SINBON Electronics - Annual Report 2013

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT ACCOUNTANTS

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Address: No.582, Kuo-Hwa Rd., Miaoli 360, Taiwan, R.O.C. Telephone: 886-37-330-099

The reader is advised that these consolidated financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

AUDIT REPORT OF INDEPENDENT ACCOUNTANTS

English Translation of a Report Originally Issued in Chinese

To SINBON Electronics Co., Ltd.

We have audited the accompanying consolidated balance sheets of SINBON Electronics Co., Ltd. and subsidiaries (collectively, the “Company”) as of December 31, 2013, December 31, 2012, and January 1, 2012, and the related consolidated statements of comprehensive income, consolidated statements of changes in equity, and cash flows for the years ended December 31, 2013 and 2012. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. Certain subsidiaries, which were accounted for under the consolidated statements based on the financial statements of the subsidiaries, were audited by other independent accountants .We did not audit the financial statements of certain consolidated subsidiaries with total assets of NT$ 1,768,912 thousand dollars, NT$ 1,810,261 thousand dollars and NT$ 1,399,912 thousand dollars, or 18.85%, 20.39% and 16.38% of the total consolidated assets of SINBON Electronics Co., Ltd. and subsidiaries as of December 31, 2013, December 31 2012 and January 1 2012, respectively and represented total revenues of NT$2,918,197 thousand dollars and NT$ 2,908,799 thousand dollars, or 27.65 and 29.05% of the consolidated revenues of SINBON Electronics Co., Ltd. and subsidiaries for the years ended December 31, 2013 and 2012. Certain investments, which were accounted for under the equity method based on the financial statements of the investees, were audited by other independent accountants. Our audit, insofar as it related to the investments accounted for under the equity method balances of NT$399,066 thousand dollars, NT$389,441 thousand dollars and NT$378,934 thousand dollars,which represented 4.25%, 4.39% and4.44% of the total consolidated assets as of December 31, 2013, December 31, 2012, and Jaunary 1, 2012, respectively, the related shares of investment income from the associates and joint ventures amounted to NT$21,437 thousand dollars and NT$7,039 thousand dollars, which represented 2.47%% and 0.97% of the consolidated income from continuing operations before income tax for the years ended December 31, 2013 and 2012, respectively , and the related shares of other comprehensive income from the associates and joint ventures amounted to NT$22,183 thousand dollars and NT$16,484 thousand dollars, Which represented 6.94% and (16.25%) of the consolidated total comprehensive income (loss), for the years ended December 31, 2013 and 2012,respectively, are based solely on the reports of other independent accountants.

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

In our opinion, based on our audits and the reports of other independent accountants, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of SINBON Electronics Co., Ltd. and its subsidiaries as of December 31, 2013, December 31, 2012 and January 1, 2012, and the consolidated results of their operations and their cash flows for the years ended December 31, 2013 and 2012, in conformity with the requirements of the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee which are endorsed by Financial Supervisory Commission of the Republic of China.

We have audited and expressed a modified unqualified opinion on the stand alone financial statements of SINBON Electronics Co., Ltd. for the years ended December 31, 2013 and 2012.

Ernst & Young

Taiwan Republic of China

March 21, 2014

Notice to Readers

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2013, December 31, 2012 and January 1, 2012 (Expressed in Thousand New Taiwan Dollars)

Assets	Notes		As of
		Amount $1,879,453 4,000 331,897 2,675,008 124,412 1,629,228 104,406 20,234 6,768,638 254,001 211,454 418,037 1,554,838 - 4,784 28,175 145,237 2,616,526 December 31,2013	Amount $1,700,389 1,271 272,305 2,569,530 98,579 1,575,128 71,418 6,405 6,295,025 132,906 201,155 406,359 1,598,775 45,171 2,334 29,647 167,916 2,584,263 December 31,2012	January1,2012
				Amount
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss, current Notes receivable, net Accounts receivable, net Other receivables Inventories Prepayments Other current assets Total current assets Non-current assets Available-for-sale financial assets, noncurrent Financial assets measured at cost, noncurrent Investments accounted for under the equity method Property, plant and equipment Goodwill Other intangible assets Deferred tax assets Other assets Total non-current assets	4,6(1) 4,6(2) 4,6(5) 4,6(6) 4,6(7) 4,6(3) 4,6(4) 4,6(8) 4,6(9) 4,6(10) 4,6(22) 4,6(11)			$1,418,003 17,573 175,152 2,328,513 92,414 1,655,343 105,283 8,139
				5,800,420
				139,474 201,169 403,556 1,766,753 46,999 3,452 34,138 147,935
				2,743,476

$9,385,164

$8,879,288

(The accompanying notes form an integral part of the consolidated financial statements) (Continued)

$8,543,896

Total assets

English Translation of Consolidated Financial Statements Originally Issued in Chinese

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS(Continued) December 31, 2013, December 31, 2012 and January 1, 2012 (Expressed in Thousand New Taiwan Dollars)

Notes		As of
	Amount $1,330,911 13,449 1,155 1,914,753 1,082 580,501 68,860 - 182,000 33,707 4,126,418 - - 346,460 165,479 19,184 2 74,368 605,493 4,731,911 2,076,709 - 2,076,709 797,621 485,695 249,922 865,434 1,601,051 64,705 32,370 97,075 80,797 4,653,253 $9,385,164 December 31,2013	Amount $1,538,963 100,097 636 1,610,378 14,990 491,153 73,968 3,172 182,000 48,430 4,063,787 4 19,102 522,361 90,385 18,512 2 54,304 704,670 4,768,457 2,000,155 65,483 2,065,638 848,735 430,946 178,457 698,790 1,308,193 (83,476) (166,446) (249,922) 138,187 4,110,831 $8,879,288 December 31,2012	January1,2012
			Amount
4,6(12) 4,6(13) 7 4,6(15) 4,6(16) 6(12) 4,6(15) 4,6(16) 4,6(23) 4,6(14) 4,6(17) 6(18) 6(18) 6(18) 6(23) 4 4,6(18)			$1,681,390 117,903 1,257 1,561,724 1,826 457,336 28,646 277,183 - 54,009
			4,181,274
			- - 705,045 86,924 19,459 2 44,653
			856,083
			5,037,357
			1,795,162 -
			1,795,162
			563,646
			386,243 142,625 544,655
			1,073,523
			- (178,457)
			(178,457)
			252,665
			3,506,539
			$8,543,896

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2013 and 2012

(Expressed in Thousand New Taiwan Dollars Except Earnings Per Share Data)

Notes Operating revenues 4,6(18) Operating costs 6(19),7 Gross profit-net Operating expenses 6(19),7 Sales and marketing expenses General and administrative expenses Research and development expenses Subtotal Operating income Non-operating income and expenses 6(20) Other income Other gains and losses Finance costs Share of profit or loss of associates and joint ventures 4,6(8) Subtotal Income from continuing operations before income tax Income tax expense 4,6(22) Net income Other comprehensive income (loss) 6(21) Exchange differences on translation of foreign operations Unrealized loss on available-for-sale financial assets Actuarial loss on defined benefit plans Share of other comprehensive income of associates and joint ventures Income tax related to components of other comprehensive income Total other comprehensive income (loss), net of tax Total comprehensive income Net income attributable to: 4,6(23) Stockholders of the parent Non-controlling interests Comprehensive income (loss) attributable to: Stockholders of the parent Non-controlling interests Earnings per share (NTD) Earnings per share-basic 4,6(23) Earnings per share-diluted	Notes	For theyears ended December 31,	For theyears ended December 31,
		$10,555,261 (8,287,168) 2,268,093 (605,388) (583,321) (346,386) (1,535,095) 732,998 154,837 (6,441) (37,075) 22,725 134,046 867,044 (258,618) 608,426 170,153 178,192 (20,921) 22,183 (29,784) 319,823 $928,249 $663,263 (54,837) $608,426 $992,896 (64,647) $928,249 $3.20 $3.19 2013	2012
			$10,011,618 (7,858,803)
			2,152,815
			(564,699) (576,177) (322,537)
			(1,463,413)
			689,402
			112,423 (23,839) (60,944) 7,979
			35,619
			725,021 (245,970)
			479,051
			(119,243) (6,568) (10,405) 16,484 18,311
			(101,421)
			$377,630
			$548,495 (69,444)
			$479,051
			$468,382 (90,752)
			$377,630
			$2.93
			$2.92

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2013 and 2012

(Expressed in Thousands of New Taiwan Dollars)

			EquityA	ttributable to Shar	eholders of the Paren	t	Total Equity
Common stock $1,795,162 - 204,993 - $2,000,155 $2,000,155 - 76,554 - $2,076,709	Certificates of Bond-to-Stock Conversion $- - 65,483 - $65,483 $65,483 - (65,483) - $-	Additional Paid-in Capital $563,646 1,055 (3,877) - 287,911 - $848,735 $848,735 (62,301) 11,240 (53) - - $797,621		Retained earnings	Unappropriated Earnings $544,655 (44,703) (35,832) (305,177) 548,495 (8,648) 539,847 - $698,790 $698,790 (54,749) (71,465) (353,041) 663,263 (17,364) 645,899 - $865,434	Exchange Differences on Translation of Foreign Operations Unrealized Gains or Losses on Available- For-Sale Financial Assets $- $(178,457) (83,476) 12,011 (83,476) 12,011 - - ($83,476) ($166,446) $(83,476) $(166,446) 148,181 198,816 148,181 198,816 - - $64,705 $32,370 Other components of equity
			Legal Reserve $386,243 44,703 - - $430,946 $430,946 54,749 - - $485,695	Special Reserve $142,625 35,832 - - $178,457 $178,457 71,465 - - $249,922		Exchange Differences on Translation of Foreign Operations $- (83,476) (83,476) - ($83,476) $(83,476) 148,181 148,181 - $64,705
							$3,506,539 - - (305,177) 1,055 (3,877) 479,051 (101,421)
							377,630
							558,387 (23,726)
							$4,110,831
							$4,110,831 - - (353,041) (62,301) 11,240 (53) 608,426 319,823
							928,249
							11,071 7,257
							$4,653,253

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2013 and 2012

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Net income before tax Adjustments to reconcile net income before tax to net cash provided by operating activities: Income and expense adjustments: Depreciation Amortization Interest expense Bad debt reversal Interest revenue Share of profit of associates and joint ventures Loss on disposal of property, plant and equipment Gain (loss) from market value decline, obsolete and slow-moving of inventories Impairment loss on financial assets Impairment loss on non-financial assets Loss of financial assets at fair value through profit or loss Gain of financial assets at fair value through profit or loss Changes in operating assets and liabilities: Increase in financial asset held for trading Increase in notes receivable Increase in accounts receivable (Increase) decrease in other receivables (Increase) decrease in inventories, net (Increase) decrease in prepayments (Increase) decrease in other current assets Increase in other noncurrent assets Increase (decrease) in notes payable Increase in accounts payable Increase (decrease) in accounts payable-related parties Increase in other payables Decrease in other current liabilities Decrease in accrued pension liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash provided by operating activities	For theyears ended December 31,	For theyears ended December 31,
	2013 $867,044 169,643 66,077 37,075 (16,896) 6,754 (22,725) 4,243 (6,433) 17,155 53,876 1,284 (87,931) (4,000) (59,592) (88,582) (25,833) (47,667) (32,988) (13,829) (41,423) 519 304,375 (13,908) 90,343 (14,723) (857) 1,141,001 (6,754) (38,035) (216,924) 879,288	2012
		$725,021 178,407 60,735 60,944 (2,428) 7,367 (7,979) 15,189 1,070 - - 15,183 (16,100) - (97,153) (238,589) 3,225 79,145 33,865 1,734 (81,587) (621) 48,654 13,164 28,678 (5,579) (754)
		821,591
		(7,367) (49,954) (174,385)
		589,885

(Continued)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)

For the years ended December 31, 2013 and 2012

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities: Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in other intangible assets Decrease in investments accounted for under the equity method Decrease in financial assets measured at cost Acquisition of financial assets measured at cost Proceeds from disposal of available-for-sale financial assets Dividends received from investee company Net cash used in investing activities Cash flows from financing activities: Decrease in short-term loans Decrease in long-term loanss (include current portion) Increase in bonds payable Cash dividends Decrease in long-term deferred revenue Increase (decrease) in non-controlling interests Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	For theyears ended December 31,	For theyears ended December 31,
	2013 $(92,543) 26,061 (2,450) 20,000 5,000 (19,789) 44,443 13,177 (6,101) (208,052) (175,901) - (415,342) (410) (2,553) (802,258) 108,135 179,064 1,700,389 $1,879,453	2012
		$(171,268) 98,276 2,946 - - - - 8,580
		(61,466)
		(142,427) (684) 300,000 (305,177) (387) (45,034)
		(193,709)
		(52,324)
		282,386 1,418,003
		$1,700,389

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2013 and 2012 (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

1. HISTORY AND ORGANIZATION

SINBON Electronics Co., Ltd. (the Company) was incorporated in 1989. The main activities of the Company include manufacturing and selling computer peripherals, connectors, wires and other parts. The shares of the Company commenced trading on Taiwan’s Over-the-Counter Market in May 2001 and were listed on the Taiwan Stock Exchange in August 2002.

2. DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS FOR ISSUE

The consolidated financial statements of the Company and its subsidiaries (“the Group”) for the years ended 31 December 2013 and 2012 were authorized for issue by the Board of Directors on March 21, 2014.

3. NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

(1) Standards or interpretations issued, revised or amended, which are recognized by Financial Supervisory Commission (“FSC”), but not yet adopted by the Group at the date of issuance of the Group’s financial statements are listed below.

IFRS 9 Financial Instruments

IFRS 9 Financial Instruments which is divided in three distinct phases is designed by the International Accounting Standards Board (“IASB”) to eventually replace IAS 39 Financial Instruments: Recognition and Measurement in its entirety. The first phase relates to the classification and measurement of financial assets and liabilities that must be applied for annual periods beginning on or after 1 January 2015. The IASB will work on the remaining phases relate to impairment methodology and hedge accounting. However companies adopting International Financial Reporting Standards, International Accounting Standards, and Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by the FSC (collectively referred to as “TIFRS”) may not early adopt IFRS 9. FSC will announce the local effective date for IFRS 9 in the future. Adopting the first phase of IFRS 9 will have an impact on the classification and measurement of financial assets. The impact of adopting the remaining two phases of IFRS 9 on the Group could not be determined at this stage.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(2) Standards or Interpretations issued by IASB but not yet recognized by FSC at the date of issuance of the Group’s financial statements are listed below.
(a) Improvements to International Financial Reporting Standards (issued in 2010):

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

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

Furthermore, the amendment allows first-time adopters to use an event-driven fair value as deemed cost, even if the event occurs after the date of transition, but before the first IFRS financial statements are issued. The amendment also expands the scope of ‘deemed cost’ for property, plant and equipment or intangible assets to include items used subject to rate regulated activities. The exemption will be applied on an item-by-item basis. All such assets will also need to be tested for impairment at the date of transition. The amendment allows entities with rate-regulated activities to use the carrying amount of their property, plant and equipment and intangible balances from their previous GAAP as its deemed cost upon transition to IFRS. These amendments became effective for annual periods beginning on or after 1 January 2011.

IFRS 3 “Business Combinations”

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

Outstanding share-based payment transactions that the acquirer does not exchange for its share-based payment transactions: if vested — they are part of non-controlling interest; if unvested — they are measured at market based value as if granted at acquisition date, and allocated between NCI and post-combination expense.

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

IFRS 7 “Financial Instruments: Disclosures”

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

IAS 1 “Presentation of Financial Statements”

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

IAS 34 “Interim Financial Reporting”

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

IFRIC 13 “Customer Loyalty Programs”

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

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

IFRS 1 has been amended to allow first-time adopters to utilize the transitional provisions of IFRS 7 Financial Instruments: Disclosures. These provisions give relief from providing comparative information in the disclosures required by

amendments to IFRS 1 in the first year of application. The amendment is effective for annual periods beginning on or after 1 July 2010.

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

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

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

The amendment requires additional quantitative and qualitative disclosures relating to transfers of financial assets, when financial assets are derecognized in their entirety, but the entity has a continuing involvement in them, or when financial assets are not derecognized in their entirety. The amendment became effective for annual periods beginning on or after 1 July 2011.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

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

(f) IFRS 10 “Consolidated Financial Statements”

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

(g) IFRS 11 “Joint Arrangements”

IFRS 11 replaces IAS 31 and SIC-13. The changes introduced by IFRS 11 primarily relate to increase comparability within IFRSs by removing the choice for jointly controlled entities to use proportionate consolidation, so that the structure of the arrangement is no longer the most important factor when determining the classification as a joint operation or a joint venture, which then determines the accounting. The standard is effective for annual periods beginning on or after 1 January 2013.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(h) IFRS 12 “Disclosures of Interests in Other Entities”

IFRS 12 primarily integrates and makes consistent the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities and present those requirements in a single IFRS. The standard became effective for annual periods beginning on or after January 1, 2013.

(i) IFRS 13 “Fair Value Measurement”

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

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

The amendments to IAS 1 change the grouping of items presented in other comprehensive income. Items that would be reclassified (or recycled) to profit or loss at certain points in the future would be presented separately from items that will never be reclassified. The amendment became effective for annual periods beginning on or after July 1, 2012.

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

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

The IASB has added an exception to the retrospective application of IFRS 9 (or IAS 39) and IAS 20. These amendments require first-time adopters to apply the requirements of IAS 20 prospectively to government loans existing at the date of transition to IFRS. However, entities may choose to apply the requirements of IFRS 9 (or IAS 39, as applicable) and IAS 20 to government loans retrospectively if the information needed to do so had been obtained at the time of initially accounting for those loans. The amendment is effective for annual periods beginning on or after 1 January 2013.

