies. The digital home-related products proactively developed by the Company are expected to bring in new momentum for profits. The Company will keep abreast of the development trend of wireless storage device and digital home multimedia streaming technologies, and will continue to develop new platforms and software for supporting business promotion and the establishment of the supply chain for key parts and components. In the area of internal planning for research and development, the Company will continue to fortify its capacity in software development and establish long-term cooperation relation with software solution suppliers and keep abreast of the development trend of related technologies. The Company will expand its client base from existing customers and cut into world leading brands.

With its effort in technology and development of products, the Group has successfully presented 6 sets of different digital wireless sound systems in the CES 2013 (the consumer electronics show in the USA). They covered different systems and devices for portable, all-in-one, family theatre and music servers. At the same time, the Group has also established the Digital Home Division, which has emerged as the 4th major business group of the Company after computer peripherals, mobile

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devices, and office appliances.

With the experience of working with a number of suppliers in the development of this business, the Company realizes that the single speaker is a critical component that affects the quality of sound. The traditional buy-sell relation can no longer achieve the differentiation of this product. For this reason, the Company proactively seeks suitable strategic partners or prospective investee with an attempt to breakthrough sound quality and create product with high p/p ratio in quality and a winner in the market.

2 Long-term Development

(1). Computer peripherals
a. Continue to enhance the capacity of automated production for cost reduction and solving the problem of labor shortage, and proceeds to develop the strength in lean production.
b. Develop new product lines (such as wearable devices, mobile device game peripherals).

(2). Non-computer peripherals

2-1. Mobile device parts and components

In the long term, the strategy will be aimed at large accounts and targets the upper course key components suppliers of camera lens (such as, image IC, optical lens, motor, IR free glass and others) for the formation of efficient strategic cooperation. With positive bonding of partnership, the Company can ascertain competitiveness in cost, technological advantage, and guaranteed sources of supply. Further, the Company will seek a larger share of purchase from its existing customers for the full product line of cameras. The Company will support the platform defined by customers in physical platforms, including TVs, wearable devices, tablet, cell phones, and even car-mounted devices and the demand of strategic customers for cameras and the derived technology modules, and engage in joint venture with the strategic customers for developing prospective new products.

In customer management, the Company started its investment in customers in the booming newly emerged markets, and expects prominent results next year.

2-2. Business machines

The group will continue to expand in scanner and multiple-function business machine technologies and business and seeks to emerge as the number one ODM professional design contractor. In response to the lucrative market needs of

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broadband wireless and mobile multimedia devices, the Company has made the best of its effort in the upgrade of the development, integration, and application of mobile device scanning, printing and related technologies. In the area of high-end scanners, automatic feeders, automatic staplers, control panel design, the Company has rich experience and good capacity. With more than 20 years of experience in the development and manufacturing of image products and embedded devices, the Group will successfully develop the business of this type of products. In the area of office automation products, the Company will continue to commit its resources in the development of its own technologies, and maintain its leadership position in energy efficient, system integration and distinguished user convenience design, and select essential groups of customers for mutual development and growth.

2-3. Digital home products

As for the long-term development planning for new product development, the Group will continue to develop wireless storage devices and digital home-related products and technologies, and will work closely with key customers for joint development of new products for market demand. In the area of business development, the Company will, based on its existing customers, develop the market of leading brands, including large US, European and Japanese leading firms for joint ventures. In the design of energy efficient, system integration and distinguished user convenience, the Company will be a pioneer in the market and select essential customers for common growth. In addition to hardware development, the Company will continue to upgrade the capacity of the development, integration, and application of related software technologies for meeting the needs in the newly emerged cloud computing. With its good experience in the design, research, development, management and implementation capacity, the Group must be able to expand the business of the products and services of this type of products.

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II.Market and Sales Overview

I. Market analysis

(1) Sales (Service) Region

s (Service) Region
Year Area	FY 2013		FY 2014
	Amount (NTD thousand)	%	Amount (NTD thousand)	%
Mainland China	26,168,043	61.83	31,083,837	59.50
USA	6,326,650	14.95	7,847,174	15.02
Others	9,825,295	23.22	13,308,766	25.48
Total	42,319,988	100.00	52,239,777	100.00

(2) Market share

The group is professional manufacturer of computer peripherals, mobile device parts and components, business machines and digital home products and is highly acclaimed in the industry. The group carries a wide array of products covering many areas of applications, including mouse, keyboard, touch panels, NB PCs, cell phones, earphones, chargers, printers, and scanners. Due to the diversity and differentiation of these terminal products, there is no information on market share as objective reference.

(3) The supply and demand in market and growth

i.Computer peripherals

The peripherals manufactured by the group, including keyboards, mouse, and mobile device peripherals are mainly used in PCs and tablet PCs of which keyboard and mouse are the main items on the market.

According to the reports released from renowned research firms, the sizable shipment volume and the appreciation of the US Dollar in Q4 2014 will be followed by a decline of shipment volume by 7.5% in the first half of 2015. The launch of Windows 10 OS in the second half of 2015 is expected to stimulate the sale of PC. However, smart phone tends to displace PC in the newly emerged markets to a much greater extent. IDC pointed out that (March 2015) shipment volume of PC would fall by 4.9% in 2015 worldwide. In addition IDC also pointed out that (March 2015) the shipment volume of tablet PC (excluding the 2-in-1 version) would only be 235 million pieces in 2015 worldwide, which indicated marginal growth of 5 million pieces from the same period of 2014. Big screen and Windows version tablet PC will grow rapidly due to the addition of its

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business applications that helps to boost up the demand for tablet PC input devices. As such, the group anticipates room for further growth of keyboard for tablet PC and other peripherals.

ii.Non-computer peripherals

2-1. Mobile device parts and components

The group runs a variety of mobile device parts and components, including camera modules, finger print recognition modules, communication peripherals such as Bluetooth earphones, charger bases, and wireless chargers of which camera module accounted for the highest proportion of the product line.

For NB PC, the shipment volume turned stagnant in the period of 2011~2014 after the record high volume of more than 200 million units in 2010. Then, the shipment volume was about 250 million units. The built-in camera module for NB PC is a standard device for NB PCs. The change in shipment volume of NB PCs will result in corresponding stagnancy of the shipment volume of this device. Tablet PCs were the stars in 2012~2013, and started to decline in 2014 (except Apple, which still enjoyed stable growth). The reason could be that after the storming for new hardware earlier, it is not being followed by the same sort of demand for new systems. It may also be the displacement effect between the modified version of NB PC and big screen smart phone, which made the role of tablet PC irrelevant. Smart phones are an area of growth. The rise in the shipment volume of mobile phone worldwide and the increasing popularity of matching camera module and audiovisual camera lenses resulted in an annual growth of shipment volume of mobile phone camera module. The prevailing use of 3G and 4G wireless network paved the way for the shipment of smart phones with sub cameras (for audiovisual communication) in a sizable volume of over 1.4 million pieces in 2015 worldwide of which 100% are equipped with a main camera and about 60% are equipped with a sub camera as well. This trend is on the rise year after year. As for the brands, there was a reshuffle of brand names in 2014 by ranking. Firms in China have won 5 seats of the top 10 while India got 1. This indicated the forceful momentum in the newly emerged market.

2-2. Business machines

The acute competition in market gave rise to the falling sale price of multiple-function machine or known as MFP. This is particularly the case for jet printer and B/W laser printer. The sluggish economy worldwide will cause further decline of the shipment volume of consumer type jet printers. Yet, the laser printer series carried by the group can still maintain marginal growth, as the demand for multiple-function business machines in the newly emerged countries is still on the

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growth. The developed markets of Europe, USA, and Japan still have increasing demand for color multiple-function business machines mainly because of the needs for switching from B/W printers to color printers. Despite the impact of portable device and digitization trend, printers and multiple-function business machines will still in demand and transform to a new wave of innovative application by integrating with the upgrade of performance, digital streaming management function, customization through vertical cooperation, and the integration with cloud service. The gravity will be A4 low-end laser MFP and the application of communication products. A new wave of growth in application is anticipated.

2-3. Digital home products

Digital home products come in a diversity of choices in many faces, given the falling price of FHD TV, sustained growth of UHD 4K TV, prevalence of one portable device per person, the popularity of media game and audiovisual streaming boxes, the continued improvement of the bandwidth for cable communication (10/100Gb), the ceaseless advancement of wireless broadband technology (IEEE802.11ac, 4G), the popularity and diversity of cloud audiovisual streaming services, and the abundance of high quality multimedia content. This was echoed with the launch of different innovative devices, application, and services. The growth in this area is anticipated.

(4) Competitive Edge

A. Sufficient capacity with the economy of scale

The product life cycle of electronic products is getting shorter and shorter. As such, manufacturers tend to concentrate their resources in the development of new products and reduction of cost. In consideration of cost reduction and short lead-time to mass production, outsourcing production emerged as the prevalent trend of operation. Under this trend, firms with the experience in the production of related products and sufficient production capacity will be the first choice of the international big firms for outsourcing production. The group has the experience in the development, design, and manufacturing of image products and embedded devices for decades, and has a solid team for technology development and strict procedures for manufacturing and quality management. Backed by a strong R&D team, the group can adjust the production process and help customers to optimize running items timely as per their request, and respond to the needs of customers instantly. The group has production bases in Dongguan, Kunshan, Chongqing, and Huizhou of China, and will continue to expand its production capacity. With the

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economy of scale in production capacity and flexible adjustment of the capacity, coupled with the professional production process technologies, the group set entrance barrier too high for the competitors. In addition, the abundance of production resources will be an essential advantage for the group to compete for OEM orders from international big firms.

B. Global Logistics Mode of Production

The group adopts the global logistics mode of production for providing services to customers. In addition to providing good quality products for customers, the group also provides strong logistic support service. The group is sound in production management with high flexibility of production the production and sale network covers Dongguan, Kunshan, Chongqing, and Huizhou. It can provide close-to-market service for customers. Through its global network of warehouse facilities (USA, Holland, and China) for quick delivery, the group can condense the delivery lead-time and provide customer stable and rapid sources of goods and allow customers to achieve low inventory level and mitigate the cash flow problems. As such, logistics support capacity is also an edge of the group in competition.

C. Positive cooperative relation with big international firms

The group has been focusing on the research and development of computer peripherals, mobile device parts and components, and business machines ever since its establishment. The quality and stability of our products have been highly recognized by the customers. As such customers continue to place orders with the group. Most customers of the group are big internationally renowned firms. At the stage of preliminary accreditation of products and related specification setup and technological innovation, the group can fully use customer relations for the best market information and can keep abreast of the trend in market. For many years, the group and the upper and lower course industries have had positive relations, and the group is essential partners with the big firms in close cooperation in the development of new products in the future.

D. With the man-machine interface technological-know-how and software development capability

The group has a strong software R&D team with good experience in related fields, and has the capacity in the research and development of man-machine interface and can actively assist the customers to improve the production operation interface. At the same time, the group is also indulged in the research and development of human-oriented software and conversion into consumer

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electronics highly receptive to the consumers. Examples are network server, wireless disk, and other newly emerged products. This is the integration of technologies on hand for development of new application, and will emerge as a strong edge of the group in the development of the future.

(5) Favorable and unfavorable factors for development and the responses

Favorable factors:

A. International big firms tend to place OEM orders for cost reduction

The international big firms tended to outsource for OEM production for keeping their branding operation and R&D technologies and keeping production cost down simultaneously. They focus on design, marketing, and R&D for simplifying the sophistication of management and upgrade operation efficiency, and at the same time can proceed to organizational downsizing, concentration of resources, cutting production cost, reinforcing brand value, and increase the market share. The international division of labor in the electronic industry is prevailing now. This mode of operation emerged as a necessity for the operation of international brand name firms. This brings about lucrative business opportunity of OEM production. The group has established production bases in Dongguan, Kunshan, Chongqing, and Huizhou in China for OEM services of the customers in the regions and for cutting down production cost. The group has been recognized by the customers in product development technologies, and can provide abundant production resources to back up the production of the customers. With this arrangement, the group can respond to the needs and provide services to the customers timely. As such, the group can work in cooperation with the international big firms for OEM business. The capacity of the group in research and development technology and sound production management can effectively cut down the cost of production and can secure much more business opportunities in an environment of keen competition.

B. There is room for further development of the terminal application market 1 Computer peripherals

The computer peripherals run by the group are mouse, keyboard, and tablet PC keyboard. In the environment where the big computer firms with famous brands are getting bigger, the growth in the computer market is expected to slow down. Yet, the group still has an edge due to its appropriate customer strategy. In 2014, the displacement of Win XP triggered a new wave of the quest for new systems and machines, and it has brought business to the group. The sustained growth of tablet PCs in 2014 also stimulated the increase

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in demand for tablet PC keyboards. The group has prepared for tablet PC keyboards way back and had benefited from such change in demand.

2 Non-computer peripherals

2-1. Mobile device parts and components

The group runs mobile device parts and components covering built-in camera modules for NB PCs, smart phones, and tablet PCs, and the communication device peripherals such as Bluetooth earphones, and charger bases. The change in the habit of the consumers in using cell phone to take photographs and share the photographs or audiovisual footage with friends drove the smart phone big firms and tablet PC big firms to continue to launch high definition and high mega pixel smart phones and tablet PCs to market. In the wake of the prevalent use of the internet and the increase in bandwidth, built-in camera modules emerged as a standard option for NB PCs. All these indicated there is room for further growth of built-in camera module in the market. The diversity of functions for cell phones resulted in high consumption of power. In the past, a cell phone could stand for one week without recharge. However, it never happens anymore. Now, portable batteries will be the name of the game. The demand for USB chargesr and car-mounted chargers grows rapidly. With the popularity of IP phones and portable devices, the demand for Bluetooth earphones also grows ceaselessly and this trend will bring in further revenue for the group.

2-2. Business machines

The product line of business machines run by the group covers laser printers, multiple-function printers, and scanners. The prevalent use of network technology prompts for the application of wireless technology to printers and business machines for data transmission and printing. The increase in the sale of smart phones and tablet PCs and the upgrade of functions stimulated the demand for more cell phones and tablet PCs. The advent of wireless printers and business machines can satisfy the needs of printing from portable devices such as cell phones and tablet PCs and indirectly helped to push up sale for the products of the group. In addition, the demand for B/W laser printers and multiple-function business machines continues to grow, and will be a direct contribution to the sale volume of the group.

2-3. Digital home products

The well successful development of the broadband network environment allows for the annual growth of Wi-Fi environment at home. Wireless transmission and related application will mushroom. Consumers have actual

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needs for home entertainment audiovisual streaming. This will boost the sales of home wireless storage devices and entertainment audiovisual servers. The vibrant growth of mobile devices, such as smart phones and tablet PCs, drives the increasing demand for wireless audiovisual data storage devices, and it will prompt the consumers to go for portable wireless disk as capacity expansion in storage. Customers have recognized the technological capacity of our design team and our excellent quality of manufacturing. In the future, product portfolio planning will be oriented towards market needs. Wireless speaker system started to grow quickly since last year. With the equipment and related technologies and platforms, customers applaud the group. In the future, the sale of mobile wireless speakers and family use wireless multiple speaker system will pick up momentum for further growth.

Unfavorable factors:

A. Condensed product life cycle

The rapid development of information, communication and consumer electronics condensed the life span of the products, to the extent that management risk increased. Idle inventory takes time to digest and the stagnancy of cash flow due to the inventory level. The lead-time for product development and design and mass production condensed too. These are challenges to the professional technical skills and management capacity of the group.

Responses:

The group spares no effort in the development of new technologies and the upgrade of the R&D capacity with the incubation of good people in research and development, improvement of production efficiency and yield rate to condense the lead-time of product development. In addition, the group has also cultivated positive relations with a number of domestic and international big firms in joint ventures. At the time of product development, the group pursues the strategy of sharing and exchange with the customers to understand the needs of the customers and market needs better. This helps to develop new products to the needs of the market very quickly. For materials of special specifications, the group exercises strict control to hold down inventory level and reduce the loss deriving from idle inventory, and too cut down the cost and upgrade its competitiveness in market efficiently.

B. Acute price competition that trim off profits

The booming of consumer electronics triggered the demand for computer peripherals, mobile device parts and components, and business machines and related parts and components in the market. As such, competition in the market turned acute with increasing pressure of product price. The result is low price for

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consumer electronics that trim off profits.

Responses:

The group concentrates on the upgrade of its core competence in competition, bolsters its capacity in product R&D and mass production. By way of the sustained improvement of production process through product design, the group can reduce loss in materials use. In addition, advanced production equipment was also introduced to enhance production efficiency. The line of high-end products entailing thicker gross margin has also been broadened for product differentiation and upgrade the added value of products. This helps to differentiate the products of the groups from its industry competitors, and maintain strong bonding with the customers in business cooperation for holding the market on hand firmly.

C. Labor shortage problem and the rise of labor cost in Mainland China

The labor authorities of Mainland China in the provinces moved up the level of minimum wage for the protection of the workers. This was echoed with the rapid economic development inland where annual economic growth is in two digits. The result is lack of incentive for the working population in the coastal regions to stay in the coastal regions for work. As such, the labor shortage problem is turning acute. The rising labor cost also adds to the cost of operation for the enterprises.

Response:

To solve the problem of labor shortage and keeping labor costs down, the group is making positive efforts in introducing module automated production equipment and process to enhance production efficiency and reduce labor costs. The group also spares no effort in improving the production processes, simplification of the production process, automatic testing and other means, and also appoints designated bodies to design and make precision molding tool and automated assembly equipment and launch into mass production to manage production process and product quality. The group also continued the development of highly automated production and IPQC testing equipment along the process line in recent years to enhance production efficiency and reducing the cost of production.

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II. The applications and production process of premium items
The application of premium products

Premium products and items	Primary functions
Mouse	Control the cursor and scrolling of computer, and provides convenience operation of the computer under Windows OS environment.
Keyboard	For character input and control of hot keys
Touch panel	With the contact of the fingertip to control the cursor of the computer screen and the scroll and other hot keys.
Writing pad and stylus pen	The use of stylus pens to control the computer cursor and drawing. The pressure sensor from the point of the stylus pen and the capacitor touch panel engaged in interactive communication for transmission of signal as thepenpoint contact thepanel.
Micro camera module	Applicable to cell phone, tablet PC, commercial and residential monitors, smart TV, game device,DVR,GPS built-in camera module
Network camera module	Applicable to NB PC, LCD monitor, built-in network camera module, external network camera.
Communication peripherals	Applicable to cell phone or MP3, built-in image, external voice device, data transmission,andpower supplydevices.
Image scanner	Applicable to PC, printers, file server, portable disk, photo/document digitization and storage.
Multiple-functio n business machine	Applicable to personal, home, office, shop, hotel, digital data center, photo/document scanning, photocopying, electronic document printing, and document facsimile.
Office automation products	Applicable to personal, home, office, shop, hotel, digital data center, photo/documents destruction, lamination and other processing.
Wireless storage devices	Applicable to personal and home audiovisual entertainment and data storage,office data storage
Sound system, speakers	Personal and family audiovisual entertainment
Wearables	Personal and familysports,health and life management

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2. Production Process

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

Materials
Manual dipping Automatic dipping Outsourcing
Process testing
Assembly to finish
Packing process test
Packing
Warehousing test
Warehousing
OQC
Shipment
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The supply of key materials

The premium products of the group are computer peripherals non-computer peripherals. The business is conducted mainly from the purchase through Primax HK (through triangular trade from indirect subsidiary of Primax Electronic & Telecommunication Products (Dongguan), Primax Electronics (Kunshan) and Primax Electronics (Chongqing). They are the wholly-owned direct and indirect subsidiaries of the group and are under full control in delivery and sources of supply. As such, there is no shortage of materials supply. The key materials for the products of the direct and indirect subsidiaries are mainly supplied from long-term partners for stability of supply source and quality. In addition, there are at least two suppliers of key materials that make interruption of supply or shortage of supply unlikely.

The names of the customers and suppliers that accounted for more than 10% of the total purchase and sales in any one of the last two years, and specify the reasons for the changes.

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i. Information on principal suppliers that accounted for more than 10% of the total purchase in any one of the last two years.
There is no principal suppliers that accounted for more than 10% of the total purchase in any one of the last two years.
ii. Information on principal customers that accounted for more than 10% of the total sales in any one of the last two years.

Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －	Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －	Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －	Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －	Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －	Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －	Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －	Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －	Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －	Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －	Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －	Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －	Currency unit: NTD million Year FY2013 FY2014 Q1 2015 Item Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer Name Amount Proportion to total sales (%) Relation with Issuer 1 Company A 6,960 16.45 No Company A 8,995 17.22 No Company A 2,306 17.80 No others 35,360 83.55 － Others 43,245 82.78 － Others 10,652 82.20 － Net sales 42,320 100.00 － Net sales 52,240 100.00 － Net sales 12,958 100.00 －
Year	FY2013				FY2014				Q1 2015
Item	Name	Amount	Proportion to total sales (%)	Relation with Issuer	Name	Amount	Proportion to total sales (%)	Relation with Issuer	Name	Amount	Proportion to total sales (%)	Relation with Issuer
1	Company A	6,960	16.45	No	Company A	8,995	17.22	No	Company A	2,306	17.80	No
	others	35,360	83.55	－	Others	43,245	82.78	－	Others	10,652	82.20	－
	Net sales	42,320	100.00	－	Net sales	52,240	100.00	－	Net sales	12,958	100.00	－

The top 10 customers of the group in the last two years are renowned international technology big firms. The client base of the group is in diversity and stable. The top 10 customers of the group in FY2013 and FY 2014 accounted for 52.00% and 49.10% of the net sales of respective years. Of the top 10 customers, no single customer or group accounted for more than 30% of the net sales. There is no concentration in particular customer in sale. The group has maintained good relation with existing customers and also proactively developed new products for expansion into other business areas, market, and customers for diversification of customer source and minimizes concentration risk in operation.

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5. Production in the Last Two Years

Units: NTD thousand; thousand pieces

				Units: NTD thousand; thousand pieces	Units: NTD thousand; thousand pieces	Units: NTD thousand; thousand pieces
Year Production Major Products (or by department)	FY2013			FY2014
	Capacity	Quantity	Amount	Capacity	Quantity	Amount
Computer peripherals	216,576	93,965	16,697,888	210,058	98,634	18,251,817
Non-computer peripherals	697,304	379,168	18,802,274	643,196	339,500	28,512,216
Total	913,880	473,133	35,500,163	853,254	438,134	46,764,033

6. Sales in the Last Two Years

Units: NTD thousand; thousand pieces

6. Sales in the	Last Two Years	Last Two Years	Last Two Years	Last Two Years	Units: NTD thousand; thousand pieces	Units: NTD thousand; thousand pieces	Units: NTD thousand; thousand pieces	Units: NTD thousand; thousand pieces
Year Major Products	FY2013				FY2014
	Local		Export		Local		Export
	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
Computer peripherals	1,205	119,193	102,442	21,120,404	1,608	216,301	99,510	23,700,228
Non-computer peripherals	25,213	2,991,454	118,875	17,093,026	13,461	2,844,664	91,723	24,224,048
Service income	0	0	0	995,911	0	0	0	1,254,536
Total	26,418	3,110,647	221,317	39,209,341	15,069	3,060,965	191,233	49,178,812

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III. The number of employees, average term of service, average age, and education in the last two years to the date this report was printed.

	Year	FY2013	FY2014	Current period to April 30,2015
Number of Employees	Technical staff (engineering)	786	768	801
	Management and salespersonnel	1,969	2,075	2,142
	Total	2,755	2,843	2,943
Average Age		38	38	38
Average Years of Service (note 1)		5	5	5.3
Distribution by education (%)	PhD	0.4	0.3	0.3
	Master	9.1	8.7	8.8
	Bachelor’s Degree	66.0	66.6	66.0
	Senior high school	15.8	16.0	16.0
	Below Senior High School	8.7	8.4	8.9

Note 1 ： Based on the term of service for employees of former Primax Technology

IV. Information on environmental spending

Loss (including indemnity) caused by pollution of the environment, total amount of penalty in the most recent year to the date this report was printed. Disclose the plan to tackle with the problem (including corrective action plan), possible spending (including the loss caused by the action plans, the penalty and the estimated amount of indemnity. If the total amount cannot be reasonably estimated, give the reasons): None.

V. Labor-management relation

Employee benefits, continuing education, training, retirement system, and the implementation.
i. Employment benefits and the implementation

The company has established the Employee Welfare Committee in accordance with the Labor Benefits Act and has appropriated fund for employee benefits. The welfare system currently in effect includes-labor insurance and national health insurance, group insurance, annual health examination, birthday gift voucher, employee social gathering, domestic and overseas traveling subsidy, emergency relief fund, year-end banquet, lucky draw, and social events.

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ii. Continuing education, training, and the implementation

The group has built up the channels for a diversity of learning programs and

development so that the employee can keep learning in different modes in multiplier effect.

On-the-job training ： Learning and development on the job through participation in meetings, assignment of project (duties), job rotation for reinforcement of job skills.
Internal training- the training covers executive training, professional training, and general skills training, which include programs for orientation of new employees, programs for training of executives at different levels, professional skills programs, quality program, general skills program, and English courses.
External professional training ： The company subsidizes the expenses in full amount for external training in order to encourage employees to upgrade their professional standing, or for learning a second professional skill in career development.
Overseas training ： Appoint employees with outstanding performance at work and have potential to participate in short-term overseas professional training program or conference for broadening their international horizon.
Online learning and knowledge community platform ： Training materials on general skills, fundamental professional knowledge, and English learning are available at the digital LMS learning system. Employees can learn without the constraints of time and space. In addition, employees can also exchange and share their knowledge through discussion in the community discussion zone and blog at the platform.
Self-learning ： the company encourages employees to learn the knowledge and skill related to their works. They may apply for flexible schedule for continuing education. In addition, the company also subsidizes employees for learning English as encouragement for learning different languages in supporting the international operations of the company. The company also recommends good books at any time and subsidizes the buying of books as encouragement for the employees to make reading a habit.

iii. Retirement system and the implementation

The group (formerly Hung Chuan Investment Co., Ltd.) was established on March 20, 2006 and has acquired former Primax Technology on December 8, 2006, and accepted all the terms and conditions of employee rights and benefits. The original retirement system is also kept intact in accordance with application laws. The terms and conditions and the standards of pension disbursement comply with the Labor Standards Act (hereinafter, “the old system”) and the Labor Pension Act (hereinafter, “the new system”).

Employees who select the old system or the new system with seniority of service under the old system remained intact will be covered by the Regulations Governing Employees Retirement establishing in accordance with the Labor Standards Act. The company will appropriate monthly contribution to the pension reserve deposited at the

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special account under the custody of the Bank of Taiwan for disbursement of pension reserve realized in the future. Further, the company also appropriate 6% of the incomes for employees selecting the new system as pension reserve to their personal pension accounts at Labor Insurance Bureau on a monthly basis as required by law.

iv. Labor-management agreement and the protection of the rights of the employees The labor-management relation of the group is harmonious. The employees can communication with the management in relevant meetings. The company and the employees are engaged in positive communications and interactions on different systems of the company, work environment and related issues. In addition, the Employee Welfare Committee of the group is responsible for administering employee benefits and organizing different activities and events to enhance the convergence of employees with the company and work in harmony. The detail is elaborated below:

(1) Routine meetings for communication at the department level on topics of the business plans of the company and of the department, business progress and market situation.
(2) Establishment of the regulations and principles for the prevention of sexual harassment, complaints, and punishment to protect positive work relation and interaction between the two sexes and avoid discrimination or harassment.
(3) Establishment of the labor-management meeting for routine communications and consultation between the management and the employees for improvement of labor-management relation.
(4) Establishment of Employment Welfare Committee for organizing recreational activities and benefits for employees at regular intervals.
(5) Establishment of flexible work schedule so that employees can keep a proper balance between work and their daily lives.
(6) Training program and subsidy for continuing education for employees as encouragement for the development of a second skill.
(7) In addition to the basic protection of labor insurance and national health insurance, the group also offers group insurance in favor of the employees for the protection of their safety, healthcare and family.
(8)Routine health examination for the employees and inspection of safety and health to ensure physical and psychological health and safe work environment for the employees.
Loss caused by labor-management dispute in the most recent period to the date this report was printed: None.
Possible amount of loss and responses at present and in the future. If it is difficult to have

reasonable estimation, give the reason with supporting evidence.

Ever since its establishment, the group strongly attach to the principles of sincerity, responsibility, and best effort for employee benefits. Labor-management relation is in harmony and all in the group spare no effort for the development of the group so that business performance improved year after year. As such, no labor-management dispute is anticipated under harmonious labor-management relation.

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VI. Major agreements

Agreement	Counterparty	Period	Major Contents	Restrictions
Product OEM	Customer E	Aug 01, 2014~Program ends	OEM of camera module and mouse	Confidential
Parts OEM	Customer F	Dec 17, 2013~Dec 17,2016	OEM of camera module	Confidential
Product OEM	Customer G	Feb 20, 2006~ Program ends	OEM of consumer electronics	Confidential
Product OEM	Customer B	May 22, 2007~ Program ends	OEM of multiple-function printers	Confidential
Product OEM	Customer V	Jun 30, 2008 ~ Jun 30, 2018	OEM of consumer electronics	Confidential
Product OEM	Customer U	Jun 08, 2007 ~ Program ends	OEM of mouse	Confidential
Product OEM	Customer T	Feb 20, 2008 ~ Program ends	OEM of consumer electronics	Confidential
Product OEM	Customer H	Jun 01, 2008 ~ Program ends	Multiple-function printers	Confidential
Product OEM	Customer A	Nov 20, 2014 ~ Program ends	OEM of consumer electronics	Confidential
Product OEM	Customer O	Jan 2006 ~ Program ends	OEM of consumer electronics	Confidential
Reconciliation	C	Dec 22, 2014 ~ Dec 22,2014	Inventory of materials	Confidential
Licensing	W	Dec 01, 2012 ~ Nov 30,2017	Technology transfer licensing	Confidential
Subscription	Global-Tek	Oct 15, 2014 ~ Oct 15,2014	Subscription of new shares	Confidential
Subscription	Huang, Ya-Hsing	Oct 15, 2014 ~ Oct 15,2014	Trading of shares	Confidential
Buy-sell and leasing	Shin Kong Life Insurance	Dec 2008 ~ Dec 2023	Buy-sell and leasing of Primax Building	None
Loan Agreement	Industrial Bank of Taiwan	Nov 07, 2013 ~ Nov 06,2015	Mid to long-term bank loans	None
Loan Agreement	Land Bank of Taiwan	Jul 04, 2013 ~ Jul 04, 2016	Mid to long-term bank loans	None
Loan Agreement	HSBC	Aug 18, 2011 ~ Aug 11,2015	Mid to long-term bank loans	None
Loan Agreement	ANZ	Jan 09, 2014 ~ Jan 09, 2017	Mid to long-term bank loans	None
Loan Agreement	Bank of Taiwan	Mar 10, 2014 ~ Mar 10,2016	Mid to long-term bank loans	None
Loan Agreement	Chinatrust Commercial Bank	Jan 05, 2015 ~ Jan 05, 2018	Mid to long-term bank loans	None
Loan Agreement	The Import-Export Bank of the ROC	Feb 12, 2015 ~ Feb 12, 2020	Mid to long-term bank loans	None
Factoring	Mega Bank	May 07, 2014 ~ May 06,2015	Factoring without recourse contract	None

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VI. Financial Position

i.Condensed consolidated balance sheet and consolidated income statements covering the last 5

years

1. Condensed Consolidated Balance Sheet – Based on IFRS

		Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand
Year Item		Financial Summaryfor The Last Five Years(Note 1)					To March 31 2015 (note 3)
		2010	2011	2012 (note 2)	2013 (note 2 )	2014 (note 2)
Current assets		－	－	15,384,183	17,385,420	23,078,336	24,200,723
Investment accounted for under the equitymethod		－	－	3,822,324	3,389,048	3,935,145	5,016,110
Property, plant, and equipment		－	－	54,961	46,479	2,916,644	3,548,487
Intangible assets		－	－	757,256	769,975	1,093,648	1,153,633
Other assets		－	－	20,018,724	21,590,922	31,023,773	33,918,953
Current liabilities	Before distribution	－	－	12,648,580	13,828,775	19,254,757	19,933,214
	After distribution	－	－	13,295,599	14,175,880	20,045,864	20,724,321
Non-current liabilities		－	－	144,506	220,580	1,460,269	2,050,866
Total liabilities	Before distribution	－	－	12,793,086	14,049,355	20,715,026	21,984,080
	After distribution	－	－	13,440,105	14,396,460	21,506,133	22,775,187
Equity attributable to shareholders of theparent		－	－	7,224,867	7,541,567	9,150,513	9,491,214
Capital stock		－	－	4,292,492	4,339,529	4,385,481	4,400,580
Capital surplus		－	－	607,334	648,747	673,543	727,165
Retained earnings	Before distribution	－	－	2,462,943	2,485,712	3,686,641	4,054,864
	After distribution	－	－	1,815,924	2,138,607	2,895,534	3,263,757
Other equities		－	－	(137,902)	67,579	404,848	308,605
Treasury stock		－	－	－	－	－	－
Non-controlling interest		－	－	771	－	1,158,234	2,443,659
Total shareholders’ equity	Before distribution	－	－	7,225,638	7,541,567	10,308,747	11,934,873
	After distribution	－	－	6,578,619	7,194,462	9,517,640	11,143,766

Note 1 ： The financial information prepared under the IFRSs does not cover a period of 5 years. For reference, the company also prepared the financial statements under the SFAS of the ROC. Please refer to table 5~8.