(m) IFRS 7 “Financial Instruments: Disclosures” — Disclosures — Offsetting Financial Assets and Financial Liabilities

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

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

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

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

(p) Improvements to International Financial Reporting Standards (2009-2011 cycle):

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

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

IAS 1 “Presentation of Financial Statements”

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

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

IAS 32 “Financial Instruments: Presentation” (Amendment)

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

IAS 34 “Interim Financial Reporting” (Amendment)

The amendment clarifies the requirements in IAS 34 relating to segment information for total assets and liabilities for each reportable segment to enhance consistency with the requirements in IFRS 8 Operating Segments. Besides, total assets and liabilities for a particular reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change in the total amount disclosed in the entity’s previous annual financial statements for that reportable segment. The amendment is effective for annual periods beginning on or after 1 January 2013.

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

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

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

(s) IFRIC 21 “Levies”

This interpretation provides guidance on when to recognize a liability for a levy imposed by a government (both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain). The interpretation is effective for annual periods beginning on or after 1 January 2014.

(t) IAS 39 “Financial Instruments: Recognition and Measurement” (Amendment)

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

(u) IFRS 9 “Financial Instruments” (Hedge accounting and amendments to IFRS 9, IFRS 7 and IAS 39)

The IASB announced amendments to the accounting requirements for financial instruments, which include: (1) bring into effect a substantial overhaul of hedge accounting that will allow entities to better reflect their risk management activities in the financial statements; (2) allow the changes to address the ‘own credit’ not to be recognized in profit or loss that were already included in IFRS 9 Financial Instruments to be applied in isolation without the need to change any other accounting for financial instruments; and (3) remove the 1 January 2015 mandatory effective date of IFRS 9.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

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

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

IFRS 2 “Share-based Payment”

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

IFRS 3 “Business Combinations”

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

IFRS 8 “Operating Segments”

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

IFRS 13 “Fair Value Measurement”

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

IAS 16 “Property, Plant and Equipment”

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

IAS 24 “Related Party Disclosures”

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

IAS 38 “Intangible Assets”

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

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

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

IFRS 3 “Business Combinations”

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

IFRS 13 “Fair Value Measurement”

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

IAS 40 “Investment Property”

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

(y) IFRS 14 “Regulatory Deferral Accounts”
IFRS 14 permits first-time adopters to continue to recognize amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that already apply IFRS and do not recognize such amounts, the Standard requires that the effect of rate regulation must be presented separately from other items. IFRS 14 is effective for annual periods beginning on or after 1 January 2016.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of Compliance

The consolidated financial statements of the Group for the years ended 31 December 2013 and 2012 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and TIFRS as endorsed by the FSC.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(2) Basis of Preparation

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars (“$”) unless otherwise stated.

(3) General Description of Reporting Entities

Preparation principle of consolidated financial statements

Subsidiaries are fully consolidated from the date of acquisition (the date on which the Group obtains control), and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, and unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

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

If the Company loses control of a subsidiary, it:

(a) derecognizes the assets (including goodwill) and liabilities of the subsidiary;
(b) derecognizes the carrying amount of any non-controlling interest;
(c) recognizes the fair value of the consideration received;
(d) recognizes the fair value of any investment retained;
(e) recognizes any surplus or deficit in profit or loss; and
(f) reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The consolidated entities are as follows:

I n v e s t o r	S u b s i d i a r y	M a i n b u s i n e s s e s	P er c en t age of own e	P er c en t age of own e	r sh ip (%)
			2013.12.31	2012.12.31	2012.1.1
Th e Compan y	Sinbon International Enterprise Co., Ltd.(SB(B.V.I))	Holding company	100.00%	100.00%	100.00%
Th e Compan y	Hong Kong Sinbon Electronics Co., Ltd. (HKSB)	Manufacturing and selling a wide variety of connectors, wires and cables	100.00%	100.00%	100.00%
Th e Company	Super Elite Ltd.(SEL)	Holdingcompany	64.48%	64.48%	56.04%
Th e Compan y	Beijing Sinbon Electronics Co., Ltd. (BJSB)	Manufacturing and selling a wide variety of connectors, wires and cables	100.00%	100.00%	100.00%
Th e Compan y	Samoa Smart and Diligent Co., Ltd. (Samoa S&D)	Holding company	51.51%	51.51%	51.51%
Th e Compan y	Sinbon Technologies L.L.C. (USSB)	Selling a wide variety of connectors, wires and cables	51.00%	51.00%	51.00%
Th e Compan y	Japan Sinbon Electronics Co., Ltd. (JPSB)	Selling a wide variety of connectors, wires and cables	70.00%	70.00%	70.00%
Th e Company	Worldwide Wire Harnesses Co.,Ltd.	Holdingcompany	50.00%	50.00%	50.00%
Th e Compan y	Kwan-Ze Corporation Ltd. (Kwan-Ze)	Selling a wide variety of electronic materials and holdingcompany	100.00%	100.00%	100.00%
Th e Company	Sinbon USA L.L.C.	Logistic center	100.00%	100.00%	100.00%
Th e Compan y	Beijing Sinbon Tongan Electronics Co., Ltd.(BJSB Tongan)	Manufacturing and selling a wide variety of connectors, wires and cables	100.00%	100.00%	-
B V I	Jiangyin Sinbon Electronics Co., Ltd. (JYSB)	Manufacturing and selling a wide variety of connectors, wires and cables	100.00%	100.00%	100.00%
B V I	Shenzhen Sinbon Electronics Co., Ltd. (SZSB)	Selling a wide variety of connectors, wires and cables	100.00%	100.00%	100.00%
B V I	Shanghai Sinbon Electronics Co., Ltd.(SHSB)	Selling a wide variety of connectors and cables	100.00%	100.00%	100.00%

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

I n v e s t o r	S u b s i d i a r y	M a i n b u s i n e s s e s	P er c en t age of own e	P er c en t age of own e	r sh ip (%)
			2013.12.31	2012.12.31	2012.1.1
B V I	Tong Cheng Sinbon Electronics Co., Ltd . (TCSB)	Manufacturing and selling a wide variety of connectors, wires and cables	100.00%	100.00%	100.00%
B V I	Wu Xi Smart and Diligent Co., Ltd. (Wu Xi S&D)	Manufacturing and selling new flatpanel displays	-	52.04%	52.04%
B V I	Sinact (Hong Kong) Co., Ltd. (HK Sinact)	Holding company	100.00%	100.00%	65.70%
S E L	Hong Kong Comtek Electronics Co., Ltd.(HongKongCMK)	Selling a wide variety of connectors and cables	64.48%	64.48%	51.06%
S E L	T-CONN Precision (Zhongshan) Co., Ltd.( T-CONN Zhongshan)	Manufacturing and selling a wide variety of connectors, wires and cables	64.48%	64.48%	56.04%
S E L	T-CONN Precision Co., Ltd.( T-CONN)	Manufacturing and selling a wide variety of connectors, wires and cables	64.48%	64.48%	56.04%
S E L	Super Progressive Ltd. (SPL)	Logistic center	64.48%	64.48%	56.04%
Hong Kong CMK	Dong Guan Comtek Electronics Co., ltd.( Dong Guan CMK)	Manufacturing and selling a wide variety of connectors, wires and cables	-	64.48%	51.06%
H K S i n a c t	Jiangyin Sinact Electronics Co., Ltd. (JY Sinact)	Manufacturing and selling a wide variety of electronic materials	100.00%	100.00%	65.70%
W o r l d w i d e Wire Harnesses Co.,Ltd.	Sinbon Technologies Tennessee L.L.C. (STT)	Logistic Center	50.00%	50.00%	50.00%
K w a n - Z e	Digi O2 International Co., Ltd. (Digi O2)	Selling a wide variety of connectors and cables	85.48%	100.00%	100.00%
W u X i S & D	Dong Guan S&D Optical Technology Co., Ltd. (DongGuan S&D)	Manufacturing and selling new flat panel displays	-	-	52.04%

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(4) Foreign Currency Transactions

The Group’s consolidated financial statements are presented in NT$, which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency rates prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date. Non-monetary items measured at fair value in foreign currencies are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in foreign currencies are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

(a) Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
(b) Foreign currency items within the scope of IAS 39 Financial Instruments: Recognition and Measurement are accounted for based on the accounting policy for financial instruments.
(c) Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(5) Translation of Foreign Currency Financial Statements

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following are accounted for as disposals even if an interest in the foreign operation is retained by the Group: the loss of control over a foreign operation, the loss of significant influence over a foreign operation, or the loss of joint control over a foreign operation.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or jointly controlled entity that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(6) Current and non-current distinction

An asset is classified as current when:

(a) The Group expects to realize the asset, or intends to sell or consume it, in its normal operating cycle
(b) The Group holds the asset primarily for the purpose of trading
(c) The Group expects to realize the asset within twelve months after the reporting period

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(d) The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

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

All other liabilities are classified as non-current.

(7) Cash Equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value (include fixed-term deposits that have maturities of 3 months from the date of acquisition).

(8) Financial Instruments

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

Financial assets and financial liabilities within the scope of IAS 39 Financial Instruments: Recognition and Measurement are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs..

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Financial Assets

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

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

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. A financial asset is classified as held for trading if:

i. it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
ii. on inititial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
iii. it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial asset at fair value through profit or loss; or a financial asset may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

i. it eliminates or significantly reduces a measurement or recognition inconsistency; or
ii. a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Financial assets at fair value through profit or loss are measured at fair value with changes in fair value recognized in profit or loss. Dividends or interests on financial assets at fair value through profit or loss are recognized in profit or loss (including those received during the period of initial investment). If financial assets do not have quoted prices in an active market and their fair value cannot be reliably measured, then they are classified as financial assets measured at cost on balance sheet and carried at cost net of accumulated impairment losses, if any, as at the reporting date.

Available-for-sale financial assets

Available-for-sale investments are non-derivative financial assets that are designated as available-for-sale or those not classified as financial assets at fair value through profit or loss, held-to-maturity financial assets, or loans and receivables.

Foreign exchange gains and losses and interest calculated using the effective interest method relating to monetary available-for-sale financial assets, or dividends on an available-for-sale equity instrument, are recognized in profit or loss. Subsequent measurement of available-for-sale financial assets at fair value is recognized in equity until the investment is derecognized, at which time the cumulative gain or loss is recognized in profit or loss.

If equity instrument investments do not have quoted prices in an active market and their far value cannot be reliably measured, then they are classified as financial assets measured at cost on balance sheet and carried at cost net of accumulated impairment losses, if any, as at the reporting date.

Held-to-maturity financial assets

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity when the Group has the positive intention and ability to hold it to maturity, other than those that are designated as available-for-sale, classified as financial assets at fair value through profit or loss, or meet the definition of loans and receivables.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

After initial measurement held-to-maturity financial assets are measured at amortized cost using the effective interest method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or transaction costs. The effective interest method amortization is recognized in profit or loss.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those that the Group upon initial recognition designates as available for sale, classified as at fair value through profit or loss, or those for which the holder may not recover substantially all of its initial investment.

Loans and receivables are separately presented on the balance sheet as receivables or bond investments for which no active market exists. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or transaction costs. The effective interest method amortization is recognized in profit or loss.

Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset other than the financial assets at fair value through profit or loss is impaired. A financial asset is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more loss events that has occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset. The carrying amount of the financial asset impaired, other than receivables impaired which are reduced through the use of an allowance account, is reduced directly and the amount of the loss is recognized in profit or loss.

A significant or prolonged decline in the fair value of an available-for-sale equity instrument below its cost is considered a loss event.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Other loss events include:

i significant financial difficulty of the issuer or obligor; or
ii. a breach of contract, such as a default or delinquency in interest or principal payments; or
iii. it becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
iv. the disappearance of an active market for that financial asset because of financial difficulties.

For held-to-maturity financial assets and loans and receivables measured at amortized cost, the Group first assesses individually whether objective evidence of impairment exists individually for financial asset that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exits for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows. The present value of the estimated future cash flows is discounted at the financial assets original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. Interest income is accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Receivables together with the associated allowance are written off when there is no realistic prospect of future recovery. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to profit or loss.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

In the case of equity investments classified as available-for-sale, where there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss - is removed from other comprehensive income and recognized in profit or loss. Impairment losses on equity investments are not reversed through profit or loss; increases in their fair value after impairment are recognized directly in other comprehensive income.

In the case of debt instruments classified as available-for-sale, the amount recorded for impairment is the cumulative loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss. Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recognized in profit or loss. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through profit or loss.

Derecognition of financial assets

A financial asset is derecognized when:

i. The rights to receive cash flows from the asset have expired
ii. The Group has transferred the asset and substantially all the risks and rewards of the asset have been transferred
iii. The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(b) Financial liabilities and equity

Classification between liabilities or equity

The Group classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Compound instruments

The Group evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, the Group assesses if the economic characteristics and risks of the put and call options contained in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element.

For the liability component excluding the derivatives, its fair value is determined based on the rate of interest applied at that time by the market to instruments of comparable credit status. The liability component is classified as a financial liability measured at amortized cost before the instrument is converted or settled.

For the embedded derivative that is not closely related to the host contract (for example, if the exercise price of the embedded call or put option is not approximately equal on each exercise date to the amortized cost of the host debt instrument), it is classified as a liability component and subsequently measured at fair value through profit or loss unless it qualifies for an equity component. The equity component is assigned the

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. Its carrying amount is not remeasured in the subsequent accounting periods. If the convertible bond issued does not have an equity component, it is accounted for as a hybrid instrument in accordance with the requirements under IAS 39 Financial Instruments: Recognition and Measurement.

Transaction costs are apportioned between the liability and equity components of the convertible bond based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized.

On conversion of a convertible bond before maturity, the carrying amount of the liability component being the amortized cost at the date of conversion is transferred to equity.

Financial liabilities

Financial liabilities within the scope of IAS 39 Financial Instruments: Recognition and Measurement are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. A financial liability is classified as held for trading if:

i. it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
ii. on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
iii. it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

i. it eliminates or significantly reduces a measurement or recognition inconsistency; or
ii. a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.

If the financial liabilities at fair value through profit or loss do not have quoted prices in an active market and their far value cannot be reliably measured, then they are classified as financial liabilities measured at cost on balance sheet and carried at cost as at the reporting date.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

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

Derecognition of financial liabilities

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

(c) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(d) Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices, without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation models.

(9) Derivative financial instruments

The Group uses derivative financial instruments to hedge its foreign currency risks and interest rate risks. A derivative is classified in the balance sheet as financial assets or liabilities at fair value through profit or loss (held for trading) except for derivatives that are designated effective hedging instruments which are classified as derivative financial assets or liabilities for hedging.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognized in equity.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognized in profit or loss.

(10) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Cost is presented by all the essential expenditures incurred to the ready status as being sold or finished products. Materials, work in process and finished goods are calculated on the following bases:

Raw materials - Purchase cost on a first in, first out basis

Finished goods and work in progress - Cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

(11) Investments accounted for under the equity method

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

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

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

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

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

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

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

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

The Group recognizes its interest in the jointly controlled entities using the equity method other than those that meet the criteria to be classified as held for sale. A jointly controlled entity is a joint venture that involves the establishment of a corporation, partnership or other entity.

(12) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 “Property, plant and equipment”. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items Buildings Machinery and equipment Transportation equipment Office equipment Other equipment Leasehold improvements	Useful Lives
	5`～`50 years 3`～`10 years 5 years 3`～`10 years 2`～`15 years Lower of leasehold years or useful lives

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

(13) Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.

A summary of the policies applied to the Group’s intangible assets is as follows:

Useful lives Amortization method used Internally generated or acquired	Computer software 1~5 years Amortized on a straight- line basis over the estimated useful life Acquired	Other intangible assets
		50 years Amortized on a straight- line basis over the estimated useful life Acquired

(14) Impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(15) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Provision for decommissioning, restoration and rehabilitation costs

The provision for decommissioning, restoration and rehabilitation costs arose on construction of a property, plant and equipment. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of that particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

Sales returns and allowances

A provision has been recognized for sales returns and allowances based on past experience and other known factors.

(16) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. The following specific recognition criteria must also be met before revenue is recognized:

Sale of goods

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

(a) the significant risks and rewards of ownership of the goods have transferred to the buyer;

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(b) neither continuing managerial involvement nor effective control over the goods sold have been retained;
(c) the amount of revenue can be measured reliably;
(d) it is probable that the economic benefits associated with the transaction will flow to the entity; and
(e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Interest income

For all financial assets measured at amortized cost (including loans and receivables and held-to-maturity financial assets) and available-for-sale financial assets, interest income is recorded using the effective interest rate method and recognized in profit or loss.

Dividends

Revenue is recognized when the Group’s right to receive the payment is established.

(17) Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(18) Government grants

Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Where the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related asset. When the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Where the Group receives non-monetary grants, the asset and the grant are recorded gross at nominal amounts and released to the statement of comprehensive income over the expected useful life and pattern of consumption of the benefit of the underlying asset by equal annual installments. Where loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favorable interest is regarded as additional government grant.

(19) Earnings per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the current reporting period. Diluted earnings per share is computed by taking basic earnings per share into consideration plus additional ordinary shares that would have been outstanding if the dilutive share equivalents had been issued. Net income is also adjusted for interest and other income or expenses derived from any underlying dilutive share equivalents. The weighted-average of outstanding shares is adjusted retroactively for stock dividends and employee stock bonus issues

(20) Post-employment benefits

All regular employees of the Company and its domestic subsidiaries are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company and its domestic subsidiaries. Therefore fund assets are not included in the Group’s consolidated financial statements. Pension benefits for employees of the overseas subsidiaries and the branches are provided in accordance with the respective local regulations.

For the defined contribution plan, the Company and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries and branches make contribution to the plan based on the requirements of local regulations. Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. The Group recognizes all actuarial gains and losses in the period in which they occur in other comprehensive income. Actuarial gains and losses recognized in other comprehensive income are recognized immediately in retained earnings.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(21) Income Tax

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The 10% income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.

Deferred income tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

(a) Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(b) In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

(a) Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
(b) In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized

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

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(22) Business Combinations and Goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred, the identifiable assets acquired and liabilities assumed are measured at acquisition date fair value. For each business combination, the acquirer measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are accounted for as expenses in the periods in which the costs are incurred and are classified under administrative expenses.

When the Group acquires a business, it assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at the acquisition-date fair value. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with IAS 39 Financial Instruments: Recognition and Measurement either in profit or loss or as a change to other comprehensive income. However, if the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

Goodwill is initially measured as the amount of the excess of the aggregate of the consideration transferred and the non-controlling interest over the net fair value of the identifiable assets acquired and the liabilities assumed. If this aggregate is lower than the fair value of the net assets acquired, the difference is recognized in profit or loss.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation. Goodwill disposed of in this circumstance is measured based on the relative recoverable amounts of the operation disposed of and the portion of the cash-generating unit retained.

5. Significant accounting judgements, estimates and assumptions

The preparation of the Group’s consolidated financial statements require management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability 。 affected in future periods

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(1) Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the income approach (for example the discounted cash flow model) or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

(2) Pension benefits

The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Please refer to Note 6 for more details.

(3) Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group company's domicile.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Deferred tax assets are recognized for all carryforward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies. Please refer to Note 6 for more details on unrecognized deferred tax assets as of December 31, 2013.

6. Contents of significant accounts

(1) Cash and cash equivalents

	As at
31 December 2013	31 December 2012	1 January 2012
$10,758 1,868,149	$66,258 1,637,544	$136,326 1,276,460
1,878,907 546	1,703,802 (3,413)	1,412,786 5,217
$1,879,453	$1,700,389	$1,418,003

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

	As at
31 December 2013	31 December 2012	1 January 2012
$ - 4,000	$1,271 -	$17,573 -
$4,000	$1,271	$17,573

Financial assets held for trading were not pledged.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(3) Available-for-sale financial assets

	As at
31 December 2013	31 December 2012	1 January 2012
$ 266,656 (12,655) -	$311,098 - (178,192)	$311,098 - (171,624)
$ 254,001	$132,906	$139,474

Available-for-sale financial assets were not pledged.

(4) Financial assets measured at cost

	As at
31 December 2013	31 December 2012	1 January 2012
$60,750 50,000 45,000 23,184 19,789 13,460 12,667 6,150 4,500 4,125 2,264 1,500 1,441	$60,750 50,000 50,000 23,184 - 13,460 12,667 6,150 4,500 4,125 2,202 1,500 1,441	$60,750 50,000 50,000 23,184 - 13,460 12,667 6,150 4,500 4,125 2,290 1,500 1,441
244,830 (33,376)	229,979 (28,824)	230,067 (28,898)
$211,454	$201,155	$201,169

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The fair value of the above investments in unlisted entities are not reliably measurable as the variability in the range of reasonable fair value measurements is significant for the instrument and the probabilities of the various estimates within the range cannot be reasonably assessed and used when measuring fair value. Therefore these investments are measured at cost.

Financial assets measured at cost were not pledged.

(5) Notes receivables

	As at
31 December 2013	31 December 2012	1 January 2012
$331,897 -	$272,305 -	$175,152 -
$331,897	$272,305	$175,152

Notes receivables were not pledged.

(6) Trade receivables

	As at
31 December 2013	31 December 2012	1 January 2012
$2,674,254 (6,150) 6,904	$2,603,999 (27,311) (7,158)	$2,348,415 (19,524) (378)
$2,675,008	$2,569,530	$2,328,513

(a) Trade receivables were not pledged.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(b) Trade receivables are generally on 60-120 day terms. The movements in

the provision for impairment of trade receivables are as follows:

	Individually	Collectively
	impaired	impaired	Total
As of January 1, 2013	$ -	$27,311	$27,311
Charge/reversal for the current period	-	(4,265)	(4,265)
Write off due to uncollection	-	(16,896)	(16,896)
As of 31 December 2013	$ -	$6,150	$6,150
As of January 1, 2012	$ -	$19,524	$19,524
Charge/reversal for the current period	-	(5,002)	(5,002)
Write off due to uncollection	-	12,789	12,789
As of 31 December, 2012	$ -	$27,311	$27,311

Impairment loss that was individually determined for the years ended 31 December 2013 and 2012, arose due to the fact that the counterparty was in financial difficulties. The amount of impairment loss recognized was the difference between the carrying amount of the trade receivable and the present value of its expected recoverable amount. The Group does not hold any collateral for such trade receivables. There was no impairment loss of individually accounts receivable for the years ended 31 December 2013 and 2012.

(c) Ageing analysis of trade receivables and trade receivables-related parties that are past due as at the end of the reporting period but not impaired is as follows:

As at	Neither past due nor impaired		Past due but not impaired	Past due but not impaired	Past due but not impaired		Total
		<=30 days	31~60 days	61~90 days	91~120 days	>=121 days
31 December 2013 31 December 2012 1 January 2012	$2,561,856 $2,491,124 $2,168,938	$68,340 $56,892 $113,103	$23,985 $9,633 $11,635	$6,867 $4,846 $6,231	$7,589 $3,917 $28,430	$6,37 $3,11 $17	1 $2,675,008 8 $2,569,530 6 $2,328,513

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(7) Inventories

	As of
31 December 2013 $662,494 5,940 92,972 529,166 402,378 1,692,950 (63,722) $1,629,228	31 December 2012 $580,996 7,508 80,605 445,743 533,432 1,648,284 (73,156) $1,575,128	1 January 2012
		$602,481 4,296 96,972 682,093 341,588
		1,727,430 (72,087)
		$1,655,343

The cost of inventories recognized in expenses for the years ended 31 December 2013 and 2012 were $8,287,168 and $7,858,803 respectively. The profit and loss that are related to cost of goods sold are as follows:

Loss on disposal of inventories Gain on physical inventory Loss (gain) from price reduction (recovery) of inventories Total	December 31	December 31
	2013 $8,006 (7,267) (9,434) $(8,695)	2012
		$18,392 - 1,069
		$19,461

(a) Gain from price recovery of inventories was due to the depositod obsolete products and the net realized value recovery for the year ended 31 December 2013.

(b) No inventories were pledged.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(8) Investments accounted for using the equity method
(a) The following table lists the investments accounted for using the equity method of the Group:

	As at
31 December 2013 Carrying amount Percentage of ownership (%) $214,785 20.90% 184,281 20.00% 18,971 37.50% - - $418,037	31 December 2012 Carrying amount Percentage of ownership (%) $189,965 20.90% 199,476 20.00% 16,918 37.50% - - $406,359	1 January2012
Carrying amount $214,785 184,281 18,971 - $418,037	Carrying amount $189,965 199,476 16,918 - $406,359	Carrying amount $182,589 196,345 15,420 9,202 $403,556	Percentage of ownership (%)
			20.78% 20.00% 37.50% 37.00%

(b) Investments in associates

Share of profit or loss of associates and joint ventures were $22,725 and $7,979 for the years ended 2013 and 2012, respectively. Share of other comprehensive income of associates and joint ventures were $22,183 and $16,484 for the years ended 2013 and 2012, respectively.

The carrying amount of investments in the associates for which there are published price quotations amounted to $214,785, $189,965, and $182,589, as at 31 December 2013, 31 December 2012, and 1 January 2012, respectively. The fair values of these investments were $229,215, $191,596, and $174,830, as at 31 December 2013, 31 December 2012, and 1 January 2012, respectively.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(d) The following table illustrates summarized financial information of the Group’s investment in the associates:

Total assets (100%) Total liabilities (100%) Revenue (100%) Profit (loss) (100%)	31 December 2013 $2,765,318 $424,431	As at
		31 December 2012	1 January 2012
		2013	2012
		$2,006,920 $106,330	$1,520,081 $(418,739)

(9) Property, plant and equipment

Cost: As at 1 January 2013 Additions Disposals Exchange differences Other changes As at 31 December 2013 Depreciation and impairment: As at 1 January 2013 Depreciation Impairment losses Disposals Exchange differences Other changes As at 31 December 2013 Net carrying amount as at: 31 December 2013 31 December 2012	Land $114,547 - - - - $114,547 $ - - - - - - $ - $114,547 $114,547	Buildings $1,068,922 2,733 (630) 46,163 4,605 $1,121,793 $290,163 43,802 - (24) 21,230 2,477 $357,648 $764,145 $778,759	Machinery and equipment $918,307 51,166 (53,936) 53,812 336 $969,685 $441,878 88,972 (8,958) (27,992) 14,044 - $507,944 $461,741 $476,429	Office equipment $92,599 9,148 (5,476) (7,279) 1,220 $90,212 $56,542 10,035 - (4,658) 3,658 - $65,577 $24,635 $36,057	Transportati on equipment $25,566 4,281 (2,594) 12,872 - $40,125 $4,479 6,282 - (2,432) 15,024 - $23,353 $16,772 $21,087	Other equipment $109,751 23,578 (10,304) 4,935 2,389 $130,349 $48,427 15,040 - (8,887) 15,293 - $69,873 $60,476 $61,324	Leasehold improvements $117,733 - - 6,567 - $124,300 $17,642 5,512 - 134 783 - $24,071 $100,229 $100,091	Construction in progress and equipment pending inspection $10,481 1,637 (425) 600 - $12,293 $ - - - - - - $- $12,293 $10,481	Total
									$2,457,906 92,543 (73,365) 117,670 8,550
									$2,603,304
									$859,131 169,643 (8,958) (43,859) 70,032 2,477
									$1,048,466
									$1,554,838
									$1,598,775

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Cost: As at 1 January 2012 Additions Disposals Exchange differences Other changes As at 31 December 2012 Depreciation and impairment: As at 1 January 2012 Depreciation Disposals Exchange differences Other changes As at 31 December 2012 Net carrying amount as at: 31 December 2012 1 January 2012	Land $114,547 - - - - $114,547 $ - - - - - $ - $114,547 $114,547	Buildings $1,092,370 2,872 (171) (30,499) 4,350 $1,068,922 $243,487 42,713 - (5,397) 9,360 $290,163 $778,759 $848,883	Machinery and equipment $990,765 143,535 (37,270) (174,112) (4,611) $918,307 $431,950 98,703 (21,100) (67,675) - $441,878 $476,429 $558,815	Office equipment $86,813 3,619 3,594 (4,236) 2,809 $92,599 $52,032 10,086 (4,936) (2,082) 1,442 $56,542 $36,057 $34,781	Transportati on equipment $39,550 2,860 (17,336) (948) 1,440 $25,566 $15,844 6,549 (12,786) (5,128) - $4,479 $21,087 $23,706	Other equipment $105,378 12,407 (2,417) (7,293) 1,676 $109,751 $41,919 14,344 (5,086) (2,750) - $48,427 $61,324 $63,459	Leasehold improvements $120,920 504 (378) (3,313) - $117,733 $12,263 6,012 (322) (311) - $17,642 $100,091 $108,657	Construction in progress and equipment pending inspection $13,905 5,471 - (8,895) - $10,481 $ - - - - - $- $10,481 $13,905	Total
									$2,564,248 171,268 (53,978) (229,296) 5,664
									$2,457,906
									$797,495 178,407 (44,230) (83,343) 10,802
									$859,131
									$1,598,775
									$1,766,753

(a) Please refer to Note 8 for more details on property, plant and equipment under pledge.
(b) There is no capitalization of interest due to purchase of property, plant and equipment
(c) Components of building that have different useful lives are the main building structure and air conditioning, which are depreciated over 50 years and 25 years, respectively.

(10)Impairment testing of goodwill

Goodwill acquired through business combinations have been allocated to electronic parts cash-generating unit, which is also a reportable operating segment, for impairment testing as follows:

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Carrying amount of goodwill allocated to electronic parts cash-generating unit:

As at Goodwill		Electronic unit	Electronic unit
	31 December 2013	31 December 2012	1 January 2012
	$ -	$45,171	$46,999

Electronic parts cash generating unit

When the Group performed the impairment testing on 31 Decemder 2013, it considered the relationship between fair value and carrying amount and other factors, and discovered that impairment occurred in the electronic parts cash-generating unit as a result of the acquisition of SEL Group previously. Because SEL Group could not improve its operation in the short term, and its operation declined sharply this year, its fair value is significantly lower than its carrying amount.

The recoverable amount of the electronic parts cash-generating unit has been determined based on a value in use calculation using cash flow projections from financial budgets approved by management covering a five-year period. The projected cash flows have been updated to reflect the change in demand for products and services. The pre-tax discount rate applied to cash flow projections was 10.3% (2012: 10.5%) and cash flows beyond the five-year period were extrapolated using a 3.0% growth rate (2012: 5.0%) that is the same as the long-term average growth rate for the electronics industry. As a result of this analysis, management has recognized an impairment loss of $45,171 against goodwill previously carried at $45,171.

Key assumptions used in value-in-use calculations

The calculation of value-in-use for both electronics and fire prevention equipment units are most sensitive to the following assumptions:

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(a) Gross margin
(b) Discount rates
(c) Raw materials price inflation
(d) Market share during the budget period; and
(e) Growth rate used to extrapolate cash flows beyond the budget period.

Gross margins - Gross margins are based on average values achieved in the three years preceding the start of the budget period. These are increased over the budget period for anticipated efficiency improvements. An increase of 1.% per annum was applied for the electronics unit.

Discount rates - Discount rates reflect the current market assessment of the risks specific to each cash generating unit (including the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted). The discount rate was estimated based on the weighted average cost of capital (WACC) for the Group, taking into account the particular situations of the Group and its operating segments. The WACC includes both the cost of liabilities and cost of equities. The cost of equities is derived from the expected returns of the Group’s investors on capital, where the cost of liabilities is measured by the interest bearing loans that the Group has obligation to settle. Specific risk relating to the operating segments is accounted for by considering the individual beta factor which is evaluated annually and based on publicly available market information.

Raw materials price inflation - Estimates are obtained from published indices for the countries from which materials are sourced, as well as data relating to specific commodities. Forecast figures are used if data is publicly available (principally for Eurozone and the United States), otherwise past actual raw material price movements have been used as an indicator of future price movements.

Market share assumptions - These assumptions are important because, as well as using industry data for estimating growth rates (as noted below), management would assesse how the change in the unit’s position, relative to its competitors, might take place over the budget period.

Growth rate estimates - Rates are based on published industry research. For the reasons explained above, the long-term average growth rate used to extrapolate the budget for the fire prevention equipment unit has been adjusted because of the acquisition of a significant industry patent.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Sensitivity to changes in assumptions

With regard to the assessment of value-in-use of the electronic cash-generating unit, management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the unit to materially exceed its recoverable amount.

(11)Other non-current assets

	As of
December 31, 2013 $45,822 21,820 15,865 2,361 59,369 $145,237	December 31, 2012 $44,358 23,673 13,707 2,361 83,817 $167,916	January 1, 2012
		$46,768 40,259 9,083 2,361 49,464
		$147,935

Long-term prepaid rents were payments for land use rights as at 31 December 2013, 31 December 2012, and 1 January 2012.

No Other non-current assets was pledged.

(12)Short-term loans

(a) Details as follows:

Unsecured bank loans		As of
	December 31,2012 $1,330,911	December 31,2012 $1,538,963	January 1, 2012
			$1,681,390

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(b)

Interest rates due date	Annual ended December 31,2013 1.00% - 6.57% 2014/01/09 – 2014/07/26	Annual ended December 31,2012
		1.00% - 3.90% 2013/01/03 – 2013/05/15

(c) The Group’s unused short-term lines of credits amounted to$667,154 $$420,964 and $467,872 as of December 31, 2013, December 31, 2012, and January 1, 2012, respectively.

(13)Financial liabilities at fair value through profit or loss

	As at
31 December 2013 $13,449 - $13,449 $13,449 - $13,449	31 December 2012 $100,097 4 $100,101 $100,097 4 $100,101	1 January 2012
		$116,966 937
		$117,903
		$117,903 -
		$117,903

(14)Long-term Deferred Revenue

(a) Details as follows:

Beginning balance Received during the period Released to the statement of comprehensive income Ending Balance	For the years ended 31 December	For the years ended 31 December
	2013	2012
	$18,512 (410) 1,082	$19,549 (387) (560)
	$19,184	$18,512

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Deferred revenue - related to assets		As at
	31 December 2013	31 December 2012	1 January 2012
	$19,184	$18,512	$19,459

(b) Government grants have been received for the purchase of certain items of property, plant and equipment. There are no unfulfilled conditions or contingencies attached to these grants.