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Note 2 ： The financial information covering FY2012 to FY 2014 were audited. Note 3 ： The financial information was audited.

2. Condensed parent company only balance sheet - IFRSs

Currency unit: NTD thousand

Year Item	Year Item	Financial Summaryfor The Last Five Years(Note 1)	Financial Summaryfor The Last Five Years(Note 1)	Financial Summaryfor The Last Five Years(Note 1)	Financial Summaryfor The Last Five Years(Note 1)	Financial Summaryfor The Last Five Years(Note 1)	To March 31 2015
		2010	2011	2012 (note 2)	2013 (note 2 )	2014 (note 2)
Current assets		－	－	9,913,021	10,459,628	13,197,595	－
Investment accounted for under the equitymethod				3,778,057	4,745,311	8,596,698	－
Property, plant, and equipment		－	－	57,728	63,517	61,287	－
Intangible assets		－	－	54,961	46,479	37,997	－
Other assets		－	－	432,405	429,204	659,461	－
Total assets		－	－	14,236,172	15,744,139	22,553,038	－
Current liabilities	Before distribution	－	－	6,893,386	8,002,029	12,157,266	－
	After distribution	－	－	7,540,405	8,349,134	12,948,373	－
Non-current liabilities		－	－	117,919	200,543	1,245,259	－
Total liabilities	Before distribution	－	－	7,011,305	8,202,572	13,402,525	－
	After distribution	－	－	7,658,324	8,549,677	14,193,632	－
Shareholders’ equity		－	－	7,224,867	7,541,567	9,150,513	－
Capital stock		－	－	4,292,492	4,339,529	4,385,481	－
Capital surplus		－	－	607,334	648,747	673,543	－
Retained earnings	Before distribution	－	－	2,462,943	2,485,712	3,686,641	－
	After distribution	－	－	1,815,924	2,138,607	2,895,534	－
Other equities		－	－	(137,902)	67,579	404,848	－
Treasury stock		－	－	－	－	－	－
Total shareholders’ equity	Before distribution	－	－	7,224,867	7,541,567	9,150,513	－
	After distribution	－	－	6,577,848	7,194,462	8,359,406	－

Note 2 ： The financial information covering FY2012 to FY 2014 were audited.

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3. Condensed Consolidated Statement of Comprehensive Income – Based on IFRS -

					Currencyunit: NTD thousand	Currencyunit: NTD thousand
Year Item	Financial Summaryfor The Last Five Years				(Note 1)	To March 31 2015 (note 3)
	2010	2011	2012 (note 2)	2013 (note 2 )	2014 (note 2)
Operating revenue	－	－	43,132,771	42,319,988	52,239,777	12,957,891
Gross profit	－	－	4,497,277	3,752,695	6,218,799	1,432,374
Income from operations	－	－	1,404,096	694,444	1,829,742	373,232
Non-operating incomes and expenses	－	－	172,794	216,308	217,839	118,365
Income before tax	－	－	1,576,890	910,752	2,047,581	491,597
Net earnings of continued operations	－	－	1,183,698	668,554	1,608,967	377,934
Loss from discontinued operations	－	－	－	－	－	－
Net earnings in currentperiod	－	－	1,183,698	668,554	1,608,967	377,934
Other comprehensive income (income after tax)	－	－	(137,661)	239,067	342,273	(44,256)
Total comprehensive income	－	－	1,046,037	907,621	1,951,240	333,678
Net income attributable to shareholders of the parent	－	－	1,183,461	668,548	1,544,690	368,223
Net income attributable to non-controlling interest	－	－	237	6	64,277	9,711
Comprehensive income attributable to Shareholders of the parent	－	－	1,045,995	907,589	1,871,224	321,115
Comprehensive income attributable to non-controlling interest	－	－	42	32	80,016	12,563
Earnings per share (Note 4)	－	－	2.91	1.55	3.57	0.85

Note 1 ： The financial information prepared under the IFRSs does not cover a period of 5 years. For

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reference, the company also prepared the financial statements under the SFAS of the ROC. Please refer to 5~8 of the table below. 。

Note 2 ： The financial information covering FY2012 to FY 2014 were audited. Note 3 ： The financial information was audited

Note 4 ： Basic earnings per share.

4. Condensed parent company only comprehensive income statement -IFRSs

Currency unit: NTD thousand

Year Item	Financial Summaryfor The Last Five Years(Note 1)	Financial Summaryfor The Last Five Years(Note 1)	Financial Summaryfor The Last Five Years(Note 1)	Financial Summaryfor The Last Five Years(Note 1)	Financial Summaryfor The Last Five Years(Note 1)	To March 31 2015 (note 3)
	2010	2011	2012 (note 2)	2013 (note 2 )	2014 (note 2)
Operating revenue	－	－	39,129,275	37,257,934	42,356,385	－
Gross profit	－	－	3,200,641	2,471,611	2,665,779	－
Income from operations	－	－	1,323,770	737,781	753,349	－
Non-operating incomes and expenses	－	－	100,150	121,510	879,985	－
Income before tax	－	－	1,423,920	859,291	1,633,334	－
Income from operations of continued segments	－	－	1,183,461	668,548	1,544,690	－
Income from discontinued operations	－	－	－	－	－	－
Net earnings in currentperiod	－	－	1,183,461	668,548	1,544,690	－
Other comprehensive incomes in current period (post-tax net earnings)	－	－	(137,466)	239,041	326,534	－
Total comprehensive incomes in current period	－	－	1,045,995	907,589	1,871,224	－
Earnings per share (Note 3)	－	－	2.91	1.55	3.57	－

Note 2 ： The financial information covering FY2012 to FY 2014 were audited.

Note 3 ： Basic earnings per share.

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5. Condensed consolidated balance sheet - SFAS of the ROC

Currency unit: NTD thousand

		Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand
Year Item		Financial Summaryfor The Last Five Years(Note)
		2010 (revised)	2011	2012	2013	2014
Current assets		12,061,025	13,647,514	15,412,672	－	－
Funds and investments		102,796	78,236	54,313	－	－
Fixed assets		2,862,018	3,858,327	3,822,324	－	－
Intangible assets		208,220	197,017	178,068	－	－
Other assets		523,144	564,766	522,500	－	－
Total assets		15,757,203	18,345,860	19,989,877	－	－
Current liabilities	Before distribution	10,864,877	12,400,406	12,635,791	－	－
	After distribution	11,262,352	12,601,135	13,282,810	－	－
Long-term liabilities		1,078,079	1,052,907	917,667	－	－
Other liabilities		－	－	－	－	－
Total liabilities	Before distribution	11,942,956	13,453,313	13,553,458	－	－
	After distribution	12,340,431	13,654,042	14,200,477	－	－
Equity attributable to shareholders of theparent		3,813,371	4,891,818	6,435,648	－	－
Capital stock		3,871,514	3,991,932	4,292,492	－	－
Capital surplus	Before distribution	289,522	328,178	620,143	－	－
	After distribution	289,522	288,032	620,143	－	－
Retained earnings	Before distribution	(168,971)	474,408	1,563,905	－	－
	After distribution	(566,446)	313,825	916,886	－	－
Unrealized gain or loss on financial instruments		－	－	－	－	－
Cumulative conversion adjustment		(178,694)	97,300	(40,892)	－	－
Net loss of unrecognized pension cost		－	－	－	－	－

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Minority shareholders’ equity	Minority shareholders’ equity	876	729	771	－	－
Total shareholders ’ equity	Before distribution	3,814,247	4,892,547	6,436,419	－	－
	After distribution	3,416,772	4,691,818	5,789,400	－	－

Source: The financial information covering FY2010 to FY 2012 was audited.

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6. Condensed consolidated balance sheet - SFAS of the ROC

Currency unit: NTD thousand

		Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand
Year Item		Financial Summaryfor The Last Five Years(Note)
		2010(revised)	2011	2012	2013	2014
Current assets		7,458,182	8,981,542	9,935,168	－	－
Funds and investments		2,786,592	3,649,465	3,820,278	－	－
Fixed assets		75,496	61,031	57,728	－	－
Intangible assets		84,719	66,002	54,961	－	－
Other assets		372,488	371,177	347,493	－	－
Total assets		10,777,477	13,129,217	14,215,628	－	－
Current liabilities	Before distribution	5,910,456	7,211,137	6,888,900	－	－
	After distribution	6,307,931	7,411,866	7,535,919	－	－
Long-term liabilities		1,053,650	1,026,262	891,080	－	－
Other liabilities		－	－	－	－	－
Total liabilities	Before distribution	6,964,106	8,237,399	7,779,980	－	－
	After distribution	7,361,581	8,438,128	8,426,999	－	－
Capital stock		3,871,514	3,991,932	4,292,492	－	－
Capital surplus		289,522	328,178	620,143	－	－
Retained earnings	Before distribution	(168,971)	474,408	1,563,905	－	－
	After distribution	(566,446)	313,825	916,886	－	－
Unrealized gain or loss on financial instruments		－	－	－	－	－
Cumulative conversion adjustment		(178,694)	97,300	(40,892)	－	－
Net loss unrecognized as pension cost		－	－	－	－	－
Total shareholder s’ equity	Before distribution	3,813,371	4,891,818	6,435,648	－	－
	After distribution	3,415,896	4,691,089	5,788,629	－	－

Source: The financial information covering FY2010 to FY 2012 was audited.

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7. Condensed consolidated income statement – SFAS of ROC

Currency unit: NTD thousand

	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand
Year Item	Financial Summaryfor The Last Five Years(Note 1)
	2010 (revised)	2011	2012	2013	2014
Operating revenue	41,079,422	47,342,606	43,132,771	－	－
Gross profit	4,563,970	4,189,546	4,500,866	－	－
Income from operations	1,658,292	1,147,835	1,470,715	－	－
Non-operating incomes and benefits	335,684	386,376	342,628	－	－
Non-operating expense and loss	235,268	184,500	169,834	－	－
Pre-tax income of continued operations	1,758,708	1,349,711	1,643,509	－	－
Incomes of continued operations	1,498,838	1,040,100	1,250,317	－	－
Loss from discontinued operations	－	－	－	－	－
Extraordinary income	－	－	－	－	－
cumulative effect from change of accounting principles	－	－	－	－	－
Net combined profits	1,500,625	1,040,854	1,250,080
Net loss of minority shareholders’ equity	(1,787)	(754)	237	－	－
Earnings per share (note 2)	3.92	2.63	3.07	－	－

Note 1 ： The financial information covering FY2010 to FY 2012 was audited. Note 2 ： Basic earnings per share.

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8. Condensed parent company only income statement - SFAS of the ROC

Currency unit: NTD thousand

	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand	Currencyunit: NTD thousand
Year Title	Financial Summaryfor The Last Five Years(Note 1)
	2010 (revised)	2011	2012	2013	2014
Operating revenue	35,392,322	43,053,109	39,129,275	－	－
Gross profit	3,456,917	2,820,525	3,204,800	－	－
Income from operations	1,600,323	935,282	1,398,317	－	－
Non-operating incomes and benefits	294,822	429,169	221,302	－	－
Non-operating expenses and loss	203,098	133,859	129,080	－	－
Pre-tax income of continued operations	1,692,047	1,230,592	1,490,539	－	－
Incomes of continued operations	1,500,625	1,040,854	1,250,080	－	－
Loss from discontinued operations	－	－	－	－	－
Extraordinary income	－	－	－	－	－
cumulative effect from change of accounting principles	－	－	－	－	－
Incomes in current period	1,500,625	1,040,854	1,250,080	－	－
Earnings per share (note 2)	3.92	2.63	3.07	－	－

Note 1 ： The financial information covering FY2010 to FY 2012 was audited. Note 2 ： Basic earnings per share.

5. Names of the certified public accountants and audit opinions in the last 5 years

Year	Accountingfirm	CPA	Audit Opinion
2010	KMPG Taiwan	MEI-PIN WU, CHENG-CHIEN CHEN	Modified unqualified opinions
2011	KMPG Taiwan	MEI-PIN WU, CHENG-CHIEN CHEN	Unqualified opinion
2012	KMPG Taiwan	MEI-PIN WU, CHENG-CHIEN CHEN	Unqualified opinion
2013	KMPG Taiwan	MEI-PIN WU, CHENG-CHIEN CHEN	Unqualified opinion
2014	KMPG Taiwan	MEI-PIN WU, CHENG-CHIEN CHEN	Modified unqualified opinions

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ii.Financial analysis of the last 5 years

1. Financial analysis –IFRSs-consolidated

Item	Year	Financial Analysis for the Last Five Years (note 1)	Financial Analysis for the Last Five Years (note 1)	Financial Analysis for the Last Five Years (note 1)	Financial Analysis for the Last Five Years (note 1)	Financial Analysis for the Last Five Years (note 1)	Current period to March 31 2015 (note 2)
		2010	2011	2012	2013	2014
Financial structure (%)	Debt Ratio	－	－	63.91	65.07	66.77	64.81
	Ratio of long-term capital to property, plant and equipment	－	－	192.82	229.04	299.07	278.82
Solvency (%)	Current ratio	－	－	121.63	125.72	119.86	121.41
	Quick ratio	－	－	79.45	93.98	92.42	91.09
	Interest earned ratio (times)	－	－	35.43	53.34	31.76	29.99
Operating performance	Accounts receivable turnover(times)	－	－	7.18	5.65	5.72	4.99
	Average collectionperiod	－	－	50.84	64.60	63.81	73.15
	Inventoryturnover(times)	－	－	7.13	8.39	10.26	8.91
	Accountspayable turnover(times)	－	－	3.96	3.86	3.99	3.79
	Average days in sales	－	－	51.19	43.52	35.58	40.95
	Property,plant and equipment turnover(times)	－	－	11.23	11.74	14.26	11.58
	Total assets turnover(times)	－	－	2.25	2.03	1.99	0.40
Profitability	Return on total assets(%)	－	－	6.36	3.28	6.33	1.21
	Return on stockholders' equity (%)	－	－	18.25	9.06	18.03	3.40
	Pre-tax income topaid-in capital(%)	－	－	36.93	21.00	47.11	11.21
	Profit ratio(%)	－	－	2.74	1.58	3.08	2.92
	Earningsper share(NT$)	－	－	2.91	1.55	3.57	0.85
Cash flow	Cash flow ratio (%)	－	－	11.02	21.63	17.42	－
	Cash flow adequacy ratio (%)	－	－	114.18	159.46	179.72	149.33
	Cash reinvestment ratio (%)	－	－	11.51	19.76	21.34	－
Leverage	Operation leverage	－	－	1.75	2.60	1.65	1.91
	Financial leverage	－	－	1.03	1.03	1.04	1.05
Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%) 1. Long-term capital to property, plant and equipment ratio：the company had stable profit in 2014 with increase of the amount of shareholders’ equity, which drove up the ratio of long-term capital to property, plant, and equipment ratio. 2. Debt service coverage ratio：the increase of interest expense in 2014 caused the decline in debt service coverage ratio. 3. Inventory turnover rate：the inventory in proportion to total assets in 2014 fell, that drove up the inventory turnover ratio. 4. Property, plant and equipment turnover rate：the increase in revenue from operating in 2014 that drove up the turnover ratio of property, plant and equipment. 5. ROA：the increase in pre-tax earnings in 2014 that drove up ROA. 6. ROE：the increase in pre-tax earnings in 2014 that drove up the ROE. 7. Pre-tax earnings to paid-in capital ratio：the increase in gross profit in 2014 that drove up the pre-tax earnings to paid-in capital ratio. 8. Net profit rate：the increase of gross margin in 2014 that drove up net profit rate. 9. Earnings per share：the increase of gross margin and net earnings in 2014 drove up the earnings per share. 10. Operation leverage：the increase of operatingincome in 2014 that improved the operation leverage.

Note 2 ： The financial information was audited.

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1. Financial analysis-IFRSs-parent company only

Item	Year	Financial Analysis for the Last Five Years (note 1)	Financial Analysis for the Last Five Years (note 1)	Financial Analysis for the Last Five Years (note 1)	Financial Analysis for the Last Five Years (note 1)	Financial Analysis for the Last Five Years (note 1)	Current period to March 31 2015 (note 2)
		2010	2011	2012	2013	2014
Financial structure (%)	Debt Ratio	－	－	49.25	52.10	59.43	－
	Ratio of long-term capital to property, plant and equipment	－	－	12,719.63	12,189.04	16,962.44	－
Solvency (%)	Current ratio	－	－	143.80	130.71	108.56	－
	Quick ratio	－	－	115.09	108.15	96.38	－
	Interest earned ratio (times)	－	－	40.61	52.96	27.92	－
Operating performance	Accounts receivable turnover (times)	－	－	8.18	5.82	5.52	－
	Average collectionperiod	－	－	44.62	62.71	66.12	－
	Inventoryturnover(times)	－	－	14.50	18.68	24.45	－
	Accounts payable turnover (times)	－	－	6.27	6.11	5.63	－
	Average days in sales	－	－	25.17	19.54	14.93	－
	Property, plant and equipment turnover(times)	－	－	658.97	614.59	678.77	－
	Total assets turnover(times)	－	－	2.86	2.49	2.21	－
Profitability	Return on total assets(%)	－	－	8.86	4.55	8.33	－
	Return on stockholders' equity (%)	－	－	18.25	9.05	18.51	－
	Pre-tax income to paid-in capital (%)			33.35	19.82	37.58	－
	Profit ratio(%)	－	－	3.02	1.79	3.65	－
	Earningsper share(NT$)	－	－	2.91	1.55	3.57	－
Cash flow	Cash flow ratio (%)	－	－	0.81	12.33	12.46	－
	Cash flow adequacy ratio (%)	－	－	24.91	103.17	192.99	－
	Cash reinvestment ratio (%)	－	－	3.43	4.31	11.06	－
Leverage	Operation leverage	－	－	1.04	1.06	1.05	－
	Financial leverage	－	－	1.03	1.02	1.09	－
1. Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%) Long-term capital to property, plant and equipment ratio：the company had stable profit in 2014 with increase of the amount of shareholders’ equity, which drove up the ratio of long-term capital to property, plant, and equipment ratio. 2. Debt service coverage ratio：the increase of interest expense in 2014 caused the decline in debt service coverage ratio. 3. Inventory turnover rate：the inventory in proportion to total assets in 2014 fell, that drove up the inventory turnover ratio. 4. Average days of sales: the inventory level fell in 2014 that drove up the inventory turnover rate and drop in average days of sales. 5. ROA：the increase in pre-tax earnings in 2014 that drove up ROA. 6. ROE：the increase in pre-tax earnings in 2014 that drove up the ROE. 7. Pre-tax earnings to paid-in capital ratio：the increase in gross profit in 2014 that drove up the pre-tax earnings to paid-in capital ratio 8. Net profit rate：the increase of gross margin in 2014 that drove up net profit rate 9. Earnings per share：the increase of gross margin and net earnings in 2014 drove up the earnings per share。 10. Cash flow suitability ratio: the increase of cash flow in operation under proper control of capital expenditure and inventory that helped to drive up cash flow suitability ratio. 11. Cash reinvestment ratio: the increase of net cash flow in operation under proper control of cash dividend policy that helped to drove up cash reinvestment ratio.

Note 2 ： The financial information was audited.

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2. Financial analysis - SFAS of the ROC - consolidated

Item	Year	Year	Financial Analysis for the Past Five Years (note 1)	Financial Analysis for the Past Five Years (note 1)	Financial Analysis for the Past Five Years (note 1)	Financial Analysis for the Past Five Years (note 1)	Financial Analysis for the Past Five Years (note 1)
			2010 (revised)	2011	2012	2013	2014
Financial structure (%)	Debt Ratio		75.79	73.33	67.80	－	－
	Ratio of long-term capital to fixed assets		170.94	154.09	192.40	－	－
Solvency (%)	Current ratio		111.01	110.06	121.98	－	－
	Quick ratio		66.05	59.50	79.62	－	－
	Interest earned ratio (times)		41.15	29.55	36.88	－	－
Operating performance	Accounts receivable turnover (times)		6.96	9.66	7.18	－	－
	Average collection period		52	38	51	－	－
	Inventory turnover (times)		10.30	8.40	7.13	－	－
	Accounts payable turnover (times)		4.34	4.66	3.96	－	－
	Average days in sales		35	43	51	－	－
	Fixed assets turnover (times)		16.46	14.09	11.23	－	－
	Total assets turnover (times)		2.62	2.78	2.25	－	－
Profitability	Return on total assets (%)		9.78	6.33	6.72	－	－
	Return on stockholders' equity (%)		48.37	23.89	22.07	－	－
	Ratio to issued capital (%)	Operating income	42.92	28.81	34.45	－	－
		Pre-tax income	45.52	33.87	38.49	－	－
	Profit ratio (%)		3.65	2.20	2.90	－	－
	Earnings per share (NT$)		3.92	2.63	3.07	－	－
Cash flow	Cash flow ratio (%)		16.95	19.09	11.03	－	－
	Cash flow adequacy ratio (%)		82.53	74.94	79.34	－	－
	Cash reinvestment ratio (%)		26.45	24.29	11.67	－	－
Leverage	Operation leverage		1.40	1.75	1.71	－	－
	Financial leverage		1.03	1.04	1.03	－	－

Note 1 ： The financial information covering the periods of FY2010 to FY2012 was audited.

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2. Financial analysis –SFAS of ROC- parent company only

Item	Year	Year	Financial analysis of the last 5 years (note 1)	Financial analysis of the last 5 years (note 1)	Financial analysis of the last 5 years (note 1)	Financial analysis of the last 5 years (note 1)	Financial analysis of the last 5 years (note 1)
			2010 (revised)	2011	2012	2013	2014
Financial structure (%)	Debt Ratio		64.62	62.74	54.73	－	－
	Ratio of long-term capital to fixed assets		6,446.73	9,696.84	12,691.81	－	－
Solvency (%)	Current ratio		126.19	124.55	144.22	－	－
	Quick ratio		92.86	81.86	115.48	－	－
	Interest earned ratio (times)		40.44	29.35	40.47	－	－
Operating performance	Accounts receivable turnover (times)		6.96	10.54	7.35	－	－
	Average collection period		52	35	50	－	－
	Inventory turnover (times)		22.14	16.35	14.50	－	－
	Accounts payable turnover (times)		5.99	7.38	6.27	－	－
	Average days in sales		16	22	25	－	－
	Fixed assets turnover (times)		355.86	630.69	658.97	－	－
	Total assets turnover (times)		3.07	3.60	2.86	－	－
Profitability	Return on total assets (%)		13.32	9.01	9.36	－	－
	Return on stockholders' equity (%)		48.45	23.91	22.07	－	－
	Ratio to issued capital (%)	Operating income	41.42	23.47	32.75	－	－
		Pre-tax income	43.79	30.89	34.91	－	－
	Profit ratio (%)		4.24	2.42	3.19	－	－
	Earnings per share (NT$)		3.92	2.63	3.07	－	－
Cash flow	Cash flow ratio (%)		27.51	9.07	(0.81)	－	－
	Cash flow adequacy ratio (%)		228.98	140.77	128.23	－	－
	Cash reinvestment ratio (%)		30.22	4.26	(3.44)	－	－
Leverage	Operation leverage		1.54	1.85	1.62	－	－
	Financial leverage		1.03	1.05	1.03	－	－

Note 1 ： The financial information covering the period of FY 2010 to FY 2012 was audited.

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Financial structure
(1) Debt Ratio = total liabilities / total assets
(2) Long-term capital to fixed assets ratio = (Net shareholders’ equity + long-term liabilities)/ net fixed assets
Solvency
(1) Current ratio = current assets/ current liabilities
(2) Quick ratio = (current assets – inventory – other prepayments -other current assets)/ current liabilities
(3) Interest earned ratio (times) = EBIT/ interest expenses in current period
Operating performance
(1) Receivables (including account receivables and note receivables deriving from business operation) turnover rate = revenue/ average receivables (including account receivables and note receivables deriving from business operation) in relevant periods.
(2) Average collection period = 365/account receivable turnover rate
(3) Inventory turnover rate = cost of operation/ average inventory
(4) Payables (including account payables and note parables deriving from business operation) turnover = cost of operation/ balance of average payables (including account payables and note payables deriving from business operation) in relevant periods.
(5) Average days of sales = 365 / inventory turnover rate
(6) Fixed assets turnover = revenue/ average net fixed assets
(7) Total assets turnover = revenue/ average total assets
Profitability
(1) Return on assets = [Earnings (loss) in current period + interest expense x (1-tax rate)/average total assets
(2) Return on stockholders' equity = Earnings (loss) in current period / average total equity
(3) Profit ratio = Earnings (loss) in current period/ revenue
(4) Earnings per share = (Earnings (loss) in current period – preferred share dividend)/ weighted average quantity of outstanding shares
Cash flow
(1) Cash flow ratio = net cash flow from operation / current liabilities
(2) Cash flow adequacy ratio = net cash flow from operation in the last 5 years / (capital expenditure + increase of inventory + cash dividend) in the last 5 years
(3) Cash reinvestment ratio = (net cash flow from operation – cash dividend) / (gross fixed assets + long-term investment + other assets + working capital)
Leverage
(1) Operation leverage = (net sales – change in cost of operation and expense) / operating income
(2) Financial leverage = operating income / (operating income – interest expenses)

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iii.Supervisor Audit Report on Financial Statements of FY 2014

Supervisor Audit Report

To: Shareholders' Meeting of Primax Electronics Ltd.

Among the Company's 2014 Business Report, Financial Statements and Proposal for Distribution of Earnings prepared and submitted by the Board of Directors, the Financial Statements have been fully audited by KPMG Taiwan, appointed by the Board of Directors, which has issued the audit report.

The supervisors have audited the above Business Report, Financial Statements and Proposal for Distribution of Earnings and determined they are in compliance with the Company Act and other applicable laws and regulations and therefore issue this report pursuant to the provisions of Article 219 of the Company Act. I hereby submit this report.

==> picture [38 x 36] intentionally omitted <==

Supervisor: Tsai, You-Wei

==> picture [38 x 37] intentionally omitted <==

Supervisor: Hsu, Chiang-Chan

==> picture [38 x 39] intentionally omitted <==

Supervisor: Chang, Te-Tsai

March 24 2015

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iv.Notes to the audited financial statements of FY 2014

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-103-

			December 31, 2013	Amount %		658,900 3	10,446,627 49		37,981 -	659,589 3	1,931,680 9	93,998 -		- -	13,828,775 64		- -	87,463 -	133,117 1	220,580 1	14,049,355 65			4,335,733 20	3,796 -	648,747 3	389,998 2	138,192 1	1,957,522 9	67,579 -	- -	7,541,567 35	21,590,922 100
			December 31, 2014	Amount %		$ 2,148,800 7	12,613,211 41		80,590 -	1,055,208 3	2,628,533 9	128,415 -		600,000 2	19,254,757 62		900,000 3	161,894 1	398,375 1	1,460,269 5	20,715,026 67			4,346,578 14	38,903 -	673,543 2	456,853 2	97,300 -	3,132,488 10	404,848 1	1,158,234 4	10,308,747 33	$ 31,023,773 100
Consolidated Balance Sheets	December 31, 2014 and 2013	(expressed in thousands of New Taiwan dollars)	December 31, 2014 December 31, 2013	Amount % Amount % Liabilities and equity	Current liabilities:	$ 6,814,023 22 4,786,865 22 Short-term borrowings (note 6(j))	Notes and accounts payable	96,285 - 34,855 - Financial liabilities at fair value through profit or	10,453,148 34 7,824,854 36 loss–current (note 6(b))	Salary payable (note 6(p))	60,581 - - - Other payables	370,254 1 349,163 2 Other current liabilities	4,810,978 15 4,161,107 20 Current portion of long-term borrowings	473,067 2 228,576 1 (note 6(k))	23,078,336 74 17,385,420 81	Non-current liabilities:	Long-term borrowings (note 6(k))	Guarantee deposits	292,916 1 54,883 - Other non-current liabilities (notes 6(m) and (n))	3,935,145 13 3,389,048 16	262,269 1 265,829 1 Total liabilities	2,916,644 10 46,479 -	154,691 - 152,932 1 Equity attributable to stockholders of parent:	383,772 1 296,331 1 Common stock (note 6(o))	7,945,437 26 4,205,502 19 Capital collected in advance (note 6(o))	Capital surplus (note 6(o))	Legal reserve (note 6(o))	Special reserve (note 6(o))	Unappropriated retained earnings (note 6(o))	Other equity	Non-controlling interests	Total equity	$ 31,023,773 100 21,590,922 100 Total liabilities and equity
				Assets	Current assets:	Cash and cash equivalents (note 6(a))	Financial assets at fair value through profit or loss–	current (note 6(b))	Notes and accounts receivable, net (note 6(d))	Accounts receivable–related parties, net	(notes 6(d) and 7)	Other receivables (note 6(d))	Inventories, net (note 6(e))	Other current assets (note 8)			Non-current assets:	Available-for-sale financial assets–non-current	(note 6(c))	Property, plant and equipment (note 6(g))	Investment property, net (note 6(h))	Intangible assets (note 6(i))	Deferred tax assets (note 6(n))	Other non-current assets (note 8)									Total assets

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PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income

For the years ended December 31, 2014 and 2013

(expressed in thousands of New Taiwan dollars, except earnings per share)

2014	2013
Amount 52,239,777 46,020,978 6,218,799 1,423,129 1,072,677 1,893,251 4,389,057 1,829,742 290,465 150,323 (222,949 ) 217,839 2,047,581 438,614 1,608,967 337,984 945 3,344 - 342,273 1,951,240 1,544,690 64,277 1,608,967 1,871,224 80,016 1,951,240	Amount 42,319,988 38,567,293 3,752,695 1,023,599 696,153 1,338,499 3,058,251 694,444 176,503 59,451 (19,646 ) 216,308 910,752 242,198 668,554 238,065 (238) 1,240 - 239,067 907,621 668,548 6 668,554 907,589 32 907,621	%
		100 91 9 2 2 3 7 2 - - - - 2 - 2 - - - - - 2 2 - 2 2 - 2 1.55 1.53

See accompanying notes to consolidated financial statements.

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					Non-	controlling	interests Total equity	771 7,225,638	6 668,554	26 239,067	32 907,621		- -	- -	- (647,019)	- -	- 5,418	- 9,127	- 37,731	- 3,854	(803 ) (803 )	- 7,541,567	64,277 1,608,967	15,739 342,273	80,016 1,951,240		- -	- -	- (347,105)	- -	- -	- 21,751	18 14,505	- 48,589	- -	1,078,200 1,078,200	1,158,234 10,308,747
							Total	7,224,867	668,548	239,041	907,589		-	-	(647,019)	-	5,418	9,127	37,731	3,854	-	7,541,567	1,544,690	326,534	1,871,224		-	-	(347,105)	-	-	21,751	14,487	48,589	-	-	9,150,513
Equity attributable to stockholders of parent	Exchange	Capital Retained earnings differences on	translation of	foreign Unrealized	Capital Unappropriated operation’s gains (losses) on Unearned	Common collected Capital Legal Special retained financial available-for-sale employee	stock in advance surplus reserve reserve earnings statements financial assets compensation	$ 4,269,698 22,794 607,334 264,990 97,300 2,100,653 (137,902) - -	- - - - - 668,548 - - -	- - - - - 1,240 238,039 (238 ) -	- - - - - 669,788 238,039 (238 ) -		- - - 125,008 - (125,008) - - -	- - - - 40,892 (40,892) - - -	- - - - - (647,019) - - -	16,360 - 21,378 - - - - - (37,738)	- - - - - - - - 5,418	- - 9,127 - - - - -	- 37,731 - - - - - -	49,675 (56,729) 10,908 - - - - - -	- - - - - - - - -	4,335,733 3,796 648,747 389,998 138,192 1,957,522 100,137 (238) (32,320)	- - - - - 1,544,690 - - -	- - - - - 3,344 322,245 945 -	- - - - - 1,548,034 322,245 945 -		- - - 66,855 - (66,855) - - -	- - - - (40,892) 40,892 - - -	- - - - - (347,105) - - -	3,550 - 11,576 - - - - - (15,126)	(3,200) - (4,254) - - - - - 7,454	- - - - - - - - 21,751	- - 14,487 - - - - - -	- 48,589 - - - - - - -	10,495 (13,482) 2,987 - - - - - -	- - - - - - - - -	$ 4,346,578 38,903 673,543 456,853 97,300 3,132,488 422,382 707 (18,241 )
								Balance on January 1, 2013	Net income in 2013	Other comprehensive income in 2013	Comprehensive income in 2013	Appropriation and distribution of retained earnings:	Legal reserve	Special reserve	Cash dividends	Issuance of restricted stock	Amortization expense of restricted stock	Compensation cost of share-based payment	Exercise of employee share options	Issuance of common stock for employee stock options and abandonment	Changes in non-controlling interests	Balance on December 31, 2013	Net income in 2014	Other comprehensive income in 2014	Comprehensive income in 2014	Appropriation and distribution of retained earnings:	Legal reserve	Special reserve	Cash dividends	Issuance of restricted stock	Retirement of restricted stock	Amortization expense of restricted stock	Compensation cost of share-based payment	Exercise of employee stock options	Issuance of common stock for employee stock options and abandonment	Changes in non-controlling interests	Balance on December 31, 2014

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PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2014 and 2013

(expressed in thousands of New Taiwan dollars)

Cash flows from operating activities: Income before income taxes Adjustments: Adjustments to reconcile profit (loss): Depreciation and amortization Losses (gains) related to inventories Provision (reversal of provision) for bad debt allowance and sales returns and allowances Impairment losses on property, plant and equipment Interest expenses Interest income Compensation cost of share-based payment Other Changes in operating assets and liabilities: Notes and accounts receivable Accounts receivable–related parties Other receivables–current and non-current Inventories Other current assets Other Changes in operating assets Notes and accounts payable Salary payable Other payables Other current liabilities Other Changes in operating liabilities Changes in operating assets and liabilities Adjustments Cash flows from operations Interest received Interest paid Income taxes paid Net cash flows provided by operating activities Cash flows from investing activities: Acquisition of subsidiary (minus cash acquired) Acquisition of available-for-sale financial assets Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of other deferred assets Other Net cash flows used in investing activities Cash flows from financing activities: Increase in short-term borrowings Increase in long-term borrowings Increase in guarantee deposits Cash dividends Exercise of employee stock options Net cash flows provided by financing activities Effect of foreign currency exchange translation Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year		2014 2,047,581 1,192,885 (26,788) 25,956 33,178 66,560 (275,451) 30,974 (11,974 ) 1,035,340 (1,400,687) (60,581) 159,723 111,714 (94,880) (32,461 ) (1,317,172 ) 953,446 400,939 262,102 (60,316) 202,578 1,758,749 441,577 1,476,917 3,524,498 275,451 (66,497) (379,257 ) 3,354,195 (2,329,526) (245,600) (1,131,498) 36,818 (77,700) (9,273 ) (3,756,779 ) 1,083,965 1,419,722 74,431 (347,105) 48,589 2,279,602 150,140 2,027,158 4,786,865 6,814,023		2013 910,752 1,113,302 352,229 (8,619) 120,948 17,382 (161,252) 15,466 15,019 1,464,475 (671,547) - 107,575 522,118 61,262 (33,743 ) (14,335 ) 904,247 (14,611) (122,626) (133,746) 6,057 639,321 624,986 2,089,461 3,000,213 161,252 (17,292) (153,161 ) 2,991,012 - - (865,411) 164,879 (16,666) (5,082 ) (722,280 ) 658,900 - 38,020 (647,019) 37,731 87,632 17,063 2,373,427 2,413,438 4,786,865
	$ $

See accompanying notes to consolidated financial statements.

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PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2014 and 2013

(expressed in thousands of New Taiwan dollars unless otherwise specified)

(1) Organization

Primax Electronics Ltd. (“the Company”), formerly known as Hong Chuan Investments Ltd., was incorporated on March 20, 2006, and registered under the Ministry of Economic Affairs, ROC. The Company changed its name to Hong Chuan Electronics Ltd. and Primax Electronics Ltd. in October 2007 and February 2008, respectively. The address of the Company’s registered office is No. 669, Ruey Kuang Road, Neihu, Taipei.

Primax Electronics Holdings, Ltd. (Primax Holdings, formerly known as Apple Holdings Ltd.) acquired all shares of the Company from YWAN PANG Management Limited on April 2, 2007. The investment was approved by the Investment Commission, Ministry of Economic Affairs. However, all shares of the Company were sold by Primax Holdings to its stockholders in October 2009.

Based on the resolution approved by the Company’s board of directors on November 5, 2007, the Company resolved to acquire and merge with Primax Electronics Ltd. (“Primax”, a listed company) on December 28, 2007. The Company is the surviving company, and Primax was dissolved upon completion of the merger.

The consolidated financial statements of the Company as at and for the year ended December 31, 2014, comprised the Company and subsidiaries (together referred to as “the Group”). The major business activities of the Group were the manufacture and sale of multi-function printers, scanners, digital camera modules, computer mice, keyboards, trackpads, mobile phone accessories, consumer electronics products, shredders, amplifiers, speakers and audio systems. Please refer to note 13 for further information.

The Company’s common shares were registered with the Financial Supervisory Commission, ROC (“FSC”) on June 22, 2012, and listed on the Taiwan Stock Exchange (“TWSE”) on October 5, 2012.

(2) Financial Statements Authorization Date and Authorization Process

The consolidated financial statements were authorized for issuance by the board of directors on March 24, 2015.

(3) New Standards and Interpretations Not Yet Adopted

(a) Effect of the 2013 version of the International Financial Reporting Standards (“2013 Version of IFRSs”) endorsed by the FSC but not yet adopted

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

According to FSC Ruling No. 1030010325 issued on April 3, 2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taipei Exchange (Gre Tai Securities Market) or Emerging Stock Market shall adopt the 2013 Version of IFRSs (not including IFRS 9 “Financial Instruments”), as endorsed by the FSC, in preparing the consolidated financial statements. The new standards, amendments and interpretations issued by the International Accounting Standards Board (“IASB”) are as follows:

New standards, amendments and interpretations Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters” Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters” – Transfers of Financial Assets” –Offsetting Financial Assets and Financial Liabilities” “Presentation of Items of Other Comprehensive Income”	Effective date per IASB
	July 1, 2010 July 1, 2011 January 1, 2013 July 1, 2011 January 1, 2013 January 1, 2013 (with January 1, 2014, as the effective date for investment entities) January 1, 2013 January 1, 2013 January 1, 2013 July 1, 2012 January 1, 2012 January 1, 2013 January 1, 2013 January 1, 2014 January 1, 2013

The Group assessed that the 2013 Version of the IFRSs may not have any significant impact on the consolidated financial statements except for the following:

1. IAS 1 “Presentation of Financial Statements”

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2. IFRS 13 “Fair Value Measurement”

The standard defines fair value, sets out a framework for measuring fair value, and requires the disclosure of fair value measurements. Based on the Group’s assessment, the adoption of the standard has no significant impact on the consolidated financial statements of the Group, and the Group will disclose any additional information about its fair value measurement accordingly.

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

A summary of the 2013 Version of IFRSs issued by the IASB but not yet endorsed by the FSC is as follows:

New standards and amendments
�IFRS 9 “Financial Instruments”
�Amended IFRS 10 and IAS 28
�Amended IFRS 10, IFRS 12 and IAS 28
�Amended IFRS 11“Accounting for Acquisitions of Interests in Joint
Operations”
�IFRS 14 “Regulatory Deferral Accounts”
�IFRS 15“Revenue from Contracts with Customers”
�Amended IAS 1
�Amended IAS 16 and IAS 38“Clarification of Acceptable Methods
of Depreciation and Amortization”
�Amended IAS 16 and IAS 41“Bearer Plants”
�Amended IAS 19 “Defined Benefit Plans: Employee Contributions”
�Amended IAS 27
�Amended IAS 36“Recoverable Amount Disclosures for
Non-Financial Assets”
�Amended IAS 39 “Novation of Derivatives and Continuation of
Hedge Accounting”
�Amended IFRIC 21 “Levies”

Effective date per IASB

January 1, 2018
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2017
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
January 1, 2014

The Group is in the process of assessing the impact on the financial position and the results of operations. The related impact will be disclosed following the completion of its assessments.

(4) Summary of Significant Accounting Policies

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(a) Statement of compliance

These consolidated annual financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by the FSC (“the IFRSs endorsed by the FSC”).

(b) Basis of preparation
Basis of measurement

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

(i) Derivative financial instruments at fair value through profit or loss are measured at fair value;
(ii) Available-for-sale financial assets are measured at fair value;
(iii) Liabilities for cash-settled share-based payment are measured at fair value; and
(iv) The defined benefit liabilities is recognized as plan assets, plus unrecognized past service cost, less the present value of the defined benefit obligation.
Functional and presentation currency

The functional currency of each Group entity is determined based on the primary economic environment in which the entity operates. The consolidated financial statements are presented in New Taiwan Dollars, which is the Company’s functional currency. All financial information presented in New Taiwan Dollars has been rounded to the nearest thousand.

(c) Basis of consolidation
Principles of preparation of the consolidated financial statements

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

List of subsidiaries in the consolidated financial statements

The details of the subsidiaries included in the consolidated financial statements are as follows:

Name of investor	Name of subsidiary Primax Industries (Cayman Holding) Ltd. (Primax Cayman) Primax Technology (Cayman Holding) Ltd. (Primax Tech.) Destiny Technology Holding Co., Ltd. (Destiny BVI.) Primax Destiny Co., Ltd. (Destiny Japan) Primax Electronics Korea Co., Ltd. (Primax Korea) Diamond (Cayman) Holdings Ltd. (Diamond) Primax Industries (Hong Kong) Ltd. (Primax HK) Tymphany Worldwide Enterprises Ltd. (TWEL) Dongguan Primax Electronic & Telecommunication Products Ltd. (PCH2) Primax Electronics (KS) Corp., Ltd. (PKS1) Primax Electronics (Chongqing) Corp., Ltd. (PCQ1) Polaris Electronics Inc. (Polaris) Destiny Electronic Corp. (Destiny Beijing) Tymphany HK Ltd. (TYM HK)	Principal activities	Percentage of	shareholding December 31, 2013 100.00% 100.00% 100.00% 100.00% 100.00% - 100.00% - 100.00% 100.00% 100.00% 100.00% 100.00% -	Description
			December 31, 2014
The Company The Company The Company The Company The Company The Company Primax Cayman Diamond Primax HK and Primax Tech. Primax HK Primax HK Primax Tech. Destiny BVI. TWEL		Holding company Holding company Holding company Market development and customer service Market development and customer service Holding company Export and import trading Holding company Manufacture of multifunctional peripherals, computer mice, mobile phone accessories, consumer electronics products, and shredders Manufacture of computer, peripherals, keyboards, and multi-function printers Manufacture of computer peripherals and keyboards Sale of multi-function printers and computer peripheral devices Research and development of computer peripheral devices and software Sale of audio accessories, amplifiers and their components	100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 70.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%		Primax Korea was incorporated in July 2013 Diamond was incorporated in January 2014 (note) (note)

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Name of investor	Name of subsidiary TYP Enterprises, Inc. (TYP) Premium Loudspeakers (Hui Zhou) Co., Ltd. Tymphany Australia Pty Ltd. (TYM Australia)	Principal activities	Percentage of	shareholding December 31, 2013 - - -	Description
			December 31, 2014
TWEL TYM HK TYM HK		Market development and customer service of amplifiers and their components Manufacture, research and development, design, and sale of audio accessories, amplifiers and their components Research and development, design, and sale of audio accessories, amplifiers and their components	100.00% 100.00% 100.00%		(note) (note) (note)

Note: TWEL was incorporated in October 2013, acquiring all shares of TYM HK by issuing new common stock. The Company acquired 70% of the shares of TWEL by cash through its subsidiary Diamond on January 10, 2014. Therefore, the Company indirectly acquired all shares of TWEL’s subsidiaries, and included them in the consolidated financial statements from the same date.

(d) Foreign currencies

1. Foreign currency transactions

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

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

Exchange differences arising on the translation of non-monetary items are recognized in profit or loss, except for exchange differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Foreign operations

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

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

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

An entity shall classify an asset as current when:

It expects to realize the asset or intends to sell or consume it in its normal operating cycle;
It holds the asset primarily for the purpose of trading;
It expects to realize the asset within twelve months after the reporting period; or
The asset is cash or a 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, or there are other restrictions.

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

An entity shall classify a liability as current when:

It expects to settle the liability in its normal operating cycle;
It holds the liability primarily for the purpose of trading;
The liability is due to be settled within twelve months after the reporting period; or

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

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

(f) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments.

Time deposits with maturities within three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used for the purpose of meeting short-term commitments, are reclassified as cash equivalents.

(g) Financial instruments

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

1. Financial assets

The Group classifies financial assets into the following categories: available-for-sale financial assets, and loans and receivables.

(i) Available-for sale financial assets

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

(ii) Loans and receivables

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

(iii) Impairment of financial assets

A financial asset not valued through profit or loss is impaired if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss event (or events) causes a loss on the estimated future cash flows of the financial asset that can be estimated reliably.

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

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

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

An impairment loss in respect of a financial asset is deducted from the carrying amount except for trade receivables, for which an impairment loss is reflected in an allowance

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

account against the receivables. When it is determined a receivable is uncollectible, it is written off from the allowance account. Any subsequent recovery of a receivable written off is recorded in the allowance account. Changes in the amount of the allowance account are recognized in profit or loss.

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

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

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

Recovery and loss on doubtful debts of account receivables are included in operating expense; others are included in other gains and losses under non-operating income and expenses.

(iv) Derecognition of financial assets

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

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

2. Financial liabilities and equity instruments

(i) Classification of debt or equity

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

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

(ii) Other financial liabilities

Financial liabilities not classified as held for trading or designated as at fair value through profit or loss, which comprise loans and borrowings, salary payable, and trade and other payables, are measured at fair value, plus any directly attributable transaction cost at the time of initial recognition. Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method. Interest expense not capitalized as capital cost is recognized in profit or loss, and is included in financial cost under non-operating income and expenses.

(iii) Derecognition of financial liabilities

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(iv) Offsetting of financial assets and liabilities

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

3. Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency exposure. Derivatives are recognized initially at fair value, and attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss, and are included in other gains and losses under non-operating income and expenses. When the fair value of a derivative instrument is positive, it is classified as a financial asset, and when the fair value is negative, it is classified as a financial liability.

(h) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted-average-costing principle, and it includes the expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(i) Investment property

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

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognized in profit or loss, and it is included in other gains and losses.

(j) Property, plant and equipment

1. Recognition and measurement

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

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately.

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

Reclassification to investment property

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

3. Subsequent cost

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

4. Depreciation

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

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

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(i) Buildings, leasehold improvement, and additional equipment: 1 ~ 51 years
(ii) Machinery and equipment: 1 ~10 years

(iii) Office and other equipment: 1 ~5 years

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

(k) Lease

1. Lessor

Lease income from an operating lease is recognized in income on a straight-line basis over the lease term.

2. Lessee

Payments made under an operating lease (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease.

Contingent rent is recognized as expense in the periods in which it is incurred.

(l) Intangible assets

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

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

The amortizable amount is the cost of an asset, less its residual value.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:

1. Customer relationships	1. Customer relationships	10 years
2. Techniques		10 years
3. Trademarks		10 years
4. Patents	2.5~10 years
5. Copyrights		15 years

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

(m) Impairment – non-financial assets

Non-financial assets, except for inventories and deferred tax assets, are assessed for impairment, and the recoverable amounts for any impaired assets are estimated at the end of each reporting period. If it is not possible to determine the recoverable amount for an individual asset, then the Group will have to determine the recoverable amount for the asset’s cash-generating unit.

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

The Group assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset may no longer exist or may have decreased. An impairment loss recognized in prior periods for an individual asset or a cash-generating unit shall be reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its recoverable amount but should not exceed the depreciated or amortized balance of the assets assuming no impairment loss was recognized in prior periods.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(n) Revenue

1. Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts, and volume rebates. Revenue is recognized when persuasive evidence exists that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that a discount will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of revenue as the sales are recognized.

The timing of the transfers of risks and rewards varies depending on the individual terms of the sales agreement. Transfer usually occurs when the product is received at the customer’s warehouse.

2. Services

The Group provides services, such as model research, development, and design, to customers. Revenue from services rendered is recognized in profit or loss in proportion to the stage of completion of the transaction, agreed by both sides, at the reporting date.

(o) Employee benefits

1. Defined contribution plans

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

2. Defined benefit plans

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

3. Short-term employee benefits

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

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

(p) Share-based payment

The grant-date fair value of share-based payment awards granted to employees is recognized as employee expenses, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards whose related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions, and there is no true-up for differences between the expected and the actual outcomes.

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities over the period that the employees become unconditionally entitled to payment. The liability is re-measured at each reporting date and settlement date. Any changes in the fair value of the liability are recognized as personnel expenses in profit or loss.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(q) Income taxes

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

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

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

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

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

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

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

(r) Business combination

Goodwill is measured as the aggregation of the consideration transferred (which generally is measured at fair value at the acquisition date) and the amount of any non-controlling interest in the acquiree, net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed (generally at fair value).

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, provisional amounts for the items for which the accounting is incomplete are reported in the Group’s financial statements. During the measurement period, the provisional amounts recognized are retrospectively adjusted at the acquisition date, or additional assets or liabilities are recognized to reflect the new information obtained about facts and circumstances that existed as of the acquisition date. The measurement period shall not exceed one year from the acquisition date.

All the transaction costs incurred for the business combination are recognized immediately as the Group’s expenses when incurred, except for the issuance of debt or equity instruments.

(s) Earnings per share

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(t) Operating segments

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

(5) Significant Accounting Assumptions and Judgments, and Major Sources of Estimation Uncertainty

The preparation of the consolidated financial statements in conformity with the Regulations and the IFRSs endorsed by the FSC requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Management continues to monitor the accounting assumptions, estimates and judgments. Management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the next period.

Information about critical judgments in applying accounting policies that have significant effect on the amounts recognized in the consolidated financial statements is included in note 6(g) Property, plant and equipment.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is included in note 6(f) Subsidiaries and non-controlling interest.

(6) Explanation of Significant Accounts

(a) Cash and cash equivalents

Cash on hand Checking accounts and demand deposits Time deposits	December 31, 2014	December 31, 2013	December 31, 2013
	$ 2,081 2,594,229 4,217,713 $ 6,814,023		1,432 2,199,457 2,585,976 4,786,865

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Please refer to note 6(v) for interest rate risk and the sensitivity analysis of the Group’s financial assets and liabilities.

(b) Financial assets and liabilities at fair value through profit or loss
The fair value of derivative financial instruments was as follows:

Derivative financial assets– current: Forward exchange contracts Foreign exchange swap contracts Option trading contracts Derivative financial liabilities– current: Forward exchange contracts Foreign exchange swap contracts Option trading contracts	December 31, 2014	December 31, 2013	December 31, 2013
	$ 95,848 437 - $ 96,285 $ (77,753) (2,837) - $ (80,590 )		24,619 1,328 8,908 34,855 (21,335) (16,180) (466 ) (37,981 )

The Group held the following derivative financial instruments not designated as hedging instruments presented as held-for-trading financial assets as of December 31, 2014 and 2013:

	December 31, 2014	December 31, 2014
Derivative financial instruments	Nominal amount	Maturity date	Predetermined rate
Forward exchange contracts� buy USD / sell TWD Forward exchange contracts� buy TWD / sell USD Forward exchange contracts� buy USD / sell CNY Forward exchange contracts� buy CNY / sell USD Foreign exchange swap contracts�swap in TWD / swap out USD	USD 35,000 thousand USD 35,000 thousand USD 161,600 thousand USD 184,600 thousand USD 11,170 thousand	January 6, 2015~ March 4, 2015 January 6, 2015~ March 4, 2015 January 5, 2015~ March 18, 2015 January 5, 2015~ March 18, 2015 January 5, 2015~ January 9, 2015	30.304~31.252 30.336~31.289 6.1555~6.2426 6.1625~6.2546 30.989~31.749

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

	December 31, 2013	December 31, 2013
Derivative financial instruments	Nominal amount	Maturity date	Predetermined rate
Forward exchange contracts� buy USD / sell TWD Forward exchange contracts� buy TWD / sell USD Forward exchange contracts� buy USD / sell CNY Foreign exchange swap contracts�swap in TWD / swap out USD Option Trading contracts� buy CNY / sell USD	USD 126,000 thousand USD 37,000 thousand USD 115,500 thousand USD 59,160 thousand USD 16,000 thousand	January 2, 2014~ January 22, 2014 January 2, 2014~ January 13, 2014 January 8, 2014~ May 19, 2014 January 8, 2014~ February 5, 2014 October 2, 2015~ December 21, 2015	29.261~29.775 29.341~29.531 6.0793~6.1068 29.428~30.025 6.213~6.237

Please refer to note 6(v) for credit risk, currency risk, and interest rate risk of the Group’s derivative financial instruments.
(c) Available-for-sale financial assets – non-current

Investments in unlisted securities: Stocks unlisted in domestic market Stocks unlisted in foreign market	December 31, 2014 $ 275,536 17,380 $ 292,916	December 31, 2013	December 31, 2013
			33,918 20,965 54,883

In December 2014, the Group acquired 2,272 thousand shares of Nien Made Enterprise Co., Ltd. at NT$108 (dollars) per share for consideration of $245,600, and the shares were recognized as available-for-sale financial assets – non-current.
In the second quarter of 2014, Titan 1 Venture Capital Co., Ltd. refunded $4,616 to the Group due to capital reduction. The difference between the refund and the book value amounting to $482 was recorded by the Group as other gains and losses. Based on the resolution of its interim meeting of shareholders held on August 31, 2014, Titan 1 Venture Capital Co., Ltd. will be closed and is in the liquidation process.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The impairment loss on WK Global Investment III Ltd. and Green Rich Technology Co., Ltd. was $4,530 and $3,500, respectively, and was recognized as other gains and losses for the year ended December 31, 2014.
The Group did not provide any of the aforementioned available-for-sale financial assets as collateral.
Please refer to note 6(v) for significant currency risk at the reporting date.
(d) Notes and accounts receivable, and other receivables (including related parties)

Notes receivable Accounts receivable Accounts receivable–related parties Other receivables Less: allowance for doubtful accounts allowance for sales returns and discounts	December 31, 2014 $ 6,565 10,512,147 60,581 370,254 (26,034) (39,530 ) $ 10,883,983	December 31, 2013	December 31, 2013
			694 7,860,628 - 349,163 (20,059) (16,409 ) 8,174,017

The Group did not provide any of the aforementioned notes and accounts receivable, and other receivables (including related parties) as collateral.
Please refer to note 6(v) for changes in the allowance for doubtful accounts and the credit risk and currency risk for the years ended December 31, 2014 and 2013.
The Company entered into agreements with banks to sell its accounts receivable without recourse. According to the agreements, within the limit of its credit facilities, the Company does not need to guarantee the capability of its customers to pay for reasons other than commercial disputes when transferring its accounts receivable. The Company receives partial advances upon sales of accounts receivable and pays interest calculated based on the interest rates agreed for the period through the collection of the accounts receivable. The remaining amounts are received upon the collection of the accounts receivable, and are recorded as other receivables. In addition, the Company shall pay handling charges based on a fixed rate. As of December 31, 2014 and 2013, the details of transferred accounts receivable which conformed to the criteria for derecognition were as follows:

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

				D	ecember 31, 2014
				C	ash received		Guarantee (promissory note) expressed in thousands US$7,000 US$58,000 NT$837,000	Amount derecognized NT$ - - - -	Amount not received - - - -
Buyer A	mount sold	Credit facilities			in advance	Interest rate
	NT$	US$ (expressed in			NT$
			thousands)

Mega International Commercial Bank $	-		35,000		-	-
HSBC Bank	-		64,400		-	-
Bank of Taiwan	-		31,000		-	-
$	-		130,400		-

				D	ecember 31, 2013
				C	ash received		Guarantee (promissory note) expressed in thousands US$45,000 US$78,000 NT$837,000	Amount derecognized NT$ - 412,687 - 412,687	Amount not received - 45,855 - 45,855
Buyer A	mount sold	C	redit facilities		in advance	Interest rate
	NT$	US$ (expressed in			NT$
			thousands)

Mega International Commercial Bank $	-		45,000		-	-
HSBC Bank	458,542		64,400		412,687	1.01%~1.04%
Bank of Taiwan	-		31,000		-	-
$	458,542		140,400		412,687

Please refer to note 9 for guarantee notes provided by the Company to sell its accounts receivable.

(e) Inventories

Raw materials Semi-finished goods and work in process Finished goods and merchandise	December 31, 2014 $ 1,407,480 991,541 2,411,957 $ 4,810,978	December 31, 2013
		860,174 1,049,215 2,251,718 4,161,107

The Group did not provide any of the aforementioned inventory as collateral.

For the years ended December 31, 2014 and 2013, the Group recognized the following items as cost of goods sold:

Additional gains (losses) on inventory valuation Unallocated manufacturing overhead resulting from the actual production being lower than the normal capacity Loss on disposal of inventories Loss on physical inventories	2014 $ 158,184 (67,179) (63,140) (1,077 ) $ 26,788	2013 (160,232) (180,558) (5,443) (5,996 ) (352,229 )

(f) Subsidiaries and non-controlling interest

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

1. Tymphany Group

Based on the resolution approved by the board of directors’ meeting held on October 25, 2013, the Company signed a share purchase agreement with Tymphany, a manufacturer of amplifiers. The Company obtained control of Tymphany Worldwide Enterprises Ltd. (TWEL) and its subsidiaries by acquiring 70% of the shares through its subsidiary Diamond (Cayman) Holdings Ltd. The aforementioned acquisition was approved by the Investment Commission, Ministry of Economic Affairs, on December 26, 2013, and the shares were transferred and registered on January 10, 2014, which was also the acquisition date.

Tymphany designs, manufactures, and sells amplifiers, speakers and audio systems. By obtaining control of TWEL and its subsidiaries, the Group will integrate Tymphany’s experience in amplifiers and audio systems with the Group’s own technology related to consumer electronics and wireless communication to provide the ultimate digital family systems to consumers. The acquisition will allow the Group to rapidly expand its digital-family product line and its relationships with this internationally famous brand, driving the growth of its revenue and profit in the foreseeable future.

(i) Consideration transferred

According to the share purchase agreement, the consideration transferred was $2,515,800 (USD 84,000) without contingent cost or other equity instruments.

(ii) According to IFRSs, the fair value of net assets acquired should be measured on the acquisition date. Therefore, the Company evaluated the fair value and useful lives of intangible assets at the time of acquisition. The Company engaged experts to evaluate its identifiable net assets. According to the result, identifiable intangible assets comprised customer relationships amounting to $718,800, techniques amounting to $419,300, and goodwill amounting to $1,850,383.
(iii) Details of consideration transferred, assets acquired, and liabilities assumed at the date of acquisition were as follows:

Items Cash Fair value of non-controlling interest Fair value		Amount 2,515,800 1,078,200 3,594,000
	$ $

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Items Fair value of identifiable assets acquired and liabilities assumed: Cash and cash equivalents Notes and accounts receivable and other receivables Inventories Other current assets Property, plant and equipment Deferred tax assets Other non-current assets Short-term and long-term borrowings Accounts payable Salary payable and other payables Other current liabilities Deferred tax liabilities Other non-current liabilities Intangible assets recognized from purchase price allocation: Customer relationships Techniques Goodwill		Amount 186,274 1,434,395 734,797 155,776 155,833 40,107 22,550 (486,213) (1,213,138) (221,561) (94,733) (107,219) (1,351)
	$ $
		605,517 718,800 419,300 1,850,383 2,988,483 3,594,000

(iv) Intangible assets

A. Goodwill

Goodwill mainly came from the reputation, profitability, and value of employees which have been established by TWEL and its subsidiaries in the amplifier and audio system market. There was no tax effect attributable to goodwill recognized from the acquisition.

B. Techniques

TWEL and its subsidiaries owned designs for digital electronics, audio frequency, acoustics, user interface, and hardware and software systems, combined with wireless technology like Bluetooth and WiFi, to design and manufacture professional amplifier and audio system products. The useful lives of techniques acquired were estimated to be 10 years.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

C. Customer relationships

Customer relationships mainly came from continuous cooperation with clients for which the relationships are expected to be beneficial in the future. The useful lives of customer relationships acquired were estimated to be 10 years.

(v) The cost of acquisition

The legal fees and on-site examination expenses of $8,260 and $1,712 due to the acquisition transaction were recognized as administrative expenses in the statement of comprehensive income in the fourth quarter of 2013 and the first quarter of 2014, respectively.

(vi) Simulated operating results

Operating results of TWEL and its subsidiaries were merged into the Company’s consolidated comprehensive income statement since the acquisition date, contributing operating revenue of $6,465,621 and net income of $398,587. If the acquisition had occurred on January 1, 2014, the simulated operating revenue and net income would be $52,421,302 and $1,627,337, respectively.

2. Global TEK Group

Global TEK is a manufacturer of sophisticated machinery components. By obtaining control of Global TEK and its subsidiaries, the Company will integrate Global TEK’s experience in sophisticated machinery components with the Company’s own technology related to audio systems and camera modules to provide the ultimate vehicle digital system to consumers. The acquisition will allow the Group to take part in the vehicle component supply chain, driving the growth of its revenue and profit in the foreseeable future.