(15)Bonds payable

(a) Details as follows:

	As at
31 December 2013	31 December 2012	1 January 2012
$ - -	$23,200 (926)	$283,800 (6,617)
- -	22,274 (3,172)	277,183 (277,183)
$-	$19,102	$-
$-	$4	$937
$-	$1,190	$12,000

(b) Issuance of convertible bonds:

On March 5, 2012, the Company issued 3,000 shares of non-interest bearing unsecured convertible bonds (the Bonds) at $100 par value, totaling NT$300,000 in Taiwan. The bonds have a term of three years and will mature on March 4, 2015. The conversion price was initially set at NT$22.7 (in dollars) per share. The investors may convert the bonds into the Company’s common stock from April 6, 2012 to February 23, 2015. The Company adopted the R.O.C. SFAS No.36 to record the bonds’ stock option portion and liability portion separately, which are recognized as equity and long-term liability, respectively.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

On May 25, 2010, the Company issued 3,000 shares of non-interest bearing unsecured convertible bonds (the “Bonds”) at $100 par value, totaling NT$300,000 in Taiwan. The Bonds have a term of three years and will mature on May 24, 2013. The conversion price was initially set at NT$24.2 (in dollars) per share. The bondholders have the right to ask to redeem the bonds in cash at par value plus interest – premium (101% of the bond’s face value from May 25, 2012). The investors may convert the Bonds into the Company’s common stock from August 24, 2011 to April 15, 2013. The Company adopted the R.O.C. SFAS No.36 to record the Bonds’ stock option portion and liability portion separately, which are recognized as equity and long-term liability, respectively.

(c) For the convertible bonds – issued on March 5, 2012, the Company adjusted the conversion price from NT$22.70 to NT$21.10 (in dollars) per share at July 30, 2012. The investors had converted 2,800 units at NT$21.10 (in dollars) into the Company’s common stock for the year ended December 31, 2012.

For the convertible bonds issued on May 25, 2010, the Company adjusted the conversion price from NT$24.20 to NT$23.20 (in dollars) per share, later adjusted to NT$21.60 (in dollars) per share at July 18, 2011, and further adjusted to NT$20.10 (in dollars) per share at July 30, 2012. The investors had converted 117 units at NT$23.20 (in dollars) into the Company’s common stock. 528 units were converted at NT$21.60 (in dollars) , and the remaining 2,278 units were converted at NT$20.10 (in dollars). For the year ended December 31, 2012, a total of 2,923 units were converted into the Company’s common stock.

(d) The Company analyzed the aforementioned financial instruments under the requirements of IFRS 7 and determine they are compound financial instruments. According to the analysis, the Company allocated the redemption price to constituent elements of liabilities and equity. The Company reduced the fair value of the instruments to the constituent elements of liabilities that was measured individually and allocated the carrying amount to constituent elements of equity. The difference between constituent elements of liabilities and its carrying amount is recognized as profit and loss. The difference between constituent elements of equity and its carrying amount is recognized as capital surplus-stock options. Issued convertible bonds recognized as financial liabilities at fair value through profit or loss were $-, $1,190, $12,000 as at 31 December 2013, 2012 and 1 January 2012, respectively.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(e) For capital management and distribution of funds, the company bought back 45 units of its convertible bonds with its working capital in the amount of $ 4,432.

(16)Long-term loans

Details of long-term loans as of December 31, 2013, December 31, 2012, and January 1, 2012 are as follows:

Lenders	As at 31 December 2013	Interest Rate(%)	Maturity date and terms of repayment
DBS and seven lending institutions of syndicated credits The Bank of Tokyo-Mitsubishi UFJ,Ltd Subtotal Less: current portion Total Lenders	$518,000 10,460	90 day average short-term interest rate of Taiwan’s secondary market posted by Reuters + 1.2% floating rate 1.50% Interest Rate(%)	Effective September 1, 2011 to September 1, 2016. Principal is repaid in 15 quarterly payments with interest payments due monthly. Effective August 7, 2013 to July 9, 2018. Principal is repaid in 3 monthly payments with interest payments due monthly. Maturity date and terms of repayment
	528,460 (182,000)
	$346,460
	As at 31 December 2012
DBS and seven lending institutions of syndicated credits The Bank of Tokyo-Mitsubishi UFJ,Ltd Subtotal Less: current portion Total	$700,000 4,361	90 day average short-term interest rate of Taiwan’s secondary market posted by Reuters + 1.2% floating rate 1.50%	Effective September 1, 2011 to September 1, 2016. Principal is repaid in 15 quarterly payments with interest payments due monthly. Effective August 7, 2011 to July 7, 2014. Principal is repaid in 3 year payments with interest payments due monthly.
	704,361 (182,000)
	$522,361

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Lenders	As at 1 January2012	Interest Rate(%)	Maturity date and terms of repayment
DBS and seven lending institutions of syndicated credits The Bank of Tokyo-Mitsubishi UFJ,Ltd Subtotal Less: current portion Total	$700,000 5,045	90 day average short-term interest rate of Taiwan’s secondary market posted by Reuters + 1.2% floating rate 1.50%	Effective September 1, 2011 to September 1, 2016. Principal is repaid in 15 quarterly payments with interest payments due monthly. Effective August 7, 2011 to July 7, 2014.Principal is repaid in 3 year payments with interest payments due monthly.
	705,045 -
	$705,045

(a) In September 2011,the Company has entered into a syndicated loan agreement with DBS and seven lending institutions of syndicated credits which contain the following restrictive covenants at each end of a quarter, the sixth month, and the year during the term of the loan:
i. The Current Ratio shall not be lower than 100%;
ii. The Liability Ratio shall not be higher than 160%;
iii. The Times of Interest Coverage shall not be lower than 4 times;
iv. The Tangible Net Value shall not be less than 2.5 billion.

Certain land and buildings were pledged as first-lien security for secured bank loans with DBS and seven lending institutions of syndicated credits. Please refer to Note 8 for more details.

(17)Post-employment benefits

Defined contribution plan

The Company and its domestic subsidiaries adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company and its domestic subsidiaries will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company and its domestic subsidiaries have made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

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

Expenses under the defined contribution plan for the years ended 31 December 2013 and 2012 were $24,021 and $23,440, respectively.

Defined benefits plan

The Company and its domestic subsidiaries adopt a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company and its domestic subsidiaries contribute an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee.

Pension costs recognized in profit or loss for the years ended 31 December 2013 and 2012:

Current period service costs Interest cost Expected return on plan assets Past service cost Total	For the years ended 31 December	For the years ended 31 December
	2013	2012
	$1,944 1,626 (947) -	$2,173 1,693 (1,042) -
	$2,623	$2,824

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The benefit expense under the defined benefits plan recognized in the statement of comprehensive income:

Operating costs Selling expenses Administrative expenses Research and development expenses Total	For the years ended 31 December	For the years ended 31 December
	2013	2012
	$735 547 549 792	$789 565 645 825
	$2,623	$2,824

The cumulative amount of actuarial gains and losses recognized in other comprehensive income is as follows:

Balance as of 1 January Actuarial gains and losses for the period Balance as of 31 December	2013	2012
	$(10,405) (20,921)	$ - (10,405)
	$(31,326)	$(10,405)

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

	As at
31 December 2013	31 December 2012 $108,409 (54,105) 54,304 - $54,304	1 January 2012
$132,635 (58,267)		$96,746 (52,093)
74,368 -		44,653 -
$74,368		$44,653

Changes in present value of the defined benefit obligation are as follows:

Defined benefit obligation at 1 January Current service cost Interest cost Benefits paid Actuarial losses Defined benefit obligation at 31 December	2013	2012 $96,746 2,173 1,693 (2,026) 9,823 $108,409
	$108,409 1,944 1,626 - 20,656
	$132,635

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Changes in fair value of plan assets are as follows:

Plan assets, at fair value at 1 January Expected return on plan assets Contributions by employer Benefits paid Actuarial losses Plan assets, at fair value at 31 December	2013 $54,105 947 3,480 - (265) $58,267	2012
		$52,093 1,042 3,579 (2,026) (583)
		$54,105

The Group expects to contribute $3,480 to its defined benefit plan during the 12 months beginning after 31 December 2013.

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

(a) Cash (b) Equity instruments (c) Debt instruments (d) Others	Pensionplan(%)as at	Pensionplan(%)as at	Pensionplan(%)as at
	31 December 2013 24.39 8.56 14.72 52.33	31 December 2012 24.51 9.17 20.33 45.99	1 January 2012
			23.87 10.17 19.06 46.90

The actual returns on plan asset of the Group were $682 and $459 for the years ended 2013 and 2012, respectively.

Employee pension fund is deposited under a trust administered by the Bank of Taiwan. The overall expected rate of return on assets is determined based on historical trend and analyst’s expectation on the asset’s return in its market over the obligation period. Furthermore, the utilization of the fund by the labor pension fund supervisory committee and the fact that the minimum earnings are guaranteed to be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks are also taken into consideration in determining the expected rate of return on assets.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The principal assumptions used in determining the Group’s defined benefit plan are shown below:

plan are shown below:
Discount rate Expected rate of return on plan assets Expected rate of salary increases		As at
	31 December 2013	31 December 2012	1 January 2012
	2.00% 2.00% 3.00%	1.50% 1.75% 1.60%	1.75% 2.00% 2.00%

A 0.5 percentage point change in discount rate on defined benefit obligation:

Effect on the defined benefit obligation	2013	2013	2012	2012
	Discount rate Increase By0.5%	Discount rate Decrease By0.5%	Discount rate Increase By0.5%	Discount rate Decrease By0.5%
	$(10,261)	$11,424	$(8,488)	$9,464

Other information on the defined benefit plan is as follows:

Defined benefit obligation at present value Plan assets at fair value Surplus (deficit) in plan Experience adjustments on plan liabilities Experience adjustments on plan assets	2013 $132,635 (58,267) $74,368 $5,159 265	2012
		$108,409 (54,105)
		$54,304
		$(9,822) 583

(18) Equities

(a) Common stock

The Company’s authorized and issued capital was $4,500,000 as at 1 January 2012, each at a par value of NT$10. The Company’s paid-in capital were $1,795,162 divided into 179,516 thousand shares with par value of NT10 each as at 1 January 2012.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The investors converted the Company’s convertible bonds into the Company’s common stock by issuing new common shares in the amount of $560,600. The effective dates of capital increase were July 10, 2012 and Nov 8, 2012. As of December 31, 2012, the Company’s authorized capital was $4,500,000, with paid-in capital of NT$2,000,155 divided into 200,015 thousand shares with par value of NT$10 each.

The investors converted the Company’s convertible bonds into the Company’s common stock by issuing new common shares in the amount of $23,200. As of December 31, 2013, the Company’s authorized capital was $4,500,000, with paid-in capital of $2,076,709 divided into 207,670 thousand shares with par value of NT$10 each.

(b) Capital surplus

According to the Company Act, the capital reserve shall not be used except for making good the deficit of the company. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them. Details as follows:

	As at
31 December 2013 $795,097 5,749 (3,930) 705 - $797,621	31 December 2012 $844,968 5,749 (3,877) 705 1,190 $848,735	1 January 2012
		$545,192 5,749 - 705 12,000
		$563,646

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(c) Legal reserve

The Company Act provides that companies must retain at least 10% of their annual earnings, as defined in the Act, until such retention equals the amount of paid-in capital. This retention is accounted for as a legal reserve account. When the Company incurs no loss, it may distribute the portion of legal serve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

(d) Special reserve

When the Company distributed the earnings of 2011 and 2012, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed.

On a public company's first-time adoption of the TIFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside an equal amount of special reserve. Following a company’s adoption of the TIFRS for the preparation of its financial reports, when distributing distributable earnings, it shall set aside to special reserve, from the profit/loss of the current period and the undistributed earnings from the previous period, an amount equal to “other net deductions from shareholders’ equity for the current fiscal year, provided that if the company has already set aside special reserve according to the requirements in the preceding point, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(e) As at the year ended 1 January 2013, the Company’s first-time adoption of the special reserve was $178,457. The Company did not reverse any special reserve as a result of using, deposing of or reclassification of related assets.
(f) Retained earnings and dividend policies
i. According to the Company’s Articles of Incorporation, the appropriations of retained earnings consisted of the following:

The revised Company Act, effective January 2012, provides that the appropriation for legal capital reserve shall be made until the reserve equals the company’s paid-in capital. The reserve may be used to offset a deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of paid-in capital if the Company incurs no loss.

j Appropriation between 1% and 15% as bonus to employees;
k Appropriation as directors' and supervisors' bonuses not higher than 3% of the earnings;
l Other appropriation to shareholders.

As the Company’s industry is undergoing growth development stage to reach higher growth, additional funding may be required in the near future. The Company will not distribute cash dividends higher than 20% of total appropriation to shareholders. In the event that the Company receives sufficient funds for current year’s capital expenditure, more than 50% of total appropriation to shareholders will be distributed as cash dividends.

ii. For the years ended 2013 and 2012, the Company has estimated the amounts of the employee bonuses and remuneration to directors as follows:

Employee bonus-cash Directors’ remuneration	2013 $12,500 10,000 $22,500	2012
		$8,000 8,000
		$16,000

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The estimates were based on post-tax net income of the period and the Company’s Articles of Incorporation, and considered factors such as appropriation to legal reserve, etc. The estimated employee bonuses and remuneration to directors and supervisors were recognized as operating costs or operating expense for the period. If the Board modified the estimates significantly in the subsequent periods, the Company will recognize the change as an adjustment to current income. The difference between the estimation and the resolution of shareholders’ meeting will be recognized in profit or loss of the subsequent year. The number of shares distributed as share dividends was calculated based on the closing price one day earlier than the date of shareholders’ meeting and considered the impacts of ex-right/ex-dividend.

iii. Detail of the 2012 earnings distribution and dividends per share as approved by the shareholders’ meeting on 10 June 2013 is as follows:

Common stock -cash dividend Legal reserve Directors’ remuneration Employee bonus`－`cash Capital surplus- Cash dividends Total	Appropriation of earnings 2012 $353,041 54,749 8,000 8,000 62,301 $486,091	Dividend per share(NT$)
		2012
		$1.7 - - - 0.3

There is no significant difference between the actual employee bonuses and remuneration to directors and supervisors distributed from the 2012’s earnings and the estimated amount in the financial statements for the year ended 2012

Information on the Board of Directors’ recommendations and shareholders’ approval regarding the employee bonuses and remuneration to directors and supervisors can be obtained from the “Market Observation Post System” on the website of the TWSE.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(e) Non-controlling interests

Beginning balance Profit (loss) attributable to non-controlling interests Other comprehensive income, attributable to non-controlling interests, net of tax: Exchange differences resulting from translating the financial statements of a foreign operation Increase (decrease) in non-controlling interests Ending balance	For theyears ended 31 December	For theyears ended 31 December
	2013 $138,187 (54,837) (9,810) 7,257 $80,797	2012
		$252,665 (69,444) (21,308) (23,726) $138,187

(19)Operating revenue

Sale revenue Less: Sales returns, discounts and allowances Total	For theyears ended 31 December	For theyears ended 31 December
	2013 $10,604,411 (49,150) $10,555,261	2012
		$10,038,933 (27,315)
		$10,011,618

(20)Summary of employee benefits, depreciation and amortization expenses by function during the years ended 31 December 2013 and 2012:

			For theyears ended 31 December	For theyears ended 31 December	For theyears ended 31 December
		2013			2012
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits expense
Salaries	$594,943	$652,977	$1,247,920	$607,220	$583,543	$1,190,763
Labor and health insurance	39,425	78,850	118,275	28,929	61,145	90,074
Pension	5,241	21,403	26,644	7,275	18,989	26,264
Other employee benefits expense	56,630	50,247	106,877	50,243	44,711	94,954
Depreciation	109,736	59,907	169,643	123,430	54,977	178,407
Amortization	24,537	41,540	66,077	24,333	36,402	60,735

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(21)Non-operating income and expenses
(a) Other income

Bad debt reversal Interest income Dividend income Others Total	For theyears ended 31 December	For theyears ended 31 December
	2013 $16,896 6,754 5,630 125,557 $154,837	2012
		$2,428 7,367 14,681 87,947
		$112,423

(b) Other gains and losses

Gain of financial instruments at fair value through profit or loss Foreign exchange gains (losses), net Other impairment losses Loss on disposal of investments Loss on impairment of financial instruments Losses on disposal of property, plant and equipment Others Total	For theyears ended 31 December	For theyears ended 31 December
	2013 $86,647 57,630 (53,876) (44,352) (17,154) (4,243) (31,093) $(6,441)	2012
		$917 25,261 - (15,238) - (15,189) (19,590)
		$(23,839)

(b) Finance costs

Interest on loans from bank Interest on bonds payable Total finance costs	For theyears ended 31 December	For theyears ended 31 December
	2013 $37,040 35 $37,075	2012
		$50,093 10,851
		$60,944

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(22)Components of other comprehensive income

For the year ended 31 December 2013:

Exchange differences resulting from translating the financial statements of a foreign operation Unrealized gains (losses) from available-for-sale financial assets Actuarial gains or losses on defined benefits plan Share of other comprehensive income of associates and joint ventures accounted for using the equity method Total of other comprehensive income	Arising during the period	Reclassification adjustments duringtheperiod	Other comprehensive income,before tax	Income tax relating to components of other comprehensive income	Other comprehensive income,net of tax
	$170,153 178,192 (20,921) 22,183	$ - - - -	$170,153 178,192 (20,921) 22,183	$(33,470) - 3,556 130	$136,683 178,192 (17,365) 22,313
	$349,607	$-	$349,607	$(29,784)	$319,823

For the year ended 31 December 2012

Exchange differences resulting from translating the financial statements of a foreign operation Unrealized gains losses from available-for-sale financial assets Actuarial gains or losses on defined benefits plan Share of other comprehensive income of associates and joint ventures accounted for using the equity method Total of other comprehensive income	Arising during the period	Reclassification adjustments duringtheperiod	Other comprehensive income,before tax	Income tax relating to components of other comprehensive income	Other comprehensive income,net of tax
	$(119,243) (6,568) (10,405) 16,484	$ - - - -	$(119,243) (6,568) (10,405) 16,484	$16,459 - 1,757 95	$(102,784) (6,568) (8,648) 16,579
	$(119,732)	$-	$(119,732)	$18,311	$(101,421)