(i) Consideration transferred

According to the share subscription agreement and share purchase agreement, the consideration transferred was $545,490 without contingent cost or other equity instruments. The settlement date was January 5, 2015.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(ii) Obtaining control

The Company holds only 30% of Global TEK’s shares. However, the Company has controlling power over its relevant activities by acquiring more than 50% of the board of directors’ voting rights based on the resolution of its interim meeting of shareholders held on February 13, 2015. The Company will include the Global TEK Group in the consolidated financial statements from the same date in accordance with IFRS 10.

(iii) Details of trading information

Cost of acquisition $ 545,490 Less: Book value of identifiable net assets (296,595) Unallocated price $ 248,895

As of by March 24, 2015, the purchase price allocation was still in progress. The Company engaged experts to evaluate the fair value of identifiable net assets. The aforementioned information was a preliminary approximation.

(g) Property, plant and equipment

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

Cost or deemed cost: Balance on January 1, 2014 Additions Disposals Acquisition from business combination Reclassifications Effect of movements in exchange rates Balance on December 31, 2014 Balance on January 1, 2013 Additions Disposals Reclassifications Effect of movements in exchange rates Balance on December 31, 2013 Depreciation and impairments loss: Balance on January 1, 2014 Depreciation Impairment loss Disposals Reclassifications Effect of movements in exchange rates Balance on December 31, 2014		Land 22,879 - - - - - 22,879 22,879 - - - - 22,879 - - - - - - -	Buildings, leasehold improvement, and additional equipment 2,864,105 50,195 (47,493) 2,299 49,332 143,715 3,062,153 2,689,235 27,796 (96,682) 90,054 153,702 2,864,105 1,341,204 261,816 - (43,418) - 84,269 1,643,871	Machinery and equipment 4,043,775 271,668 (167,306) 89,292 267,034 236,594 4,741,057 3,459,765 216,975 (277,897) 421,516 223,416 4,043,775 2,508,045 668,954 33,178 (150,543) (554) 155,104 3,214,184		Office and other equipment		Construction in progress and testing equipment 151,353 912,684 - - (319,375) 34,367 779,029 257,822 433,436 (308) (549,007) 9,410 151,353 - - - - - - -		Government grants (12,281) - - - - (630 ) (12,911 ) (6,949) (4,838) - - (494 ) (12,281 ) (3,551) (2,837) - - - (336 ) (6,724 )	Total
	$ $ $ $ $ $					463,430 50,784 (27,908) 64,242 587 27,829 578,964 447,273 25,265 (29,603) (2,914) 23,409 463,430 298,515 86,721 - (27,798) - 27,257 384,695					7,553,261 1,285,331 (242,707) 155,833 (2,422) 441,875 9,171,171 6,870,025 698,634 (404,490) (40,351) 409,443 7,533,261 4,144,213 1,014,654 33,178 (221,759) (554) 266,294 5,236,026

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Balance on January 1, 2013 Depreciation Impairment loss Disposals Reclassifications Effect of movements in exchange rates Balance on December 31, 2013 Carrying amounts: Balance on December 31, 2014 Balance on December 31, 2013 Balance on January 1, 2013		Land - - - - - - - 22,879 22,879 22,879	Buildings, leasehold improvement, and additional equipment 1,053,765 292,147 7,177 (74,153) - 62,268 1,341,204 1,418,282 1,522,901 1,635,470	Machinery and equipment 1,761,289 671,243 106,518 (125,257) (31,032) 125,284 2,508,045 1,526,873 1,535,730 1,698,476		Office and other equipment		Construction in progress and testing equipment - - - - - - - 779,029 151,353 257,822		Government grants (1,313) (2,102) - - - (136 ) (3,551 ) (6,187 ) (8,730 ) (5,636 )	Total
	$ $ $ $ $					233,960 68,054 7,253 (21,381) (2,652) 13,281 298,515 194,269 164,915 213,313					3,047,701 1,029,342 120,948 (220,791) (33,684) 200,697 4,144,213 3,935,145 3,389,048 3,822,324

The Group did not provide property, plant and equipment as collateral.

(h) Investment property

Cost or deemed cost: Balance on January 1, 2014 Additions Balance on December 31, 2014 Balance on January 1, 2013 Additions Balance on December 31, 2013 Depreciation and impairment losses: Balance on January 1, 2014 Depreciation Balance on December 31, 2014 Balance on January 1, 2013 Depreciation Balance on December 31, 2013 Carrying amounts: Balance on December 31, 2014 Balance on December 31, 2013 Balance on January 1, 2013		Land 162,012 - 16,2012 162,012 - 16,2012 33,941 - 33,941 33,941 - 33,941 128,071 128,071 128,071		Buildings and other equipment 172,167 - 172,167 172,167 - 172,167 34,409 3,560 37,969 30,849 3,560 34,409 134,198 137,758 141,318		Total 334,179 - 334,179 334,179 - 334,179 68,350 3,560 71,910 64,790 3,560 68,350 262,269 265,829 269,389
	$ $ $ $ $ $ $ $ $ $ $

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Fair value: Balance on December 31, 2014 Balance on December 31, 2013 Balance on January 1, 2013

$ $ $		Total
		561,338
		622,009
		589,104

The fair value of investment property is based on the market value.
Investment property comprises a number of commercial properties which are leased to third parties. Each of the leases contains an initial non-cancellable period between 1 and 2 years. Subsequent renewals are negotiated with the lessee, and no contingent rents are charged. Please refer to note 6(l) for further information.
The Goup did not provide any of the aforementioned investment property as collateral.

(i) Intangible assets

The cost and amortization of the intangible assets of the Group for the years ended December 31, 2014 and 2013, were as follows:

Goodwill Cost or deemed cost: Balance at January 1, 2014 $ - Acquisition - Acquisition from business combination 1,850,383 Effect of movements in exchange rates - Balance at December 31, 2014 $ 1,850,383 Balance at January 1, 2013 $ - Acquisition - Balance at December 31, 2013 $ - Amortization and impairment loss: Balance at January 1, 2014 $ - Amortization - Effect of movements in exchange rates - Balance at December 31, 2014 $ -	Customer Relationships - - 718,800 - 718,800 - - - - 70,141 - 70,141	Techniques Trademarks, Patents and Copyrights - 120,687 - 1,306 419,300 - - 86 419,300 122,079 - 120,687 - - - 120,687 - 74,208 40,916 8,628 - 25 40,916 82,861		Total
				120,687 1,306 2,988,483 86
				3,110,562
				120,687 -
				120,687
				74,208 119,685 25
				193,918

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Goodwill Balance at January 1, 2013 $ - Amortization - Balance at December 31, 2013 $ - Carrying amount: Balance at December 31, 2014 $ 1,850,383 Balance at December 31, 2013 $ - Balance at January 1, 2013 $ -	Customer Relationships - - - 648,659 - -	Techniques Trademarks, Patents and Copyrights - 65,726 - 8,482 - 74,208 378,384 39,218 - 46,479 - 54,961		Total
				65,726 8,482
				74,208
				2,916,644
				46,479
				54,961

Intangible assets comprised customer relationships, techniques, and goodwill from obtaining control of TWEL and its subsidiaries on January 10, 2014; please refer to note 6(f).
The Group did not provide any of the aforementioned intangible assets as collateral.
(j) Short-term borrowings

The details were as follows:

Unsecured bank loans Unused credit lines Annual interest rates

December 31, 2014 $ 2,148,800 $ 6,374,139 0.80%~1.60%		December 31, 2013
$ $	658,900 3,809,728 0.80%~1.23%

(k) Long-term borrowings

The details were as follows:

Unsecured bank loans Less�current portion Total Unused credit lines		December	31, 2014		Amount
	Currency TWD	Annual interest rate 1.05%~1.48%	Maturity year
			2017	$ $ $	1,500,000 (600,000 ) 900,000 1,789,600

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Unsecured bank loans Less�current portion Total Unused credit lines		December	31, 2013
	Currency -	Annual interest rate -	Maturity year -		Amount
				$ $ $	- - - 3,508,700

Pursuant to the loan agreements with Industrial Bank of Taiwan, Land Bank, HSBC, ANZ, and CTBC Bank, the Company has to maintain the following financial ratios calculated based on the Company’s semi-annual audited (reviewed) consolidated financial statements. As of December 31, 2014, the Company had not violated the financial covenants. The financial covenants include (1) a current ratio of not less than 100%; (2) a financial debt ratio of not greater than 75%; (3) an interest coverage ratio of not less than 400%; and (4) stockholders’ equity of not less than $4,000,000. If the Company violates the financial covenants, the banks have the right to charge a default penalty or to require the Company to improve its financial ratios.
The details of the outstanding guarantee notes are disclosed in note 9.

(l) Operating lease

Lessee

Non-cancellable operating lease rentals are payable as follows:

Less than one year Between one and five years More than five years	December 31, 2014 $ 256,375 656,982 41,545 $ 954,902	December 31, 2013 249,086 593,534 - 842,620
	$ $

The Group leases a number of offices and warehouses and equipment under operating leases. The lease terms are between 1 and 15 years.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2. Lessor

The Group leases out its investment property under operating leases. Please refer to note 6(h) for further information. Non-cancellable operating leases are receivable as follows:

Less than one year Between one and five years	December 31, 2014 $ 5,584 - $ 5,584	December 31, 2013 11,917 4,524 16,441
	$ $

(m) Employee benefits

1. Defined benefit plans

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

Present value of defined benefit obligations Fair value of plan assets Deficit in the plan Recognized liabilities for defined benefit obligations	December 31, 2014 $ 162,598 104,919 57,679 $ 57,679	December 31, 2013 169,353 108,207 61,146 61,146
	$ $

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

(ii) Composition of plan assets

The Company contributes pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company’s Bank of Taiwan labor pension reserve account balance amounted to $104,919 at the end of the reporting period. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

(iii) Movements in present value of defined benefit obligations

The movements in present value of defined benefit obligations for the Company for the years ended December 31, 2014 and 2013, were as follows:

Defined benefit obligation at January 1 Benefits paid by plan assets Current service costs and interest Actuarial gains Defined benefit obligation at December 31	2014		2013
	$ 169,353 (8,695) 5,025 (3,085 ) $ 162,598		166,762 - 3,811 (1,220 ) 169,353

(iv) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Company for the years ended December 31, 2014 and 2013, were as follows:

Fair value of plan assets at January 1 Contributions made Benefits paid by plan assets Expected return on plan assets Actuarial losses Fair value of plan assets at December 31	2014		2013
	$ 108,207 2,942 (8,695) 2,207 258 $ 104,919		100,341 6,555 - 1,291 20 108,207

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(v) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company for the years ended December 31, 2014 and 2013, were as follows:

Service cost Interest cost Expected rate of return on plan assets Expenses Actual return on plan assets	2014		2013
	$ 1,638 3,387 (2,207 ) $ 2,818 $ 2,465		1,629 2,182 (1,291 ) 2,520 1,311

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

The Company’s actuarial gains and losses recognized in other comprehensive income for the years ended December 31, 2014 and 2013, were as follows:

Cumulative amount at January 1 Recognized during the period Cumulative amount at December 31	December 31, 2014 $ 1,676 3,344 $ 5,020	December 31, 2013 436 1,240 1,676	December 31, 2013 436 1,240 1,676
	$ $		436 1,240 1,676

(vii) Actuarial assumptions

The following are the Company’s principal actuarial assumptions:

Discount rate at December 31 Expected rate of return on plan assets at January 1 Future salary increase rate	2014	2013
	2.125% 1.750% 3.250%	2.000% 2.000% 2.875%

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(viii) Experience adjustments based on historical information

Present value of defined benefit plans Fair value of plan assets Net liabilities of defined benefit obligations Experience adjustments arising on the present value of defined benefit plans Experience adjustments arising on the fair value of plan assets	December 31, 2014 $ 162,598 104,919 $ 57,679 $ 3,085 $ 258	December 31, 2013 169,353 108,207 61,146 (63,788 ) 69,559	December 31, 2012 166,762 100,341 66,421 (59,569 ) 57,248	January 1, 2012 163,447 97,057 66,390 - -

The expected contribution to be made by the Group to the defined benefit plans for the one-year period after the reporting date was $2,818.

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

As of December 31, 2014, the Company’s accrued pension liabilities were $57,679. If the discount rate had been increased or decreased by 0.25%, the Company’s accrued pension liabilities would have been decreased by $3,975 or increased by $4,118, respectively. If the salary increase rate had increased or decreased by 0.25%, the Company’s accrued pension liabilities would have increased by $3,968 or decreased by $3,851, respectively.

2. Defined contribution plans

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

The Company’s foreign subsidiaries have defined contribution plans. These plans are funded in accordance with the regulations of their respective countries. Contributions to these plans are expensed as incurred without additional legal or constructive obligations.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Group recognized pension costs under the defined contribution method amounting to $271,335 and $209,274 for the years ended December 31, 2014 and 2013, respectively, recorded as operating expenses and operating cost in the statement of comprehensive income.

(n) Income taxes

The amounts of income tax expenses for 2014 and 2013 were as follows:

Current tax expense Deferred tax expense (benefit) Income tax expense		2014 370,738 67,876 438,614		2013 280,162 (37,964 ) 242,198
	$ $

The Group had no income tax recognized directly in equity or other comprehensive income for the years ended December 31, 2014 and 2013.
Reconciliation of income tax expenses and profit before tax for 2014 and 2013 was as follows:

Profit before tax Income tax using the Company’s domestic tax rate Effect of tax rates in foreign jurisdictions Overseas investment losses (gains) recognized under the equity method Non-taxable income Investment tax credits accrued Prior year’s income tax adjustment 10% surtax on unappropriated earnings Other			2014 2,047,581 834,775 (129,340) (119,243) (148,161) (42,794) 7,561 29,548 6,268 438,614			2013 910,752 254,015 3,968 4,594 (7,971) (58,836) 48,601 43,716 (45,889 ) 242,198
	$ $

Deferred tax assets and liabilities
(i) Unrecognized deferred tax liabilities

The Company is able to control the timing of the reversal of the temporary differences associated with subsidiaries’ earnings. Also, the management considered it probable that the temporary differences will not be reversed in the foreseeable future. Hence, such temporary differences were not recognized under deferred tax liabilities. Details were as follows:

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, December 31, 2014 2013 Aggregate amount of temporary differences related to investments in subsidiaries $ 388,595 223,617

(ii) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:

Deductible temporary differences		December 31, 2014 76,900	December 31, 2013 84,100
	$

The deductible temporary differences cannot be realized, or there may not be sufficient taxable profit to utilize after the Company’s evaluation. Therefore, they were not recognized as deferred tax assets.

(iii)Recognized deferred tax assets and liabilities

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

Deferred tax liabilities: Balance on January 1, 2014 Acquisition from business combination Recognized in profit or loss Balance on December 31, 2014 Balance on January 1, 2013 Recognized in profit or loss Balance on December 31, 2013	Investment income recognized under the equity method (overseas) $ 47,102 - 42,120 $ 89,222 $ 41,869 5,233 $ 47,102	Unrealized foreign exchange Amortization of appraised value adjustment of intangible gains assets 3,418 - - 104,825 82 (10,229 ) 3,500 94,596 - - 3,418 - 3,418 -	Others 1,396 2,394 (2,439 ) 1,351 1,329 67 1,396	Total
	$ $ $ $			51,916 107,219 29,534
				188,669
				43,198 8,718
				51,916

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Deferred tax assets: Balance on January 1, 2014 $ Acquisition from business combination Recognized in profit or loss Balance on December 31, 2014 $ Balance on January 1, 2013 $ Recognized in profit or loss Balance on December 31, 2013 $	Bad debt in excess of tax limit	Loss Unfunded pension fund carryforword contribution 86,805 15,153 - - (47,891 ) (278 ) 38,914 14,875 51,230 15,582 35,575 (429 ) 86,805 15,153		Unrealized sales returns and allowances 15,789 - 14,188 29,977 9,472 6,317 15,789	Loss on inventory valuation 2,969 26,545 (9,654 ) 19,860 1,779 1,190 2,969	Deferred granted income - - 15,595 15,595 - - -	Others 20,044 13,562 (9,789 ) 23,817 14,807 5,237 20,044	Total
	12,172 - (519 ) 11,653 13,380 (1,208 ) 12,172							152,932 40,107 (38,348 ) 154,691 106,250 46,682 152,932

The Company’s income tax returns have been examined by the tax authority through the years up to 2012. However, the Company disagreed with the examination of the income tax returns for 2008, 2009 and 2011, and requested a reexamination. The tax effect of the reexamination has been recognized by the Company.
Information related to the unappropriated earnings and tax deduction ratio is summarized below:

Unappropriated earnings in 1998 and after Balance of imputation credit account Creditable ratio for earnings distribution to ROC residents stockholders
	$

The above information was prepared in accordance with information letter No. 10204562810 issued by the Ministry of Finance, ROC, on October 17, 2013.

(o) Capital and other equity

As of December 31, 2014 and 2013, the nominal common stock amounted to $5,000,000. Face value of each share is $10, which means in total there were 500,000 thousand authorized common shares, of which 434,658 and 433,573 thousand shares, respectively, were issued. All issued shares were paid up upon issuance.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Reconciliation of shares outstanding for 2014 and 2013 was as follows:

(in thousands of shares) Balance on January 1 Exercise of employee stock options Issued for restricted stock Retirement of restricted stock Balance on December 31		Ordinary shares	Ordinary shares	Ordinary shares
		2014 433,573 1,050 355 (320 ) 434,658		2013
	$ $			426,970 4,967 1,636 - 433,573

1. Common stock

(i) The Company issued 1,050 thousand and 4,967 thousand new shares of common stock for the exercise of employee stock options in 2014 and 2013, respectively. The related registration procedures were also completed.
(ii) Employee stock options were exercised without registration procedures, and the exercised amounts were recorded as capital collected in advance. The exercise price and units as of December 31, 2014 and 2013, were as follows:

December 31,2014	December 31,2014	December 31,2014
Exercised shares (in thousands) Exercise price 2,151 $ 24,563 275 4,922 340 9,418 2,766 $ 38,903 December 31,2013	Exercise price
Exercised shares (in thousands) 173 100 273	Exercise price
	$ $	1,976 1,820 3,796

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2. Capital surplus

The balances of capital surplus as of December 31, 2014 and 2013, were as follows:

Additional paid-in capital Employee stock options Restricted employee stock options	December 31, 2014 $ 392,739 256,985 23,819 $ 673,543	December 31, 2013	December 31, 2013
			379,002 248,367 21,378 648,747

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

3. Retained earnings

According to the articles of the Company, 10% of its annual net income after settling accumulated deficit, if any, is to be set aside as legal reserve until it is equal to authorized capital. Also, a special reserve should be retained or reversed under related regulations. After the recognition or reversal of special reserve, 2% to 10% is to be appropriated as employee bonuses, and a maximum of 2% as directors’ and supervisors’ remuneration. The remainder, if any, is to be distributed as dividends as determined by the board of directors and approved by the stockholders.

The Company is at the growth stage and considers its future cash demand, long-term financial plans, benefits to stockholders, and balanced dividends. Earnings distribution is made by stock dividend and cash dividend. The cash dividend shall not be less than 10 percent of the total dividends and could be adjusted depending on the Company’s operating condition.

(i) Legal reserve

In accordance with the Company Act, 10 percent of the net income after tax should be set aside as legal reserve, until it is equal to share capital. If the Company experiences profit for the year, the distribution of the statutory earnings reserve, either by new shares or by cash, shall be decided at the shareholders’ meeting, and the distribution amount is limited to the portion of legal reserve which exceeds 25 percent of the paid-in capital.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(ii) Special reserve

By choosing to apply exemptions granted under IFRS 1 “First-time Adoption of International Financial Reporting Standards” during the Company’s first-time adoption of the International Financial Reporting Standards endorsed by the FSC, retained earnings increased by $97,300 by recognizing the cumulative translation adjustments (gains) on the adoption date as deemed cost. In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, the increase in retained earnings due to the first-time adoption of IFRSs shall be reclassified as special reserve, and when the relevant asset is used, disposed of, or reclassified, this special reserve, shall be reversed as distributable earnings proportionately. The carrying amount of special reserve amounted to $97,300 on December 31, 2014.

In accordance with the guidelines of the above Ruling, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should be equal to the difference between the total net current-period reduction of special earnings reserve resulting from the first-time adoption of IFRSs and the carrying amount of other stockholders’ equity as stated above. Similarly, a portion of undistributed prior-period earnings shall be reclassified as special earnings reserve (which does not qualify for earnings distribution) to account for cumulative changes to other stockholders’ equity pertaining to prior periods due to the first-time adoption of IFRSs. Amounts of subsequent reversals pertaining to the net reduction of other stockholders’ equity shall qualify for additional distributions. The Company recognized the special reserve amounting to $40,892 in the 2012 earnings distribution, and it was reversed as distributable earnings in 2013.

(iii) Earnings distribution

Employee bonuses amounted to $71,318 and $31,966 for 2014 and 2013, respectively. Directors’ and supervisors’ remuneration amounted to $28,527 and $12,787 for 2014 and 2013, respectively. These amounts were calculated based on the Company’s net profit for 2014 and 2013 by using the earnings allocation method as stated under the Company’s articles. These benefits were expensed under operating costs or operating expenses during 2014 and 2013.

The distribution for employee bonuses, directors’ and supervisors’ remuneration, and dividends for 2014 is yet to be administered by the board of directors or decided by the meeting of the stockholders. Related information would be available on the Market Observation Post System after the convening of the meeting of the stockholders. For subsequent adjustments to the actual distributed amount as determined by a future meeting of the stockholders, the difference shall be accounted for under profit or loss in 2015.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

On June 24, 2014, and June 25, 2013, the stockholders’ meeting resolved the distribution of earnings for 2013 and 2012, respectively. The distribution was NT$0.8 and 1.5 (dollars) per share, which amounted to $347,105 thousand and 647,019 thousand, respectively. The differences between the amounts approved in the stockholders’ meeting and those recognized in the financial statements for employee bonuses and remuneration for directors and supervisors were as follows:

Employee bonuses Stock Cash Directors’and supervisors’ remuneration Employee bonuses Stock Cash Directors’and supervisors’ remuneration	2013 Actual earnings distributed Accrued in the financial statements Difference $ - - - 32,000 31,966 (34) 12,000 12,787 787 2012 Actual earnings distributed Accrued in the financial statements Difference $ - - - 54,000 56,421 2,421 21,000 22,587 1,587

Differences between the amounts approved in the stockholders’ meeting and those recognized in the financial statements for the distributions of earnings for 2013 and 2012 were accounted for as changes in accounting estimates and recognized as profit or loss in the years 2014 and 2013, respectively.

The information about the employee bonuses and the directors’ and supervisors’ remuneration approved in the board of directors’ and stockholders’ meetings can be accessed in the Market Observation Post System.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(p) Share-based payment
Employee stock options and share-based payment
- (i) On December 28, 2007, the Company merged with Primax and assumed the outstanding employee stock options of Primax. Based on the swap ratio approved by Primax Holdings’ board of directors, Primax Holdings issued 1,795,879 units of employee stock options in exchange for all of the employee stock options issued by Primax. According to the option plan, each unit could be converted into 1 common share of Primax Holdings. The primary terms and conditions of the employee stock options were as follows:
  - A. Exercise period:

From the grant dates in May 2005, June and December 2006, and February and March 2007, the options are exercisable at the following rates two years after the grant date. The term of the employee stock options is 5 years. The employee stock options and any right thereof shall not be transferred, pledged, donated, or disposed of in any way, with the exception of inherited options.

Period following the grant of options Exercisable percentage (cumulative)

2	years	50%
3	years	100%

B. Procedure for fulfilling obligation: Primax Holdings fulfills its obligation by issuing new common stock.
(ii) Based on the resolution approved in the board of directors’ meeting of Primax Holdings held on December 31, 2007, Primax Holdings declared an incentive plan to grant the right to some employees of the Company to participate in the subscription of the non-voting ordinary shares of Primax Holdings. The transaction is a kind of equity-settled share-based payment agreement, and the equity instruments under this agreement were vested at the date of grant. Primax Holdings recognized the compensation cost by using the fair value method. The difference in value between the net value per share of Primax Holdings determined at the grant date and the exercise price per share was recognized as cost of long-term investment in the Company by Primax Holdings in 2007, and was recognized as compensation cost and capital surplus by the Company. Based on the resolution approved in the board of directors’ meeting of Primax Holdings held in April 2008, Primax Holdings amended the share-based payment agreement mentioned above, and consequently, the non-voting ordinary shares were replaced by options to purchase them. The amendment had no impact on the accompanying consolidated financial statements.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(iii) In addition, Primax Holdings declared an incentive plan to grant stock options to employees of the Company in January, May and November 2008 to participate in the subscription of the non-voting ordinary shares of Primax Holdings. Some of the options are vested at the grant date; the others are vested from two years to five years after the grant date. Primax Holdings recognized the compensation cost by using the fair value method as cost of long-term investment in the Company, and the Company correspondingly recognized it as compensation cost and capital surplus.
(iv) Based on the resolution approved in the board of directors’ meetings of Primax Holdings and the Company held in December 2008, the Company issued employee stock options in exchange for part of the unvested or unexercised employee stock options issued by Primax Holdings. Specifically, 2.94 units of employee stock options were issued by the Company in exchange for 1 unit of the employee stock options issued by Primax Holdings. Each unit of the Company’s options could be converted into 1 common share of the Company. The exercise price of Primax Holdings’ options is USD0.2 per unit; the exercise price of the Company’s options is NT$11.42 (dollars) per unit after the modification. Meanwhile, the Company granted a certain amount of retention bonus to employees at the modification date, and the Company shall pay the retention bonus when the Company’s stock options are exercised. The other terms and conditions of the employee stock options are not changed. According to the modification, the Company decreased the capital surplus by $118,089, and recognized a corresponding increase in retention bonus payable (recorded as accrued expense and other liabilities) on December 30, 2008. The incremental fair value of $55,308 resulting from the modification will be recognized as compensation cost over the remainder of the vesting period.
(v) In accordance with the revised employee stock option plan mentioned above, the Company issued 9,545,248 units of employee stock options in November 2009. Each unit could be converted into 1 common share of the Company.
(vi) In September 2011, the Company’s board of directors resolved to issue employee stock options (Plan 3). The plan was approved by the SFB in October 2011, and the maximum number of options authorized to be granted was 5,000 units with each unit eligible to be converted into 1,000 common shares of the Company when exercised. The options may be granted to qualified employees of the Company or any of its domestic or foreign subsidiaries in which the Company owns, directly or indirectly, more than fifty percent (50%) of the subsidiary’s voting rights. The Company actually issued 1,500 units and 3,500 units in November 2011 and October 2012, respectively, which were evaluated at fair value. In accordance with the employee stock option plan mentioned above, the Company recognized the investment and capital surplus amounting to $265 and $190 in 2014 and 2013, respectively.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As of December 31, 2014, outstanding employee stock options of the Company for equity-settled share-based payment were as follows:

Modification and grant date Exercise price Granted units (thousand) Service period (from the grant date of the original stock options) Vesting period (from the grant date of the original stock options)	Plan 1 (note 1)	Plan 2 (note 2) December 30, 2008 $11.42 7,224 6~8 years (January 2, 2008~November11, 2017) 3 ~ 5 years	Plan 3 (note 3)	Plan 3 (note 3)
			Issued in November 2011 November 24, 2011 $17.90 1,500 5 years (November 24, 2011~November 23, 2016) 2 ~ 3 years	Issued in October 2012
	December 30, 2008 $11.42 30,828 5 years (May 23, 2005~ November 11, 2014) 2 ~ 3 years			October 22, 2012 $27.70 3,500 5 years (October 22, 2012~ October 21, 2017) 2 ~ 3 years

Note 1: Stock options under Plan 1 included those granted by Primax in May 2005, June and December 2006, and February and March 2007; those granted by Primax Holdings in January, May and November 2008; and those granted by the Company in November 2009.

Note 2: Stock options under Plan 2 included those granted by Primax Holdings in January and May 2008, and those granted by the Company in November 2009.

Note 3: Stock options under Plan 3 included those granted by the Company in November 2011 and October 2012.
(vii) The information on the outstanding employee stock options of Primax Holdings using the Black-Scholes option pricing model to measure the fair value at the grant date was as follows:

Excise price of Primax Holdings’stock options (USD) Expected time until expiration (years) Stock price per share of Primax Holdings (USD) Expected volatility of stock price Expected cash dividend rate Risk-free interest rate	Plan 1 0.20 2.37~5 0.91677~1 34.78%~44.59% - 2.439%~2.665%	Plan 2
		0.20 6~8 0.91677~0.92827 38.98%~48.44% - 2.509%~2.538%

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company applied the Black-Scholes option pricing model to measure the fair value of employee stock options granted in November 2009, 2011 and 2012. The information on share-based payment was as follows:

Period of stock options	Plan 1	Plan 2	Plan 3
			Issued in November 2011 $18.2 5 $26.02 29.12% 6% 1.81%	Issued in October 2012
Excise price of stock options (NT dollars) Expected time until expiration (years) Stock price per share (NT dollars) Expected volatility of stock price Expected cash dividend rate Risk-free interest rate	$11.42 5 $16.50 45.18% - 2.26%	$11.42 8 $16.50 45.18% - 2.26%		$28.25 5 $28.25 32.38%~34.61% 3.77% 1.425%

(viii) The incremental fair value resulting from the modification described in section (iv) above amounted to $55,308 (including the accrued retention bonus of $261,721). The measurement basis of share-based payment as of December 30, 2008 (the modification date) was as follows:

Granted units of options Granted units of options		Plan 1	Plan 1
		Before the modification After the modification Primax Holdings the Company 7,365 21,654 Plan 2	After the modification
		Before the modification Primax Holdings 2,331	After the modification
			the Company 6,853

The information on the stock options using the Black-Scholes option pricing model to measure the incremental fair value at the modification date was as follows:

Excise price Expected time until expiration (years) Stock price per share Expected volatility of stock price Expected dividend rate Risk-free interest rate		Plan 1	Plan 1
		Before the modification USD0.20 0.39~3.89 USD1.12 33.56%~45.36% - 1.005%~1.5%	After the modification
			NT$11.42 (dollars) 0.39~3.89 NT$11.42 (dollars) 33.56%~45.36% - 1.005%~1.5%

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Excise price Expected time until expiration (years) Stock price per share Expected volatility of stock price Expected dividend rate Risk-free interest rate		Plan 2	Plan 2
		Before the modification USD0.20 3.51~5.85 USD1.12 39.30%~45.36% - 1.50%~1.95%	After the modification
			NT$11.42 (dollars) 3.51~5.85 NT$11.42 (dollars) 39.30%~45.36% - 1.50%~1.95%

(ix) The related information on compensatory employee stock option plans was as follows:

Outstanding at January 1 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at December 31 Exercisable at December 31		2014	2014	2014		2013	2013
		Weighted- average exercise price 18.74 - 16.40 13.72 25.47 22.66 19.57	Stock options (in thousands)			Weighted- average exercise price 16.98 - 11.42 11.63 22.38 18.74 11.94	Stock options (in thousands) 12,414 - (420) (3,244) (1,198 ) 7,552 3,939
				7,552 - (65) (3,543) (220 ) 3,724 2,308

As of December 31, 2014 and 2013, the information on the employee stock option plans outstanding was as follows:

Employee stock option plan 1 Employee stock option plan 2 Employee stock option plan 3 –Issued in November 2011 Employee stock option plan 3 –Issued in October 2012 Outstanding at end of year Weighted-average expected time remaining until expiration (years)	December 31, 2014 - 1,032 200 2,492 3,724 2.37	December 31, 2013	December 31, 2013
			1,485 2,365 700 3,002 7,552 2.62

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(x) PCH2 issued stock appreciation rights of 915,810 units and 294,720 units to its employees in September and November 2009, respectively. The stock appreciation rights were measured by fair value and are a form of cash-settled share-based payment. The exercise price of each unit is NT$2.2 (dollars), and the holder will receive a bonus equal to the unit stock price, minus the exercise price, on the fourth day after the exercise day. The expected time until expiration is 4 and 5 years, respectively. The vesting period is 1~3 years, and a certain percentage of the stock appreciation rights can be exercised each year.

The information on the outstanding stock appreciation rights of the Group on December 31, 2014 and 2013, using the Black-Scholes option pricing model to measure the fair value at the balance sheet date was as follows:

Expected time until expiration (years) Stock price per share (NT dollars) Expected volatility of stock price Expected dividend rate Risk-free interest rate	Stock appreciation rights plan December 31, 2014 December 31, 2013 - 0~0.86 - 26.85 - 52.2% - 5.43% - 0%	Stock appreciation rights plan December 31, 2014 December 31, 2013 - 0~0.86 - 26.85 - 52.2% - 5.43% - 0%
	December 31, 2014 - - - - -
		0~0.86 26.85 52.2% 5.43% 0%

The related information on the stock appreciation rights plan of PCH2 was as follows:

Outstanding at January 1 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at December 31 Exercisable at December 31		2014 Weighted- average exercise price Stock options (in thousands) 2.20 45 - - - - 2.20 (45) - - - - - -	2014 Weighted- average exercise price Stock options (in thousands) 2.20 45 - - - - 2.20 (45) - - - - - -	2014 Weighted- average exercise price Stock options (in thousands) 2.20 45 - - - - 2.20 (45) - - - - - -		2013	2013	2013
		Weighted- average exercise price 2.20 - - 2.20 - - -				Weighted- average exercise price 2.20 - - 2.20 - 2.20 2.20	Stock options (in thousands)
				45 - - (45) - - -				287 - - (242) - 45 45

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As of December 31, 2014 and 2013, the information on the PCH2 employee stock option plan outstanding was as follows:

Weighted-average expected time remaining until expiration (years)	December 31, 2014 -	December 31, 2013 0.86

(xi) TWEL issued employee stock options to its employees in November 2014. As of December 31, 2014, the outstanding employee stock options of TWEL for equity-settled share-based payment were as follows:

Grant date Exercise price Granted units (thousand) Service period Vesting period	November 2014
	November 18, 2014 $15.74 700 5 years 3 ~4 years

The information on the outstanding stock appreciation rights of TWEL using the Black-Scholes option pricing model to measure the fair value as follows:

Exercise price Expected time until expiration (years) Stock price per share Expected volatility of stock price Expected dividend rate Risk-free interest rate	December 31, 2014 $ 15.74 4~4.5 14.81 29.49%~30.14% - 1.09%~1.17%

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The related information on the stock appreciation rights plan of TWEL was as follows:

Outstanding at January 1 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at December 31 Exercisable at December 31	2014	Stock options (in thousands) - 700 - - - 700 700
	Weighted-average exercise price - 15.74 - - - 15.74 15.74

2. Restricted stock

(i) After the stockholders’ meeting on June 25, 2013, the Company decided to issue 2,000 thousand shares of restricted stock to those full-time employees who meet the Company’s requirements. The restricted stock has been registered with and approved by the Securities and Futures Bureau of the FSC.
(ii) The board of directors’ meeting resolved to issue 1,450 thousand shares, 186 thousand shares, 135 thousand shares, and 220 thousand shares on August 13 and November 12, 2013, and January 22 and June 27, 2014, respectively.

(iii) As of December 31, 2014, the outstanding restricted stock of the Company was as follows:

Grant date	October 1, 2013	November 20, 2013	February 10, 2014	July 17, 2014
Fair value on grant date (per share)	22.8	25.15	27.30	52.00
Exercise price	Free grants	Free grants	Free grants	Free grants
Granted units (thousand shares)	1,450	186	135	220
Vesting period	1~3 years	1~2 years	1~2 years	1~2 years
	(notes 1 and 2)	(notes 2 and 3)	(notes 2 and 3)	(note 2)

Note 1: If the employees continue to provide service to the Company and meet the prior year’ performance indicator, 30% of the restricted stock shall be vested in year 1 after the grant date, and the remaining 30% and 40% shall be vested in year 2 and year 3, respectively, after the grant date.
Note 2: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, 50% of the restricted stock shall be vested in year 1 after the grant date, and the remaining 50% shall be vested in year 2 after the grant date.
Note 3: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, the restricted stock shall be vested in year 1 after the grant date.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The restricted stock is kept by a trust, which is appointed by the Company, before it is vested. These shares shall not be sold, pledged, transferred, gifted, or, by any other means, disposed of to third parties during the custody period. The voting rights of these shares are executed by the custodian, and the custodian will act based on law and regulations. If the shares remain unvested after the vesting period, the Company will cancel the unvested shares thereafter.

(iv) The related information on restricted stock of the Company for 2014 and 2013 was as follows:

Outstanding at January 1 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at December 31		2014 1,636 355 - (361) (320 ) 1,310		2013
				- 1,636 - - - 1,636

Expenses and liabilities attributable to share-based payment for 2014 and 2013 were as follows:

Expenses attributable to employee stock options Restricted stock Total Salary payable: Current		2014 9,223 21,751 30,974 11,844		2013
	$ $ $			10,048 5,418 15,466 39,109

(q) Earnings per share
Basic earnings per share

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

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Profit attributable to common stockholders Weighted-average number of common shares (thousand shares) Basic earnings per share (NT dollars)		2014 1,544,690 432,362 3.57		2013
	$ $			668,548 430,269 1.55

Weighted-average number of common shares (thousand shares)

Ordinary shares at January 1 Exercise of employee stock options Exercise of restricted stock Ordinary shares at December 31		2014 431,937 353 72 432,362		2013
	$ $			426,970 3,299 - 430,269

2. Diluted earnings per share

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

Profit attributable to ordinary stockholders Weighted-average number of common shares (diluted / thousand shares) Diluted earnings per share (NT dollars) Weighted-average number of ordinary shares at December 31 (basic) Effect of employee stock options Effect of employee stock bonuses Effect of restricted stock Weighted-average number of ordinary shares at December 31 (diluted)		2014 1,544,690 438,990 3.52 2014 432,362 3,621 2,199 808 438,990		2013 668,548 436,038 1.53 2013 430,269 3,447 2,234 88 436,038
	$ $

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(r) Operating revenue

The operating revenue in the years ended December 31, 2014 and 2013, was as follows:

Goods sold Services rendered		2014 50,985,241 1,254,536 52,239,777		2013
	$ $			41,324,078 995,910 42,319,988

(s) Other income

The other income in the years ended December 31, 2014 and 2013, was as follows:

Interest revenue of cash in banks Rent revenue Other		2014 275,451 11,939 3,075 290,465		2013
	$ $			161,252 9,268 5,983 176,503

(t) Other gains and losses

The other gains and losses in the years ended December 31, 2014 and 2013, were as follows:

Impairment losses on property, plant and equipment Net losses on disposal of property, plant and equipment Net gains (losses) on financial assets/liabilities measured at fair value through profit or loss Net gains on foreign currency Other		2014 (33,178) 15,870 15,695 56,143 95,793 150,323		2013
	$ $			(40,945) (13,508) (3,126) 93,487 23,543 59,451

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(u) Finance costs

The finance costs in the years ended December 31, 2014 and 2013, were as follows:

Interest expense Expense of prematurely terminated contract for derivative financial instruments Finance costs		2014 66,560 156,389 - 222,949		2013 17,382 - 2,264 19,646
	$ $

(v) Financial instruments

1. Credit risk

The aging analysis of notes, accounts, and other receivables (including related parties) that were past due but not impaired was as follows:

Past due 0-30 days Past due 31-90 days Past due 91-180 days Past due 181-360 days Past due over a year		December 31, 2014 925,204 267,594 46,069 - - 1,238,867	December 31, 2013 308,721 71,523 - - - 380,244	December 31, 2013 308,721 71,523 - - - 380,244
	$ $
				380,244

The Group assesses the uncollectible amount of notes, accounts, and other receivables (including related parties) based on aging analysis, the collection history, and the customers’ current financial status, and recognizes an allowance for doubtful debts accordingly. After the Group’s assessment, there is no significant change in the customers’ credit quality, and the related receivables will still be collectible.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The changes in the allowance for 2014 and 2013 were as follows:

Balance on January 1, 2014 Impairment loss recognized Acqusition from business combination Amounts written off Exchange differences on translation of foreign currency Balance on December 31, 2014 Balance on January 1, 2013 Impairment loss recognized Amounts written off Exchange differences on translation of foreign currency Balance on December 31, 2013	Individually assessed impairment $ - - - - - $ - Individually assessed impairment $ 16,908 - (21,007) 4,099 $ -		Collectively assessed impairment		Total
			20,059 2,835 1,156 - 1,984 26,034 Collectively assessed impairment		20,059 2,835 1,156 - 1,984 26,034 Total
	$ $		19,561 625 - (127 ) 20,059		36,469 625 (21,007) 3,972 20,059

2. Liquidity risk

The following table shows the contractual maturities of financial liabilities:

December 31, 2014 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Other payables Long-term borrowings Guarantee deposits Derivative financial liabilities: Outflow Inflow		Carrying amount 2,148,800 12,613,211 1,758,516 1,500,000 161,894 80,590 - - 18,263,011		Contractual cash flows		Within 6 months 2,148,800 12,613,211 1,758,516 309,315 - - 6,376,549 (6,295,665 ) 16,910,726	6~12 months - - - 307,576 - - - - 307,576		1~2 years - - - 611,302 - - - - 611,302		2~5 years - - - 300,093 - - - - 300,093	Over 5 years - - - - 161,894 - - - 161,894	Over 5 years - - - - 161,894 - - - 161,894
	$ $			2,148,800 12,613,211 1,758,516 1,528,286 161,894 - 6,376,549 (6,295,665 ) 18,291,591
													161,894

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2013 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Other payables Guarantee deposits Derivative financial liabilities: Outflow Inflow		Carrying amount 658,900 10,446,627 1,152,878 87,463 37,981 - - 12,383,849	Contractual cash flows		Within 6 months 658,900 10,446,627 1,152,878 - - 6,339,217 (6,345,854 ) 12,251,768	6~12 months - - - - - - - -		1~2 years - - - - - - - -		2~5 years - - - - - - - -	Over 5 years - - - 87,463 - - - 87,463	Over 5 years - - - 87,463 - - - 87,463
	$ $		658,900 10,446,627 1,152,878 87,463 - 6,339,217 (6,345,854 ) 12,339,231
												87,463

The Group does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

3. Currency risk

(i) Exposure to foreign currency risk

The Group’s significant exposure to foreign currency risk was as follows:

Financial assets Monetary items USD:CNY USD:HKD USD:TWD Non-monetary items USD:CNY USD:HKD USD:TWD Financial liabilities Monetary items USD:CNY USD:HKD USD:TWD Non-monetary items USD:CNY USD:HKD USD:TWD		December 31, 2014	December 31, 2014	TWD 11,130,719 8,047,888 12,160,595 5,466,800 366,560 1,468,136 10,046,373 7,684,400 10,923,734 5,106,560 - 1,367,016		December 31, 2013 Foreign currency Exchange rate TWD 265,003 6.0969 7,936,831 159,653 7.7546 4,781,596 278,979 29.95 8,355,413 47,000 6.0969 1,407,650 - 7.7546 - 155,280 29.95 4,650,636 287,785 6.0969 8,619,165 176,041 7.7546 5,272,428 237,291 29.95 7,106,859 49,500 6.0969 1,482,525 19,000 7.7546 569,050 83,580 29.95 2,503,221	December 31, 2013 Foreign currency Exchange rate TWD 265,003 6.0969 7,936,831 159,653 7.7546 4,781,596 278,979 29.95 8,355,413 47,000 6.0969 1,407,650 - 7.7546 - 155,280 29.95 4,650,636 287,785 6.0969 8,619,165 176,041 7.7546 5,272,428 237,291 29.95 7,106,859 49,500 6.0969 1,482,525 19,000 7.7546 569,050 83,580 29.95 2,503,221
		Foreign currency 352,238 254,680 384,829 173,000 11,600 46,460 317,923 243,177 345,688 161,600 - 43,260	Exchange rate 6.119 7.7567 31.6 6.119 7.7567 31.6 6.119 7.7567 31.6 6.119 7.7567 31.6			Foreign currency 265,003 159,653 278,979 47,000 - 155,280 287,785 176,041 237,291 49,500 19,000 83,580	Exchange rate 6.0969 7.7546 29.95 6.0969 7.7546 29.95 6.0969 7.7546 29.95 6.0969 7.7546 29.95

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(ii) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, trade and other receivables, loans and borrowings, and notes and accounts payable and other payables that are denominated in foreign currency.

A weakening (strengthening) of 5% of the TWD against the USD as of December 31, 2014 and 2013, would have increased or decreased the net profit after tax by $134,561 and $64,653, respectively. The analysis is performed on the same basis for both periods.

Interest rate analysis

Please refer to note 6(w) for the exposure of financial assets and liabilities to changes in interest rate.

Fair value
(i) Fair value and carrying amount

The management of the Group believes that the carrying amounts of the financial assets and liabilities in the financial statements to be a reasonable approximation of fair value.

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

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

A. The fair value of derivative instruments is based on quoted prices. When quoted prices are unavailable, the fair value is estimated on the basis of the contract’s spot exchange rate and swap point.
B. Available-for-sale financial assets – non-current held by the Group are investments in unlisted stock in domestic and foreign markets. The fair value is determined under the market-price method.
(iii)Fair value hierarchy

The table below analyzes financial instruments carried at fair value by the levels in the fair value hierarchy. The different levels have been defined as follows:

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

December 31, 2014 Financial assets at fair value through profit or loss–current Available-for-sale financial assets Financial liabilities at fair value through profit or loss–current December 31, 2013 Financial assets at fair value through profit or loss–current Available-for-sale financial assets Financial liabilities at fair value through profit or loss–current		Level 1 - - - - - - - - - -		Level 2 - - - - - - - - - -		Level 3 96,285 292,916 389,201 (80,590 ) 308,611 34,855 54,883 89,738 (37,981 ) 51,757		Total 96,285 292,916 389,201 (80,590 ) 308,611 34,855 54,883 89,738 (37,981) 51,757
	$ $ $ $

The following table shows a reconciliation of the beginning balances to the ending balances on fair value measurements in Level 3 of the fair value hierarchy, which were financial assets or liabilities derived from forward exchange contracts and stock investments:

Balance on January 1 Recognized in profit or loss Recognized in other comprehensive income Acquisition / disposal / pay-off Balance on December 31			2014		Total 51,757 11,799 945 244,110 308,611			2013		Total 63,897 (3,126) 570 (9,584 ) 51,757
	Fair value through profit or loss $ (3,126) 15,695 - 3,126 $ 15,695		Available for sale			Fair value through profit or loss 9,584 (3,126) - (9,584 ) (3,126 )		Available for sale
	$ $		54,883 (3,896) 945 240,984 292,916					54,313 - 570 - 54,883

There were no transfers from one level to another in the years ended December 31, 2014 and 2013.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(w) Financial risk management

1. Briefings

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

(i) Credit risk
(ii) Liquidity risk

(iii)Market risk

This note presents information on exposure to each of the above risks and on the objectives, policies, and processes for measuring and managing risk. For detailed information, please refer to the related notes on each risk.

2. Structure of risk management

The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The board of directors oversees how the management complies in monitoring the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The board of directors is assisted in its oversight role by an internal auditor. The internal auditor undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the board of directors.

3. Credit risk

Credit risk is the risk of financial loss to the Group if a customer or a counterparty to a financial instrument fails to meet its contractual obligations, which arises principally from the Group’s cash and cash equivalents; notes, accounts, and other receivables; and derivative instruments.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(i) Cash and cash equivalents

The Group deposited $6,409,008 (including restricted deposits) in Huaxia Bank and 9 other financial institutions, and $4,305,710 (including restricted deposits) in China Construction Bank and 10 other financial institutions, representing 21% and 20% of total assets as of December 31, 2014 and 2013, respectively. The Group believes that there is no significant credit risk from the above-mentioned financial institutions.

(ii) Notes and accounts receivable

Sales to individual customers constituting over 10% of total revenue for the years ended December 31, 2014 and 2013 totaled 17% and 16%, respectively. As of December 31, 2014 and 2013, 13% and 14%, respectively, of the ending balance of notes and accounts receivable were accounted for by those customers. In order to reduce credit risk, the Group assesses the financial status of the customers and the possibility of collection of receivables on a regular basis. The above-mentioned customers are profitable and have a good credit record, and the Group did not suffer any significant credit loss from those customers during the financial reporting period.

(iii)Derivative instruments

The Group entered into derivative instrument contracts with reputable and creditworthy financial institutions. The Group believes that the risk that these financial institutions may default on these contracts is relatively low and anticipates no significant credit loss.

4. Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group manages sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Group had unused bank facilities of $8,163,739 and $6,318,428 as of December 31, 2014 and 2013, respectively.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

5. Market risk

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

(i) Currency risk

The Group is exposed to currency risk on sales, purchases, and borrowings that are denominated in a currency other than the respective functional currencies of the Group’s entities, primarily the New Taiwan Dollar (TWD), US Dollar (USD), HK Dollar (HKD), and Chinese Yuan (CNY). These transactions are denominated in USD.

The Group uses forward exchange contracts and foreign exchange swap contracts to hedge its currency risk. The Group makes performance reports and reviews operating strategy regularly, and believes that there is no significant risk because the gains or losses from exchange rate fluctuation will mostly be offset by the hedged item.

(ii) Interest rate risk

The Group’s main assets and liabilities with a floating-interest-rate basis are deposits and short-term borrowings. The Group believes that cash flow risk arising from interest rate fluctuation is insignificant.

(x) Capital management

The board’s policy is to maintain a strong capital base so as to maintain investor, creditor, and market confidence, and to sustain future development of the business. Capital consists of ordinary shares, capital surplus, retained earnings, other equity, and non-controlling interests.

The Group sets its objectives for managing capital to safeguard the capacity to continue to operate, to continue to provide a return to stockholders, to safeguard the interest of other related parties, and to maintain an optimal capital structure to reduce the cost of capital.

The Group’s debt ratio as of December 31, 2014 and 2013, was 67% and 65%, respectively.

(7) Related-party Transactions

(a) Parent company and ultimate controlling company

The Company is the ultimate controlling party of the Group and its subsidiaries.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(b) Key management personnel compensation

Short-term employee benefits $ Post-employment benefits Termination benefits Other long-term benefits Share-based payments $		2014 134,030 755 3,748 - 7,690 146,223		2013
				69,312 1,058 - - 1,906 72,276

For information related to share-based payments, please refer to note 6(p).

(c) Other related-party transactions
Sale of goods to related parties

The amounts of significant sales by the Group to related parties and the outstanding balances were as follows:

Other related parties		Sales	2013 -	Notes and accounts receivable December 31, 2014 December 31, 2013 60,581 -	Notes and accounts receivable December 31, 2014 December 31, 2013 60,581 -	Notes and accounts receivable December 31, 2014 December 31, 2013 60,581 -
		2014 151,524			December 31, 2013
	$					-

There were no significant differences in the selling prices and trading terms between the related parties and other customers.

Purchase of service

The amounts of purchase of service by the Group from its related parties and the outstanding balances were as follows:

Other related parties		Purchase of service	Purchase of service	Other payables December 31, 2014 December 31, 2013 - -	Other payables December 31, 2014 December 31, 2013 - -
		2014 20,165	2013 -	December 31, 2014 -
	$				-

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Other related parties provided marketing consulting to the Group. There were no significant differences in the terms of such purchase transactions between related parties and other vendors.

(8) Pledged Assets

As of December 31, 2014 and 2013, assets pledged as collateral were as follows:

Pledged assets Other current assets–restricted deposits Other non-current assets– restricted deposits	Pledged to secure	Book value of pledged assets December 31, December 31, 2014 2013 $ - 1,444 $ 36,568 3,173	Book value of pledged assets December 31, December 31, 2014 2013 $ - 1,444 $ 36,568 3,173	Book value of pledged assets December 31, December 31, 2014 2013 $ - 1,444 $ 36,568 3,173	Book value of pledged assets December 31, December 31, 2014 2013 $ - 1,444 $ 36,568 3,173
			December 31, 2014 - 36,568
	Guarantee letters issued by bank Guarantee letters issued by bank				1,444 3,173

(9) Commitments and Contingencies

(a) The Group’s unused letters of credit were as follows:

	December 31, 2014 12,562	December 31, 2013
$		-

(b) The amounts of guarantee the Company provided to subsidiaries were as follows:

Name of subsidiary	Content Guarantee for purchase of material Guarantee for bank loans		December 31, 2014 51,192 1,106,000 1,157,192	December 31, 2013 82,962 - 82,962
PCH2 TYM HK		$ $

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(c) The following are savings accounts provided by the Group to the bank in order for the bank to issue a guarantee letter to customs as guarantee deposits. Please refer to note 8.

Guarantee letters		December 31, 2014 101,632	December 31, 2013	December 31, 2013
	$			155,574

(d) Guarantee notes provided as part of agreements with banks to sell its accounts receivable and long-term borrowings were as follows; please refer to note 6(d) for related information.

Sales of accounts receivable Long-term borrowings		December 31, 2014 2,891,000 5,404,000	December 31, 2013	December 31, 2013
	$ $			4,520,850
				3,279,000

(10) Loss Due to Major Disasters: None

(11) Subsequent Events

Based on the resolution approved by the board of directors’ meeting held on October 15, 2014, the Company signed a share subscription agreement and a share purchase agreement with Global TEK and its primary stockholders, respectively; therefore, the Company acquired 16,530 shares of Global TEK (30% of its shares), comprising 9,300 shares of newly issued common stock and 7,230 shares from its primary stockholders. The consideration of $545,490 was all transferred on January 5, 2015.

The Company holds only 30% of Global TEK’s shares. However, the Company has controlling power over its related activities by acquiring more than 50% of the board of director’s voting rights based on the resolution of its interim meeting of stockholders held on February 13, 2015. The Company will include the Global TEK Group in the consolidated financial statements from the same date in accordance with IFRS 10.

As of March 24, 2015, the purchase price allocation was still in progress. The Company engaged experts to evaluate the fair value identifiable net assets. Please refer to note 6(f) for detailed information.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(12) Others

The following is a summary statement of current-period employee benefit, depreciation, and amortization expenses by function:

By function Byitem		2014			2013
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefit expenses Salaries Labor and health insurance Pension Others Depreciation Amortization	3,353,137 76,168 196,231 77,710 890,526 18,602	2,069,059 90,391 77,922 114,637 124,128 156,069	5,422,196 166,559 274,153 192,347 1,014,654 174,671	2,464,591 52,160 143,065 47,605 941,638 28,567	1,400,009 72,812 68,729 81,702 87,704 51,833	3,864,600 124,972 211,794 129,307 1,029,342 80,400

(13) Segment Information

(a) General information

The Group’s reported segments are the divisions for computer peripherals and non-computer peripherals. The division for computer peripherals specializes in the manufacture and sale of computer mice, keyboards, trackpads, etc. The division for non-computer peripherals specializes in the manufacture and sale of digital camera modules, mobile phone accessories, multi-function printers, scanners, shredders, amplifiers, speakers, audio systems, etc.

The Group’s reported segments consisted of strategic business units which provide essentially different products and services. These units have to be separately managed as the result of the different technology and marketing strategies. Most of the business units were acquired, and the original management teams are still operating.

(b) Reportable segments’ profit or loss, segment assets, segment liabilities, and their measurement and reconciliation

Income tax and extraordinary profits and losses are not allocated to the Group’s reportable segments, and the amounts for the reported segments are identical with those in the report used by the chief operating decision maker.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Group assessed the performance of the segments based on the segments’ income before income taxes (excluding extraordinary profit and loss), and the accounting policies of the operating segments are the same as those described in note 4. Sales and transfers between segments are deemed to be transactions with third parties and are measured by using the market price.

For the years ended December 31, 2014 and 2013, the Consolidated Company’s segment financial information was as follows:

External revenue Intra-group revenue Total segment revenue Segment profit External revenue Intra-group revenue Total segment revenue Segment profit	For the year	ended December 31, 2014 Non-computer Peripherals Total 28,079,101 52,239,777 - - 28,079,101 52,239,777 723,459 2,047,581 ended December 31, 2013 Non-computer Peripherals Total 20,885,772 42,319,988 - - 20,885,772 42,319,988 (104,422 ) 910,752
	Computer Peripherals $ 24,160,676 - $ 24,160,676 $ 1,324,122 For the year
	$ $ $
	Computer Peripherals $ 21,434,216 - $ 21,434,216 $ 1,015,174	Non-computer Peripherals 20,885,772 - 20,885,772 (104,422 )
	$ $ $

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

In presenting information on the basis of geography, revenue is based on the geographical location of customers, and non-current assets are based on the geographical location of the assets. Details were as follows:

Geographic Information Revenues from external customers: China Americas Other Non-current assets: China Taiwan Other		2014 31,083,837 7,847,174 13,308,766 52,239,777 4,100,625 370,797 2,934,953 7,406,375	2013 26,168,043 6,326,650 9,825,295 42,319,988 3,520,241 395,446 3,182 3,918,869
	$ $ $ $

(d) Major customer information

The information on major customers that accounted for more than 10% of revenue in the consolidated statements of comprehensive income in 2014 and 2013 is as follows:

Company A		2014	Percentage of net sales 17%	2013 Net sales 6,960,326
		Net sales 8,995,458			Percentage of net sales 16%
	$

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v.The audited parent company only financial statements and attached notes of FY2014

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December 31, 2013	Amount %		658,900 4	1,438 -	6,053,996 39		35,324 -	218,552 2	975,048 6	58,771 -		- -	8,002,029 51		- -	85,429 -	115,114 1	200,543 1	8,202,572 52		4,335,733 28	3,796 -	648,747 4	389,998 2	138,192 1	1,957,522 12	67,579 1	7,541,567 48	15,744,139 100
December 31, 2014	Amount %		$ 2,148,800 9	7,493 -	8,026,918 36		22,902 -	387,912 2	902,386 4	60,855 -		600,000 3	12,157,266 54		900,000 4	128,204 -	217,055 1	1,245,259 5	13,402,525 59		4,346,578 19	38,903 -	673,543 3	456,853 2	97,300 1	3,132,488 14	404,848 2	9,150,513 41	$ 22,553,038 100
December 31, 2013	Amount % Liabilities and equity	Current liabilities:	1,586,671 10 Short-term borrowings (note 6(j))	Notes and accounts payable	34,014 - Accounts payable–related parties (note 7)	6,671,280 43 Financial liabilities at fair value through profit or	loss–current (note 6(b))	288,959 2 Salary payable (note 6(p))	50,215 - Other payables (note 7)	1,787,705 11 Other current liabilities	40,784 - Current portion of long-term borrowings	10,459,628 66 (note 6(k))		Non-current liabilities:	Long-term borrowings (note 6(k))	33,918 - Guarantee deposits	Other non-current liabilities (notes 6(m) and (n))	4,745,311 30	63,517 1 Total liabilities	265,829 2	46,479 - Common stock (note 6(o))	59,950 - Capital collected in advance (note 6(o))	69,507 1 Capital surplus (note 6(o))	5,284,511 34 Legal reserve (note 6(o))	Special reserve (note 6(o))	Unappropriated retained earnings (note 6(o))	Other equity	Total equity	15,744,139 100 Total liabilities and equity
December 31, 2014	Amount %		$ 3,001,879 13		21,165 -	7,580,133 34		1,102,500 5	9,664 -	1,458,489 7	23,765 -	13,197,595 59				275,536 2		8,596,698 38	61,287 -	262,269 1	37,997 -	64,021 -	57,635 -	9,355,443 41					$ 22,553,038 100
	Assets	Current assets:	Cash and cash equivalents (note 6(a))	Financial assets at fair value through profit or loss–	current (note 6(b))	Accounts receivable (note 6(d))	Accounts receivable–related parties (notes 6(d)	and 7)	Other receivables (note 6(d))	Inventories, net (note 6(e))	Other current assets			Non-current assets:	Available-for-sale financial assets–non-current	(note 6(c))	Investments accounted for using equity method	(note 6(f))	Property, plant and equipment (note 6(g))	Investment property, net (note 6(h))	Intangible assets (note 6(i))	Deferred tax assets (note 6(n))	Other non-current assets						Total assets

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PRIMAX ELECTRONICS LTD.

Statements of Comprehensive Income

For the years ended December 31, 2014 and 2013

(expressed in thousands of New Taiwan dollars, except earnings per share)

2014	2013
Amount 42,356,385 39,690,606 2,665,779 643,337 388,961 880,132 1,912,430 753,349 27,467 120,397 949,194 (217,073 ) 879,985 1,633,334 88,644 1,544,690 322,245 945 3,344 - 326,534 1,871,224	Amount 37,257,934 34,786,323 2,471,611 599,993 283,352 850,485 1,733,830 737,781 12,214 118,411 9,687 (18,802 ) 121,510 859,291 190,743 668,548 238,039 (238) 1,240 - 239,041 907,589	%
		100 93 7 2 1 2 5 2 - - - - - 2 - 2 - - - - - 2 1.55
		1.53

See accompanying notes to financial statements.

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											Total equity	7,224,867	668,548	239,041	907,589		-	-	(647,019)	-	5,418	9,127	37,731	3,854	7,541,567	1,544,690	326,534	1,871,224		-	-	(347,105)	-	-	21,751	14,487	48,589	-		9,150,513
PRIMAX ELECTRONICS LTD.	Statements of Changes in Equity	For the years ended December 31, 2014 and 2013	(expressed in thousands of New Taiwan dollars)	Exchange	Capital Retained earnings differences on		translation of	foreign Unrealized	Capital Unappropriated operation’s gains (losses) on Unearned	Common collected Capital Legal Special retained financial available-for-sale employee	stock in advance surplus reserve reserve earnings statements financial assets compensation	Balance on January 1, 2013 $ 4,269,698 22,794 607,334 264,990 97,300 2,100,653 (137,902) - -	Net income in 2013 - - - - - 668,548 - - -	Other comprehensive income in 2013 - - - - - 1,240 238,039 (238 ) -	Comprehensive income in 2013 - - - - - 669,788 238,039 (238 ) -	Appropriation and distribution of retained earnings (note 1):	Legal reserve - - - 125,008 - (125,008) - - -	Special reserve - - - - 40,892 (40,892) - - -	Cash dividends - - - - - (647,019) - - -	Issuance of restricted stock 16,360 - 21,378 - - - - - (37,738)	Amortization expense of restricted stock - - - - - - - - 5,418	Compensation cost of share-based payment - - 9,127 - - - - - -	Exercise of employee share options - 37,731 - - - - - - -	Issuance of common stock for employee stock options and abandonment 49,675 (56,729 ) 10,908 - - - - - -	Balance on December 31, 2013 4,335,733 3,796 648,747 389,998 138,192 1,957,522 100,137 (238) (32,320)	Net income in 2014 - - - - - 1,544,690 - - -	Other comprehensive income in 2014 - - - - - 3,344 322,245 945 -	Comprehensive income in 2014 - - - - - 1,548,034 322,245 945 -	Appropriation and distribution of retained earnings (note 2):	Legal reserve - - - 66,855 - (66,855) - - -	Special reserve - - - - (40,892) 40,892 - - -	Cash dividends - - - - - (347,105) - - -	Issuance of restricted stock 3,550 - 11,576 - - - - - (15,126)	Retirement of restricted stock (3,200) - (4,254) - - - - - 7,454	Amortization expense of restricted stock - - - - - - - - 21,751	Compensation cost of share-based payment - - 14,487 - - - - - -	Exercise of employee stock options - 48,589 - - - - - - -	Issuance of common stock for employee stock options and abandonment 10,495 (13,482 ) 2,987 - - - - - -		Balance on December 31, 2014 $ 4,346,578 38,903 673,543 456,853 97,300 3,132,488 422,382 707 (18,241 )	Note 1: Directors’and supervisors’remuneration of $21,000 and employee bonuses of $54,000 have been deducted from the statement of comprehensive income for 2012.	Note 2: Directors’and supervisors’remuneration of $12,000 and employee bonuses of $32,000 have been deducted from the statement of comprehensive income for 2013.	See accompanying notes to financial statements.