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(23)Income tax

The major components of income tax expense are as follows:

Income tax expense recognized in profit or loss

For the years ended 31 December 2013 2012 Current income tax expense : Current income tax charge $210,037 $221,328 Adjustments in respect of current income tax of prior periods 1,799 (1,621) Deferred tax expense (income): Deferred tax expense (income) relating to origination and reversal of temporary differences 46,782 26,263 Total income tax expense $258,618 $245,970 Income tax relating to components of other comprehensive income For the years ended 31 December 2013 2012 Deferred tax expense (income): Unrealized gains (losses) from available-for-sale financial assets $33,470 $(16,459) Actuarial gains or losses on defined benefits plan (3,556) (1,757) Share of other comprehensive income of associates and joint ventures accounted for using the equity method (130) (95) Income tax relating to components of other comprehensive income $29,784 $(18,311)	For the years ended 31 December	For the years ended 31 December
		2012
		$221,328 (1,621) 26,263
		$245,970
Deferred tax expense (income): Unrealized gains (losses) from available-for-sale financial assets Actuarial gains or losses on defined benefits plan Share of other comprehensive income of associates and joint ventures accounted for using the equity method Income tax relating to components of other comprehensive income
	2013 $33,470 (3,556) (130) $29,784	2012
		$(16,459) (1,757) (95)
		$(18,311)

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

Accounting profit (loss) before tax from continuing operations Tax at the domestic rates applicable to profits in the country concerned Tax effect of expenses not deductible for tax purposes 10% surtax on undistributed retained earnings Adjustments in respect of current income tax of prior periods Total income tax expense recognized in profit or loss	For the years ended 31 December	For the years ended 31 December
	2013 $867,044 $269,872 (19,876) 6,823 1,799 $258,618	2012
		$725,021
		$267,006 (25,547) 6,132 (1,621)
		$245,970

Deferred tax assets (liabilities) relate to the following:

For the year ended 31 December 2013

Temporary differences Exchange differences on translation of foreign operations Unrealized foreign exchange gains or losses loss from price recovery (reduction) of inventories Revaluations of financial assets and liabilities at fair value through profit or loss Investments accounted for using the equity method Unrealized intragroup profits and losses Actuarial gains or losses on defined benefits plan Pension cost Convertible Bond Allowance for doubtful accounts Impairment on financial instruments Deferred tax income/ (expense) Net deferred tax assets/(liabilities) Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	Balance as of January1 $(15,305) 15,573 2,300 6,798 (82,330) 1,581 2,640 7,249 756 - - $(60,738) $29,647 $90,385	Recognized in profit or loss $6,040 (16,240) (97) (5,030) (31,934) (1,581) (871) 68 - (53) 2,916 $(46,782)	Recognized in other comprehensive income $(33,470) - - - 130 - 3,556 - - - - $(29,784)	Balance as of June 30
				$(42,735) (667) 2,203 1,768 (114,134) - 5,325 7,317 756 (53) 2,916
				$(137,304)
				$28,175
				$165,479

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

For the year ended 31 December 2012

Temporary differences Exchange differences on translation of foreign operations Unrealized foreign exchange gains or losses loss from price recovery (reduction) of inventories Revaluations of financial assets and liabilities at fair value through profit or loss Investments accounted for using the equity method Unrealized intragroup profits and losses Actuarial gains or losses on defined benefits plan Pension cost Convertible Bond Deferred tax income/ (expense) Net deferred tax assets/(liabilities) Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	Balance as of January1 $(31,859) 10,339 1,457 9,012 (51,543) 1,066 7,591 1,139 12 (52,786) $34,138 $86,924	Recognized in profit or loss $- 5,234 843 (2,214) (30,787) 515 (6,708) 6,110 744 $(26,263)	Recognized in other comprehensive income $16,554 - - - - - 1,757 - - $18,311	Balance as of June 30
				$(15,305) 15,573 2,300 6,798 (82,330) 1,581 2,640 7,249 756
				$(60,738)
				$29,647
				$90,385

Unrecognized deferred tax liabilities relating to the investment in subsidiaries

The Group did not recognize any deferred tax liability for taxes that would be payable on the unremitted earnings of the Group’s overseas subsidiaries, as the Group has determined that undistributed profits of its subsidiaries will not be distributed in the foreseeable future. As at 31 December 2013, 31 December 2012, and 1 January 2012, the taxable temporary differences associated with investment in subsidiaries, for which deferred tax liability has not been recognized, aggregated to $71,268, $83,971 and $59,323, respectively.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Imputation credit information

Balances of imputation credit amounts		As at
	31 December 2013 $51,558	31 December 2012 $27,546	1 January 2012
			$38,560

The expected creditable ratio for 2013 and the actual creditable ratio for 2012 were 11.62% and 12. 21%, respectively.

Information of the Company’s earnings generated

	As at
31 December 2013 $382 865,052 $865,434	31 December 2012 $382 698,408 $698,790	1 January 2012
		$382 544,273
		$544,655

The assessment of income tax returns

As of 31 December 2013, the assessment of the income tax returns of the Company and its subsidiaries is as follows:

The assessment of income tax

	The assessment of income tax
The Company Subsidiary- Kwan-Ze Corporation Ltd. Subsidiary- Digi O2 International Co., Ltd. Subsidiary- T-CONN Precision Co., Ltd.	returns
	Assessed and approved up to 2011 Assessed and approved up to 2011 Assessed and approved up to 2011 Assessed and approved up to 2011

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(24)Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year.

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

(a) Basic earnings per share Profit attributable to ordinary equity holders of the Company Weighted average number of ordinary shares outstanding for basic earnings per share (in thousands) (note) Basic earnings per share (NT$) (b) Diluted earnings per share Profit attributable to ordinary equity holders of the Company Less: Interest expense from convertible bonds Profit attributable to ordinary equity holders of the Company after dilution Weighted average number of ordinary shares outstanding for basic earnings per share (in thousands)	For the years ended 31 December	For the years ended 31 December
	2013 $663,263 207,588 $3.20 $663,263 35 $663,298	2012
		$548,495
		187,255
		$2.93
		$ 548,495 -
		$ 548,495

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Effect of dilution: Employee bonus-stock (in thousands) Convertible bonds (in thousands) Weighted average number of ordinary shares outstanding after dilution (in thousands) Diluted earnings per share (NT$)	For the years ended 31 December	For the years ended 31 December
	2013 313 - 207,901 $3.19	2012
		491 -
		187,746
		$2.92

Note: Weighted average number of ordinary shares is calculated at conversion date.

(25) Changes in parent’s interest in subsidiaries

Acquisition of additional interest in a subsidiary

(1) The Group revised its investment structure as at 1 January 2012: The Company transferred its holdings of 51.06% of HK CMK to its subsidiaries, SEL , of which the Company held 53.82%; therefore, SEL’s holdings of HK CMK rose to 100%. After the adjustment, the Company’s holdings of SEL was at 53.82%. Furthermore, the Company paid US$940,079 to non-controlling interest holders to purchase 10.66% of SEL’s equity as of 9 November 2012, and its holdings increased to 64.48%.
(2) The Group paid US$165,971 to non-controlling interest holders to purchase 34.3% of HK Sinact’s and JY Sinact’s equity as of 15 February 2012. From then on, the Group holds 100% ownership of HK Sinact and JY Sinact.

7. Related party transactions

(1) Significant transactions with related parties

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(a) Purchases

Other related parties	For the years ended 31 December	For the years ended 31 December
	2013 $14,547	2012
		$13,499

The purchase price from the above related parties was determined through mutual agreement based on the market rates. The payment terms from the related party suppliers are comparable with third party suppliers and are set between one to four months.

(b) Amounts owed to related parties

Other related parties		As at
	31 December 2013 $1,082	31 December 2012 $14,990	1 January 2012 $1,826

Short-term employee benefits Post-employment benefits Total	For the years ended 31 December	For the years ended 31 December
	2013 $69,225 25,868 $95,093	2012
		$40,946 24,916
		$65,862

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

8. Assets pledged as security

The following table lists assets of the Group pledged as security:

Assetspledged for security	Carryingamount	Carryingamount	Carryingamount	Secured liabilities
	2013.12.31	2012.12.31	2012.1.1
Property, plant and equipment - land Property, plant and equipment –buildings(carrying value) Land use rights Total	$114,547 115,435 -	$114,547 194,389 -	$114,547 300,835 -	Long-term loans Long-term loans Short-term loans
	$229,983	$308,936	$440,734

9. SIGNIFICANT CONTINGENCIES AND UNRECOGNIZED CONTRACT COMMITMENTS

(1) The Company provided guarantees for subsidiaries’ financing to banks for the years ended 31 December 2013 and 2012. Please refer to Note 13.(1)(b).
(2) The Company’s facilities from DBS and seven lending institutions of syndicated credits made in September 2011 was $700,000. For related commitment please refer to Note 6.(16).

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT SUBSEQUENT EVENTS

None.

12. OTHERS

(1) Categories of financial instruments

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Financial assets

	As at	1 January 2012 $17,573 - 17,573 139,474 201,169 1,281,677 2,503,665 92,414 3,877,756 $4,235,972
31 December 2013 $ - 4,000 4,000 254,001 211,454 1,868,695 3,006,905 124,412 5,000,012 $5,469,467	31 December 2013 $1,271 - 1,271 132,906 201,155 1,634,131 2,841,835 98,579 4,574,545 $4,909,877 As at
31 December 2013	31 December 2012 $1,538,963 1,626,004 22,274 704,361 3,891,602 100,097 4 100,101 $3,991,703	1 January 2012
$1,330,911 1,916,990 - 528,460		$1,681,390 1,564,807 277,183 705,045
3,776,361		4,228,425
13,449 -		116,966 937
13,449		117,903
$3,789,810		$4,346,328

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(2) Financial risk management objectives and policies

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

The Group has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Group complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk, interest rate risk and other price risk (such as equity risk).

In practice, it is rarely the case that a single risk variable will change independently from other risk variable, there is usually interdependencies between risk variables. However the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

Foreign currency risk

The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense are denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign subsidiaries.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Group has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore natural hedge is received. The Group also uses forward contracts to hedge the foreign currency risk on certain items denominated in foreign currencies. Hedge accounting is not applied as they did not qualify for hedge accounting criteria. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Group.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Group’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period. The Group’s foreign currency risk is mainly related to the volatility in the exchange rates for USD and RMB.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s loans at variable interest rates and bank loans with fixed interest rates.

The Group manages interest rate risk by maintaining an appropriate portfolio of fixed and floating interest rates.

Equity price risk

The Group’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group’s listed equity securities are classified under available-for-sale financial assets, while unlisted equity securities are classified as financial assets measured at cost. The Group manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Group’s senior management on a regular basis. The Group’s Board of Directors reviews and approves all equity investment decisions.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(a) Pre-tax sensitivity analysis of changes in related risk factors for the years ended December 31, 2013 and 2012 are as follows:

For the year ended 31 December 2013

Main Risk Foreign currency risk Interest rate risk Equity price risk	Fluctuation NTD/USD rate +/− 1% NTD/RMB rate +/− 1% Market rate +/− 10 basis points Stock price +/− 10%	Sensitivity of profit/loss +/−34,749 +/− 9 +/− 1,859 -	Sensitivity of equity
			+/− 2,553 +/− 26,942 - +/− 25,400

For the year ended 31 December 2012

Main Risk Foreign currency risk Interest rate risk Equity price risk	Main Risk NTD/USD rate +/− 1% NTD/RMB rate +/− 1% Market rate +/− 10 basis points Stock price +/− 10%	Sensitivity of profit/loss +/− 21,919 +/− 1,738 +/− 2,243 -	Sensitivity of equity
			+/− 5,699 +/− 26,380 - +/− 13,291

(4) Credit risk management

Credit risk is the risk that a counterparty will not meet its obligations under a contract, leading to a financial loss. The Group is exposed to credit risk from operating activities (primarily for accounts receivables and notes receivables) and from its financing activities, including bank deposits and other financial instruments.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to customer credit risk management. Credit limits are established for all customers based on their financial positions, ratings from credit rating agencies, historical experiences, prevailing economic condition and the Group’s internal rating criteria, etc. Certain customer’s credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment or insurance.

As of 31 December 2013, 31 December 2012, and 1 January 2012, amounts receivables from top ten customers represented 23.47%, 13.21% and 18.36% of the total accounts receivables of the Group, respectively. The credit concentration risk of other accounts receivables is insignificant.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Group’s treasury in accordance with the Group’s policy. The Group only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating and with no significant default risk. Consequently, there is no significant credit risk for these counter parties.

(5) Liquidity risk management

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments, bank loans, convertible bonds and finance leases. The table below summarizes the maturity profile of the Group’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to loans with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Non-derivative financial instruments

As at 31 December 2013 Loans Notes and accounts payable As at 31 December 2012 Loans Notes and accounts payable Convertible bonds As at 1 January 2012 Loans Notes and accounts payable Convertible bonds	Less than 1 year $1,540,884 $1,916,990 $1,753,357 $1,626,004 $3,172 $1,724,222 $1,564,807 $277,183	2 to 3years $343,297 - $4,457 - $19,102 $5,154 - -	4 to 5years - - $529,356 - - $715,154 - -	> 5years - - - - - - - -	Total
					$1,884,181 $1,916,990 $2,287,170 $1,626,004 $22,274 $2,444,530 $1,564,807 $277,183

(6) Fair values of financial instruments
(a) the methods and assumptions applied in determining the fair value of financial instruments:

The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

i. The carrying amount of cash and cash equivalents, accounts receivables, accounts payable and other current liabilities approximate their fair value.
ii. For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities and bonds) at the reporting date.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

iii. Fair value of equity instruments without market quotations (including unquoted public company and private company equity securities) are estimated using the market method valuation techniques based on parameters such as recent fund raising activities, valuation of similar companies, individual company’s development, market conditions and other economic indicators.
iv. The fair value of derivative financial instrument is based on market quotations. For unquoted derivatives that are not options, the fair value is determined based on discounted cash flow analysis using interest rate yield curve for the contract period. Fair value of option-based derivative financial instruments is obtained using the option pricing model.
(b) Fair value of financial instruments measured at amortized cost

The carrying amount of the Group’s financial assets and liabilities measured at amortized cost approximate their fair value.

The following table contains the fair value of financial instruments after initial recognition and the details of the three levels of fair value hierarchy:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

As at 31 December 2013 Financial assets: Financial assets at fair value through profit or loss Forward foreign exchange contracts Fund Financial liabilities: Financial liabilities at fair value through profit or loss Forward foreign exchange contracts As at 31 December 2012 Financial assets: Financial assets at fair value through profit or loss Forward foreign exchange contracts Available-for-sale financial assets-noncurrent Stock Financial liabilities: Financial liabilities at fair value through profit or loss Forward foreign exchange contracts Embedded derivatives As at 1 January 2012 Financial assets: Financial assets at fair value through profit or loss Forward foreign exchange contracts Available-for-sale financial assets-noncurrent Stock Financial liabilities: Financial liabilities at fair value through profit or loss Forward foreign exchange contracts Embedded derivatives	Level 1 $4,000 - Level 1 - $132,906 - - Level 1 - $139,474 - -	Level 2 - $13,449 Level 2 $1,271 - $100,097 $4 Level 2 $17,573 - $116,966 $937	Level 3 - - Level 3 - - - - Level 3 - - - -	Total
				$4,000 $13,449 Total
				$1,271 $132,906 $100,097 $4 Total
				$17,573 $139,474 $116,966 $937

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

During the years ending 31 December 2013 and 2012, there were no transfers between Level 1 and Level 2 fair value measurements.

(7) The Group’s derivative financial instruments held for trading include forward currency contracts and embedded derivatives. The related information is as follows:

Forward currency contracts

The Group entered into forward currency contracts to manage its exposure to financial risk, but these contracts are not designated as hedging instruments. The table below lists the information related to forward currency contracts:

Items(bycontract) As at 31 December 2013 Forward currency contract Forward currency contract Forward currency contract As at 31 December 2012 Forward currency contract Forward currency contract Forward currency contract Forward currency contract As at 1 January 2012 Forward currency contract Forward currency contract Forward currency contract Forward currency contract	Notional Amount Buy put option USD 350 Sell call option USD 2,100 Sell put option USD 1,050 Buy call option USD 2,120 Buy put option USD 4,200 Sell call option USD 8,025 Sell put option USD 5,883 Buy call option USD 3,700 Buy put option USD 15,970 Sell call option USD 30,113 Sell put option USD 19,510	Contract Period
		From 2014/01/06 to 2014/01/06 From 2013/12/30 to 2014/06/26 From 2014/01/07 to 2014/01/24 From 2012/06/27 to 2014/12/09 From 2012/07/02 to 2012/10/29 From 2012/07/02 to 2014/01/06 From 2012/07/02 to 2012/10/29 From 2011/05/06 to 2012/11/20 From 2011/05/06 to 2012/09/26 From 2011/05/06 to 2012/11/20 From 2011/05/06 to 2012/10/18

Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Financial assets Monetary items: JPY USD EUR HKD RMB Non-monetary items: USD KRW Financial assets Monetary items: USD JPY HKD RMB EUR	31	December 2013 Foreign exchange rate NTD 0.29 $ 28,616 29.95 1,890,368 41.29 33,245 3.86 10,903 4.95 1,723,123 - - 0.03 18,970 29.95 860,130 0.29 2,478 3.86 250,252 4.95 989,132 41.29 13,569	31	December 2012 Foreign exchange rate NTD 0.34 $68,908 29.14 2,042,830 38.61 21,299 3.76 274,517 4.67 1,181,060 29.14 - 0.03 16,918 29.14 532,815 0.34 8,753 3.76 361,346 4.67 1,460,643 38.61 9,012	1 January2012	1 January2012	1 January2012
	Foreign currencies $ 100,305 63,117 805 2,823 348,301 - 668,490 28,719 8,686 64,788 199,937 329	Foreign exchange rate 0.29 29.95 41.29 3.86 4.95 - 0.03 29.95 0.29 3.86 4.95 41.29	Foreign currencies $204,151 70,114 552 73,037 252,682 - 621,642 18,287 25,931 96,138 312,497 233	Foreign exchange rate 0.34 29.14 38.61 3.76 4.67 29.14 0.03 29.14 0.34 3.76 4.67 38.61	Foreign currencies $56,600 25,308 803 175,602 404,347 70 664,976 10,163 151,338 81,947 299,770 20	Foreign exchange rate 0.39 30.29 39.20 3.90 4.81 30.29 0.03 30.29 0.39 3.90 4.81 39.20	NTD
							$22,102 766,572 31,480 684,583 1,945,923 2,120 19,949 307,852 59,098 319,469 1,442,644 768

(9) Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payments to shareholders, return capital to shareholders or issue new shares.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

13. Other disclosure

(1) Information at significant transactions
(a) Financing provided to others for the year ended December 31, 2013: Please refer to Attachment 1.
(b) Endorsement/Guarantee provided to others for the year ended December 31, 2013: Please refer to Attachment 2.
(c) Securities held as of December 31, 2013: Please refer to Attachment 3.
(d) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20 percent of the paid-in capital for the year ended December 31, 2013: None.
(e) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the paid-in capital for the year ended December 31, 2013: None.
(f) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2013: None.
(g) Related party transactions for purchases and sales exceeding the lower of NT$100 million or 20 percent of the capital stock for the year ended December 31, 2013: Please refer to Attachment 4.
(h) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of capital stock as of year ended December 31, 2013: None.
(i) Financial instruments and derivative transactions: Please refer to Note 12. (7).
(j) The business relationship, significant transactions and amounts between parent company and subsidiaries: Please refer to Attachment 5.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(2) Information on investees:

Names, locations, main businesses and products, original investment amount, investment as of December 31, 2013, net income (loss) of investee company and investment income (loss) recognized as of December 31, 2013: Please refer to Attachment 6.

(3) Information on investments in mainland China

Investment in Mainland China: Please refer to Attachment 7.

14. Segment information

For management purposes, the Group is organized into business units based on their products and services and has three reportable operating segments as follows:

(1) DMIS: The segment focuses on manufacturing and sale of cable assemblies.
(2) Component: The segment is in charge of selling various electronic connectors and electronic components.
(3) Headquarter Operating : The segment focuses on managing investment and other businesses beyond the scopes of DMIS and Component segments.

Operating segments are not aggregated to be reported as aforementioned operating segments.

The management monitors the operation results of its business units individually to make decisions on resource allocation and performance assessment. Segment performance is evaluated by its operating profit or loss and is measured in consistence with the operating profit or loss in the consolidated financial statements. However, the financial costs, financial income and income taxes are managed on a consolidated basis and are not allocated to operating units.

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Transfer prices between operating segment are on an arm’s length basis in a manner similar to transactions with third parties.

(a) Information on profit or loss, assets and liabilities of the reportable segment:

For the year ended 31 December 2013

Electronic Segment	Management Operation Segment	Adjustment and cancellation (note)	Consolidated
$3,471,472 47,408	$1,389,946 412,246	$- (1,661,066) $(1,661,066) $- $1,977,282 $74,368	$10,555,261 -
$3,518,880	$1,802,192		$10,555,261
$450,691	$(300,569)		$867,044
$1,378,172	$1,563,228		$9,385,164
$794,191	$1,189,448		$4,731,911

Note: Inter-segment revenues were eliminated when consolidated.

For the year ended 31 December 2012

Electronic Segment	Management Operation Segment	Adjustment and cancellation (note)	Consolidated
$3,190,780 104,362	$1,274,452 241,346	$- (1,329,191) $(1,329,191) $- $1,806,679 $57,476	$10,011,618 -
$3,295,142	$1,515,798		$10,011,618
$403,841	$(270,532)		$725,021
$1,546,810	$1,312,425		$8,879,288
$649,937	$1,557,066		$4,768,457

Note: Inter-segment revenues were eliminated when consolidated.

100

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(b) Information on reconciliations of revenue, profit or loss, assets, liabilities and other material items of reportable segments:

There’s no segment revenue, profit, assets, liabilities or significant items that needed to be reconciled for the years ended December 31, 2013 and 2012.

(c) Geographical information
i. Revenue from external customers:

Mainland China (Hong Kong) United States Taiwan Other countries Total	For theyears ended 31 December	For theyears ended 31 December
	2013	2012 $6,769,939 851,125 459,585 1,930,969 $10,011,618
	$6,940,726 959,021 507,950 2,147,564
	$10,555,261

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

ii. Non-current assets:

	As at
31 December 2013	31 December 2012 $1,468,707 1,111,361 4,195 $2,584,263	1 January 2012
$1,323,069 1,288,499 4,958		$1,537,932 1,200,357 5,187
$2,616,526		$2,743,476

101

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(d) Information about major customers

There’s no sales revenue from a single customer accounting for over 10% of revenue on income statement for the years ended December 31, 2013 and 2012.

15. First-time adoption of TIFRS

For all periods up to and including the year ended 31 December 2012, the Group prepared its financial statements in accordance with the generally accepted accounting principles in R.O.C. (R.O.C. GAAP). The consolidated financial statements for the year ended 31 December 2013 are the first the Group has prepared in accordance with TIFRS.

Accordingly, the Group has prepared financial statements which comply with TIFRS and the Regulations Governing the Preparation of Financial Reports by Securities Issuers for periods beginning 1 January 2013 as described in the accounting policies under Note 4. Furthermore the first interim financial statements prepared under TIFRS also comply with the requirements under IFRS 1 First-time Adoption of International Financial Reporting Standards. The Group’s opening balance sheet was prepared as at 1 January 2012, the Group’s date of transition to TIFRS.

- Exemptions applied in accordance with IFRS 1 First time Adoption of International Financial Reporting Standards

IFRS 1 First-time Adoption of International Financial Reporting Standards allows first-time adopters certain exemptions from the retrospective application of certain IFRS. The Group has applied the following exemptions:

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SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(1) IFRS 3 Business Combinations has not been applied to acquisitions of subsidiaries or of interests in associates and joint ventures that occurred before 1 January 2012. By applying this exemption, immediately after the business combination, the carrying amount in accordance with R.O.C. GAAP of assets acquired and liabilities assumed in that business combination, shall be their deemed costs in accordance with TIFRS at that date. The subsequent measurement of these assets and liabilities will be in accordance with TIFRS. Under IFRS 1 First-time Adoption of International Financial Reporting Standards, the carrying amount of goodwill in the opening balance sheet shall be its carrying amount in accordance with R.O.C. GAAP at 31 December 2011, after testing for impairment and reclassifying amounts to intangible assets that are required to be recognized. The Group has performed goodwill impairment testing as at the date of transition to TIFRS and no impairment loss has been recognized as at that date.
(2) The Group has recognized all cumulative actuarial gains and losses on pensions as at the date of transition to TIFRS directly in retained earnings.
(3) The Group has elected to disclose amounts required by paragraph 120A(p) of IAS 19 prospectively from the date of transition to TIFRS.
(4) Accumulated balance of exchange differences resulting from translating the financial statements of a foreign operation is deemed to be zero as at the date of transition to TIFRS.

Impacts of transitioning to TIFRS

The following tables contain reconciliation of balance sheets as at 1 January 2012 (the date of transition to TIFRS) and 31 December 2012 and statements of comprehensive income for the year ended 31 December 2012:

103

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Reconciliation of consolidated balance sheet items as at 1 January 2012:

R.O.C. GAAP	Amounts $1,418,003 17,573 175,152 2,328,513 92,414 1,655,555 104,185 11,108 8,139 5,810,642 139,474 201,169 403,556 2,361 746,560 1,775,836 98,317 48,798 40,925 11,377 101,100 $8,532,455	Impact of transitioningto TIFRS Remeasurements Presentation $ - $ - - - - - - - - - (212) - - 1,098 - (11,108) - - (212) (10,010) - - - - - - - (2,361) - (2,361) - (9,083) - (47,866) - (48,798) - 107,010 882 21,879 882 80,091 $670 $10,771		TIFRS Items Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable Accounts receivable Other receivables Inventories Prepayments - Other current assets Total current assets Non-current assets Available-for-sale financial assets - non-current Financial assets measured at cost- noncurrent Investments accounted for under the equity method - Property, plant and equipment Intangible assets - Other noncurrent assets Deferred tax assets Total assets	Notes
Items Current assets Cash and cash equivalents Financial assets at fair value through income statement - current Notes receivable Accounts receivable Other receivables Inventories Prepayments Deferred income tax assets – current Other current assets Total current assets Funds and investments Available-for-sale financial assets - non-current Financial assets measured at cost- noncurrent Long-term investments at equity Other long-term investment Total funds and investments Fixed assets, net Intangible assets Deferred expense Other noncurrent assets Deferred income tax assets - non-current Total assets		Remeasurements $ - - - - - (212) - - - (212) - - - - - - - - - 882 882 $670	Amounts $1,418,003 17,573 175,152 2,328,513 92,414 1,655,343 105,283 - 8,139 5,800,420 139,474 201,169 403,556 - 744,199 1,766,753 50,451 - 147,935 34,138 182,073 $8,543,896
					7 1 6 10 3 1 8 1.3.8.10 6

104

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

R.O.C. GAAP	Amounts $1,681,390 117,903 1,257 1,563,550 28,646 457,336 277,183 54,009 705,045 19,459 42,643 2 76,153 5,024,576 1,795,162 570,094 386,243 8,179 539,547 (178,457) 134,446 252,665 3,507,879 $8,532,455	Impact of transitioningto TIFRS Remeasurements Presentation $ - $ - - - - - - - - - - - - - - - - - - - 2,010 - - - - 10,771 2,010 10,771 - - (6,448) - - - 134,446 - 5,108 - - - (134,446) - - - (1,340) - $670 $10,771		TIFRS Items Current liabilities Short-term borrowings Financial liabilities at fair value through profit or loss - current Notes payable Accounts payable Current tax liabilities Other payables Bonds payable Other current liabilities Long-term loans Long-term deferred revenue Accrued pension liability Guarantee deposits received Deferred tax liabilities Total liabilities Share capital Common stock Capital surplus Retained earnings Legal reserve Special reserve Undistributed earnings Other equity Unrealized gains (losses) from available-for-sale financial assets Exchange differences resulting from translating the financial statements of a foreign operation Non-controlling interest Total equity Total equity and liabilities	Notes
Items Current liabilities Short-term loans Financial liabilities at fair value through income statement - current Notes payable Accounts payable Income tax payable Other payables Current portion of bonds paybale Other current liabilities Long-term borrowings Long-term deferred revenue Accrued pension liability Guarantee deposits received Deferred income tax liabilities – non-current Total liabilities Share capital Common stock Capital surplus Retained earnings Legal reserve Special reserve Undistributed earnings Adjusting items in shareholders' equity Unrealized gains (losses) from available-for-sale financial assets Cumulative translation adjustment Minority interest Total shareholders' equity Total liabilities and shareholders' equity		Remeasurements $ - - - - - - - - - - 2,010 - - 2,010 - (6,448) - 134,446 5,108 - (134,446) - (1,340) $670	Amounts $1,681,390 117,903 1,257 1,563,550 28,646 457,336 277,183 54,009 705,045 19,459 44,653 2 86,924 5,037,357 1,795,162 563,646 386,243 142,625 544,655 (178,457) - 252,665 3,506,539 $8,543,896
					2 6 5 9 4.9

105

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Reconciliation of consolidated balance sheet items as at 31 December 2012:

R.O.C. GAAP	Amounts $1,700,389 1,271 272,305 2,569,530 98,579 1,575,089 70,352 13,098 6,405 6,307,018 132,906 201,155 406,359 2,361 742,781 1,612,482 92,930 83,809 23,681 13,908 121,398 $8,876,609	Impact of transitioningto TIFRS Remeasurements Presentation $ - $ - - - - - - - - - 39 - - 1,066 - (13,098) - - 39 (12,032) - - - - - - - (2,361) - (2,361) - (13,707) - (45,425) - (83,809) - 144,235 2,640 13,099 2,640 73,525 $2,679 $ -		TIFRS Items Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable Accounts receivable Other receivables Inventories Prepayments - Other current assets Total current assets Non-current assets Available-for-sale financial assets - non-current Financial assets measured at cost- noncurrent Investments accounted for under the equity method - Property, plant and equipment Intangible assets - Other noncurrent assets Deferred tax assets Total assets	Notes
Items Current assets Cash and cash equivalents Financial assets at fair value through income statement - current Notes receivable Accounts receivable Other receivables Inventories Prepayments Deferred income tax assets – current Other current assets Total current assets Funds and investments Available-for-sale financial assets - non-current Financial assets measured at cost- noncurrent Long-term investments at equity Other long-term investment Total funds and investments Fixed assets, net Intangible assets Deferred expense Other noncurrent assets Deferred income tax assets - non-current Total assets		Remeasurements $ - - - - - 39 - - - 39 - - - - - - - - - 2,640 2,640 $2,679	Amounts $1,700,389 1,271 272,305 2,569,530 98,579 1,575,128 71,418 - 6,405 6,295,025 132,906 201,155 406,359 - 740,420 1,598,775 47,505 - 167,916 29,647 197,563 $8,879,288
					7 1 6 10 3 1 8 1.3.8.10 6

106

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

R.O.C. GAAP	Amounts $1,538,963 100,097 636 1,625,368 73,968 491,153 185,172 48,430 4 19,102 522,361 18,512 42,644 2 90,385 4,756,797 2,000,155 65,483 855,183 430,946 44,011 701,323 (166,446) 50,970 138,187 4,119,812 $8,876,609	Impact of transitioningto TIFRS Remeasurements Presentation $ - $ - - - - - - - - - - - - - - - - - - - - - - - 11,660 - - - - - 11,660 - - - - - (6,448) - - - 134,446 - (2,533) - - - (134,446) - - - (8,981) - $2,679 $ -		TIFRS Items Current liabilities Short-term borrowings Financial liabilities at fair value through profit or loss - current Notes payable Accounts payable Current tax liabilities Other payables Other current liabilities Financial liabilities at fair value through profit or loss - non-current Bonds payable Long-term loans Long-term deferred revenue Accrued pension liability Guarantee deposits received Deferred tax liabilities Total liabilities Share capital Common stock Preferred stock Capital surplus Retained earnings Legal reserve Special reserve Undistributed earnings Other equity Unrealized gains (losses) from available-for-sale financial assets Exchange differences resulting from translating the financial statements of a foreign operation Non-controlling interest Total equity Total equity and liabilities	Notes
Items Current liabilities Short-term loans Financial liabilities at fair value through income statement - current Notes payable Accounts payable Income tax payable Other payables Current portion of long-term bank loans Other current liabilities Financial liabilities at fair value through income statement - non-current Bonds payable Long-term loans Long-term deferred revenue Accrued pension liability Guarantee deposits received Deferred income tax liabilities – non-current Total liabilities Share capital Common stock Certificates of Bond-to-Stock Conversion Capital surplus Retained earnings Legal reserve Special reserve Undistributed earnings Adjusting items in shareholders' equity Unrealized gains (losses) from available-for-sale financial assets Cumulative translation adjustment Minority interest Total shareholders' equity Total liabilities and shareholders' equity		Remeasurements $ - - - - - - - - - - - - 11,660 - - 11,660 - - (6,448) - 134,446 (2,533) - (134,446) - (8,981) $2,679	Amounts $1,538,963 100,097 636 1,625,368 73,968 491,153 185,172 48,430 4 19,102 522,361 18,512 54,304 2 90,385 4,768,457 2,000,155 65,483 848,735 430,946 178,457 698,790 (166,446) (83,476) 138,187 4,110,831 $8,879,288
					2 5 9 9

107

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Reconciliation of statement of comprehensive income items for the year ended 31 December 2012:

R.O.C. GAA	P Amounts $10,011,618 (7,858,803) 2,152,815 (322,537) (576,932) (564,699) (1,464,168) 688,647 7,979 7,367 14,681 152 16,100 25,010 90,375 161,664 (15,341) (15,238) (60,944) (15,183) (19,590) (126,296) 724,015 (245,970) $478,045	Impact of transitioningto TIFRS Remeasurements Presentation $ - $ - - - - - - - 755 - - - 755 - 755 - - - - - - - - - - - 251 - - - 251 - - - - - - - - - - - - - 1,006 - - - $1,006 $ - - (119,243)		TIFRS Items Operating revenue, Net Operating costs Gross profit Operating expenses Research and development expenses Administrative expenses Selling expenses Operating income (loss) Non-operating income and expenses Share of profit (loss) of associates and joint ventures accounted for using the equity method Other income Other income Other gains (losses) Other gains (losses) Other gains (losses) Other income Other gains (losses) Other gains (losses) Finance costs Other gains (losses) Other gains (losses) Profit (loss) before tax Income tax expense Profit (loss) Exchange differences resulting from translating the financial	Notes
Items Operating revenue, Net Operating costs Gross profit Operating expenses Research and development expenses Administrative expenses Selling expenses Total Operating income (loss) Non-operating income Investment income recognized under the equity method Interest revenue Dividend income Gain on disposal of fixed assets Gain on valuation of financial liability Foreign exchange gains Other income Total Non-operating Expenses and Losses Loss on disposal of fixed assets Loss on disposal of investments Interest expense Loss on valuation of financial asset Other losses Total Profit (loss) before tax Income tax expense Consolidated net income -		Remeasurements $ - - - - 755 - 755 755 - - - - - 251 - 251 - - - - - - 1,006 - $1,006 -	Amounts $10,011,618 (7,858,803) 2,152,815 (322,537) (576,177) (564,699) (1,463,413) 689,402 7,979 7,367 14,681 152 16,100 25,261 90,375 161,915 (15,341) (15,238) (60,944) (15,183) (19,590) (126,296) 725,021 (245,970) 479,051 (119,243)
					2 11 11 11 11 11 11 7.11 11 11 11 11 11 11 6 11

108

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

R.O.C. GAA	P Amounts	Impact of transitioningto TIFRS Remeasurements Presentation - (6,568) (10,405) - 16,484 1,757 16,554		TIFRS Items statements of a foreign operation Unrealized gains (losses) from available-for-sale financial assets Actuarial losses on defined benefits plan Share of other comprehensive income of associates and joint ventures accounted for using the equity method Income tax relating to components of other comprehensive income Other comprehensive income, net of tax Total comprehensive income	Notes
Items - - - - -		Remeasurements - (10,405) 1,757	Amounts (6,568) (10,405) 16,484 18,311 (101,421) $377,630
					11 2.11 11 11 11

Material adjustments to the consolidated statement of cash flows for the year ended 31 December 2012

The transition from R.O.C. GAAP to TIFRS has not had a material impact on the statement of cash flows. The statement of cash flow prepared under R.O.C. GAAP was reported using the indirect method. Furthermore, cash flows from interest and dividends received and interest paid were classified as cash flows from operating activities and interest and dividends received were not disclosed separately. However, in accordance with the requirements under IAS 7 Statement of Cash Flows, the interest received for the year ended 31 December 2012, are separately disclosed in the statement of cash flow in the amount of $7,367. Interest received is classified as cash flows from operating activities. Apart from the aforementioned differences, there were no material differences between the statements of cash flows prepared under R.O.C. GAAP and TIFRS.