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PRIMAX ELECTRONICS LTD.

Statements of Cash Flows

For the years ended December 31, 2014 and 2013

(expressed in thousands of New Taiwan dollars)

Cash flows from operating activities: Income before income taxes Adjustments: Adjustments to reconcile profit (loss): Depreciation and amortization Losses (gains) related to inventories Provision (reversal of provision) for bad debt allowance and sales returns and allowances Interest expenses Interest income Compensation cost of share-based payment Amortization expense of restricted stock Share of profit of associates accounted for using equity method Gain on disposal of property, plant and equipment Gain on disposal of financial assets Impairment loss on financial assets Changes in operating assets and liabilities: Accounts receivable (including related parties) Other receivables Inventories Other current assets Other Changes in operating assets Notes and accounts payable (including related parties) Salary payable Other payables Other current liabilities Other non-current liabilities Other Changes in operating liabilities Changes in operating assets and liabilities Adjustments Cash flows from operations Interest received Interest paid Income taxes paid Net cash flows provided by operating activities Cash flows from investing activities: Acquisition of available-for-sale financial assets Refund from capital reduction of available-for-sale financial assets Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of other deferred assets Increase in refundable deposits Other Net cash flows used in investing activities Cash flows from financing activities: Increase in short-term borrowings Increase in long-term borrowings Increase in guarantee deposits Cash dividends Exercise of employee stock options Net cash flows provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year		2014 1,633,334 41,404 63,376 23,746 60,684 (17,500) 8,523 21,751 (949,194) (921) (4,134) 3,500 (748,765 ) (1,746,140) 40,551 265,840 17,019 8,778 (1,413,952 ) 1,978,977 175,018 101,680 2,084 63,143 29,720 2,350,622 936,670 187,905 1,821,239 17,500 (60,621) (263,049 ) 1,515,069 (245,600) 4,616 (2,578,698) (12,623) 2,126 (5,337) 1,531 (35 ) (2,834,020 ) 1,489,900 1,500,000 42,775 (347,105) 48,589 2,734,159 1,415,208 1,586,671 3,001,879		2013 859,291 47,838 21,376 (9,244) 16,538 (2,736) 9,903 5,418 (9,687) - - - 79,406 (543,788) 152,646 127,706 35,838 (18,012 ) (245,610 ) 713,211 (37,914) (165,062) (134,998) - 29,940 405,177 159,567 238,973 1,098,264 2,736 (16,448) (97,758 ) 986,794 - - (719,576) (21,687) - (10,275) - (1,026 ) (752,564 ) 658,900 - 38,243 (647,019) 37,731 87,855 322,085 1,264,586 1,586,671
	$ $

See accompanying notes to financial statements.

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PRIMAX ELECTRONICS LTD.

Notes to Financial Statements

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

(1) Organization

The major business activities of the Company were the manufacture and sale of multi-function printers, scanners, digital camera modules, computer mice, keyboards, trackpads, mobile phone accessories, consumer electronics products and shredders.

The Company’s common shares were registered with the Financial Supervisory Commission, ROC (“FSC”) on June 22, 2012, and listed on the Taiwan Stock Exchange (“TWSE”) on October 5, 2012.

(2) Financial Statements Authorization Date and Authorization Process

The financial statements were authorized for issuance by the board of directors on March 24, 2015.

(3) New Standards and Interpretations Not Yet Adopted

(a) Effect of the 2013 version of the International Financial Reporting Standards (“2013 Version of IFRSs”) endorsed by the FSC but not yet adopted

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

According to FSC Ruling No. 1030010325 issued on April 3, 2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taipei Exchange (Gre Tai Securities Market) or Emerging Stock Market shall adopt the 2013 Version of IFRSs (not including IFRS 9 “Financial Instruments”), as endorsed by the FSC, in preparing the financial statements. The new standards, amendments and interpretations issued by the International Accounting Standards Board (“IASB”) are as follows:

	New standards, amendments and interpretations Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters” Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters” ans” –Transfers of FinancialAssets” –Offsetting Financial Assets and Financial Liabilities” Consolidated Financial statements” ded IAS 1 “Presentation of Items of Other Comprehensive Income” Financial statements” Financial Assets and FinancialLiabilities”	Effective date per IASB July 1, 2010 July 1, 2011 January 1, 2013 July 1, 2011 January 1, 2013 January 1, 2013 (with January 1, 2014, as the effective date for investment entities) January 1, 2013 January 1, 2013 January 1, 2013 July 1, 2012 January 1, 2012 January 1, 2013 January 1, 2013 January 1, 2014 January 1, 2013

The Company assessed that the 2013 Version of IFRSs may not have any significant impact on the financial statements except for the following:

IAS 1 “Presentation of Financial statements”

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

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

2. IFRS 13 “Fair Value Measurement”

The standard defines fair value, sets out a framework for measuring fair value, and requires the disclosure of fair value measurements. Based on the Company’s assessment, the adoption of the standard has no significant impact on the financial statements of the Company, and the Company will disclose any additional information about its fair value measurement accordingly.

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

A summary of the 2013 Version of IFRSs issued by the IASB but not yet endorsed by the FSC is as follows:

New standards and amendments
�IFRS 9 “FinancialInstruments”
�Amended IFRS 10 and IAS 28
�Amended IFRS 10, IFRS 12 and IAS 28
�Amended IFRS 11“Accounting for Acquisitions of Interests in Joint
Operations”
�IFRS 14“Regulatory Deferral Accounts”
�IFRS 15“Revenue from Contracts with Customers”
�Amended IAS 1
�Amended IAS 16 and IAS 38“Clarification of Acceptable Methods
of Depreciation and Amortization”
�Amended IAS 16 and IAS 41“Bearer Plants”
�Amended IAS 19 “Defined Benefit Plans: Employee Contributions”
�Amended IAS 27
�Amended IAS 36“Recoverable Amount Disclosures for
Non-FinancialAssets”
�Amended IAS 39 “Novation of Derivatives and Continuation of
Hedge Accounting”
�Amended IFRIC 21 “Levies”

Effective date per IASB

The Company is in the process of assessing the impact on the financial position and the results of operations. The related impact will be disclosed following the completion of its assessments.

(4) Summary of Significant Accounting Policies

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

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(a) Statement of compliance

These annual financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”).

(b) Basis of preparation
Basis of measurement

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

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

The functional currency is determined based on the primary economic environment in which the Company operates. The Company’s financial statements are presented in New Taiwan Dollars, which is the Company’s functional currency. All financial information presented in New Taiwan Dollars has been rounded to the nearest thousand.

(c) Foreign currencies
Foreign currency transactions

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

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

2. Foreign operations

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

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

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

The Company shall classify an asset as current when:

It expects to realize the asset or intends to sell or consume it in its normal operating cycle;
It holds the asset primarily for the purpose of trading;
It expects to realize the asset within twelve months after the reporting period; or
The asset is cash or a 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, or there are other restrictions.

The Company shall classify all other assets as non-current.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

The Company shall classify a liability as current when:

It expects to settle the liability in its normal operating cycle;
It holds the liability primarily for the purpose of trading;
The liability is due to be settled within twelve months after the reporting period; or
It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

The Company shall classify all other liabilities as non-current.

(e) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits that are subject to an insignificant risk of changes in their fair value, and are used by the Company in the management of its short-term commitments.

(f) Financial instruments

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

Financial assets

The Company classifies financial assets into the following categories: available-for-sale financial assets, and loans and receivables.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(i) Available-for sale financial assets

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

(ii) Loans and receivables

(iii) Impairment of financial assets

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

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

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

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

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

Recovery and loss on doubtful debts of account receivables are included in operating expense; others are included in other gains and losses under non-operating income and expenses.

(iv) Derecognition of financial assets

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

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

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

2. Financial liabilities and equity instruments

(i) Classification of debt or equity

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

(ii) Other financial liabilities

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(iii) Derecognition of financial liabilities

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

(iv) Offsetting of financial assets and liabilities

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

Derivative financial instruments

The Company holds derivative financial instruments to hedge its foreign currency exposure. Derivatives are recognized initially at fair value, and attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss, and are included in other gains and losses under non-operating income and expenses. When the fair value of a derivative instrument is positive, it is classified as a financial asset, and when the fair value is negative, it is classified as a financial liability.

(g) Inventories

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(h) Investments in subsidiaries

Investments in subsidiaries are accounted for using the equity method. There is no difference between net income and comprehensive income in the Company’s financial statements and net income and comprehensive income attributable to stockholders of the parent. The equity in the Company’s financial statements and the equity attributable to stockholders of the parent in the Company’s consolidated financial statements are also the same. Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

(i) Investment property

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

(j) Property, plant and equipment
Recognition and measurement

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Reclassification to investment property

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

Subsequent cost

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

4. Depreciation

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

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

(i) Buildings, leasehold improvement, and additional equipment: 1 ~ 51 years
(ii) Machinery and equipment: 1 ~4 years
(iii) Other equipment: 1 ~5 years

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(k) Lease

1. Lessor

Lease income from an operating lease is recognized in income on a straight-line basis over the lease term.

Lessee

Payments made under an operating lease (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease.

Contingent rent is recognized as expense in the periods in which it is incurred.

(l) Intangible assets

Intangible assets that are acquired by the Company are measured at cost, less accumulated amortization and any accumulated impairment losses.

The amortizable amount is the cost of an asset, less its residual value.

Trademarks 10 years 2. Patents 2.5~10 years 3. Copyrights 15 years

(m) Impairment – non-financial assets

Non-financial assets, except for inventories and deferred tax assets, are assessed for impairment, and the recoverable amounts for any impaired assets are estimated at the end of each reporting period. If it is not possible to determine the recoverable amount for an individual asset, then the Company will have to determine the recoverable amount for the asset’s cash-generating unit.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

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

The Company assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset may no longer exist or may have decreased. An impairment loss recognized in prior periods for an individual asset or a cash-generating unit shall be reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its recoverable amount but should not exceed the depreciated or amortized balance of the assets assuming no impairment loss was recognized in prior periods.

(n) Revenue

1. Goods sold

The timing of the transfers of risks and rewards varies depending on the individual terms of the sales agreement. Transfer usually occurs when the product is received at the customer’s warehouse.

2. Services

The Company provides services, such as model research, development, and design, to customers. Revenue from services rendered is recognized in profit or loss in proportion to the stage of completion of the transaction, agreed by both sides, at the reporting date.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(o) Employee benefits

1. Defined contribution plans

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

2. Defined benefit plans

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

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

3. Short-term employee benefits

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

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

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(p) Share-based payment

(q) Income taxes

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

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

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

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

(r) Earnings per share

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

(s) Operating segments

Please refer to the Company’s consolidated financial statements for the years ended December 31, 2014 and 2013, for further details.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(5) Significant Accounting Assumptions and Judgments, and Major Sources of Estimation Uncertainty

The preparation of the financial statements in conformity with the Regulations requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

There are no critical judgments in applying accounting policies.

There are no assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year.

(6) Explanation of Significant Accounts

(a) Cash and cash equivalents

Cash on hand Checking accounts and demand deposits Time deposits	December 31, 2014	December 31, 2013	December 31, 2013
	$ 300 1,222,594 1,778,985 $ 3,001,879		639 1,123,322 462,710 1,586,671

Please refer to note 6(v) for interest rate risk and the sensitivity analysis of the Company’s financial assets and liabilities.

(b) Financial assets and liabilities at fair value through profit or loss
The fair value of derivative financial instruments was as follows:

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Derivative financial assets– current: Forward exchange contracts Foreign exchange swap contracts Option trading contracts Derivative financial liabilities– current: Forward exchange contracts Foreign exchange swap contracts Option trading contracts	December 31, 2014	December 31, 2013	December 31, 2013
	$ 20,728 437 - $ 21,165 $ (20,065) (2,837) - $ (22,902 )		23,778 1,328 8,908 34,014 (18,678) (16,180) (466 ) (35,324 )

The Company held the following derivative financial instruments not designated as hedging instruments presented as held-for-trading financial assets as of December 31, 2014 and 2013:

	December 31, 2014	December 31, 2014
Derivative financial instruments	Nominal amount	Maturity date	Predetermined rate
Forward exchange contracts� buy USD / sell TWD Forward exchange contracts� buy TWD / sell USD Foreign exchange swap contracts–swap in TWD/swap out USD	USD 35,000 thousand USD 35,000 thousand USD 11,170 thousand	January 6, 2015~ March 4, 2015 January 6, 2015~ March 4, 2015 January 5, 2015~ January 9, 2015	30.304~31.252 30.336~31.289 30.989~31.749

	December 31, 2013	December 31, 2013
Derivative financial instruments	Nominal amount	Maturity date	Predetermined rate
Forward exchange contracts� buy USD / sell TWD Forward exchange contracts� buy TWD / sell USD Foreign exchange swap contracts�swap in TWD / swap out USD Option Trading contracts� buy CNY / sell USD	USD 126,000 thousand USD 37,000 thousand USD 59,160 thousand USD 16,000 thousand	January 2, 2014~ January 22, 2014 January 2, 2014~ January 13, 2014 January 8, 2014~ February 5, 2014 October 2, 2015~ December 21, 2015	29.621~29.775 29.341~29.531 29.428~30.025 6.213~6.237

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Please refer to note 6(v) for credit risk, currency risk, and interest rate risk of the Company’s derivative financial instruments.
(c) Available-for-sale financial assets – non-current

Stocks unlisted in domestic market	December 31, 2014 $ 275,536	December 31, 2013	December 31, 2013
	$		33,918

In December 2014, the Company acquired 2,272 thousand shares of Nien Made Enterprise Co., Ltd. at NT$108 (dollars) per share for consideration of $245,600, and the shares were recognized as available-for-sale financial assets – non-current.
In the second quarter of 2014, Titan 1 Venture Capital Co., Ltd. refunded $4,616 to the Company due to capital reduction. The difference between the refund and the book value amounting to $482 was recorded by the Company as other gains and losses. Based on the resolution of its interim meeting of stockholders held on August 31, 2014, Titan 1 Venture Capital Co., Ltd. will be closed and is in the liquidation process.
The impairment loss on Green Rich Technology Co., Ltd. was $3,500 and was recognized as other gains and losses for the year ended December 31, 2014.
The Company did not provide any of the aforementioned available-for-sale financial assets as collateral.
(d) Accounts receivable and other receivables (including related parties)

Accounts receivable Accounts receivable–related parties Other receivables Less: allowance for doubtful accounts allowance for sales returns and discounts	December 31, 2014 $ 7,639,093 1,102,500 9,664 (19,430) (39,530 ) $ 8,692,297	December 31, 2013	December 31, 2013
			6,705,485 288,959 50,215 (17,796) (16,409 ) 7,010,454

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

The Company did not provide any of the aforementioned accounts receivable and other receivables (including related parties) as collateral.
Please refer to note 6(v) for changes in the allowance for doubtful accounts and the credit risk and currency risk for the years ended December 31, 2014 and 2013.
The Company entered into agreements with banks to sell its accounts receivable without recourse. According to the agreements, within the limit of its credit facilities, the Company does not need to guarantee the capability of its customers to pay for reasons other than commercial disputes when transferring its accounts receivable. The Company receives partial advances upon sales of accounts receivable and pays interest calculated based on the interest rates agreed for the period through the collection of the accounts receivable. The remaining amounts are received upon the collection of the accounts receivable, and are recorded as other receivables. In addition, the Company shall pay handling charges based on a fixed rate. As of December 31, 2014 and 2013, the details of transferred accounts receivable which conformed to the criteria for derecognition were as follows:

				D	ecember 31, 2014
				C	ash received		Guarantee (promissory note) expressed in thousands US$7,000 US$58,000 NT$837,000	Amount derecognized NT$ - - - -	Amount not received - - - -
Buyer A	mount sold	Credit facilities			in advance	Interest rate
	NT$	US$ (expressed in			NT$
			thousands)

Mega International Commercial Bank $	-		35,000		-	-
HSBC Bank	-		64,400		-	-
Bank of Taiwan	-		31,000		-	-
$	-		130,400		-

				D	ecember 31, 2013
				C	ash received		Guarantee (promissory note) expressed in thousands US$45,000 US$78,000 NT$837,000	Amount derecognized NT$ - 412,687 - 412,687	Amount not received - 45,855 - 45,855
Buyer A	mount sold	C	redit facilities		in advance	Interest rate
	NT$	US$ (expressed in			NT$
			thousands)

Mega International Commercial Bank $	-		45,000		-	-
HSBC Bank	458,542		64,400		412,687	1.01%~1.04%
Bank of Taiwan	-		31,000		-	-
$	458,542		140,400		412,687

Please refer to note 9 for guarantee notes provided by the Company to sell its accounts receivable.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(e) Inventories

Raw materials Finished goods and merchandise	December 31, 2014 $ - 1,458,489 $ 1,458,489	December 31, 2013 715 1,786,990 1,787,705

The Company did not provide any of the aforementioned inventory as collateral.

For the years ended December 31, 2014 and 2013, the Company recognized the following items as cost of goods sold:

Additional losses on inventory valuation Loss on disposal of inventories Gain (loss) on physical inventories	2014 $ (2,000) (63,140) 1,764 $ (63,376 )	2013
		(13,900) (5,443) (2,033 ) (21,376 )

(f) Investments accounted for using equity method

The Company’s investments accounted for using the equity method at the reporting dates comprise:

Subsidiaries	December 31, 2014 $ 8,596,698	December 31, 2013 4,745,311
	$

Please refer to the Company’s consolidated financial statements for the years ended December 31, 2014 and 2013, for further details.
The Company did not provide investments accounted for using the equity method as collateral.
(g) Property, plant and equipment

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

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Cost or deemed cost: Balance on January 1, 2014 Additions Disposals Reclassifications Balance on December 31, 2014 Balance on January 1, 2013 Additions Disposals Reclassifications Balance on December 31, 2013 Depreciation and impairments loss: Balance on January 1, 2014 Depreciation Disposals Balance on December 31, 2014 Balance on January 1, 2013 Depreciation Disposals Balance on December 31, 2013 Carrying amounts: Balance on December 31, 2014 Balance on December 31, 2013 Balance on January 1, 2013		Land 22,879 - - - 22,879 22,879 - - - 22,879 - - - - - - - - 22,879 22,879 22,879		Buildings and additional equipment 143,024 - (1,235) - 141,789 143,129 - (105) - 143,024 131,893 560 (1,235 ) 131,218 130,919 1,079 (105 ) 131,893 10,571 11,131 12,210	Machinery and equipment 44,716 6,786 (2,624) 1,018 49,896 38,844 4,707 (2,557) 3,722 44,716 30,472 5,776 (1,419 ) 34,829 27,157 5,872 (2,557 ) 30,472 15,067 14,244 11,687		Other equipment 48,567 2,722 (7,137) - 44,152 38,980 9,661 (150) 76 48,567 33,304 6,104 (7,137 ) 32,271 28,091 5,363 (150 ) 33,304 11,881 15,263 10,889		Testing equipment - 3,115 - (2,226 ) 889 63 7,319 - (7,382 ) - - - - - - - - - 889 - 63	Total
	$ $ $ $ $ $ $ $ $ $ $									259,186 12,623 (10,996) (1,208 ) 259,605 243,895 21,687 (2,812) (3,584 ) 259,186 195,669 12,440 (9,791 ) 198,318 186,167 12,314 (2,812 ) 195,669 61,287 63,517 57,728

The Company did not provide property, plant and equipment as collateral.

(h) Investment property

Cost or deemed cost: Balance on January 1, 2014 Additions Balance on December 31, 2014 Balance on January 1, 2013 Additions Balance on December 31, 2013 Depreciation and impairment losses: Balance on January 1, 2014 Depreciation Balance on December 31, 2014		Land 162,012 - 16,2012 162,012 - 16,2012 33,941 - 33,941		Buildings and other equipment 172,167 - 172,167 172,167 - 172,167 34,409 3,560 37,969		Total 334,179 - 334,179 334,179 - 334,179 68,350 3,560 71,910
	$ $ $ $ $ $

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Balance on January 1, 2013 Depreciation Balance on December 31, 2013 Carrying amounts: Balance on December 31, 2014 Balance on December 31, 2013 Balance on January 1, 2013 Fair value: Balance on December 31, 2014 Balance on December 31, 2013 Balance on January 1, 2013	$ $ $ $ $	Land 33,941 - 33,941 128,071 128,071 128,071		Buildings and other equipment 30,849 3,560 34,409 134,198 137,758 141,318 $ $ $		Total
						64,790 3,560
						68,350
						262,269
						265,829
						269,389
						561,338
						622,009
						589,104

The fair value of investment property is based on the market value.
Investment property comprises a number of commercial properties which are leased to third parties. Each of the leases contains an initial non-cancellable period between 1 and 2 years. Subsequent renewals are negotiated with the lessee, and no contingent rents are charged. Please refer to note 6(l) for further information.
The Company did not provide any of the aforementioned investment property as collateral.
(i) Intangible assets

The cost and amortization of the intangible assets of the Company for the years ended December 31, 2014 and 2013, were as follows:

Cost: Balance at January 1, 2014 Acquisition Balance at December 31, 2014 Balance at January 1, 2013 Acquisition Balance at December 31, 2013	Trademarks		Patents 64,271 - 64,271 64,271 - 64,271	Copyrights	Copyrights		Total
	$ 25,584 - $ 25,584 $ 25,584 - $ 25,584				30,832 - 30,832 30,832 - 30,832		120,687 - 120,687 120,687 - 120,687

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Amortization: Balance at January 1, 2014 Amortization Balance at December 31, 2014 Balance at January 1, 2013 Amortization Balance at December 31, 2013 Carrying amount: Balance at December 31, 2014 Balance at December 31, 2013 Balance at January 1, 2013	Trademarks		Patents 54,599 3,869 58,468 50,731 3,868 54,599 5,803 9,672 13,540	Copyrights 8,736 2,055 10,791 6,680 2,056 8,736 20,041 22,096 24,152	Total
	$ 10,873 2,558 $ 13,431 $ 8,315 2,558 $ 10,873 $ 12,153 $ 14,711 $ 17,269				74,208 8,482 82,690 65,726 8,482 74,208 37,997 46,479 54,961

The Company did not provide any of the aforementioned intangible assets as collateral.

(j) Short-term borrowings

The details were as follows:

Unsecured bank loans Unused credit lines Annual interest rates	December 31, 2014 $ 2,148,800 $ 4,469,600 0.80%~1.60%		December 31, 2013
	$ $	658,900 3,257,750 0.80%~1.23%

(k) Long-term borrowings

The details were as follows:

Unsecured bank loans Less: current portion Total Unused credit lines		December	31, 2014		Amount 1,500,000 (600,000 ) 900,000 1,789,600
	Currency TWD	Annual interest rate 1.05%~1.48%	Maturity year 2017
				$ $ $

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Unsecured bank loans Less: current portion Total Unused credit lines		December	31, 2013
	Currency -	Annual interest rate -	Maturity year		Amount
			-	$ $ $	- - - 3,508,700

Pursuant to the loan agreements with Industrial Bank of Taiwan, Land Bank, HSBC, ANZ, and CTBC Bank, the Company has to maintain the following financial ratios calculated based on the Company’s semi-annual audited (reviewed) consolidated financial statements. As of December 31, 2014, the Company had not violated the financial covenants. The financial covenants include (1) a current ratio of not less than 100%; (2) a financial debt ratio of not greater than 75%; (3) an interest coverage ratio of not less than 400%; and (4) stockholders’ equity of not less than $4,000,000. If the Company violates the financial covenants, the banks have the right to charge a default penalty or to require the Company to improve its financial ratios.
The details of the outstanding guarantee notes are disclosed in note 9.

(l) Operating lease

Lessee

Non-cancellable operating lease rentals are payable as follows:

Less than one year Between one and five years	December 31, 2014 $ 88,066 274,847 $ 362,913	December 31, 2013 88,066 362,913 450,979
	$ $

The Company leases a number of offices under operating leases. The lease terms are between 1 and 15 years.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

2. Lessor

The Company leases out its investment property under operating leases. Please refer to note 6(h) for further information. Non-cancellable operating leases are receivable as follows:

Less than one year Between one and five years	December 31, 2014 $ 5,584 - $ 5,584	December 31, 2013 11,917 4,524 16,441
	$ $

(m) Employee benefits

1. Defined benefit plans

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

Present value of defined benefit obligations Fair value of plan assets Deficit in the plan Recognized liabilities for defined benefit obligations	December 31, 2014 $ 162,598 104,919 57,679 $ 57,679	December 31, 2013 169,353 108,207 61,146 61,146
	$ $

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

(ii) Composition of plan assets

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

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

The movements in present value of the defined benefit obligations for the Company for the years ended December 31, 2014 and 2013, were as follows:

Defined benefit obligation at January 1 Benefits paid by plan assets Current service costs and interest Actuarial gains Defined benefit obligation at December 31	2014		2013
	$ 169,353 (8,695) 5,025 (3,085 ) $ 162,598		166,762 - 3,811 (1,220 ) 169,353

(iv) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Company for the years ended December 31, 2014 and 2013, were as follows:

Fair value of plan assets at January 1 Contributions made Benefits paid plan assets Expected return on plan assets Actuarial losses Fair value of plan assets at December 31	2014		2013
	$ 108,207 2,942 (8,695) 2,207 258 $ 104,919		100,341 6,555 - 1,291 20 108,207

(v) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company for the years ended December 31, 2014 and 2013, were as follows:

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Service cost Interest cost Expected rate of return on plan assets Expenses Actual return on plan assets	2014 $ 1,638 3,387 (2,207 ) $ 2,818 $ 2,465		2013
			1,629 2,182 (1,291 ) 2,520 1,311

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

The Company’s actuarial gains and losses recognized in other comprehensive income for the years ended December 31, 2014 and 2013, were as follows:

Cumulative amount at January 1 Recognized during the period Cumulative amount at December 31	December 31, 2014 $ 1,676 3,344 $ 5,020	December 31, 2013 436 1,240 1,676	December 31, 2013 436 1,240 1,676
	$ $		436 1,240 1,676

(vii) Actuarial assumptions

The following are the Company’s principal actuarial assumptions:

Discount rate at December 31 Expected rate of return on plan assets at January 1 Future salary increase rate	2014 2.125% 1.750% 3.250%	2013
		2.000% 2.000% 2.875%

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(viii) Experience adjustments based on historical information

Present value of defined benefit plans Fair value of plan assets Net liabilities of defined benefit obligations Experience adjustments arising on the present value of defined benefit plans Experience adjustments arising on the fair value of plan assets	December 31, 2014 $ 162,598 104,919 $ 57,679 $ 3,085 $ 258	December 31, 2013 169,353 108,207 61,146 (63,788 ) 69,559	December 31, 2012 166,762 100,341 66,421 (59,569 ) 57,248	January 1, 2012 163,447 97,057 66,390 - -

The expected contribution to be made by the Company to the defined benefit plans for the one-year period after the reporting date was $2,818.

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

2. Defined contribution plans

The Company recognized pension costs under the defined contribution method amounting to $36,465 and $34,303 for the years ended December 31, 2014 and 2013, respectively, recorded as operating expenses and operating cost in the statement of comprehensive income.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(n) Income taxes
The amounts of income tax expenses for 2014 and 2013 were as follows:

Current tax expense Deferred tax expense (benefit) Income tax expense		2014 50,513 38,131 88,644		2013 191,107 (364 ) 190,743
	$ $

The Company had no income tax recognized directly in equity or other comprehensive income for the years ended December 31, 2014 and 2013.
Reconciliation of income tax expenses and profit before tax for 2014 and 2013 was as follows:

Profit before tax Income tax using the Company’s domestic tax rate Overseas investment losses (gains) recognized under the equity method Investment tax credits accrued Prior year’s income tax adjustment 10% surtax on unappropriated earnings Other			2014 1,633,334 277,667 (119,243) (42,794) (599) 29,548 (55,935 ) 88,644			2013 859,291 146,079 4,594 (58,836) 48,601 43,716 6,589 190,743
	$ $

Deferred tax assets and liabilities
(i) Unrecognized deferred tax liabilities

Aggregate amount of temporary differences related to investments in subsidiaries		December 31, 2014 388,595	(Continued) December 31, 2013 223,617
	$

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(ii) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:

Deductible temporary differences		December 31, 2014 76,900	December 31, 2013 84,100
	$

The deductible temporary differences cannot be realized. Therefore, they were not recognized as deferred tax assets.

(iii)Recognized deferred tax assets and liabilities

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

			Investment
			income
			recognized	Unrealized
		under the equity		foreign
			method	exchange
			(overseas)	gains	Others			Total
Deferred tax liabilities:
Balance on January 1, 2014		$	47,102	3,418		1,061		51,581
Recognized in profit or loss			42,120	82		-		42,202
Balance on December 31, 2014		$	89,222	3,500		1,061		93,783
Balance on January 1, 2013		$	41,869	-		1,120		42,989
Recognized in profit or loss			5,233	3,418		(59 )		8,592
Balance on December 31, 2013		$	47,102	3,418		1,061		51,581
		Bad debt		Unrealized
		in excess	Unfunded	sales returns	Loss on
		of tax	pension fund	and	inventory
		limit	contribution	allowances	valuation	Others		Total
Deferred tax assets:
Balance on January 1, 2014	$	12,114	15,153	15,789	2,943	13,951		59,950
Recognized in profit or loss		(593 )	(278 )	14,188	1,439	(10,685 )		4,071
Balance on December 31, 2014	$	11,521	14,875	29,977	4,382		3,266	64,021
Balance on January 1, 2013	$	13,249	15,582	9,472	1,779	10,912		50,994
Recognized in profit or loss		(1,135 )	(429 )	6,317	1,164		3,039	8,956
Balance on December 31, 2013	$	12,114	15,153	15,789	2,943	13,951		59,950

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

The Company’s income tax returns have been examined by the tax authority through the years up to 2012. However, the Company disagreed with the examination of the income tax returns for 2008, 2009 and 2011, and requested a reexamination. The tax effect of the reexamination has been recognized by the Company.
Information related to the unappropriated earnings and tax deduction ratio is summarized below:

Unappropriated earnings in 1998 and after Balance of imputation credit account Creditable ratio for earnings distribution to ROC resident stockholders	December 31, 2014 $ 3,132,488 $ 385,069 2014 (estimated)	December 31, 2014 $ 3,132,488 $ 385,069 2014 (estimated)	December 31, 2013 $ 1,957,522 $ 190,418 2013 (actual) 16.96%	December 31, 2013 $ 1,957,522 $ 190,418 2013 (actual) 16.96%	December 31, 2013 $ 1,957,522 $ 190,418 2013 (actual) 16.96%
	$	12.29%			16.96%

The above information was prepared in accordance with information letter No. 10204562810 issued by the Ministry of Finance, ROC, on October 17, 2013.