(1) Reclassification of land use rights to prepaid rent

Land use rights were classified as intangible assets under R.O.C. GAAP. Upon transitioning to TIFRS, in accordance with the requirements of IAS 17 Leases, land use rights were reclassified to prepaid rent under current assets and long-term prepaid rent under non-current assets. As

109

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

of 1 January 2012 and 31 December 2012, land use rights reclassified to prepaid rent were $1,098 and $1,066, respectively. As of 1 January 2012 and 31 December 2012, land use rights reclassified to long-term prepaid rent were $46,768 and $44,358, respectively.

(2) Employee benefits

The Group used actuarial techniques to calculate the defined benefit obligation and recognized related pension costs and accrued pension liabilities under R.O.C. GAAP. Upon transitioning to TIFRS, actuarial calculations were made in accordance with the requirements under IAS 19 Employee Benefits. As of 1 January 2012 and 31 December 2012, adjustments were made to accrued pension liabilities in the amount of $2,010 and $11,660, respectively, due to the following reasons:

n The Group has re-performed actuarial calculation in accordance with the requirements of IAS 19 on defined benefit obligation as of 1 January 2012 and 31 December 2012.
n The Group recognized all cumulative actuarial gains and losses on pensions as at the date of transition to TIFRS directly in retained earnings.
n The Group recognized all remaining balance of unrecognized transitional net assets (or net benefit obligation).

Furthermore, as the Group adopts the accounting policy of recognizing all actuarial gains or losses to other comprehensive income after transitioning to TIFRS, and combining with the effect of the aforementioned adjustments, the pension costs and other comprehensive income for the year ended 31 December 2012 were increased by $755 and $8,648, respectively.

(3) Reclassification of advance payments in equipment

According to the revised Regulations Governing the Preparation of Financial Reports by Securities Issuers, advance payments in equipment are reclassified from property, plant and equipment to prepaid assets. As of 1 January 2012 and 31 December 2012, property, plant and equipment reclassified to advance payments in equipment were

110

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

$9,083and $13,707, respectively.

(4) Accumulated balance of exchange differences resulting from translating the financial statements of a foreign operation deemed to be zero

Accumulated balance of exchange differences resulting from translating the financial statements of a foreign operation reduced by $134,446 and was deemed to be zero as at the date of transition to TIFRS in accordance with IFRS 1 First-time Adoption of International Financial Reporting Standards, .

(5) Capital surplus-long-term equity investments adjusted to retained earnings

The capital surplus-long-term equity investments recognized by equity method, expect for those not provided under IFRSs or are applicable under Company Act or involving orders issued by the Ministry of Economic Affairs, was adjusted to retained earnings in the amount of $6,448 as of 1 January 2012, due to not consistent with IFRSs.

(6) Income tax

Classification and valuation of deferred tax

Under the requirements of R.O.C. GAAP, the current and non-current deferred tax liabilities and assets of the same taxable entity should offset against each other and presented as a net amount. However, under the requirements of IAS 12 Income Taxes, an entity shall offset deferred tax assets and deferred tax liabilities if, and only if, the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and if the deferred tax assets and the deferred tax liabilities related to income taxes are levied by the same taxation authority on the same taxable entity.

Under the requirements of R.O.C. GAAP, a deferred tax asset or liability should, according to the classification of its related asset or liability, be classified as current or non-current. If a deferred tax asset or liability is not related to an asset or liability for financial reporting, it should be classified as current or non-current according to the expected reversal date of the temporary difference. However, under the requirements of IAS 1 Presentation of Financial Statements, deferred tax assets or liabilities are classified as non-current. Therefore as of 1 January 2012

111

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

and 31 December 2012, deferred tax assets reclassified to non-current assets were $11,108 and $13,098, respectively; and deferred tax liabilities reclassified to non-current liabilities were $10,771 and $-.

Under the requirements of R.O.C. GAAP, deferred tax assets are recognized in full, however, if there is over 50% possibility that the economic benefits of a deferred tax asset become unrealizable, a valuation allowance account should be established to reduce the carrying amount of the deferred tax asset. Under the requirements of IAS 12 Income Taxes, a deferred tax asset shall be recognized to the extent that it is probable that it would be utilized.

The following tables illustrate the deferred tax effects of all adjustments relating to the transitioning to TIFRS:

Income tax expense:

Recognized in profit or loss: Employee benefits Recognized in other comprehensive income: Employee benefits	Note 2 2	For the year ended 31 December 2012
		$755
		$1,757

Deferred tax assets and liabilities:

Employee benefits	Note	As at 31 December 2012	As at 31 December 2012	As at 1 January 2012	As at 1 January 2012
		Deferred tax assets	Deferred tax liabilities	Deferred tax assets	Deferred tax liabilities
	2	$882	$-	$2,640	$-

112

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(7) Functional currency

A certain subsidiaries determined that their functional currencies differ from the original accounting currency under the requirements of IAS 21 The Effects of Changes in Foreign Exchange Rates. Therefore, as of 1 January 2012 and 31 December 2012, merchandise decreases $212 and increases $39, respectively; retained earnings both decreased $212. Based on the above impact, profit increased $251 for the year ended 31 December, 2012.

(8) Deferred expense

According to Regulations Governing the Preparation of Financial Reports by Securities Issuers, the Company reclassified deferred expense to other non-current assets. Therefore, as of 1 January 2012 and 31 December 2012, deferred expense reclassified to other non-current assets were $48,798 and $83,809, respectively.

(9) Special reserve

According to Letter No. Jin-Guan-Zheng-Fa-Zi -1010012865 issued by the Financial Supervisory Commission, on a public company's first-time adoption of the TIFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside an equal amount of special reserve. An equal amount of the Company’s cumulative translation adjustments (gains) in the amount of $134,446 that the Company elects to transfer to retained earnings by application of the exemption under IFRS 1 has been set aside to special reserve. Furthermore, as the Company had not used, disposed of, or reclassified related assets during the year ended 31 December 2012, the amount of special reserve needed not to be adjusted as of 31 December 2012.

113

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(10) Investments accounted for under the equity method

For certain investments accounted for under the equity method, the investee companies have reclassified its financial assets measured at cost to available-for-sale financial assets. Consequently, as of 1 January 2012 and 31 December 2012, the Group’s investments accounted for under the equity method both increased by $2,361, unrealized gains or losses from available-for-sale financial assets under equity both increased by $2,361.

(11) Reconciliations of consolidated statement of comprehensive income

The consolidated income statement prepared under R.O.C. GAAP and the Regulations Governing the Preparation of Financial Reports by Securities Issuers before revision only presented the following components of operating profit or loss: operating revenue, operating costs and operating expenses. Upon transitioning to TIFRS, in order to comply with the presentation of financial statements under TIFRS and the revised Regulations Governing the Preparation of Financial Reports by Securities Issuers, certain items on the statement of comprehensive income have been reclassified. All other impact on the statement of comprehensive income as results of adjustments upon transitioning to TIFRS has been described in Items (1) –(10).

(12) Others

Certain items in the financial statements prepared based on R.O.C. GAAP have been reclassified for comparison purposes.

114

Attachment 1: Financing provided to others for the year ended December 31, 2013

No.	Lender (Note 1)	Counter-party	Financial statement account	Related Party	Maximum balance for the period	Ending balance	Actual amount provided	Interest rate	Nature of financing	Amount of sales to (purchases from) counter-party	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Collateral	Limit of financing amount for individual counter-party (Note2)	Limit of total financing amount (Note3)
													Item	Value
1	JYSB	JY Sinact	Other receivables	Y	$49,472	$49,472	$49,472	2.85%	Note 4	$ -	Need for operating	$ -	-	$ -	$457,246	$1,828,982
1	JYSB	JY Sinact	Other receivables	Y	$20,277	$ -	$ -	0.00%	Note 4	$ -	Need for operating	$ -	-	$ -	$457,246	$1,828,982
1	JYSB	BJSB Tongan	Other receivables	Y	$49,472	$49,472	$49,472	4.00%	Note 4	$ -	Need for operating	$ -	-	$ -	$457,246	$1,828,982
2	BJSB	BJSB Tongan	Other receivables	Y	$24,572	$ -	$ -	0.00%	Note 4	$-	Need for operating	$ -	-	$ -	$457,246	$1,828,982
3	S E L	T-CONN	Other receivables	Y	$51,204	$ -	$ -	0.00%	Note 4	$ -	Need for operating	$ -	-	$ -	$457,246	$1,828,982

Note 1: Transations above are all between consolidated entities in the Group and have been reversed.

Note 2: Limit of financing amount for individual counter-party is 10% of the net worth of the financial report audited by the certified public accountants as of 31 December 2013.

$4,572,456 x 10%=$457,246

Note 3: Limit of total financing amount for individual counter-party is 40% of the net worth of the financial report audited by the certified public accountants as of 31 December 2013.

$4,572,456 x 40%=$1,828,982

Note 4: For short-term financing.

115

Attachment 2: Endorsement/Guarantee provided to others for the year ended December 31, 2013

(Note 1) No.	Endorsor/ Guarantor	Receiving party	Receiving party	Limit of guarantee/endorsemen t amount for receiving party (Note 3)	Maximum balance for the period	Ending balance	Actual amount provided	Amount of collateral guarantee/ endorseme nt	Percentage of accumulated guarantee amount to net assets value from the latest financial statement	Limit of total guarantee/ endorsement amount (Note 4)	Parent company's guarantee/ endorsement amount to subsidiaries (Note 5)	Subsidiaries' guarantee/ endorsement amount to parent company (Note 5)	Guarantee/ endorsement amount to company in Mainland China (Note 5)
		Company name	Releationshi p (Note 2)
0	The Company	JYSB	3	$1,828,982	$256,020	$254,575	$ -	none	5.57%	$4,572,456	Y	N	Y
0	The Company	BJSB	2	$1,828,982	$406,620	$404,325	$59,900	none	8.84%	$4,572,456	Y	N	Y
0	The Company	BJSB Tongan	2	$1,828,982	$44,813	$29,950	$13,219	none	0.66%	$4,572,456	Y	N	Y
0	The Company	SHSB	3	$1,828,982	$15,060	$14,975	$ -	none	0.33%	$4,572,456	Y	N	Y
0	The Company	~~T-CONN~~ ~~Zhonshan~~	3	$1,828,982	$120,480	$119,800	$50,915	none	2.62%	$4,572,456	Y	N	Y
0	The Company	~~g~~ JY Sinact	3	$1,828,982	$240,960	$239,600	$176,825	none	5.24%	$4,572,456	Y	N	Y
0	The Company	TCSB	3	$1,828,982	$60,240	$59,900	$ -	none	1.31%	$4,572,456	Y	N	Y
0	The Company	SZSB	3	$1,828,982	$30,120	$29,950	$ -	none	0.66%	$4,572,456	Y	N	Y
0	The Company	S P L	3	$1,828,982	$45,180	$29,950	$ -	none	0.66%	$4,572,456	Y	N	N
1	JYSB	JY Sinact	3	$1,828,982	$3,367	$ -	$ -	none	-	$4,572,456	N	N	Y
2	T-CONN	HK CMK	3	$1,828,982	$30,120	$29,950	$ -	none	0.66%	$4,572,456	N	N	N
2	T-CONN	~~T-CONN~~ ~~Zhonshan~~	3	$1,828,982	$120,480	$119,800	$ -	none	2.62%	$4,572,456	N	N	Y
3	S E L	~~g~~ HK CMK	3	$1,828,982	$24,096	$23,960	$ -	none	0.52%	$4,572,456	N	N	N
3	S E L	S P L	3	$1,828,982	$67,770	$67,388	$ -	none	1.47%	$4,572,456	N	N	N

Note 1: The Company and its subsidiaries are coded as follows:
The Company is coded "0".
The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.
Note 2: According to the "Guidelines Governing the Preparation of Financial Reports by Securities Issuers" issued by the R.O.C. Securities and Futures Bureau, receiving parties should be disclosed as one of the following:
A company that has a business relationship with the Company.
A subsidary in which the Company holds directly over 50% of equity interest.
An investee in which the Company and its subsidiaries hold over 50% of equity interest.
An investee in which the Company holds directly and indirectly over 50% of equity interest.
A company that has provided guarantees to the Company, and vice versa, due to contractual requirements.
An investee in which the Company conjunctly invests with other shareholders, and for which UMC has provided endorsement/guarantee in proportion to its shareholding percentage.

Note 3: Limit of guarantee/endorsement amount for receiving party is 40% of the net worth of the financial report audited by the certified public accountants as of 31 December 2013. $4,572,456 x 40%=$1,828,982

Note 4: Limit of total guarantee/ endorsement amount is 100% of the net worth of the financial report audited by the certified public accountants as of 31 December 2013.
Note 5: "Y" for the listed (OTC) parent company guarantees/endorses for subsidiary, subsidiary guarantees/endorses for the listed (OTC) parent company or guarantee/endorse for companies in Mainland China.

116

Attachment 3: Securities held as of December 31, 2013 (Excluding subsidiaries, associates and joint ventures)

Holding Company	Type and name of securities	Relationship (Note 1)	Financial statement account	December 31, 2013	December 31, 2013	December 31, 2013	December 31, 2013	December 31, 2013	December 31, 2013	Note
				Shares	Book value			Percentage of ownership (%)	Fair value
The Company	Top Taiwan VII Venture Capital Co., Ltd.	-	Financial assets measured at cost- noncurrent	6,000,000shares	$60,750			3.06%	Note 2	-
The Company	Top Taiwan III Venture Capital Co., Ltd.	-	Financial assets measured at cost- noncurrent	5,000,000shares	50,000			4.06%	Note 2	-
The Company	Top Taiwan II Venture Capital Co., Ltd.	-	Financial assets measured at cost- noncurrent	4,500,000shares	45,000			5.00%	Note 2	-
The Company	General Research Of Electronics Inc.	-	Financial assets measured at cost- noncurrent	16,000shares	23,184			7.48%	Note 2	-
The Company	Niigata Seimitsu Co., Ltd.	-	Financial assets measured at cost- noncurrent	100,000shares	13,460			0.46%	Note 2	-
The Company	ULTRACAP Technologies Co., Ltd.	-	Financial assets measured at cost- noncurrent	791,667shares	12,667			4.28%	Note 2	-
The Company	DYNAHZ Technologies Co., Ltd.	-	Financial assets measured at cost- noncurrent	2,309,725shares		6,150		16.67%	Note 2	-
The Company	SINTEX Material Co., Ltd	Head of this company and the Company is the same person	Financial assets measured at cost- noncurrent	450,000shares		4,500		18.00%	Note 2	-
The Company	BANDRICH, INC.	-	Financial assets measured at cost- noncurrent	330,000shares		4,125		2.95%	Note 2	-
The Company	Taiwan B2C Co., Ltd.	-	Financial assets measured at cost- noncurrent	150,000shares		1,500		12.50%	Note 2	-
SHSB	Guo Shun Fund	-	Financial assets measured at cost- noncurrent	-		19,789		-	Note 2	-
SB BVI	Argosy (Beijing) Technologies Co., Ltd.	-	Financial assets measured at cost- noncurrent	-		2,264		12.00%	Note 2	-
Kwan-Ze	ACTMAX Technologies INC.	-	Financial assets measured at cost- noncurrent	-		1,441		19.00%	Note 2	-
			Subtotal			244,830
			Less: accumulated impairment			(33,376)
			Total			$211,454
Kwan-Ze	Taishin International Bank DR Fund	-	Held-for-trading financial assets	-			$4,000	-	$4,074
The Company	INPAQ Technology Co., Ltd.	The Company is it's director	Available-for-sale financial assets-noncurrent	6,623,231shares		$266,656		6.67%	$254,001
			Less: accumulated impairment			(12,655)
			Total			$254,001

Note 1: Not required if the issuer of securities is not a related party.