(o) Capital and other equity

As of December 31, 2014 and 2013, the nominal common stock amounted to $5,000,000. Face value of each share is $10 (dollars), which means in total there were 500,000 thousand authorized common shares, of which 434,658 and 433,573 thousand shares, respectively, were issued. All issued shares were paid up upon issuance.

Reconciliation of shares outstanding for 2014 and 2013 was as follows:

(in thousands of shares) Balance on January 1 Exercise of employee stock options Issued for restricted stock Retirement of restricted stock Balance on December 31		Ordinary shares	Ordinary shares	Ordinary shares
		2014 433,573 1,050 355 (320 ) 434,658		2013 426,970 4,967 1,636 - 433,573

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Common stock
(i) The Company issued 1,050 thousand and 4,967 thousand new shares of common stock for the exercise of employee stock options in 2014 and 2013, respectively. The related registration procedures were also completed.
(ii) Employee stock options were exercised without registration procedures, and the exercised amounts were recorded as capital collected in advance. The exercise price and units as of December 31, 2014 and 2013, were as follows:

December 31,2014	December 31,2014	December 31,2014
Exercised shares (in thousands) Exercise price 2,151 $ 24,563 275 4,922 340 9,418 2,766 $ 38,903 December 31,2013	Exercise price
Exercised shares (in thousands) 173 100 273	Exercise price
	$ $	1,976 1,820 3,796

Capital surplus

The balances of capital surplus as of December 31, 2014 and 2013, were as follows:

Additional paid-in capital Employee stock options Restricted employee stock options	December 31, 2014 $ 392,739 256,985 23,819 $ 673,543	December 31, 2013	December 31, 2013
			379,002 248,367 21,378 648,747

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

3. Retained earnings

(i) Legal reserve

(ii) Special reserve

By choosing to apply exemptions granted under IFRS 1 “First-time Adoption of International Financial Reporting Standards” during the Company’s first-time adoption of the International Financial Reporting Standards endorsed by the FSC, retained earnings increased by $97,300 by recognizing the cumulative translation adjustments (gains) on the adoption date as deemed cost. In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, the increase in retained earnings due to the first-time adoption of IFRSs shall be reclassified as special reserve, and when the relevant asset is used, disposed of, or reclassified, this special reserve shall be reversed as distributable earnings proportionately. The carrying amount of special reserve amounted to $97,300 on December 31, 2014.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(iii) Earnings distribution

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Employee bonuses Stock Cash Directors’and supervisors’ remuneration Employee bonuses Stock Cash Directors’and supervisors’ remuneration	2013 Actual earnings distributed Accrued in the financial statements Difference $ - - - 32,000 31,966 (34) 12,000 12,787 787 2012 Actual earnings distributed Accrued in the financial statements Difference $ - - - 54,000 56,421 2,421 21,000 22,587 1,587

(p) Share-based payment
Employee stock options and share-based payment
- (i) On December 28, 2007, the Company merged with Primax and assumed the outstanding employee stock options of Primax. Based on the swap ratio approved by Primax Holdings’ board of directors, Primax Holdings issued 1,795,879 units of employee stock options in exchange for all of the employee stock options issued by Primax. According to the option plan, each unit could be converted into 1 common share of Primax Holdings. The primary terms and conditions of the employee stock options were as follows:

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

A. Exercise period:

Period following the grant of options Exercisable percentage (cumulative)

2 years 50% 3 years 100%

B. Procedure for fulfilling obligation: Primax Holdings fulfills its obligation by issuing new common stock.
(ii) Based on the resolution approved in the board of directors’ meeting of Primax Holdings held on December 31, 2007, Primax Holdings declared an incentive plan to grant the right to some employees of the Company to participate in the subscription of the non-voting ordinary shares of Primax Holdings. The transaction is a kind of equity-settled share-based payment agreement, and the equity instruments under this agreement were vested at the date of grant. Primax Holdings recognized the compensation cost by using the fair value method. The difference in value between the net value per share of Primax Holdings determined at the grant date and the exercise price per share was recognized as cost of long-term investment in the Company by Primax Holdings in 2007, and was recognized as compensation cost and capital surplus by the Company. Based on the resolution approved in the board of directors’ meeting of Primax Holdings held in April 2008, Primax Holdings amended the share-based payment agreement mentioned above, and consequently, the non-voting ordinary shares were replaced by options to purchase them. The amendment had no impact on the accompanying financial statements.
(iii) In addition, Primax Holdings declared an incentive plan to grant stock options to employees of the Company in January, May and November 2008 to participate in the subscription of the non-voting ordinary shares of Primax Holdings. Some of the options are vested at the grant date; the others are vested from two years to five years after the grant date. Primax Holdings recognized the compensation cost by using the fair value method as cost of long-term investment in the Company, and the Company correspondingly recognized it as compensation cost and capital surplus.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(iv) Based on the resolution approved in the board of directors’ meetings of Primax Holdings and the Company held in December 2008, the Company issued employee stock options in exchange for part of the unvested or unexercised employee stock options issued by Primax Holdings. Specifically, 2.94 units of employee stock options were issued by the Company in exchange for 1 unit of the employee stock options issued by Primax Holdings. Each unit of the Company’s options could be converted into 1 common share of the Company. The exercise price of Primax Holdings’ options is USD0.2 per unit; the exercise price of the Company’s options is NT$11.42 (dollars) per unit after the modification. Meanwhile, the Company granted a certain amount of retention bonus to employees at the modification date, and the Company shall pay the retention bonus when the Company’s stock options are exercised. The other terms and conditions of the employee stock options are not changed. According to the modification, the Company decreased the capital surplus by $118,089, and recognized a corresponding increase in retention bonus payable (recorded as accrued expense and other liabilities) on December 30, 2008. The incremental fair value of $55,308 resulting from the modification will be recognized as compensation cost over the remainder of the vesting period.
(v) In accordance with the revised employee stock option plan mentioned above, the Company issued 9,545,248 units of employee stock options in November 2009. Each unit could be converted into 1 common share of the Company.
(vi) In September 2011, the Company’s board of directors resolved to issue employee stock options (Plan 3). The plan was approved by the SFB in October 2011, and the maximum number of options authorized to be granted was 5,000 units with each unit eligible to be converted into 1,000 common shares of the Company when exercised. The options may be granted to qualified employees of the Company or any of its domestic or foreign subsidiaries in which the Company owns, directly or indirectly, more than fifty percent (50%) of the subsidiary’s voting rights. The Company actually issued 1,500 units and 3,500 units in November 2011 and October 2012, respectively, which were evaluated at fair value. In accordance with the employee stock option plan mentioned above, the Company recognized the investment and capital surplus amounting to $265 and $190 in 2014 and 2013, respectively.

As of December 31, 2014, outstanding employee stock options of the Company for equity-settled share-based payment were as follows:

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Modification and grant date Exercise price Granted units (thousand) Service period (from the grant date of the original stock options) Vesting period (from the grant date of the original stock options)	Plan 1 (note 1)	Plan 2 (note 2) December 30, 2008 $11.42 7,224 6~8 years (January 2, 2008~November11, 2017) 3~5 years	Plan 3 (note 3)	Plan 3 (note 3)
			Issued in November 2011 November 24, 2011 $17.90 1,500 5 years (November 24, 2011~November 23, 2016) 2~3 years	Issued in October 2012
	December 30, 2008 $11.42 30,828 5 years (May 23, 2005~ November 11, 2014) 2~3 years			October 22, 2012 $27.70 3,500 5 years (October 22, 2012~ October 21, 2017) 2~3 years

Note 2: Stock options under Plan 2 included those granted by Primax Holdings in January and May 2008, and those granted by the Company in November 2009.

Note 3: Stock options under Plan 3 included those granted by the Company in November 2011 and October 2012.

(vii) The information on the outstanding employee stock options of Primax Holdings using the Black-Scholes option pricing model to measure the fair value at the grant date was as follows:

Excise price of Primax Holdings’stock options (USD) Expected time until expiration (years) Stock price per share of Primax Holdings (USD) Expected volatility of stock price Expected cash dividend rate Risk-free interest rate	Plan 1 0.20 2.37~5 0.91677~1 34.78%~44.59% - 2.439%~2.665%	Plan 2
		0.20 6~8 0.91677~0.92827 38.98%~48.44% - 2.509%~2.538%

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Period of stock options	Plan 1	Plan 2	Plan 3
			Issued in November 2011 $18.2 5 $26.02 29.12% 6% 1.81%	Issued in October 2012
Excise price of stock options (NT dollars) Expected time until expiration (years) Stock price per share (NT dollars) Expected volatility of stock price Expected cash dividend rate Risk-free interest rate	$11.42 5 $16.50 45.18% - 2.26%	$11.42 8 $16.50 45.18% - 2.26%		$28.25 5 $28.25 32.38%~34.61% 3.77% 1.425%

Granted units of options Granted units of options		Plan 1	Plan 1
		Before the modification After the modification Primax Holdings the Company 7,365 21,654 Plan 2	After the modification
		Before the modification Primax Holdings 2,331	After the modification
			the Company 6,853

The information on the stock options using the Black-Scholes option pricing model to measure the incremental fair value at the modification date was as follows:

Excise price Expected time until expiration (years) Stock price per share Expected volatility of stock price Expected dividend rate Risk-free interest rate		Plan 1	Plan 1
		Before the modification USD0.20 0.39~3.89 USD1.12 33.56%~45.36% - 1.005%~1.5%	After the modification
			NT$11.42 (dollars) 0.39~3.89 NT$11.42 (dollars) 33.56%~45.36% - 1.005%~1.5%

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Excise price Expected time until expiration (years) Stock price per share Expected volatility of stock price Expected dividend rate Risk-free interest rate		Plan 2	Plan 2
		Before the modification USD0.20 3.51~5.85 USD1.12 39.30%~45.36% - 1.50%~1.95%	After the modification
			NT$11.42 (dollars) 3.51~5.85 NT$11.42 (dollars) 39.30%~45.36% - 1.50%~1.95%

(ix) The related information on compensatory employee stock option plans was as follows:

Outstanding at January 1 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at December 31 Exercisable at December 31		2014	2014	2014		2013	2013	2013
		Weighted- average exercise price 18.74 - 16.40 13.72 25.47 22.66 19.57	Stock options (in thousands)			Weighted- average exercise price 16.98 - 11.42 11.63 22.38 18.74 11.94	Stock options (in thousands)
				7,552 - (65) (3,543) (220 ) 3,724 2,308				12,414 - (420) (3,244) (1,198 ) 7,552 3,939

As of December 31, 2014 and 2013, the information on the employee stock option plans outstanding was as follows:

Employee stock option plan 1 Employee stock option plan 2 Employee stock option plan 3 –Issued in November 2011 Employee stock option plan 3 –Issued in October 2012 Outstanding at end of year Weighted-average expected time remaining until expiration (year)	December 31, 2014 - 1,032 200 2,492 3,724 2.37	December 31, 2013	December 31, 2013
			1,485 2,365 700 3,002 7,552 2.62

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

2. Restricted stock

(i) After the stockholders’ meeting on June 25, 2013, the Company decide to issue 2,000 thousand shares of restricted stock to those full-time employees who meet the Company’s requirements. The restricted stock has been registered with and approved by the Securities and Futures Bureau of the FSC.
(ii) The board of directors’ meeting resolved to issue 1,450 thousand shares, 186 thousand shares, 135 thousand shares, and 220 thousand shares on August 13 and November 12, 2013, and January 22 and June 27, 2014, respectively.

(iii) As of December 31, 2014, the outstanding restricted stock of the Company was as follows:

Grant date	October 1, 2013	November 20, 2013	February 10, 2014	July 17, 2014
Fair value on grant date (per share)	22.8	25.15	27.30	52.00
Exercise price	Free grants	Free grants	Free grants	Free grants
Granted units (thousand shares)	1,450	186	135	220
Vesting period	1~3 years	1~2 years	1~2 years	1~2 years
	(notes 1 and 2)	(notes 2 and 3)	(notes 2 and 3)	(note 2)

Note 1: If the employees continue to provide service to the Company and meet the prior year’ performance indicator, 30% of the restricted stock shall be vested in year 1 after the grant date, and the remaining 30% and 40% shall be vested in year 2 and year 3, respectively, after the grant date.
Note 2: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, 50% of the restricted stock shall be vested in year 1 after the grant date, and the remaining 50% shall be vested in year 2 after the grant date.
Note 3: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, the restricted stock shall be vested in year 1 after the grant date.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(iv) The related information on restricted stock of the Company for 2014 and 2013 was as follows:

Outstanding at January 1 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at December 31		2014 1,636 355 - (361) (320 ) 1,310		2013
				- 1,636 - - - 1,636

Expenses and liabilities attributable to share-based payment for 2014 and 2013 were as follows:

Expenses attributable to employee stock options Restricted stock Total Salary payable: Current		2014 8,523 21,751 30,274 9,476		2013
	$ $ $			9,903 5,418 15,321 35,017

(q) Earnings per share
Basic earnings per share

The calculation of basic earnings per share at December 31, 2014 and 2013, based on the net income and the weighted-average number of common shares outstanding was as follows:

Net income Weighted-average number of common shares (thousand shares) Basic earnings per share (NT dollars)		2014 1,544,690 432,362 3.57		2013
	$ $			668,548 430,269 1.55

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Weighted-average number of common shares (thousand shares)

Ordinary shares at January 1 Exercise of employee stock options Exercise of restricted stock Ordinary shares at December 31		2014 431,937 353 72 432,362		2013
	$ $			426,970 3,299 - 430,269

2. Diluted earnings per share

The calculation of diluted earnings per share at December 31, 2014 and 2013, based on the net income and the weighted-average number of common shares outstanding after adjustment for the effects of all dilutive potential common shares was as follows:

Net income Weighted-average number of common shares (diluted / thousand shares) Diluted earnings per share (NT dollars) Weighted-average number of ordinary shares at December 31 (basic) Effect of employee stock options Effect of employee stock bonuses Effect of restricted stock Weighted-average number of ordinary shares at December 31 (diluted)		2014 1,544,690 438,990 3.52 2014 432,362 3,621 2,199 808 438,990		2013 668,548 436,038 1.53 2013 430,269 3,447 2,234 88 436,038
	$ $

(r) Operating revenue

The operating revenue in the years ended December 31, 2014 and 2013, was as follows:

Goods sold Services rendered	$ $	2014 41,177,774 1,178,611 42,356,385		2013
				36,273,146 984,788 37,257,934

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(s) Other income

The other income in the years ended December 31, 2014 and 2013, was as follows:

Interest revenue of cash in banks Rent revenue Cash dividends		2014 17,500 9,704 263 27,467		2013
	$ $			2,736 9,268 210 12,214

(t) Other gains and losses

The other gains and losses in the years ended December 31, 2014 and 2013, were as follows:

Net losses on financial assets/liabilities measured at fair value through profit or loss Net gains on foreign currency Impairment loss on available-for-sale financial assets Gain on disposal of financial assets Other		2014 (1,737) 70,102 (3,500) 4,134 51,398 120,397		2013
	$ $			(1,310) 62,495 - - 57,226 118,411

(u) Finance costs

The finance costs in the years ended December 31, 2014 and 2013, were as follows:

Interest expense Expense of prematurely terminated contract for derivative financial instruments Finance costs		2014 60,684 156,389 - 217,073		2013 16,538 - 2,264 18,802
	$ $

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(v) Financial instruments

1. Credit risk

The aging analysis of accounts and other receivables (including related parties) that were past due but not impaired was as follows:

Past due 0-30 days Past due 31-90 days Past due 91-180 days Past due 181-365 days Past due over a year		December 31, 2014 635,451 154,618 3,108 - - 793,177	December 31, 2013 297,306 62,181 - - - 359,487	December 31, 2013 297,306 62,181 - - - 359,487
	$ $
				359,487

The Company assesses the uncollectible amount of accounts and other receivables (including related parties) based on aging analysis, the collection history, and the customers’ current financial status, and recognizes an allowance for doubtful debts accordingly. After the Company’s assessment, there is no significant change in the customers’ credit quality, and the related receivables will still be collectible.

The changes in the allowance for 2014 and 2013 were as follows:

Balance on January 1, 2014 Impairment loss recognized Amounts written off Exchange differences on translation of foreign currency Balance on December 31, 2014	Individually assessed impairment $ - - - - $ -		Collectively assessed impairment		Total
	$ $		17,796 625 - 1,009 19,430		17,796 625 - 1,009 19,430

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Balance on January 1, 2013 Amounts written off Exchange differences on translation of foreign currency Balance on December 31, 2013	Individually assessed impairment $ 15,380 (19,412) 4,032 $ -		Collectively assessed impairment		Total
	$ $		18,045 - (249 ) 17,796		33,425 (19,412) 3,783 17,796

2. Liquidity risk

The following table shows the contractual maturities of financial liabilities:

	Contractual cash flows	Over 5 years - - - - - 128,204 - - - 128,204 - - - - 85,429 - - - 85,429
$ $ $ $	2,148,800 7,493 8,026,918 596,881 1,528,286 128,204 - 1,212,301 (1,189,105 ) 12,459,778 658,900 1,438 6,053,996 427,118 85,429 - 2,879,992 (2,888,449 ) 7,218,424
		128,204
		- - - - 85,429 - - -
		85,429

The Company does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

3. Currency risk

(i) Exposure to foreign currency risk

The Company’s significant exposure to foreign currency risk was as follows:

Financial assets Monetary items USD:TWD Non-monetary items USD:TWD Financial liabilities Monetary items USD:TWD Non-monetary items USD:TWD		December 31, 2014	December 31, 2014	TWD 11,663,048 1,450,756 10,627,314 1,367,016		December 31, 2013 Foreign currency Exchange rate TWD 276,066 29.95 8,268,172 154,580 29.95 4,629,671 237,179 29.95 7,103,540 83,580 29.95 2,503,221	December 31, 2013 Foreign currency Exchange rate TWD 276,066 29.95 8,268,172 154,580 29.95 4,629,671 237,179 29.95 7,103,540 83,580 29.95 2,503,221
		Foreign currency 369,084 45,910 336,307 43,260	Exchange rate 31.6 31.6 31.6 31.6			Foreign currency 276,066 154,580 237,179 83,580	Exchange rate 29.95 29.95 29.95 29.95

(ii) Sensitivity analysis

The Company’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, trade and other receivables, loans and borrowings, and notes and accounts payable and other payables that are denominated in foreign currency.

A weakening (strengthening) of 5% of the TWD against the USD as of December 31, 2014 and 2013, would have increased or decreased the net profit after tax by $35,967 and $136,580, respectively. The analysis is performed on the same basis for both periods.

4. Interest rate analysis

Please refer to note 6(w) for the exposure of financial assets and liabilities to changes in interest rate.

5. Fair value

(i) Fair value and carrying amount

The management of the Company believes that the carrying amounts of the financial assets and liabilities in the financial statements to be a reasonable approximation of fair value.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

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

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

A. The fair value of derivative instruments is based on quoted prices. When quoted prices are unavailable, the fair value is estimated on the basis of the contract’s spot exchange rate and swap point.
B. Available-for-sale financial assets – non-current held by the Company are investments in unlisted stock in domestic and foreign markets. The fair value is determined under the market-price method.
(iii)Fair value hierarchy

The table below analyzes financial instruments carried at fair value by the levels in the fair value hierarchy. The different levels have been defined as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

December 31, 2014 Financial assets at fair value through profit or loss–current Available-for-sale financial assets Financial liabilities at fair value through profit or loss–current December 31, 2013 Financial assets at fair value through profit or loss–current Available-for-sale financial assets Financial liabilities at fair value through profit or loss–current		Level 1 - - - - - - - - - -		Level 2 - - - - - - - - - -		Level 3 21,165 275,536 296,701 (22,902 ) 273,799 34,014 33,918 67,932 (35,324 ) 32,608		Total 21,165 275,536 296,701 (22,902 ) 273,799 34,014 33,918 67,932 (35,324)
	$ $ $ $
								32,608

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

Balance on January 1 Recognized in profit or loss Acquisition / disposal / pay- off Balance on December 31			2014		Total 32,608 (1,103) 242,294 273,799			2013		Total 34,268 (1,310) (350 ) 32,608
	Fair value through profit or loss $ (1,310) (1,737) 1,310 $ (1,737 )		Available for sale			Fair value through profit or loss 350 (1,310) (350 ) (1,310 )		Available for sale
	$ $		33,918 634 240,984 275,536					33,918 - - 33,918

There were no transfers from one level to another in the years ended December 31, 2014 and 2013.

(w) Financial risk management

1. Briefings

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

(i) Credit risk
(ii) Liquidity risk

(iii)Market risk

2. Structure of risk management

The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

The board of directors oversees how the management complies in monitoring the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The board of directors is assisted in its oversight role by an internal auditor. The internal auditor undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the board of directors.

3. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or a counterparty to a financial instrument fails to meet its contractual obligations, which arises principally from the Company’s cash and cash equivalents; accounts and other receivables (including related parties); and derivative instruments.

(i) Cash and cash equivalents

The Company deposited $2,814,705 (including restricted deposits) in Industrial Bank of Taiwan and 5 other financial institutions, and $1,212,429 (including restricted deposits) in HSBC and 6 other financial institutions, representing 12% and 8% of total assets as of December 31, 2014 and 2013, respectively. The Company believes that there is no significant credit risk from the above-mentioned financial institutions.

(ii) Accounts receivable

Sales to individual customers (including related parties) constituting over 10% of total revenue for the years ended December 31, 2014 and 2013, totaled 21% and 19%, respectively. As of December 31, 2014 and 2013, 16% of the ending balance of accounts – receivable (including accounts receivable related parties) was accounted for by those customers. In order to reduce credit risk, the Company assesses the financial status of the customers and the possibility of collection of receivables on a regular basis. The above-mentioned customers are profitable and have a good credit record, and the Company did not suffer any significant credit loss from those customers during the financial reporting period.

(iii)Derivative instruments

The Company entered into derivative instrument contracts with reputable and creditworthy financial institutions. The Company believes that the risk that these financial institutions may default on these contracts is relatively low and anticipates no significant credit loss.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

4. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company manages sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Company had unused short-term bank facilities of $6,259,200 and $6,766,450 as of December 31, 2014 and 2013, respectively.

5. Market risk

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

(i) Currency risk

The Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies. These transactions are denominated in USD.

The Company uses forward exchange contracts and foreign exchange swap contracts to hedge its currency risk. The Company makes performance reports and reviews operating strategy regularly, and believes that there is no significant risk because the gains or losses from exchange rate fluctuation will mostly be offset by the hedged item.

(ii) Interest rate risk

The Company’s main assets and liabilities with a floating-interest-rate basis are deposits and short-term borrowings. The Company believes that cash flow risk arising from interest rate fluctuation is insignificant.

(x) Capital management

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

The Company sets its objectives for managing capital to safeguard the capacity to continue to operate, to continue to provide a return to stockholders, to safeguard the interest of other related parties, and to maintain an optimal capital structure to reduce the cost of capital.

The Company’s debt ratio as of December 31, 2014 and 2013, was 59% and 52%, respectively.

(7) Related-party Transactions

(a) The Company and its subsidiaries

Name of investor	Name of subsidiary Primax Industries (Cayman Holding) Ltd. (Primax Cayman) Primax Technology (Cayman Holding) Ltd. (Primax Tech.) Destiny Technology Holding Co., Ltd. (Destiny BVI) Primax Destiny Co., Ltd. (Destiny Japan) Primax Electronics Korea Co., Ltd. (Primax Korea) Diamond (Cayman) Holdings Ltd. (Diamond) Primax Industries (Hong Kong) Ltd. (Primax HK) Tymphany Worldwide Enterprises Ltd. (TWEL)	Location	Percentage of shareholding December 31, 2014 December 31, 2013 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% - 100.00% 100.00% 70.00% -	Percentage of shareholding December 31, 2014 December 31, 2013 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% - 100.00% 100.00% 70.00% -	Description Primax Korea was incorporated in July 2013 Diamond was incorporated in January 2014 (note)
			December 31, 2014 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 70.00%
The Company The Company The Company The Company The Company The Company Primax Cayman Diamond		Cayman Islands	100.00%

		Cayman Islands

		British Virgin Islands

		Japan

		Korea

		Cayman Islands

		Hong Kong

		Cayman Islands

Primax HK and	Dongguan Primax Electronic	China	100.00%	100.00%
Primax Tech.	& Telecommunication
	Products Ltd. (PCH2)
Primax HK	Primax Electronics (KS)	China	100.00%	100.00%
	Corp., Ltd. (PKS1)
Primax HK	Primax Electronics	China	100.00%	100.00%
	(Chongqing) Corp., Ltd.
	(PCQ1)
Primax Tech.	Polaris Electronics Inc.	United States	100.00%	100.00%
	(Polaris)
Destiny BVI TWEL TWEL TYM HK TYM HK	Destiny Electronic Corp. (Destiny Beijing) Tymphany HK Ltd. (TYM HK) TYP Enterprises, Inc. (TYP) Huizhou Ultrasound Audio Corp. (Huizhou Ultrasound) Tymphany Australia Pty Ltd. (TYM Australia)	China	100.00% 100.00% 100.00% 100.00% 100.00%	100.00% - - - -	(note) (note) (note) (note)

		Hong Kong

		United States
		China

		Australia

Note: TWEL was incorporated in October 2013, acquiring all shares of TYM HK by issuing new common stock. The Company acquired 70% of the shares of TWEL by cash through its Diamond subsidiary on January 10, 2014. Therefore, the Company indirectly acquired all shares of TWEL’s subsidiaries.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(b) Parent company and ultimate controlling company

The Company is the ultimate controlling party of the Company and its subsidiaries.

1. Sales

The amounts of significant sales by the Company to related parties and the outstanding balances were as follows:

Subsidiaries		Sales	2013 2,971,908	Accounts receivable December 31, 2014 December 31, 2013 1,102,500 288,959	Accounts receivable December 31, 2014 December 31, 2013 1,102,500 288,959	Accounts receivable December 31, 2014 December 31, 2013 1,102,500 288,959
		2014 4,552,898				December 31, 2013
	$					288,959

The sales prices for related parties and other customers were not significantly different. The credit terms for other customers are within 90 days, but they can be lengthened for related parties.

The Company’s sales of products to subsidiaries’ customers on behalf of its subsidiaries amounted to $2,203,836 and $2,132,856 for the years ended December 31, 2014 and 2013, respectively. Related sales and purchase were eliminated and recorded on a net basis.

2. Purchases

The amounts of significant purchases by the Company from related parties and the outstanding balances were as follows:

Subsidiaries		Purchases	Purchases		Accounts related	payable– party December 31, 2013	payable– party December 31, 2013
		2014 38,664,339	2013 34,068,376		December 31, 2014 8,026,918
	$						6,053,996

The prices of purchases were determined based on the cost plus a reasonable profit margin. The payment terms of related parties and other vendors are 60 days and 45 to 90 days, respectively.

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

3. Purchase of service

The amounts of purchase of service by the Company from related parties and the outstanding balances were as follows:

Subsidiaries		Purchase of service	Purchase of service		Other payables December 31, 2014 December 31, 2013 6,505 4,225	Other payables December 31, 2014 December 31, 2013 6,505 4,225	Other payables December 31, 2014 December 31, 2013 6,505 4,225
		2014 67,377	2013 42,104		December 31, 2014 6,505
	$						4,225

4. Guarantees and endorsements

The amounts of guarantee the Company provided to related parties were as follows:

Purchasing of raw materials Bank loans Key management personnel compensation Short-term employee benefits Post-employment benefits Termination benefits Other long-term benefits Share-based payments		December 31, 2014 51,192 1,106,000 1,157,192 2014 63,291 755 - - 7,690 71,736		December 31, 2013	December 31, 2013
	$ $ $ $				82,962 - 82,962 2013
					67,889 1,058 - - 1,937
					70,884

(d) Key management personnel compensation

For information related to share-based payments, please refer to note 6(p).

(8) Pledged Assets: None

(Continued)

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PRIMAX ELECTRONICS, LTD.

Notes to Financial Statements

(9) Commitments and Contingencies

(a) Please refer to notes 7 for guarantees and endorsements provided to related parties.
(b) Guarantee notes provided as part of agreements with banks to sell its accounts receivable and long-term borrowings were as follows; please refer to note 6(d) for related information.

Sales of accounts receivable Long-term borrowings		December 31, 2014 2,891,000 5,404,000	December 31, 2013 4,520,850 3,279,000	December 31, 2013 4,520,850 3,279,000
	$ $
				3,279,000

(10) Loss Due to Major Disasters: None

(11) Subsequent Events

The Company holds only 30% of Global TEK’s shares. However, the Company has controlling power over its related activities by acquiring more than 50% of the board of director’s voting rights based on the resolution of its interim meeting of stockholders held on February 13, 2015. The Company will include the Global TEK in consolidated financial statements from the same date in accordance with IFRS 10.

As of March 24, 2015, the purchase price allocation was still in progress. The Company engaged experts to evaluate the fair value of identifiable net assets. Please refer to the Company’s consolidated financial statements for the years ended December 31, 2014 and 2013, for detailed information.

(Continued)

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PRIMAX ELECTRONICS, LTD. AND SUBSIDIARIES

Notes to Financial statements

(12) Others

The following is the summary statement of current-period employee benefit, depreciation, and amortization expenses by function:

By function Byitem		2014			2013
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefit expenses Salaries Labor and health insurance Pension Others Depreciation Amortization	113,803 4,935 3,100 3,658 10 -	1,106,082 59,249 36,183 44,276 12,430 25,404	1,219,885 64,184 39,283 47,934 12,440 25,404	41,392 2,776 1,786 2,127 10 -	879,781 55,169 35,037 42,431 12,304 31,964	921,173 57,945 36,823 44,558 12,314 31,964

The average number of the Company’s employees for the years ended December 31, 2014 and 2013, was 701 and 662, respectively.

(13) Segment Information

Please refer to the Company’s consolidated financial statements for the years ended December 31, 2014 and 2013, for details.

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vi.Any insolvency of the company and its affiliates in the most recent period to the date this report was printed, and the impact on the financial position of the company: None.

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VII. Review of Financial Conditions, Financial

Performance, and Risk Management

i.Analysis of Financial Status

Currency unit: NTD thousand

			Currency unit: NTD thousand	Currency unit: NTD thousand
Year Title	FY2014	FY2013	Change
			Amount	%
Current assets	23,078,336	17,385,420	5,692,916	32.75
Investment	-	-	-	-
Fixed assets	3,935,145	3,389,048	546,097	16.11
Intangible assets	2,916,644	46,479	2,870,165	6175.19
Other assets	1,093,648	769,975	323,673	42.04
Total assets	31,023,773	21,590,922	9,432,851	43.69
Current liabilities	19,254,757	13,828,775	5,425,982	39.24
Long-term liabilities	1,460,269	220,580	1,239,689	562.01
Total liabilities	20,715,026	14,049,355	6,665,671	47.44
Capital stock	4,385,481	4,339,529	45,952	1.06
Capital surplus	673,543	648,747	24,796	3.82
Retained earnings	3,686,641	2,485,712	1,200,929	48.31
Other equity	404,848	67,579	337,269	499.07
Uncontrolled equity	1,158,234	-	1,158,234	-
Total shareholders’ equity	10,308,747	7,541,567	2,767,180	36.69
Note to significant changes: (I) Increase of current assets from previous period: the increase in cash, note and account receivables, and inventory. (II) Increase of intangible assets from previous period: TWEL and its subsidiaries have their reputation in speakers and sound system market, profitability, employee value, and customer relation contributed to the change. (III) Increase of other assets from the previous period: the acquisition of shares from an unlisted acquiree -Global Tek with an increase of financial assets available for sales - non-current. (IV) Increase of total assets from the previous period: the acquisition of TWEL that resulted in all assets. (V) Increase of current liabilities from the previous period: the acquisition of TWEL equity and NIEN MADE ENTERPRISE CO.,LTD., and the cash flow needs. (VI) Increase of long-term liabilities from the previous period: capital needs for the acquisition of TWEL equity. (VII) Increase of total liabilities from the previous period: the increase of loans from financial institutions, note and account payables. (VIII) Increase of retained earnings from the previous period: the good profit position and high earnings of the acquirees. (IX) Increase of other equity from the previous period: the result of foreign exchange adjustment. (X) Increase of uncontrolled equity: the acquisition of TWEL equity and uncontrolled equity through merger. (XI) Increase of total shareholders’ equity from the previous period: the good profit position and high earnings of the acquirees, and the acquisitions of additional uncontrolled equity through merger. In sum, the operation performance of the company in current fiscal year is better than the previous period with growth of operating incomes and return on investments. The stable injection of cash flow contributed to the increase of shareholders’ equity, to the extent that the company can maintain healthyfinancial structure.

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ii.Analysis of Financial Performance

Financial analysis of the last 2 years

alysis of Financial Performance 1. Financial analysis of the last 2 years	alysis of Financial Performance 1. Financial analysis of the last 2 years	alysis of Financial Performance 1. Financial analysis of the last 2 years	alysis of Financial Performance 1. Financial analysis of the last 2 years	alysis of Financial Performance 1. Financial analysis of the last 2 years
Currency unit: NTD thousand
Year Title	FY2014	FY2013	Change in amount	(%)
Net sales	52,239,777	42,319,988	9,919,789	23.44
Operating costs	46,020,978	38,567,293	7,453,685	19.33
Gross profit	6,218,799	3,752,695	2,466,104	65.72
Operating expense	4,389,057	3,058,251	1,330,806	43.52
Operating income	1,829,742	694,444	1,135,298	163.48
Non-operating income and expense	217,839	216,308	1,531	0.71
Continuing operations income before tax	2,047,581	910,752	1,136,829	124.82
Income tax expense (benefit)	438,614	242,198	196,416	81.10
Continuing operations income after tax	1,608,967	668,554	940,413	140.66
Notes to significant change (change in two period by more than 20% and the amount change exceeds NTD 10 million): 1. Increase of net sales from the previous period: further to the growth of revenues of all other divisions, the acquisition of Tymphany brought about revenue growth. 2. Increase of gross profit from the previous period: further to the growth of revenues of all other divisions, the acquisition of Tymphany brought about gross profit growth. 3. Increase of operating expense from the previous period: due to the recognition of operating expense incurred from Tymphany. 4. Increase of operating income from the previous period: due to the significant increase of gross profit from the previous period. 5. Increase of Continuing operations income before tax from the previous period: the rise in gross margin that brought about an increase of operating incomes. 6. Increase of income tax expense from the previous period: due to the increase of pre-tax earnings of the continued operations. 7. Increase of Continuing operations income after tax from the previous period: due to the increase of pre-tax earnings of the continued operations in currentperiod.

The projection of sale volume and value in the year ahead and the basis of projection, and possible influence on the financial position and operation of the company, and the plan in response to the change.

The company projects its sales volume and value on the basis of the industry environment and the supply and demand of the market in the future, and takes business development and the status of purchase orders on hand, production capacity planning of the production bases into consideration. It is expected that the sale of premium items in FY2015 will be level or marginal growth in computer peripherals and stable growth for non-computer peripherals. At present, the company has sound financial structure and good standing in operation. The equity capital of the company and net cash flow from operations are sufficient to satisfy the needs of working capital and capital expenditures driven by revenue growth.

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iii.Cash Flows

Cash Flow Analysis for the Current Year (2014)

Currency unit: NTD thousand

Cash and Cash Equivalents, Beginning of Year	Net Cash Flow from Operating Activities	Cash Outflow	Cash Surplus (Deficit)	Leverage of Cash Deficit	Leverage of Cash Deficit
				Investment plan	Financing plan
4,786,865	3,354,195	2,027,158	6,814,023	－	－
Analysis of the change in cash flow in the recent period: (1) From operation: Net cash inflow from operation amounted to NT$3,354,195 thousand due to the increase of profit, note and account payable. (2) From investment: Net cash outflow from investment amounted to NT$3,756,779 thousand due to the acquisition of TWEL equity and increase in the purchase of property, plant, and equipment. (3) From financing: Net cash inflow from financing amounted to NT$2,279,602 thousand due to the increase of short-term and long-term loans.

Remedy for insufficient liquidity: the company did not have cash flow problem in the most recent year.
Remedy for Cash Deficit and Liquidity Analysis (FY 2015)

Currency unit: NTD thousand

Cash and Cash Equivalents, Beginning of Year	Net Cash Flow from Operating Activities	Cash Outflow	Cash Surplus (Deficit)	Leverage ofCash Deficit	Leverage ofCash Deficit
				Investment plan	Financing plan
6,814,023	2,972,337	(1,421,183)	5,392,840	－	－
1.Analysis of financial ratio change: (1) From operation: projected net cash inflow from operation amounted to NT$ 2,972,337 thousand due to the projection of profit in the period. (2) From investment: projected net cash outflow from investment amounted to NT$1,702,210 thousand due to the acquisition of property, plant, and equipment. (3) From financing: projected net cash outflow from financing amounted to NT$2,691,310 thousand due to the planning for retirement of short-term loans. 2. Projected cash inadequacy and remedy and liquidity analysis: no projected cash in adequacy and is not applicable here.

Note: the financial data of the year ahead (FY2015) are consolidated data.

iv.Major capital expenditure in the most recent period and the influence on financial position and operation: None.

v. Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year
Direct investment policy

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The management team of the company will consider the needs in operation and the strategic development factors and will make decision for investment based on the professional information fed by relevant segments subject to the interpretation and compilation of the data by Finance and Administration Division before proposing to the competent authority of the competent. Once a proposal for investment was made, the company will assess the past and the prospect of the investees, market situations, and the operation capacity of these investees.

Investment Profits or Losses, Improvement Plans and Investment Plans for the current year

2. Investment Profits or Losses, Improvement Plans and Investment Plansfor the current year	2. Investment Profits or Losses, Improvement Plans and Investment Plansfor the current year	2. Investment Profits or Losses, Improvement Plans and Investment Plansfor the current year	2. Investment Profits or Losses, Improvement Plans and Investment Plansfor the current year
December 31 2014 Currency: NTD thousand
Note Title	Amount of profit (loss) in FY 2014	Main reason of profit or loss	Correction action plan
Primax Industries (Cayman Holding)Ltd.	530,613	Operation is normal
Primax Technology (Cayman Holding) Ltd.	204,103	Operation is normal
Destiny Technology HoldingCo.,Ltd	(348)	Operation is normal
Primax Destiny Co., Ltd. (Japan)	478	Operation is normal
Primax Electronics Korea Co.,Ltd	780	Operation is normal
Diamond(Cayman)Holdin gs Ltd.	213,568	Operation is normal
Primax Industries (HongKong)Ltd.	477,479	Operation is normal
Polaris Electronics Inc.	32,999	Operation is normal
Tymphany Worldwide Enterprises Ltd	149,981	Operation is normal
Tymphany HK Ltd	418,691	Operation is normal
TYP Enterprises Ltd	0	Operation is normal
Tymphany Australia Pty Ltd	0	Operation is normal
Primax Electronics (Dongguan)Corp. Ltd.	430,387	Operation is normal
Beijing Destiny Electronic Technology Co.,Ltd.	(348)	Operation is normal
Primax Electronics (Kunshan)Corp.,Ltd.	117,182	Operation is normal
Primax Electronics (Chongqing)Corp. Ltd.	72,998	Operation is normal
Premium Loudspeakers (Huizhou) Co., Ltd.	100,678	Operation is normal

Note: the amount stated was based on the data contained in the audited financial statements of FY2014.

vi.Analysis of Risk Management

Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate

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Finance, and Future Response Measures

i. Interest rate

Most of the sales of the company are for export and the quotation of the products for export is denominated in USD. Yet, the company also settles the account of purchase from the suppliers and for procurement of machinery and equipment from foreign countries in USD. As such, there is a tradeoff effect, which gives a natural hedge against exchange rate fluctuation. The company had exchange gain amounted to NT$56,143 thousand in FY2014 or accounted for 0.11% of the revenue. As such, the overall exchange settlement does not pose any risk to the company in profitability. In responding to the risk on the income status of the company deriving from exchange rate fluctuation, the company makes use of spot trade or forwards trade timely for hedging off exchange risk. In the future, the company will continue to watch the fluctuation of exchange rate in market and the foreign exchange position of the company to maintain equilibrium between assets and liabilities denominated in foreign currencies for hedging off the risk from exchange risk fluctuation for mitigation the impact on the income status of the company.

ii. Foreign exchange rates

The income/loss from foreign exchange transactions in 2014 was an amount equivalent to 0.13% of total operating income. The Company has a clear operating strategy and risk control procedure to respond to changes in the spot exchange rate, stays in close contact with financial institutions, and adjusts its foreign exchange strategy to minimize the risk of exchange rate accordingly.

iii. Inflation

According to the statistics released by Executive Yuan Directorate-General of Budget, Accounting, and Statistics, the annual CPI growth rate in December 2013 was 0.06% while the annual bulk goods price index fell by 4.75%. This indicated no significant inflation and caused no significant influence on the income status of the company in FY2014. The company pays attention to price fluctuation in market at all times and it will adjust sale price and the inventory level and raw materials accordingly. There is no significant impact on the company from inflation.

Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions
i. The engagement in high risk and high leverage investment

The Company did not engage in any high-risk or high-leveraged investments.

ii. Loaning to a third party and guarantee and endorsement in favor of a third party

In the most recent period to the date this report was printed, the company has taken guarantee and endorsement only in favor of its wholly-owned subsidiaries under

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necessity. The company finances a third party, acts in guarantee and endorsement in favor of a third party in accordance with the policies and measures under the “Procedure for Financing” and the “Procedure for Guarantee and Endorsement”. Risk factors have been considered and caution has been taken before proceeding to relevant operations.

iii. Derivative Trade

The company takes caution in assessment before proceeding to any form of derivative trade. The engagement in derivative trade is only for upgrading the operation performance, reducing the operation and financial risk of the company. Gate approval for decision-making of derivative trade is made along the corporate hierarchy with corresponding level of authority and in accordance with the “Procedure for the Acquisition and Disposition of Assets”.

Future Research & Development Projects and Corresponding Budget
i. R&D plan in the future

The premium items carried by the company are computer peripherals, mobile device parts and components, business machines, and digital home products. The plan for development in the future will be the intensification with the cooperation with international big firms with the gravity in high-end mouse, keyboard, and keyboard module, high-end smart phone, camera module, computer built-in camera module, Bluetooth camera related products, multiple-function business machine scanner module, laser jet printers and multiple-function business machine, and big size paper shredder, for pushing the R&D capacity of the company forward, enlarging the market share, and making the products of the company more competitive internationally.

ii. Projected R&D expenditure

The company prepares the budget for R&D spending based on the progress in the development of new products and new technologies, and maintains specific proportion of growth in line with the operation of the future to ensure the competitive advantage of the company.

Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales:

The company runs the operation in compliance with applicable domestic laws and the laws in the countries of investment. Related personnel will also pay close attention to the change in legal rules and gather relevant information for the reference of the management. The company can respond to any change in any vital policy and laws in the country and in the countries of investment very timely.

Effects of and Response to Changes in Technology and the Industry Relating to Corporate Finance and Sales:

The company keeps abreast of any change in the market situation and technology of

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computer peripherals, mobile device parts and components, business machines, digital home products and conducts relevant analysis to mitigate the impact caused by technological change and responds by intensifying the research and development of high adding value and thicker profit for the products. These allow for the diversification and stabilization of the product lines and ensure the sources of profit. With its distinguished production process technology on hand, the company will continue to expand its strategic alliance system in width and in depth from product design, mass production, logistics support, sales distribution and post-delivery services for bolstering the symbiotic relation with the partners. Technological and industrial change has not caused any significant influence on the financial position and operation of the company so far.

The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures:

The company has a positive corporate image and is one of the leading suppliers in computer peripherals, mobile device parts and components, business machines, and digital home products. With an effective program for the training and development of talents, and also the humanity side of management, the company has attracted many good people and introduced a number of sound technologies. With the solid management team, the company seeks feedback to the shareholders, performs its corporate social responsibility. In the quest for maximization of shareholders’ equity, the company spares no effort in performing its corporate social responsibility. As such, its corporate image has been reinforced. In the most recent period to the date this report was printed, there was no event that may cause damage to its corporate image.

Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans: The Board resolved in a session dated October 15 2014 to acquire 30% of the equity of Global Tek in January 2015. Global Tek is specialized in the sale of automobile parts and components and meters and panels for industrial use and related products. The reason for the acquisition is that the demand in the industry of this company is relatively stable, the life span of products is longer, profit margin is higher, and the entrance barrier in technology is higher. The company anticipated the acquisition would help to bring in stable revenue and profits. In the future, the company may extend its product portfolios to different platforms via Global Tek so that the company can use its resources more efficiently and effectively. The merger and acquisition plan has been subject to feasibility study and financial analysis to control possible risks and ensure the achievement of the desired goal of return on investment.
Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans:

The company started to launch a mass program of capacity expansion since 2014, including the sites at Dongguan and Chongqing. The construction is expected to complete in current year. After completion, the company expects a reduction of the cost of production and expansion in production capacity for high capacity and high quality production support. The capacity expansion plan of the company has been subject to

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feasibility study and financial analysis to control possible risks and ensure the achievement of the desired goal of return on investment.

Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration.
i. The risk deriving from concentration of purchase and the responses

The company usually keeps at least two qualified suppliers for purchase except for the purchase of finished items so as to keep flexible purchase and no interruption of supply and keep an edge in bargaining of price for cost reduction. In sum, the company does not have any risk deriving from concentration of purchase or interruption of supply.

ii. The risk deriving from concentration of sales and the responses

Most of the customers of the company are renowned international technology big firms and are in diversity and stability. In FY2014, the top 10 customers accounted for 49% of the net sale of the year. Of the top 10 customers, no particular customer alone accounted for more than 20% of the total sales. As such, the company does not have the concentration of sales on particular customer. The company has maintained positive relation with existing customers, and makes great effort to development new products for expansion to new markets and new customers for diversification of market and minimizes the risk of concentration.

Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10%:

Institutional Directors PMX LLC of USA and Asia Pacific Growth Fund V of Cayman Islands each holds more than 10% of the stakes of the company and are two dominant shareholders. They previously held 33.82% of the total outstanding shares of the company through private placement. Since the fund is about to mature, they started to dispose the shares of the company in May and June of 2014 incrementally in large sum. On June 16 2014, they are relieved from the seats of Directors automatically after fully disposed the company shares in their holding. The company has held an election of Directors to fill the two vacancies on September 5 2014 for fortifying the function of corporate governance. Such change causes no impact on the operation of the Board.

Effects of, Risks Relating to and Response to the Changes in Management Rights: None.
Litigation or Non-litigation Matters
i. In the last two years to the date this report was printed, the law suits, non-contentious matters, or administrative actions already trailed with ruling or still in proceeding, and the result of which will cause significant influence on shareholders’ equity or stock price of the company, disclose the facts of the disputes, the amount involved,

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the date of initial proceeding, major litigants and the status of the actions:

CSAA Insurance Exchange acted on behalf of and in the name of its insured, Manuel Dias and Pamela Dias filed an action with the High Court of California against the company and its affiliates Polaris Electronics, Inc. and customer Woods Industries on November 18 2013 on a claim for product liability due to fire damage. Upon notice, the company has responded to the insurer and helped to clarify the sources of the product in contention (Surge Protector) and necessary information. The case is in proceeding at the High Court of California, USA.

Hui Jun Landscape Co., Ltd. Of Dongguan City petitioned with the First People’s Court of Dongguan in July 2014 to claim for the final payment for the green belt at Phase III of the Plant and the green belt surrounding the new plant against Primax Electronics & Telecommunication Products (Dong Guan) through compulsory action of payment amounting to CNY2,714,960.8. Upon notice, the company took immediate action with the court for deferred action, and petitioned with the Intermediate Court of Dongguan for a retrial. The Intermediate Court of Dongguan overruled the petition of the company. The company then petitioned with the Guangdong Provincial High Court. The high court ruled on January 29 2015 to order a retrial at the Intermediate Court of Dongguan, and informed that the previous ruling shall be ceased in the proceeding of the retrial.

ii. In the last two years to the date this report was printed, the Directors, Supervisors, President, the de facto person in charge of the company, shareholders each holding more than 10% of the company and their subsidiaries, involved in law suits, non-contentious matters, or administrative actions, with ruling or still pending on judgment, and the result of which may cause significant influence on the shareholders’ equity or stock price of the company: None.
iii. Directors, Supervisors, President, shareholders each holding more than 10% of the company, are involved in events as stated in Article 57 of the Securities and Exchange Act in the last two years to the date this report was printed, and the response of the company: None.
Other major risks and the responses: None.

vii.Other Major Risks: None.

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Special Disclosure
VIII.
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2. Basic information on the affiliates

Currency unit: NTD thousand

December 31 2014

				December 31 20
Name of enterprise	Date of establishment	Address	Paid-in capital	Principal business
Dongguan, Primax Electronic & Telecommunication Products Ltd. (PRC)	Dec 21, 1995	B4079, Liu Wu Dao Section, Xincheng Qu, Shijie Chen, Dongguan City	2,302,919	Production and sale of computer peripherals, mobile device parts and components, and business machines.
Primax Electronics (Kun Shan) Corp., Ltd.	Nov 17, 2009	No. 2688 Tong Xin Road, Yushan Zhen, Kunshan City	1,008,371	Production of computer peripherals
Primax Electronics (Chong Qing) Corp., Ltd. (PRC)	Feb 23, 2011	No. 999, Building No. 1, Xing Guang Blvd, Yongcuan Qu, Chongqing City	394,151	Production of computer peripherals
Beijing Destiny Electronic Technology Co., Ltd.	Mar 24, 1994	Suite 201-202, No. 10, He Fang Road, Dinghai District, Beijing	45,619	Research and development of computer peripherals and business machines
Primax Destiny Co., Ltd. (Japan)	Jul 28, 1995	6th Fl., Hamamatsucho MK Bldg., 1-4-12 Kaigan, Minato-ku, Tokyo 105-0022 JAPAN	6,633	Market development and customer service of computer peripherals, mobile device parts and components, business machines
Primax Electronics Korea Co., Ltd. (Korea)	Jul 02, 2013	7F, SIGMA Tower, Olympic-Ro 289, Songpa-Gu, Seoul 138-734 KOREA	9,675	Market development and customer service of computer peripherals, mobile device parts and components, business machines
Polaris Electronics, Inc.	Apr 24, 1996	356 S. Milpitas Blvd, Milpitas. CA. 95035 USA	50,560	Market development and customer service of computer peripherals, mobile device parts and components, business machines
Primax Industries (Hong Kong) Ltd.	May 19, 1989	Rm.1520-21, 15/F., Block A, Hi-Tech Industrial Centre, 5-21 Pak Tin Par Street,Tsuen Wan,N.T.,HongKong.	2,201,605	Computer peripherals, mobile device parts and components, business machines
Primax Technology (Cayman Holding) Ltd.	Oct 08, 1997	2nd Floor, Midtown Plaza, Elgin Avenue, George Town, Grand Cayman KY1-1106,Cayman Islands.	900,811	Holding company
Primax Industries (Cayman Holding) Ltd.	Oct 24, 1996	2F,Zephyr House,Mary St.PO.Box 709,GeorgeTown, Grand Cayman, Cayman Islands,British West Indies.	2,321,853	Holding company
Destiny Technology Holding Co., Ltd.	Jan 19, 2001	Sealight House, Tortola, British Virgin Islands	33,180	Holding company
Diamond (Cayman) Holdings Ltd.	Oct 08, 2013	P.O. Box 32052, The Grand Pavilion Commercial Centre, Oleander Way, 802 West Bay Road, Grand Cayman, KY1-1208 Cayman Islands.	2,655,980	Holding company
Tymphany Worldwide Enterprises Ltd.	Oct 29, 2013	P.O. Box 309, Ugland House, Grand Cayman, KY1-1104 Cayman Islands.	550,010	Holding company
TYP Enterprises, Inc.	Jan 06, 2014	1 Harbor Drive, Suite 209 Sausalito, CA94965	16	Market development and customer service of loud speakers and the parts and components.
Tymphany HK Ltd.	May 11, 1995	ROOM 1307-8 DOMINION CENTRE. 43-59 QUEENS ROAD EAST, WANCHAI,HONG KONG	79,013	Sales of sound system devices, speakers and the parts and components.
Premium Loudspeakers (Huizhou) Co., Ltd.	Aug 09, 2003	Difenni Industrial Zone, Xin Lian Village, Xinxu Zhen, Huiyang Qu, Huizhou, Guangdong	162,369	Production, research and development, and sales of sound system devices, speakers and theparts and components.
Tymphany Australia Pty Ltd.	Dec 10, 2012	ALTEC LANSING AUSTRALIA PTY LIMITED LEVEL 14 20 BERRY STREET NORTH SYDNEY NSW 2060	0	Research and development, design, and sales of sound system devices, speakers and theparts and components.

Control and subordination as defined in Article 369-3 of the Company Act: None.
The industries covered by all group companies and the transactions in division of labor:

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The principal business of the company and the group companies is the design, manufacturing, processing, and sales of computer peripherals and non-computer peripherals. In general, the division of labor among the group companies is the mutual support of technology, production capacity, sales, and service for optimization of synergy.

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5. Profiles of the Directors, Supervisors, and managers of the group companies

December 21 2014

		December 21 2

Name of enterprise	Title	Name or representative

Dongguan, Primax Electronic & Telecommunication Products Ltd. (PRC)	Chairman	Primax Industries (Hong Kong) Ltd. &
		Primax Technology (Cayman Holding) Ltd.

		Representative: Pan,Wu-Lung
	Director	Primax Industries (Hong Kong) Ltd. &
		Primax Technology (Cayman Holding) Ltd.
		Representative: Ying,Chung-Wen
	Director	Primax Industries (Hong Kong) Ltd. &
		Primax Technology (Cayman Holding) Ltd.
		Representative: Chang,Chen-Deh
	President	Pan, Wu-Lung

Primax Electronics (Kun Shan) Corp., Ltd.	Executive Director	Primax Industries (Hong Kong) Ltd.
		Representative: Yang,Hai-Hung
	Supervisor	Primax Industries (Hong Kong) Ltd.
		Representative: Chang,Chen-Deh
	President	Pan Wu-Lung

PRIMAX Electronics (Chongqing) Co. Ltd.	Executive Director	Primax Industries (Hong Kong) Ltd.
		Representative: YangHai-Hung
	Supervisor	Primax Industries (Hong Kong) Ltd.
		Representative: Chang,Chen-Deh
	President	Pan, Wu-Lung

Beijing Destiny Electronic Technology Co., Ltd	Chairman	Destiny Technology Holding Co., Ltd.
		Representative: Liang,Li-Sheng
	Director	Destiny Technology Holding Co., Ltd.
		Representative: Pan,Wu-Lung
	Director	Destiny Technology Holding Co., Ltd.
		Representative: Ying,Chung-Wen
	President	Wang, Po-Ying

Primax Destiny Co., Ltd. (Japan)	Director	Liu, Chia-Lun

	Director	Jack, Pan

	Director	Lee, Yi-Ping

	Supervisor	Wei, Hao-San

Primax Electronics Korea Co., Ltd.	Director	Shih, Chia-Ling

	Director	Jack Pan

	Director	Liu, Chia-Lun

Polaris Electronics, Inc.	Director	Yang, Hai-Hung

	Director	Liang, Li-Sheng

Primax Industries (Hong Kong) Ltd.	Director	Liang, Li-Sheng

	Director	Yang, Hai-Hung

Primax Technology (Cayman Holding) Ltd.	Director	Liang, Li-Sheng

	Director	Yang, Hai-Hung

	Director	Lee, Yi-Ping

Primax Industries (Cayman Holding) Ltd.	Director	Liang, Li-Sheng

	Director	Yang,Hai-Hung
	Director	Lee, Yi-Ping

Destiny Technology Holding Co., Ltd.	Director	Liang, Li-Sheng

Diamond (Cayman) Holdings Ltd.	Representative: Liang Li-Sheng	Representative: Liang, Li-Sheng

Tymphany Worldwide Enterprises Ltd.	Director	Diamond (Cayman) Holdings Ltd.
		Representative:
		Liang, Li-Sheng
		Yang, Hai-Hung
		Jack Pan
		Pan, Yung-Tai
		United Industrial Development Limited:
		Representative:
		Edward Townsend Boyd III
		Thomas Lee Jacoby
TYP Enterprises, Inc.	Director	Edward Townsend Boyd III
		Thomas Lee Jacoby
		Representative: Jack Pan
Tymphany HK Ltd.	Director	Edward Townsend Boyd III
		Representative: Jack Pan
Premium Loudspeakers (Huizhou) Co., Ltd	Director	Representative: Jack Pan

Tymphany Australia Pty Ltd.	Director	Edward Townsend Boyd III
		Anders Brogestam
		Representative: Jack Pan

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(2) The operation outlook of the group enterprises

Currency unit: NTD thousand

December 31 2014

Name of enterprise	Stated capital	Total assets	Total liabilities	Net worth	Sales revenue	Operating income	Earnings in current period (after taxation)	Earnings per share (after taxation)
Dongguan, Primax Electronic & Telecommunicat ion Products Ltd.(PRC)	2,302,919	16,612,046	11,927,340	4,684,706	37,605,583	461,406	430,387	－
Primax Electronics (Kun Shan) Corp.,Ltd	1,008,371	1,615,770	769,467	846,303	3,204,980	152,192	117,182	－
Primax Electronics (Chong Qing) Corp., Ltd. (PRC)	394,151	1,942,984	1,560,956	382,028	2,837,591	63,160	72,998	－
Beijing Destiny Electronic Technology Co., Ltd.	45,619	30,844	20,710	10,134	97,926	312	-348	－
Primax Destiny Co.,Ltd.(Japan)	6,633	17,309	2,520	14,789	21,249	1,013	478	956
Polaris Electronics,Inc.	50,560	1,484,843	1,120,827	364,016	3,504,235	53,112	32,999	20.62
Primax Industries (Hong Kong)Ltd.	2,201,605	10,365,973	6,466,171	3,899,802	32,878,955	-125	477,479	0.88
Primax Technology (Cayman Holding)Ltd.	900,811	1,999,509	－	1,999,509	－	-194	174,489	0.61
Primax Industries (Cayman Holding)Ltd.	2,321,853	4,211,756	296,143	3,915,613	497,221	-1,850	476,516	0.07
Destiny Technology Holding Co., Ltd.	33,180	10,138	0	10,138	0	0	-348	-0.33
Primax Electronics Korea Co.,Ltd.	9,675	10,839	264	10,575	16,940	807	780	11.64
Diamond (Cayman) Holdings Ltd.	2,655,980	2,769,130	309	2,768,821	62,408	61,940	214,763	2.56
Tymphany Worldwide Enterprises Ltd.	550,010	1,062,479	13,995	1,048,484	48,904	-3,004	398,587	7.25
Tymphany HK Ltd.	79,013	2,833,770	1,782,915	1,050,855	5,984,636	277,959	418,691	21.59
TYP Enterprises,Inc.	16	17,108	17,092	16	47,563	19	0	0
Premium Loudspeakers (Huizhou) Co., Ltd.	162,369	2,035,237	1,597,175	438,062	4,506,254	141,173	143,826	-
Tymphany Australia Pty Ltd.	-	-	-	-	-	-	-	-

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Consolidated financial statements of the group companies:
(1). Declaration of consolidated financial statements of the group enterprises: refer to page 102.
(2). Auditors’ Report on consolidated financial statements of group enterprises: refer to 103~175
Report on affiliation: n/a

ii.Any private placement of securities in the most recent period to the date this report was printed: None.

iii.The holding or disposition of shares of the company by subsidiaries in the most recent period to the date this report was printed: None.

iv.Other supplementary information: None.

v.Anything happened as stated in Article 36-II-(II) of the Securities and Exchange Act in the most recent year to the date this report was printed, and the significant impact on shareholders’ equity or stock price: None.

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AI assistant

Primax — Annual Report 2014

52436_rns_2015-07-30_e9255990-3749-4ebc-80d8-a26407ae70dc.pdf

Contents

I. Letter to Shareholders

i.Business highlights in FY 2014

1. Business performance

2. Budget implementation

3. Financial analysis

4. Profitability analysis

5. Research and Development Status

ii.Business plan for 2015 and the future development strategy

iii.The Impact of the External Competitive Environment, Regulatory Environment, and Macroeconomic Conditions

II. Company Profile

i.Date of Incorporation: March 20, 2006

ii.Company History:

III. Corporate Governance Report

i.Organization

iv.Implementation of Corporate Governance

1. Board of Directors:

11. Major resolutions of the General Meeting of Shareholders and the Board in the most recent period to the date this report was printed.

(1) Major Resolutions of Shareholders’ Meeting

(2) Major Resolutions of Board Meetings

v.Information on service fees for certified public accountants

vi.Replacement of CPA

managers and shareholders holding more than 10% of the company shares in the most recent period to the date this report was printed.

ix.Information on the top 10 shareholders by proportion of shareholding and they are related parties or spouse, kindred within the 2[nd] tier under the Civil Code, if applicable

x.The investment directly or indirectly controlled by the Directors, Supervisors and Managers of the company and the overall quantity of shareholding of particular investees and the proportion of shareholding.

IV. Capital Overview

i.Sources of Capital

ii.Status of Shareholders

iii.Shareholding Distribution Status

iv.List of Major Shareholders

v.Market price, net asset value, earnings and dividend per share in the last 2 years and related

information

vi.Dividend Policy and Implementation status

vii.The influence of stock dividends planned to the release by the General Meeting on the operation performance of the Company and earnings per share: no release.

viii.Employee Bonus and Directors' and Supervisors' Remuneration

ix.Buyback of Treasury Stock: None.

x.Corporate bonds, preferred shares, overseas depository receipts: None.

xii.Issuance of New Restricted Employee Shares

xiii.Status of New Shares Issuance in Connection with Mergers and Acquisitions

xiv.Financing Plans and Implementation

V. Operation Outlook

I. Operational Highlights:

2-1. Mobile device parts and components

2-4. Wearable devices

(1) Computer peripherals

(2) Non-computer peripherals

2-1. Mobile device parts and components

2-2. Business machines

2-3. Digital home products

2. Industry Overview

1. Computer peripherals

2. Non-computer peripherals

2-1. Mobile device parts and components

2-2. Business machines

2-3. Digital home products

physical fitness applications.

2-4. Wearable devices

2-3. Digital home products ：

2-4. Wearable devices:

1. Computer peripherals

2. Non-computer peripherals

2-1. Mobile device parts and components

2-2. Business machines

2-3. Digital home products

2-4.Wearable devices

(4) State of competition in products

1. Computer peripherals

2. Non-computer peripherals

2-1. Parts and components for mobile devices

2-2. Business machines

2-3. Digital home products

2-4. Wearable devices

(1) Short-term Development

1. Computer peripherals

(2) Non-computer peripherals

2-1. Parts and components of mobile devices

2-2. Business machines

Primax Annual Report 2014