Note 2: Financial assets do not have quoted prices in an active market and their fair value cannot be reliably measured

117

Attachment 4 : Related party transactions for purchases and sales exceeding the lower of NT$100 million or 20 percent of the capital stock for the year ended December 31, 2013

Related- party	Counter-party	Relationship	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions	Details of non-arm's length transaction	Details of non-arm's length transaction	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchases (Sales)	Amount	Percentage of total consolidated purchase (Sales)	Terms	Unit price	Terms	Carrying amount	Percentage of total consolidated receivables (payable)
The Company	Jiangyin sinbon Electronics Co., Ltd. (JYSB)	represents the transactions from parent company to subsidiary.	Purchase	$967,014	40.63%	Trading condition is as same as other supplier	N/A	N/A	$(310,800)	(42.78)%

Attachment 5: The business relationship, significant transactions and amounts between parent company and subsidiaries

No. (Note 1)	Related-party	Counter-party	Relationship with the Company (Note 2)	Transactions	Transactions	Transactions	Transactions
				Account	Amount	Terms	Percentage of consolidated operating revenues or consolidated total assets(Note3)
0	The Company	Jiangyin sinbon Electronics Co., Ltd. (JYSB)	1	Prutcase	$967,014	(Note 4)	9.16%
1	Jiangyin sinbon Electronics Co., Ltd. (JYSB)	The Company	2	Sales	$967,014	(Note 4)	9.16%

Note 1 : The Company is coded "0".The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.

Note 2 : Transactions are categorized as follows:
The holding company to subsidiar
Subsidiary to holding company.
Subsidiary to subsidiary.

Note 3 : The percentage with respect to the consolidated asset/liability for transactions of balance sheet items are based on each item's balance at period-end.

For profit or loss items, cumulative balances are used as basis.

Note 4 : The sales price to the above related parties was determined through mutual agreement based on the market conditions.

118

Attachment 6: Names, locations, main businesses and products, original investment amount, investment as at December 31, 2013, net income (loss) of investee company and investment income (loss) recognized as of December 31, 2013: (Excluding investment in Mainland China)

Investor	Investee company (Note1 )	Address	Main businesses and products	Initial Investment	Initial Investment	Investment as of December 31, 2013	Investment as of December 31, 2013	Investment as of December 31, 2013	Net income (loss) of investee company (Note1)	Investment income (loss) recognized (Note 1)	Note (Note 1 )
				Ending balance	Beginning balance	Number of shares	Percentage of ownership (%)	Book value
The Company	HKSB	Hong Kong	Manufacturing and selling a wide variety of connectors, wires and cables.	HKD95,606,000 $401,262	HKD95,606,000 $401,262	-	100.00%	$610,203	$253,574	$253,574	Subsidiary
The Company	JPSB	Japan	Selling a wide variety of connectors, wires and cables.	JPY25,000,000 $5,008	JPY25,000,000 $5,008	350`股`	70.00%	$5,834	$780	$546	Subsidiary
The Company	Kwan-Ze	Taipei Country, Taiwan	Holding company	$85,000	$85,000	23,560,000`股`	100.00%	$296,571	$10,421	$10,421	Subsidiary
The Company	Top Taiwan IV Venture Capital Co., Ltd	Taipei City, Taiwan	Holding company	$180,000	$200,000	18,000,000`股`	20.00%	$184,281	$7,700	$1,540	Investee under the equity method
The Company	SB BVI	British Virgin Islands	Holding company	USD38,921,000 $1,276,694	USD38,921,000 $1,276,694	-	100.00%	$2,626,837	$238,150	$238,225	Subsidiary
The Company	Korea Sinbon Electronics Co., Ltd.	Korea	Selling a wide variety of connectors, wires and cables.	USD$30,000 $1,019	USD$30,000 $1,019	-	37.50%	$18,970	$3,435	$1,288	Investee under the equity method
The Company	USSB	U.S.A Florida	Selling a wide variety of connectors, wires and cables.	$ -	$ -	-	51.00%	($963)	($5,621)	($2,867)	Subsidiary
The Company	S A M O A	Samoa	Holding company	USD3,143,000 $101,747	USD3,143,000 $101,747	-	51.51%	$9,586	($61,873)	($31,870)	Subsidiary
The Company	Argosy Technologies Co., Ltd.	Hsinchu City, Taiwan	Produce and sells a variety of electronic components, computers andperipheral equipment	$30,648	$30,648	2,945,034`股`	3.50%	$35,284	$95,195	$3,335	Investee under the equity method
The Company	Worldwide Wire Harnesses Co., Ltd.	Samoa	Logistic center.	USD75,000 $2,451	USD75,000 $2,451	-	50.00%	$4,334	$2,670	$1,335	Subsidiary
The Company	S E L	Mauritius	Holding company	USD 6,109,000 $192,742	USD 6,109,000 $192,742	-	64.48%	$105,821	($65,826)	$87,171	Subsidiary
S E L	HK CMK	Hong Kong	Selling a wide variety of connectors and cables.	USD4,620,000 $136,429	USD4,620,000 $136,429	-	100.00%	USD1,650,000 $49,413	USD(1,704,000) ($50,748)	$ -	Subsidiary
S E L	T-CONN	Hsinchu City, Taiwan	Manufacturing and selling a wide variety of connectors, wires and cables.	$10,000	$10,000	-	100.00%	USD913,000 $27,356	USD(13,000) ($382)	$ -	Subsidiary
S E L	S P L	Mauritius	Logistic center.	USD 100,000 $3,228	USD 100,000 $3,228	-	100.00%	USD 1,808,000 $54,158	USD49,000 $1,474	$ -	Subsidiary

119

Investor	Investee company (Note1 )	Address	Main businesses and products	Initial Investment	Initial Investment	Investment as of December 31, 2013	Investment as of December 31, 2013	Investment as of December 31, 2013	Net income (loss) of investee company (Note1)	Investment income (loss) recognized (Note 1)	Note (Note 1 )
				Ending balance	Beginning balance	Number of shares	Percentage of ownership (%)	Book value
SB BVI	HK Sinact	Hong Kong	Holding company	USD4,671,000 $145,335	USD4,671,000 $145,335	-	100.00%	USD431,000 $12,922	USD412,000 $12,278	$ -	Subsidiary
Kwan-Ze	Digi O2	Miaoli Country, Taiwan	Selling a wide variety of connectors and cables.	$42,740	$1,000	4,274,000`股`	85.48%	$37,496	($6,090)	$ -	Subsidiary
Kwan-Ze	Argocy Research Inc.	Hsinchu City, Taiwan	Produce and sells a variety of electronic components, computers andperipheral equipment	$147,175	$147,175	14,624,200`股`	17.40%	$179,500	$95,195	$ -	Investee under the equity method
Worldwide Wire Harnesses Co., Ltd.	STT	U.S.A Tennessee	Logistic center.	USD140,000 $4,542	USD140,000 $4,542	-	100.00%	USD(195,000) ($5,825)	USD45,000 $1,325	$ -	Subsidiary
Argosy Technologies Co., Ltd.	Argosy Technology B.V.	The Netherlands	Sell Multimedia related products, ODM and OED	$22,488	$22,488	-	100.00%	$ -	($193)	$ -	Investee under the equity method
Argocy Research Inc.	Argosy Technology Inc.(USA)	U.S.A	Sell Multimedia related products, ODM and OED	$30,347	$30,347	900`股`	100.00%	$ -	($332)	$ -	Investee under the equity method
Argocy Research Inc.	Ari International B.V.	The Netherlands	Leasing operations and sell ODM and OED	$22,314	$22,314	-	100.00%	$19,453	($447)	$ -	Investee under the equity method
Argocy Research Inc.	Ari International (Singapore)Pte.,Ltd. (AIS)	Singapore	Sell computer peripheral products and import and export business	$32,697	$32,697	-	100.00%	$9,369	($616)	$ -	Investee under the equity method
Argocy Research Inc.	NOVAC ARGOSY	Tokyo	Sell computer peripheral products	$4,294	$4,294	-	49.00%	$ -	$ -	$ -	Investee under the equity method
Argocy Research Inc.	Global Saber Electronics Co., Ltd.	Mauritius	Selling a wide variety of connectors and cables.	$ -	$ -	-	100.00%	$102,599	($4,593)	$ -	Investee under the equity method
Argocy Research Inc.	ROTEC LIMITED	British Virgin Islands	Holding company	$212,590	$151,685	6,750`股`	77.14%	$281,673	($20,410)	$ -	Investee under the equity method
Global Saber Electronics Co., Ltd	ROTEC LIMITED	British Virgin Islands	Holding company	$57,650	$57,650	2,000`股`	22.86%	$83,472	($20,410)	$ -	Investee under the equity method

Note 1: （ 1 ） "Investee company", "Addres", "Main businesses and products", "Initial Investment"and "Investment as of December 31, 2013" shall be filled in the Company's investmet.

to the subsidiaries' re-investment in corresponding order, and indicate the relationship in the Notes.

（ 2 ） "Net income (loss) of investee company" shall be filled in net income (loss) of investee for the year ended 31 December 2013.

（ 3 ） "Investment income (loss) recognized", shall be filled in only investment income (loss) under the equity method, and the investor shall confirm that its investment income (loss) includes the subsidiaries' re-investment.

120

Attachment 7: Investment in Mainland China

Investee company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2013	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2013	Net income (loss) of investee company	Percentage of Ownership	Investment income (loss) recognized	Carrying Value as of December 31, 2013	Accumulated Inward Remittance of Earnings as of Outflow December 31, 2013
					Outflow	Inflow
BJSB	Manufacturing and selling a wide variety of connectors, wires and cables.	USD 4,450,000	Indirectly investment in Mainland China through remittance from a third region.	USD 1,020,000 $30,719	$ -	$ -	USD 1,020,000 $30,719	$129,538	100.00%	$129,538 (Note 1)	$618,265	USD214,000 $6,092
JY Sinact	Manufacturing and selling a wide variety of connectors, wires and cables.	USD 31,280,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 21,550,000 $690,252	$ -	USD 3,131,000 $93,587	USD 18,419,000 $596,665	USD 6,146,000 $181,465	100.00%	USD6,146,000 $181,465 (Note 1)	USD63,116,000 $1,890,338	USD3,564,000 $108,112
SHSB	Selling a wide variety of connectors, wires and cables.	USD 3,280,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 1,700,000 $55,358	$ -	$ -	USD 1,700,000 $55,358	USD 327,000 $9,738	100.00%	USD327,000 $9,738 (Note 1)	USD7,581,000 $227,060	USD185,000 $6,050
SZSB	Selling a wide variety of connectors, wires and cables.	USD 310,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 250,000 $8,297	$ -	$ -	USD 250,000 $8,297	USD 969,000 $28,841	100.00%	USD969,000 $28,841 (Note 1)	USD6,790,000 $203,375	$ -
TCSB	Selling a wide variety of connectors, wires and cables.	USD 6,000,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 3,000,000 $96,090	$ -	$ -	USD 3,000,000 $96,090	USD(21,000) ($631)	100.00%	USD(21,000) ($631) (Note 1)	USD8,531,000 $255,511	$ -
China Digital Library Corp.Ltd.	Technology development of computer software, transfer of technology, advisory service	RMB 88,600,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 750,000	$ -	$ -	USD 750,000	$ -	4.85%	$ - (Note 2)	$ -	$ -
Argosy (Beijing) Technologies Co., Ltd.	Selling a wide variety of connectors, wires and cables.	RMB 5,000,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 76,000	$ -	$ -	USD 76,000	$ -	12.00%	$ - (Note 2)	USD76,000 $2,264	$ -
Wu Xi S&D	Manufacturing and selling new flat panel displays.	USD 4,000,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 1,900,000 $61,823	$ -	$ -	USD 1,900,000 $61,823	USD(450,000) ($13,425)	52.04%	USD(450,000) ($13,425) (Note 3)	$ -	$ -
Ning Bo Smart and Diligent Co., Ltd.	Manufacturing and selling a new Flat Panel Display.	USD 2,000,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 1,140,000 $37,025	$ -	$ -	USD 1,140,000 $37,025	$ -	51.51%	$ -	$ -	$ -

121

Attachment 7: Investment in Mainland China

Investee company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2013	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2013	Net income (loss) of investee company	Percentage of Ownership	Investment income (loss) recognized	Carrying Value as of December 31, 2013	Accumulated Inward Remittance of Earnings as of Outflow December 31, 2013
					Outflow	Inflow
JY Sinact	Manufacturing and selling a wide variety of electronic materials.	HKD 73,980,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 5,666,000 $177,159	$ -	$ -	USD 5,666,000 $177,159	HKD3,246,000 $12,460	100.00%	HKD3,246,000 $12,460 (Note 1)	HKD19,093,000 $73,750	$ -
Shang Hai Comtek Electronics Trading Co., ltd.	Selling a wide variety of electronic materials.	USD 160,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 104,000 $3,302	$ -	$ -	USD 104,000 $3,302	$ -	51.06%	$ -	$ -	$ -
Dong Guan CMK	Manufacturing and selling a wide variety of connectors, wires and cables.	USD 1,000,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 645,000 $20,768	$ -	$ -	USD 645,000 $20,768	$ -	51.06%	$ -	$ -	$ -
T-CONN Zhongshan	Manufacturing and selling a wide variety of connectors, wires and cables.	USD 5,000,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 3,086,000 $99,007	$ -	$ -	USD 3,086,000 $99,007	USD(548,000) ($16,320)	64.48%	USD(353,000) ($10,523) (Note 4)	USD925,000 $27,697	$ -
BJSB Tongan	Manufacturing and selling a wide variety of connectors, wires and cables.	USD 3,000,000	Indirectly investment in Mainland China through remittance from a third region.	USD 160,000 $4,688	USD2,840,000 $84,446	$ -	USD 3,000,000 $89,134	($8,078)	100.00%	($8,078) (Note 1)	$85,466	$ -
Accumulated Investment in Mainland China as of December 31, 2013 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment USD 40,756,000 USD 51,320,000 N/A (Note 5)
Accumulated Investment in Mainland China as of December 31, 2013			Investment Amounts Authorized by Investment Commission, MOEA		Upper Limit on Investment
USD 40,756,000			USD 51,320,000		N/A (Note 5)

Note 1: The financial statements certificated by the public accountant of the parent company in Taiwan.

Note 2:Investee measured at cost.

Note 3: Investment income (loss) recognized by the investee's financial statement.

Note 4: The financial statements certificated by other public accountants.

Note 5: According to No. Shen-Zi-09704604680 issued by Ministry of Economic Affairs, R.O.C., the Company's investment in Mainland China is not limited to 60% of net worth or consolidated net worth specified by the Investment commission.

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AI assistant

SINBON Electronics — Annual Report 2013

52256_rns_2013-11-12_c29914c5-aa6b-48a7-8654-2b825f956f8d.pdf

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT ACCOUNTANTS

AUDIT REPORT OF INDEPENDENT ACCOUNTANTS

English Translation of a Report Originally Issued in Chinese

Ernst & Young

Notice to Readers

English Translation of Consolidated Financial Statements Originally Issued in Chinese SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2013, December 31, 2012 and January 1, 2012 (Expressed in Thousand New Taiwan Dollars)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS(Continued) December 31, 2013, December 31, 2012 and January 1, 2012 (Expressed in Thousand New Taiwan Dollars)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2013 and 2012

English Translation of Consolidated Financial Statements Originally Issued in Chinese SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2013 and 2012

CONSOLIDATED STATEMENTS OF CASH FLOWS

English Translation of Consolidated Financial Statements Originally Issued in Chinese

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)

1. HISTORY AND ORGANIZATION

2. DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS FOR ISSUE

3. NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

IFRS 9 Financial Instruments

IFRS 3 “Business Combinations”

IFRS 7 “Financial Instruments: Disclosures”

IAS 1 “Presentation of Financial Statements”

IAS 34 “Interim Financial Reporting”

(f) IFRS 10 “Consolidated Financial Statements”

(g) IFRS 11 “Joint Arrangements”

IAS 1 “Presentation of Financial Statements”

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

IAS 32 “Financial Instruments: Presentation” (Amendment)

IAS 34 “Interim Financial Reporting” (Amendment)

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

IFRS 2 “Share-based Payment”

IFRS 3 “Business Combinations”

IFRS 8 “Operating Segments”

IFRS 13 “Fair Value Measurement”

IAS 16 “Property, Plant and Equipment”

IAS 24 “Related Party Disclosures”

IAS 38 “Intangible Assets”

IFRS 3 “Business Combinations”

IFRS 13 “Fair Value Measurement”

IAS 40 “Investment Property”

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of Compliance

(2) Basis of Preparation

Preparation principle of consolidated financial statements

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(4) Foreign Currency Transactions

(5) Translation of Foreign Currency Financial Statements

Financial Assets

Financial assets at fair value through profit or loss

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Available-for-sale financial assets

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Loans and receivables

Impairment of financial assets

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Derecognition of financial assets

(b) Financial liabilities and equity

Classification between liabilities or equity

Equity instruments

Compound instruments

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Financial liabilities

Financial liabilities at fair value through profit or loss

Financial liabilities at amortized cost

Derecognition of financial liabilities

(c) Offsetting of financial instruments

(d) Fair value of financial instruments

(9) Derivative financial instruments

(15) Provisions

Provision for decommissioning, restoration and rehabilitation costs

Sales returns and allowances

(16) Revenue recognition

SINBON Electronics Annual Report 2013